Bolitho v Banksia Securities Ltd (No 6)

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT
COMMERCIAL LIST

S CI 2012 07185

LAURENCE JOHN BOLITHO	Plaintiff
v
BANKSIA SECURITIES LIMITED ACN 004 736 458 (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) & ORS	Defendant

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JUDGE:	JOHN DIXON J
WHERE HELD:	Melbourne
DATE OF HEARING:	29–30 May 2019
DATE OF RULING:	26 September 2019
CASE MAY BE CITED AS:	Bolitho v Banksia Securities Ltd (No 6)
MEDIUM NEUTRAL CITATION:	[2019] VSC 653

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EVIDENCE – Privilege against exposure to penalty – Whether engaged

PRACTICE AND PROCEDURE – Contradictor – Nature and functions of a court-appointed contradictor considered – Interveners and amici curiae compared

PRACTICE AND PROCEDURE – Group proceeding – Approval of settlement – Whether claims for legal costs and funding commission should be approved – Appointment of contradictor –Allegations of disentitling conduct made against counsel, solicitor and litigation funder – Allegations of contravention of overarching obligations made against counsel and solicitor acting for representative plaintiff and against litigation funder – Solicitor and counsel withdraw from acting for the plaintiff in the proceeding - Scope of contradictor’s role – Application by counsel and solicitor to redefine the issues on the application – Whether contravention of overarching obligations can affect exercise of power to approve settlement - Supreme Court Act 1986 (Vic) ss 33V, 33ZF, Part 4A; Civil Procedure Act 2010 (Vic) ss 28, 29

PRACTICE AND PROCEDURE – Subpoena – Legitimate forensic purpose – Risk of irrelevant collateral issues being exposed – Subpoena set aside

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APPEARANCES:		Counsel		Solicitors
For the Plaintiff		Ms S M Jacobsen		Crow Legal
For Australian Funding Partners Limited	Mr S R Horgan QC with Mr C Tran		Arnold Bloch Leibler
For Mr Lindholm and Mr McCluskey in their capacity as joint and several special purpose receivers of the Banksia Securities Limited (receivers and managers appointed) (in liquidation)	Mr R A Dick SC with Mr J Redwood		Maddocks
For the Contradictor		Mr P Jopling QC with Ms J Collins		Corrs Chambers Westgarth
For Mr N O’Bryan AM QC		Mr D Batt QC with Mr M Costello		MinterEllison
For Mr M Symons		Mr R G Craig		King & Collins
For Mr A Zita, Portfolio Law		Mr C G Juebner		Colin Biggers & Paisley
For The Trust Company (Nominees) Ltd		Ms F Shand		Clayton Utz
For the Objecting Group Members		Mr C H Withers

TABLE OF CONTENTS

Introduction................................................................................................................................... 3
The applications before the court............................................................................................. 12
Resolution of the applications.................................................................................................. 15
The nature of the court’s role.................................................................................................... 18
The role of the contradictor....................................................................................................... 27
Amici curiae, interveners and contradictors - principles........................................................ 28
The Revised List of Issues......................................................................................................... 43
Challenge to the Revised List of Issues................................................................................... 50
Finalising the Revised List of Issues........................................................................................ 69
Penalty privilege......................................................................................................................... 71
The subpoena.............................................................................................................................. 77
Conclusion................................................................................................................................... 79

HIS HONOUR:

Introduction

I have for determination applications by Mr Norman O’Bryan AM QC, and Mr Michael Symons who both formerly acted as counsel for the plaintiff Mr Bolitho, and Mr Anthony Zita who was his solicitor, none of whom are parties to this remitter proceeding. To understand the applications that were made, I must first explain the proceeding and its procedural history.

Banksia Securities Limited (Banksia) was a debenture issuer regulated by a trustee under Chapter 2L of the Corporations Act 2001 (Cth). The Trust Company (Nominees) Limited (Trust Co) acted as trustee pursuant to the terms of a trust deed.

On 25 October 2012, receivers and managers were appointed to Banksia. On 24 June 2014, Mr John Ross Lindholm and Mr Peter Damien McCluskey were appointed the liquidators of Banksia and subsequently as the special purpose receivers (SPRs) of Banksia by orders of the Supreme Court of New South Wales. Banksia’s financial collapse left approximately $663 million owing to debenture holders. Following interim distributions, debenture holders were still owed approximately $172 million in outstanding principal and accrued interest under the Banksia Trust Deed.

Mr Bolitho commenced a group proceeding on his own behalf and on behalf of all debenture holders against Trust Co and others to recover losses in respect of the debentures held by them at the time of Banksia’s collapse. Mr Bolitho’s proceeding was funded by Australian Funding Partners Limited[1] (AFPL), which was incorporated for the purpose of funding this group proceeding. Other proceedings that have been issued against Trust Co and others to recover losses of debenture holders were prosecuted by the SPRs (the SPRs proceedings).
[1]Formerly known as BSL Litigation Partners Limited.

The Court of Appeal recited a procedural history of the litigation in Botsman v Bolitho[2] and for present purposes it is sufficient to refer the reader to that judgment.
[2](2019) 57 VR 68.

A settlement of both the group proceeding and the SPRs proceedings was negotiated,[3] and a Deed of Settlement and Release (Deed) was executed by Mr Bolitho, Banksia and Trust Co. Croft J approved the settlement pursuant to s 33V and s 33ZF of the Supreme Court Act 1986 (Vic).[4]
[3]Although irrelevant for present purposes, I note that not all claims were then settled.
[4]Re Banksia Securities Limited (Receiver & Manager appointed) (In Liquidation) (No 2) [2018] VSC 47.

In the Court of Appeal, a debenture holder successfully objected to that approval and the settlement was, in part, set aside. The Court of Appeal upheld the primary judge’s finding that the settlement sum of $64 million was fair and reasonable. However, it concluded that the primary judge had erred in approving distribution to AFPL of its claimed commission and legal costs. Those matters were remitted for determination by a judge of the Trial Division.

The remitter proceeding is an application by AFPL, pursuant to ss 33V and 33ZF of the Supreme Court Act, for approval of the distribution from the settlement sum of the funder’s application for commission (pursuant to clause 3.10 of the Deed), and the funder’s application for legal costs and disbursements (pursuant to clause 3.11 of the Deed) and for approval of the procedure for a Settlement Scheme. A settlement scheme would provide for the payment to group members, as specified in the Deed, of the balance of the settlement sum after taking into account whatever payments are ordered, or are to be ordered, for the benefit of the funder.

At the first directions hearing on 22 November 2018, I directed that the parties develop a list of issues for determination on the remitter pursuant to s 50 of the Civil Procedure Act2010 (Vic) and listed the remitter for hearing on 18 March 2019. Shortly thereafter I appointed Mr Peter Jopling AM QC and Ms Jennifer Collins as Contradictor for the purposes of the remitter. Later, Mr Craig Phillips of Corrs Chambers Westgarth was appointed as independent solicitor to instruct the contradicting counsel. The proper role of the Contradictor is in contest on this application, which requires that I explain what has so far occurred on the remitter.

At a further directions hearing on 1 February 2019, I made case management directions. The parties had consented to orders for discovery, for the exchange of counsel’s opinions and to orders proposed by the Contradictor directing the SPRs to file evidence. Amongst those directions, the SPRs filed:

(a) a procedural chronology of Supreme Court Proceeding SCI 2012 7185 (Bolitho Proceeding) and Supreme Court of Victoria Proceeding SCI 2015 01384 (SPRs Proceeding) (collectively, the proceedings);

(b) affidavits addressing any arrangements between the plaintiffs in each of the proceedings (and their respective legal teams) for dividing up the work necessary for a trial of each of the proceedings, including preparing the evidence to be relied upon by the plaintiffs in each of the proceedings at trial;

(c) affidavits providing a chronological account and description of the categories of work that was performed by the SPRs and their lawyers (and for the avoidance of doubt, including work performed by Ashurst and/or McGrathNicol) for the proceedings, including the cost of the work broken down as between counsel fees, solicitors fees, SPRs fees and expert fees, and into the following time periods:

(i) prior to 1 July 2016; and

(ii) 1 July 2016 to 31 December 2017.

(d) a confidential opinion from counsel with the primary conduct of the proceedings for the SPRs throughout the course of each of the proceedings (including at first instance and on appeal), Mr Robert Dick, Mr Jonathon Redwood and Ms Prue Bindon, responding to the confidential opinions dated 19 January 2018 (First Bolitho Opinion) and 24 January 2018 (Second Bolitho Opinion) that had been tendered to the primary judge as to the relative prospects of the SPRs’ claims and Mr Bolitho’s claims against Trust Co and such other matters as are appropriate.

The plaintiff, Mr Bolitho, could file a further confidential opinion from his counsel Mr O’Bryan and Mr Symons responding to the confidential submissions of the SPRs dated 23 January 2018 and/or the confidential opinions of counsel for the SPRs dated 12 May 2017 and 7 November 2017. Thereafter, the SPRs and Mr Bolitho could file responsive confidential opinions from counsel responding to this further material. Directions were made for discovery by AFPL and Mr Bolitho, on the one hand and the SPRs on the other, for the preparation and exchange of expert evidence on legal costs, litigation funder risk profiles, and lay evidence.

On 1 March 2019, I vacated the hearing date and refixed the remitter for hearing on 3 June 2019, making further case management directions in respect of discovery and expert evidence and extending the time for filing of, inter alia, the opinions of counsel directed on 1 February 2019. By this time, the Contradictor had revised the list of issues to refer to certain conduct under the heading ‘Disentitling Conduct’ that it contended was relevant to the court’s discretion under s 33ZF of the Supreme Court Act to reduce or disallow AFPL’s claims for legal costs and disbursements and for funding commission. The issue was identified in paragraph 7 of the statement in these terms:

Has there been any conduct by AFPL/Mr Elliott, Mr O’Bryan AM SC, Mr Symons and/or Portfolio Law/Mr Zita in respect of the applications brought by Mr Bolitho and AFPL for payment to AFPL of:
(a) legal costs and disbursements; and/or
(b) funding commission,
by reason of which the court should exercise its discretion under section 33ZF of the Supreme Court Act 1986 (Vic) to reduce or disallow AFPL’s claims for those payments so that justice is done in the proceeding?

Following the 1 March 2019 hearing, the Contradictor sought explanations of certain alleged conduct of Mr Bolitho’s legal team, Mr Zita, Mr O’Bryan and Mr Symons, and of AFPL and its managing director, Mr Mark Elliott. The Contradictor contended that, absent any explanation, it would be open to the court, when considering AFPL’s claims for legal costs and funding commission, to draw inferences that might be material considerations on the remitted issues. It is necessary to say more about these contentions presently but I note that the Contradictor contended, absent explanation to the contrary, that it was open to infer that misleading information might have been provided to the judge at the first approval hearing and subsequently to the Court of Appeal, either through instructions given to the costs consultant, Mr Trimbos, for his expert report or directly in submissions to the court.

The Contradictor identified six matters in respect of which they sought an explanation:

(a) the dates on counsels’ fee invoices in respect of the period following the partial settlement were not the dates on which they had been issued;

(b) invoices provided to Mr Trimbos and attached to his third report of 4 January 2018 were stamped as paid when they had not been paid;

(c) no written fee agreements existed with counsel with respect to the period following the partial settlement, but written fee agreements were created and provided to Mr Trimbos when he asked for them;

(d) senior counsel told Mr Trimbos that his fees had been duly paid by AFPL when, in fact, none of senior counsel’s fees that Mr Trimbos was asked to opine upon had been paid;

(e) the summons by Portfolio Law seeking approval of the settlement asked the court to approve the settlement on the basis of the Deed including a claim in respect of ‘reimbursement’ of legal costs and disbursements; and

(f) the time charged to this proceeding by senior counsel appeared to be inconsistent with publicly available information regarding senior counsel’s involvement in other matters.

The proceeding returned for a case management hearing on 29 March 2019. In part, what occurred at this directions hearing is relevant to this application. Ms Jacobson of counsel now appeared for Mr Bolitho. Mr O’Bryan appeared as a courtesy to inform the court that he had returned his brief, the Victorian Bar’s Ethics Committee having ruled that he do so. Mr O’Bryan indicated that Mr Symons was away from Melbourne, but he understood that he would also be returning his brief upon his return. Apparently, he did so.

Mr O’Bryan suggested that the opinion responding to the SPRs opinion, which was directed to be filed on 1 February 2019, might now need to be provided by other counsel, as he and Mr Symons would become witnesses rather than counsel in the proceeding. I did not consider this suggestion appropriate as the opinions were being provided as evidence, not submission, and concerned the allocation of preparation work of the proceedings for trial and its subsequent settlement, matters that were peculiarly, from Mr Bolitho’s perspective within the knowledge of Mr O’Bryan and Mr Symons. It was a matter for AFPL what evidence was presented on the application. Mr O’Bryan sought an extension of time to prepare that affidavit, which was granted by consent. Mr O’Bryan then withdrew. Further trial preparation directions were then considered and orders made.

Paragraph 3 the orders made on 29 March 2019 read (the affidavit order):

Evidence to be filed by AFPL and Mr Bolitho’s representatives
3.By 23 April 2019, AFPL by its managing director, Mr Zita, Mr O’Bryan AM SC and Mr Symons are to file affidavits addressing the following matters to the extent that those matters are within their knowledge:
(a)Why was a summons issued in this court on 7 December 2017 seeking payment out of the settlement to AFPL for “reimbursement” of legal costs?
(b)Why did counsel’s invoices in respect of the post-1 July 2016 period have a “processed date” which made them appear as if they were issued monthly?
(c)Why were invoices stamped as “PAID” when they had not been paid? Who stamped them as “PAID”?
(d)Why were invoices stamped as “PAID” provided to the expert witness Mr Trimbos? Who provided them to Mr Trimbos?
(e)Why did senior counsel for Mr Bolitho inform the expert witness Mr Trimbos that fees had been duly paid, when they had not been paid?
(f)Why were fee agreements created in December 2017 after Mr Trimbos asked for them, and why were they provided to Mr Trimbos?
(g)Precisely what discussions occurred at relevant times between AFPL and Mr Bolitho's representatives about the costs incurred and to be incurred in the proceeding, and the terms upon which Mr Bolitho's representatives were asked to act, and the terms upon which Mr Bolitho's representatives agreed to act?
(h)Why was the Trimbos Report filed with the court annexing invoices stamped as “PAID”?
(i)Why did counsel for Mr Bolitho rely upon and endorse the Trimbos Report, including the annexures in their confidential counsel opinion dated 19 January 2018 filed with the court?
(j)Why did counsel for Mr Bolitho state in their opinion at paragraph 116 that Mr Bolitho's solicitors and counsel had been engaged on their usual terms? Do those terms usually include an arrangement to defer the delivery of invoices and the payment of fees?
(k)Why did counsel for Mr Bolitho state in their opinion that AFPL's commission was justified by the legal costs it absorbed without informing the court that most of those costs had not been paid (and in circumstances where the Trimbos report, which was referred to in the opinion, stated the costs had been paid, and the summons sought payment of legal costs by way of “reimbursement”)?
(l)Why did Mr Bolitho's representatives and AFPL permit the Trimbos Report and confidential counsel opinion to then be relied upon in the Court of Appeal?

On the application of the parties, the date for Mr Zita, Mr O’Bryan and Mr Symons to comply with the affidavit order has been extended pending the outcome of this application.

I pause to note that on 29 March 2019, AFPL consented to the SPRs producing documents discovered by them to the Contradictor and, together with Mr Bolitho, also consented to the affidavit order. The Contradictor contended, and it appears sufficiently from the then current revised statement of issues, that the issues were developed by reference to the documents produced on discovery, the evidence of the SPRs, and admissions made in correspondence.

On 11 April 2019, the Contradictor obtained a subpoena to Mr O’Bryan seeking:

(1)For the period 1 July 2016 to 30 January 2018, all documents which evidence or record your fees charged (disclosing the time and rate charged), on a daily basis, and not in the aggregate, with respect to all matters and clients apart from proceeding S CI 2012 07185.
(2) All documents which record or evidence the terms on which you have acted in the Elliott Matters with respect to:
(a) your hourly and daily rate on the matter;
(b) the conditions attached to the obligation to pay your fees on the matter, in particular:
(i) whether fees were to be invoiced and paid on an interim basis, and if so, at what intervals;
(ii) whether the obligation to pay your fees was deferred, and if so, until when;
(iii) whether the obligation to pay your fees was contingent upon the happening of a particular event, and if so, what event.

(together, the Critical Terms),

For each of the Elliott Matters, the documents sought are:
1. Your fee agreements in respect of that matter.
2. Any notification from you or your secretary to Mr Elliott advising of any increase in your rates on the matter.

3.   All records of communications between you or your secretary and Mr Elliott which refer to any one or more of the Critical Terms of your engagement with respect to that matter.
4.   A summary report disclosing your total fees and charge-out rate on the matter for work undertaken on the matter, if a summary report is available.
5.   If no summary report is available:
(a)all of your invoices for that matter;
(b)the first fee memorandum you rendered on the matter;
(c)on each occasion on which your rates were varied on the matter, the first fee memorandum you rendered at that new rate.

6. A summary report disclosing your total outstanding fees on the matter, if a summary report is available.
(a)If any invoice you issued on the matter was paid:
(b)All records of communications between you or your secretary and Mr Elliott in which you were informed that your fees were to be paid or had been paid.
(c)Any receipt evidencing payment of fees.
(d)Your bank statements evidencing that the invoices were paid, and disclosing when they were paid.

The “Elliott Matters” means the following matters:
·     Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd (Supreme Court of Victoria Proceeding S CI 2013 5731; Federal Court Proceeding NSD 216 of 2015).
·     Melbourne City Investments Pty Ltd v Leighton Holdings Ltd (Supreme Court of Victoria Proceeding SCI 2013 5159).
·     Melbourne City Investments v Myer Holdings Ltd (Supreme Court of Victoria Proceeding S CI 2015 01318).
·     Melbourne City Investments Pty Ltd v UGL Ltd (Supreme Court of Victoria Proceeding S CI 2015 01440).
·     Melbourne City Investments Pty Ltd v WorleyParsons Limited (Supreme Court of Victoria Proceeding S CI 2013 6536).
·     Walsh v Worleyparsons Ltd (Supreme Court of Victoria Proceeding S CI 2014 04712).
·     Camping Warehouse v Downer EDI (Supreme Court of Victoria Proceeding SCI 2014 01423).
·     Webster v Murray Goulburn Cooperative Co Ltd (Federal Court Proceeding VID 508 of 2017).

On 16 April 2019, the Contradictor provided substantial particulars of the disentitling conduct by serving a Revised List of Issues (RL Issues).

At all times through active case management, the proceeding has been closely managed by the court and any party has been able to exercise liberty to apply for a case management hearing on short notice. Much of the work done, and the steps taken, by the Contradictor to date in preparation for the trial of the issues on the remitter have been taken with the consent of the parties and/or pursuant to court orders.

On 22 May 2019, I approved an interim settlement distribution scheme in respect of the settlement sum under the Deed, save for the sum of $22 million that is being held on trust by the solicitors for the SPRs, pending resolution of AFPL’s application on the remitter.[5]
[5]Bolitho v Banksia Securities Limited (No 5) [2019] VSC 554.

Broadly speaking, the issues remaining on the remitter are not limited to determining the competing claims between AFPL and approximately 16,000 debenture holders about the fair and reasonable deductions to be permitted from the remaining settlement funds, but extend to allocating responsibility for the significant costs that have been incurred since the settlement was entered into. Such costs include the costs of the SPRs because they fall in the first instance for payment from funds otherwise available for distribution to the debenture holders.

Section 33V is as follows:

Settlement and discontinuance
(1)A group proceeding may not be settled or discontinued without the approval of the Court.
(2) If the Court gives such approval, it may make such orders as it thinks fit with respect to the distribution of any money, including interest, paid under a settlement or paid into court.

In considering whether to approve a settlement, the court has general power to make orders, found in s 33ZF:

General power of court to make orders
In any proceeding (including an appeal) conducted under this Part the Court may, of its own motion or on application by a party, make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding.

The applications before the court

By summonses in the proceeding, Mr O’Bryan sought an order setting aside the subpoena issued on 11 April 2019 and Mr O’Bryan, Mr Symons and Mr Zita (the non‑parties) relevantly sought:

(a) an order that the affidavit order be set aside;

(b) an order that the RL Issues and the annexure thereto (Particulars) be removed from the court file;

(c) alternatively to (b), an order that paragraph 7 of the RL Issues and the Particulars be struck out; and

(d) alternatively to (b) and (c) an order that the Contradictor is not permitted to rely upon the RL Issues and the Particulars.

The non‑parties’ primary submission was that each order sought in the summonses was warranted because the Contradictor had acted in excess of, and outside of, the scope of its proper role in making ‘and seeking to prosecute’ the allegations made in the RL Issues, procuring the affidavit order, and issuing the subpoena. They submitted with technical precision that they had no notice as non‑parties, distinct from their role as counsel, that the orders were being sought. Secondly, the RL Issues was, through the inclusion of paragraph 7 and the particulars of disentitling conduct, improper and prejudicial. Thirdly, the Contradictor has created procedural unfairness that ‘will be aggravated and compounded if the remitter continues to proceed in accordance with the Contradictor’s intentions’. Finally, they invoked the privilege against exposure to penalties. The non-parties submitted that immediate orders were required to correct the role of the Contradictor and to ensure procedural fairness.

It is curious that Mr Bolitho, when represented by the non‑parties, did not oppose the procedural directions sought by the Contradictors that were largely agreed to by the parties and adopted by the court when those non‑parties were the lawyers on the record up to 29 March 2019.

Another curiosity evident on the application was that it was the non‑parties and not AFPL or Mr Bolitho who sought to restrict the role of the Contradictor. Invited to explain their standing to do so, the non‑parties submitted that they were affected by the way that the Contradictor was exercising the role, which provided a sufficient basis for their submissions. I was not persuaded by this submission in its broad application.

Mr O’Bryan undoubtedly has standing to contest the subpoena. The non-parties are presently obliged to directly and personally respond to the affidavit order. They are entitled to contest that obligation, but they go further and seek substantive procedural orders affecting the RL Issues document. I accept that the non-parties have standing in the proceeding in the sense identified in Ainsworth v Criminal Justice Commission.[6] That is to say the nature of the power being invoked in the proceeding rather than the character of the proceeding that attends its exercise gives rise to a duty of procedural fairness because the power involved is one which may ‘destroy, defeat or prejudice a person's rights, interests or legitimate expectations’.[7]
[6](1992) 175 CLR 564.
[7]Ibid 576, quoting Annetts v McCann (1990) CLR 596, 598.

Although it might be more distinctly clarified in the Particulars, the Contradictor stated during the hearing that the relief claimed by the RL Issues is claimed against AFPL only and no claim is put for that relief from the non-parties. Accepting that to be so, and I will later explain that clarification in the allegations is desirable, I am proceeding on the basis that there is no claim for any positive payment made against the non-parties. That said, there is the prospect that, should the Contradictor establish the allegations made at the trial, fees paid or payable to, the non-parties might be disallowed as deductible from the settlement sum. There is also the prospect that findings might be made in respect of AFPL’s application that could adversely affect the interests of the non-parties in other ways.

In Ainsworth, the plurality noted that it has long been accepted that reputation, including business or commercial reputation, is an interest attracting the protection of the rules of natural justice that should not be damaged by ‘an official finding after a statutory inquiry’ unless the person whose reputation is likely to be affected has had a full and fair opportunity to show why the finding should not be made.[8] It is not contentious that the allegations that the Contradictor intends on pursuing could adversely impact on the professional reputations of the non-parties. Presently, those allegations, which are of a most serious kind, include alleged contraventions of overarching obligations under the Civil Procedure Act and alleged breach of professional conduct rules.
[8]Ibid 592, quoting Annetts v McCann (1990) CLR 596, 608.

What follows is that the non-parties are entitled to procedural fairness, but that entitlement is not a carte blanche to contest the court’s order appointing the Contradictor, the definition of the Contradictor’s role, or the manner of definition of the issues in contest between the parties. There are a number of issues to be resolved before the precise content of the entitlement to procedural fairness can be identified and reflected in appropriate case management.

Resolution of the applications

There is a short answer to the non‑parties’ primary contention arising out of the changing circumstances on the remitter. The orders made on 29 March 2019 were directions for trial preparations that, when sought by the Contradictor, were not opposed. That is unsurprising given that the history of the preparation of the matter up until that time. First, until 29 March 2019 each of the non‑parties was, as the legal practitioner on the record, a disclosed agent of the plaintiff, who was a party to a relevant commercial agreement with AFPL. The parties adopted a form of trial directions that made direct reference to the person to provide evidence rather than to the party to provide that evidence. For example, orders had directed named counsel, rather that the party represented by such counsel, to prepare an affidavit.

Secondly, the non‑parties were the appropriate persons on behalf of Mr Bolitho to explain apparent irregularities in the documents supporting the funder’s claim for costs and disbursements. Because the costs and disbursement for which AFPL sought approval were incurred by Mr Bolitho through engagement of the non‑parties, the orders were expressed in the form that they were. Given the significance of the extent to which work was performed by the SPRs in both proceedings when determining an appropriate funding commission, the parties had sensibly agreed that the evidentiary matrix relevant to that question should include opinions from trial counsel. That logic was unaffected when the non‑parties ceased to act as the plaintiff’s legal practitioners.

Thirdly, whether the claimed costs were reasonable necessarily involves evidence from the non‑parties because, at that time, they were the persons whose fees made up that claim.

However, when the non‑parties ceased to be the legal practitioners for Mr Bolitho, circumstances significantly changed. Although the court has not been informed of the precise basis for the rulings of the Ethics Committees that have necessitated this change, it seems reasonable to infer that the rulings were based on the circumstances established by the decision of the Court of Appeal resulting in this remitter.

As I indicated during argument, I propose to amend the affidavit order so that the chapeau reads:

3.By (date to be determined), AFPL shall file affidavits (by its managing director, Mr Mark Elliott and/or its legal representatives at the relevant time, Mr O’Bryan AM SC, Mr Symons and Mr Zita) addressing the following matters to the extent that those matters are within its knowledge, or information based belief:

The purpose of the amendment of the order is to recognise that the non‑parties are no longer the legal representatives of Mr Bolitho. They are now potential witnesses capable of giving relevant evidence on the remitter. Whether they give evidence and what evidence they give is a matter for AFPL, which is being challenged by the Contradictor with circumstances that, if unanswered at trial, may justify inferences adverse to AFPL for matters on which it bears an onus.

The change in the relationship between the non‑parties, AFPL and Mr Bolitho when they ceased to be the legal practitioners for Mr Bolitho does not permit them to intervene in this proceeding or to to put substantive submissions about the content of the RL Issues to be determined on the remitter or the nature of discovery to be made by the parties within the proceeding.

The exception that I will return to later in these reasons turns on the Contradictor’s particulars of disentitling conduct that may directly affect the non‑parties. That they might be so affected raises the question of whether they need to be joined as parties to the proceeding. To date, they have not made that application. Rather they make an antecedent application to strike out the allegations of disentitling conduct, which is not an application that is open to them. The cart is before the horse. The issues joined between AFPL and the Contradictor on the remitter are a matter for the parties to the remitter and the expression ‘parties’ in this usage includes the Contradictor.

Related to this question is whether the court might of its own motion acting under s 29(2)(b) of the Civil Procedure Act consider whether, on the balance of probabilities, some or all of Mr Bolitho, AFPL, each of the non‑parties, and Mr Trimbos being person to whom by force of s 10 of the Act the overarching obligations apply, has contravened any overarching obligation. Necessarily, that inquiry would be linked to whether the court should, in the interests of justice pursuant to s 29(1) of the Act, make an order that might be to the financial benefit of group members entitled to a distribution from the remaining settlement sum. I will return to these issues later in these reasons.

I do not accept the submission that the Contradictor had exceeded its role and I will develop my reasons for this conclusion. However, leaving aside the application to set aside the subpoena and the possible application of the Civil Procedure Act, I see no basis for the court to entertain a submission from a possible witness about the conduct of the Contradictor.

Whether fact finding at the trial of the issues raised on the remitter is to be based on evidence that the non‑parties might give, or upon inferences to be drawn in the absence of that evidence, is a matter for the forensic judgment of the parties. Those forensic judgments will consider where the onus of proof lies and the opportunity for the court to draw inferences, including whether satisfaction of an evidentiary onus permits an inference to be drawn in the absence of an explanation. These are matters for trial. The variation to the trial preparation directions will now make clear what was always intended but was obscured by the fact that the relevant witnesses were acting as the plaintiff’s legal advisers.

It is sufficient to rule that the non‑parties presently lack standing to challenge the status of the affidavit order (once amended) or the RL Issues. Save that I will amend paragraph 3 of the affidavit order in the form I have already noted, each of the summonses filed by Mr O’Bryan and Mr Symons dated 12 May 2019, and Mr Zita’s summons dated 15 May 2019 will be dismissed.

AFPL made no submission on the non‑parties’ applications save that it concurred in the submission that the role of the Contradictor should be confined appropriately. When I pressed counsel in oral submissions on this point, the following exchanged occurred.

HIS HONOUR: Are you pressing for a precise definition of the contradictor's rights in the way that the affected non‑parties are?
MR HORGAN: What we've said in our position statement is that AFPL agrees that the role of the contradictors should be confined appropriately but we make no submissions about that. We're not an applicant and we don't adopt anything because we're not an applicant but we think that it should be confined appropriately, if Your Honour pleases.

Mr Bolitho also did not take a position in relation to the non‑parties’ application. However, the SPRs expressed a real interest in understanding the scope of the Contradictor’s role (which they submitted should not be confined or restricted) and in understanding the expected future role of the SPRs in the resolution of the issues on the remitter.

Having regard to these submissions, and the strong submission put that the Contradictor had exceeded a proper role, I now turn to that issue.

The nature of the court’s role

The non‑parties contended that the Contradictor’s role was identified from the scope of the remitter and was limited by the Court of Appeal to the matters properly in issue on the remitter. So much may be accepted. The primary source for the powers of the Contradictor is the context of the appointment. The submission continued that nothing was evident in its reasons that suggested that the Court of Appeal contemplated the ambit of contradiction to be wider than in the ordinary case, namely, making submissions on the issues joined and on the basis of the material before the court. Further, the court’s reasons were to be understood in the context of existing authority on the function of non-party amici curiae. I accept that the scope of the remitter is a relevant consideration but as I will in due course explain, the context of existing authority does not assist the non‑parties.

Assuming that AFPL’s bald submission that the ‘role of the Contradictor should be confined accordingly’ is an adoption of the non‑parties’ submission, I turn to consider what otherwise amount to the submissions of a non-party witness. The non‑parties contended that the Court of Appeal contemplated that the Contradictor’s role concerned the reasonableness of the legal costs and disbursements and the funder’s commission. The confidentiality of materials before the primary approving judge meant that neither group members nor the SPRs could assist, in a meaningful way, with the assessment of the reasonableness of the claims being made against the settlement sum. The Court of Appeal held it was necessary that a contradictor with access to that material be appointed to fulfil this role.

The court said:

We have concluded that the judge’s decision to approve distributions to the litigation funder for its commission and legal costs cannot stand. That is because critical matters were not given the scrutiny they required. The extensive confidentiality regime ordered by the judge impeded the ability of the parties and group members to make submissions on the reasonableness of the claimed commission and costs. In relation to the commission payment, the confidentiality orders and the contractual obligation on the special purpose receivers to support the settlement meant that the judge was denied the benefit of a proper contest on the reasonableness of the claimed payment. The problems occasioned by the confidentiality regime, and the potential for a conflict of interest between the litigation funder and the group members, could have been addressed by the appointment of a contradictor. The judge erred in refusing to do so.[9]

[9](2019) 57 VR 68, 73 [5].

The non‑parties submitted that this passage encapsulated the scope of the remitter and accordingly the constraints on the role of the Contradictor. The Contradictor’s role was designed to overcome the limitations arising from the confidentiality of the material before the primary judge.

The submission continued that the informing principle for the approval of the commission and costs was reasonableness and the concept of ‘reasonableness’ informed the extent of the task on remitter. The non‑parties submitted that so much was evident from the following passage.

In Earglow, Murphy J referred to the supervisory role of the court in relation to costs. His Honour stated that the court should satisfy itself that the arrangements meet any relevant legal requirements, contain reasonable and proportionate terms relative to the commercial context in which they were entered, and that the costs and disbursements are in accordance with relevant agreements and are otherwise reasonable.
The assessment of the reasonableness of costs and disbursements will involve a consideration of:
(qq) whether the work in a particular area, or in relation to a particular issue, was undertaken efficiently and appropriately;
(rr) whether the work was undertaken by a person of an appropriate level of seniority;
(ss)whether the charge out rate was appropriate having regard to the level of seniority of that practitioner and the nature of the work undertaken;
(tt) whether the task and associated charge was appropriate, having regard to the nature of the work and the time taken to complete the task; and
(uu) whether the ratio of work and interrelation of work undertaken by the solicitors and counsel was reasonable.[10]

[10]Ibid 115, 116 [222]–[223].

Accordingly, the non-parties submitted that these were the factors that defined the ambit of the court’s task on the remitter and what could not be considered on this assessment as part of the remitted task was conduct that might be characterised, by reference to other legal norms, as misconduct. The court was simply to assess the reasonableness of the work done, using the integers outlined by the Court of Appeal.

The non‑parties contended that any misconduct was irrelevant to the assessment of reasonableness because the question, as the Court of Appeal indicated, was factual reasonableness, a consideration of the actual work done, the rates involved, and the time spent on that work. There is no notion of disentitling conduct in Part 4A of the Supreme Court Act. The particulars of disentitling conduct lacked a nexus with the assessment of the reasonableness of the costs and the commission.

The following criteria were emphasised by the non‑parties:

(a) the court’s task did not involve an exhaustive review of the lawyers’ files but sufficient information to enable the court to undertake the assessment must be provided; that is, the court is to take ‘a pragmatic approach, seeking some independent verification of the reasonableness of the costs claimed, but not imposing an onerous or exhaustive task upon an applicant’;[11]
[11]Stanford v DePuy International Ltd (No 6) [2016] FCA 145 [120].

(b) the general principle that where a person has through their exertions brought into court a fund in which various parties are interested in its administration, that person is entitled to their costs and expenses from the fund;[12]

(c) the court’s task is not to fix a sum it considers reasonable, but to decide whether to approve as reasonable the sum claimed; and

(d) the Contradictor need only receive such information as is necessary for its appropriate role of testing the information put forward by the parties in light of the court’s task considered above.

[12]Referring to Re Universal Distributing Co Ltd (In Liq) (1933) 48 CLR 171, 174; Shirlaw v Taylor (1991) 31 FCR 222, 228; Thackray v Gunns Plantations Ltd (2011) 85 ACSR 144, 154 [41]; Kadam v MiiResorts Group 1 Pty Ltd (No 5) (2018) 129 ACSR 74, 93 [73]; Kelly v Willmott Forests Ltd (in liq) (No 4) (2016) 335 ALR 439, 510–11 [325].

The non‑parties also contended that the provisions of the Civil Procedure Act were not relevant to the court’s task on assessing the reasonableness of the work done.

Identifying a slightly different emphasis, the SPRs contended that defining the precise role for the Contradictor on the remitter must reflect the context of the proceeding.

Both the SPRs and the Contradictor emphasised that s 33ZF empowers the court, of its own motion or on application by a party, to make any order the court thinks appropriate or necessary to ensure that justice is done in the proceeding, which requires the exercise of a broad judicial discretion.

The Contradictor contended that the discretion was not constrained to a tick-a-box exercise against the factors identified in Modtech Engineering Pty Limited v GPT Management Holdings Pty Ltd[13] in respect of legal costs and disbursements. The Full Court of the Federal Court of Australia in Money Max Int Pty Ltd v QBE Insurance Group Ltd[14] expressly acknowledged that the factors identified as relevant when assessing the reasonableness of a claim for funder’s commission were not intended as an exhaustive list of the relevant considerations. So much is also clear from the reasons of the Full Court of the Federal Court in Westpac Banking Corporation v Lenthall.[15] I accept the Contradictor’s submission that s 33ZF provides a sound basis for the court to consider what is broadly described in this proceeding as disentitling conduct, subject to what is said later in these reasons about the precise scope of the proposed inquiry. In particular, I will later consider the Contradictor’s assertion that there is a nexus between the non‑parties’ obligation to adhere to the law (including their fiduciary duties) their professional conduct obligations, and the funder’s contractual and statutory obligations, particularly those obligations arising under the funding agreement.
[13][2013] FCA 626.
[14](2016) 245 FCR 191.
[15](2019) 366 ALR 136, 157–8 [85]–[86], [88].

In submissions, the SPRs noted three important characteristics of the application. First, there was a substantial dispute involving approximately $22 million. It is a contest between AFPL, as funder, and the debenture holders, as beneficiaries. Any reduction in the sums claimed by AFPL goes to the debenture holders. Any reduction in the claims being made against the funds remaining in the liquidation benefits the debenture holders.

Secondly, the debenture holders themselves are not parties to the proceeding but they will be bound by the approval orders that the court makes. As J Forrest J noted in Downey v Spiral Foods Pty Ltd & Ors,[16] the court approaches its task by asking, first, whether the proposed settlement is fair and reasonable as between the parties having regard to the claims of the group members; and, secondly, whether the proposed settlement is in the interest of group members as a whole and not just in the interest of the plaintiff and the defendants.
[16][2015] VSC 190 [45].

J Forrest J observed that the first of these issues is akin to the exercise carried out by a court in determining whether to approve settlement of a claim brought by a person under a disability. It is a protective role, the rationale for which has been examined and explained in a number of decisions. The following observations made by Osborn JA in Matthews v AusNet Electricity Services Pty Ltd apply equally to consideration of a funder’s commission. His Honour observed:

As Gordon J recognised in Modtech, the group members who are to share the liability for the fees and disbursements are limited in their capacity to act as contradictors of the claim for costs because the information available to them is limited. While the opt out notice is distributed to the group members in 2011 specifically notified them of [some details]…[t]hey do not know how the sum was quantified and have not had access to the confidential affidavits of the costs consultants… the process of analysis undertaken in the evidence before the court is therefore integral to ensuring that the costs sought are fair and reasonable.[17]

[17][2014] VSC 663 [349].

More recently in Australian Securities and Investments Commission v Richards,[18] the Full Court of the Federal Court provided the following pithy and frequently cited statement of the applicable principle:

Justice will be satisfied where a settlement is “fair and reasonable having regard to the claims made by group members who will be bound by it”: Jarra Creek Central Packing Shed Pty Ltd v Amcor Limited [2011] FCA 671 at [70], see also Australian Competition and Consumer Commission v Chats House Investments Pty Limited (1996) 71 FCR 250 at 258.
The role of the Court is important and onerous: Lopez v Star World Enterprises Pty Ltd [1999] FCA 104 at [16]. It is protective. It assumes a role akin to that of a guardian, not unlike the role a court assumes when approving infant compromises: P Dawson Nominees Pty Ltd v Brookfield Multiplex Limited (No 4) [2010] FCA 1029 at [23]; Tasfast Air Freight Pty Ltd v Mobil Oil Australia Ltd [2002] VSC 457 at [4], Carnie v Esanda Finance Corporation Ltd (1995) 182 CLR 398 at 408. In the current context, the Court’s role is to protect those group members who are not represented by Levitt Robinson and whose interests may be prejudiced by their absence: Chats House Investments at 258; DarwallaMilling Co Pty Ltd (ACN 009 698 631) v F Hoffman-La Roche Ltd (No 2) (2006) 236 ALR 322 at [41].

[18][2013] FCAFC 89 [7]–[8].

Citing Richards with approval, the Court of Appeal in ordering this remitter identified the organising principle that underpins s 33V to be whether the proposed settlement is fair and reasonable and in the interests of the group members bound by the settlement.[19]
[19](2019) 57 VR 68, 111 [202].

Next, the Court of Appeal’s reasons for the remitter are directly relevant.

The Court of Appeal concluded[20] that the process by which the primary judge approved the payments to the funder for legal costs and commission miscarried in that critical matters were not given the attention that they required. The Court of Appeal noted that many of the problems to which it had adverted could have been avoided had a contradictor been appointed to assist the court in the approval applications. As the court observed:

It remains the position that there has been no access by the SPR and Mr Bolitho’s lawyers to each other’s legal advice, the applicant’s lawyers have not been given access to the confidential opinions of counsel for Mr Bolitho, and the SPR remain bound by the terms of the deed. That has had a consequence that, even before this Court, the issues have not been ventilated to the extent necessary to enable the Court to be satisfied that the claimed payments for commission and legal costs are appropriate distributions to be made from the settlement sum.
In our view, on a remitter, in considering whether to approve the claimed commission and legal costs, the remitter judge would not be bound by a binary choice between approving the claimed amounts or refusing them. It would be open to the judge to determine the appropriate payments that should be made.[21]

[20]Ibid 145 [395].

[21]Ibid 145–6 [396]–[397].

Speaking generally about the potential for conflicts of interest that might warrant the appointment of a contradictor, the Court of Appeal observed:

It is the nature of group proceedings that are funded by third parties on a commercial basis that a potential conflict may arise between the funder and group members in relation to the size of any commission that is payable to the funder.
In circumstances where a common fund order is sought, the plaintiff may have an interest in obtaining a common fund order on the basis that it might reduce the liability that the plaintiff had under a funding agreement. The funder will often play a critical role in negotiations and, understandably, may seek to maximise its return on its investment. The position of the funder is more acute in circumstances where the funder is the source of instructions about how the case is to be run and on what terms it may settle. On the other hand, group members have an interest in minimising any common fund order.[22]

[22]Ibid 135 [330]–[331].

Here there is a claim by the funder for a common fund order and there is no doubt that AFPL played a central role in negotiations leading to the settlement. Further, with respect to its funding commission, AFPL was motivated to treat all of the settlement sum as referrable to the group proceeding and to minimise the significance of the SPRs proceeding. Additionally, it was plainly not in the interests of Mr Bolitho’s lawyers to challenge their own costs.

The Court of Appeal observed that there is heavy burden on the court in approving distributions for funder’s commissions and legal costs:

The funder has an obvious interest in maximising its return and recovering its legal costs. The defendant may have little interest in how any settlement sum is distributed other than to the extent that the distribution may imperil court approval. Group members may not have access to all the relevant information and may not be well placed to ensure that any settlement is fair and reasonable.[23]

[23]Ibid 136 [335].

In identifying that the primary judge’s exercise of discretion miscarried, the Court of Appeal emphasised the potential for conflict and the need to ameliorate the burden on the court in assessing the appropriateness of the claimed commission and costs. That will be achieved on the remitter by appointing a contradictor with access to all of the confidential material that was before the primary approval judge. As the SPRs contended, in order to have that proper contest, there must be no procedural handicap on the Contradictor. But for the SPRs contracting themselves out of actively testing the settlement, their role, representing the interest of the debenture holders, would have been to carefully review and test the evidence supporting the claim to commission and costs as appropriate.

The Court of Appeal reserved to the Trial Division judge conducting the remitter how it was to be conducted,[24] and its reasons provide guidance,[25] essentially stressing that the court ought to have in its rigorous scrutiny of the remaining issues the benefit of a proper contest. The court was not bound to a binary choice.[26]
[24]Ibid 146 [397]–[398], [401].
[25]Ibid 76 [5], 122 [255], 124 [266], 130 [300], 133–4 [320]–[321], 136 [333], 145 [395].
[26]Ibid 146 [397], [399].

Pausing at this point, I note that a number of key features of the Contradictor’s role are identified:

(a) There is a contest in respect of the funds claimed for commission and legal costs ($22 million) that are to be deducted from the settlement by what is effectively a common fund order.

(b) In that contest, there is a potential for conflict between the interests of AFPL and Mr Bolitho on the one hand and the interests of the debenture holders on the other hand.

(c) The role of the Contradictor is to represent the interests of debenture holders in order to assist the court, in the exercise of a protective jurisdiction in which the debenture holders are beneficiaries whose rights are thereby determined, in seeking to satisfy itself of the fairness and reasonableness of the settlement, having regard to the claims being made against the settlement sum.

AFPL bears an onus to persuade the court that the claimed deductions from the settlement sum are fair and reasonable. The Contradictor has access to confidential and privileged material that is relevant to the court’s assessment. The purpose of that access is not limited to preparing a submission for the court. The debenture holders are not parties to the proceeding and it is not appropriate, having regard to the structure of proceedings under Part 4A that they be joined into the proceeding. But for its contractual constraint, the SPRs, on behalf of the debenture holders could have challenged the case being mounted by AFPR for recovery of legal costs and disbursements and the determination of a fair and reasonable commission. The later question is more complex in this particular case because of the two sets of proceedings and the questions that have arisen about the distribution of the work load undertaken by Mr Bolitho and the SPRs in securing the settlement between those proceedings. That analysis informs the proper entitlement of the funder to its claimed commission.

I accept the submission put by the SPRs that, absent the restrictions contained in the Deed, the SPRs, as a party to the proceedings, would have been free and obliged in accordance with their duties, to actively scrutinise the payments sought by AFPL. It is, broadly speaking, inconsistent with the Court of Appeal’s reasoning to contemplate a Contradictor with lesser powers, rights and privileges in challenging and contesting the payments sought by AFPL than would have been available to the SPRs but for the contractual restrictions.

Having identified these features of the task, it is clear that the role envisaged for a contradictor from both the context of a s 33V application and by the Court of Appeal cannot be regarded as limited to the traditional role of an amicus. It is akin to the role that might have been assumed by the SPRs.

I next turn to the context provided by consideration of authority in respect of the roles of contradictors, amici curiae and interveners and the interaction between these roles.

The role of the contradictor

I consider that the non‑parties’ submissions improperly conflate the roles of contradictor and amicus curiae and improperly apply legitimate constrictions on the powers and functions of an amicus to the role of a contradictor. These roles are conceptually distinct, with distinct purposes. Whilst amici curiae are appointed to assist the court (usually impartially) and are very limited in the role they are permitted to play in proceedings, contradictors are generally appointed to ensure that there is a ‘real conflict’ in proceedings. This role bears closer relationship with, but is also distinct from, the position of interveners.

In any event, were I to consider the role of a contradictor was directly analogous to that of amici curiae, the debate descends to nomenclature. The court’s inherent jurisdiction to prevent an abuse of its processes and its powers under Part 4A and the Civil Procedure Act allow me to expand and empower the role as necessary. A contradictor always remains subject to the supervision of the court, both in terms of the tasks that are undertaken and the manner of their execution.

For the reasons that follow, I will expressly declare that the Contradictor may take any step authorised or permitted by the Supreme Court (General Civil Procedure) Rules 2015 to be taken in the proceeding by a party to the proceeding and the Contradictor shall take such steps having regard to the interests of the group members (debenture holders) for the purpose of assisting the court to determine whether the settlement is fair and reasonable as between the parties and is fair and reasonable in and between the interests of group members.

Amici curiae, interveners and contradictors - principles

Definitions in legal dictionaries of the terms describing the roles referred to by counsel in submissions - amicus curiae, interveners and contradictors - can be noted, but no legal dictionaries define a ‘contradictor’, despite frequent use in case law, particularly in the class action context, of that term. Mostly the cases concentrate on whether a contradictor should be appointed, rather than on defining the role.

In this proceeding, the parties agreed that an ‘amicus curiae/contradictor’ should appear to assist the court in relation to the applications in respect of the partial settlement and the court appointed a barrister as an ‘amicus curiae/contradictor’.[27] The language of this consent order submitted by the parties is apt to confuse as the roles of amici curiae and contradictor are not interchangeable, even though there may be overlap. There is also overlap between the roles of contradictors and interveners, although the notion of group members intervening generally, that is, other than as provided for under Part 4A conflicts with foundational principles of Part 4A.
[27]Re Banksia Securities Ltd (recs & mgrs apptd) [2017] VSC 148 [9]–[13].

The Australian Law Dictionary defines ‘amicus curiae’ as:

A person or organisation, not a party to the proceedings, who offers to assist a court or tribunal by providing representation to an unrepresented person (see also PRO BONO WORK) or in some other way assisting by expounding the law impartially (Allen v Sir Alfred McAlpine & Sons Ltd [1968] 2 QB 229, 266; David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 (ASIC offering its interpretation of the Corporations Law)) or giving perspectives related to the case to which the court would not otherwise have access: Levy v Victoria (the ‘Duck-shooting Case’) (1997) 189 CLR 579. In contrast to a person AGGRIEVED, an amicus is a STRANGER to the matter, without STANDING or a special interest that will support a grant of CERTIORARI: Re McBain (2002) 209 CLR 372. Granting an audience to an amicus is entirely at the court’s discretion. The role is often confused with the role of an intervener (see INTERVENTION), who is granted leave to appear on different considerations: see Levy v Victoria, where leave was granted to nine interveners (states and newspaper owners) and two media bodies as amici curiae (MEAA to appear, APC to file written submissions). Since the 1990s the role has achieved greater recognition, particularly in the USA. States, NON-GOVERNMENT ORGANISATIONS, and persons have been heard in amicus roles in international courts and tribunals including the International Court of Justice, the European Court of Human Rights, the International Criminal Court, and in the WTO dispute settlement mechanism. See also OPEN STANDING.[28]

[28]Australian Law Dictionary (Oxford University Press, 2^nd ed, 2013) ‘amicus curiae’.

The same dictionary relevantly provides the following definition of ‘intervention’:

…In a specifically legal sense, an intervener in a court action is a person permitted by the court to appear by consent as an interested non-party. The source of the jurisdiction to allow intervention should be identified in any application to intervene; jurisdiction cannot be assumed for mere convenience or utility: Levy v Victoria (1997) 189 CLR 579. A non-party whose interests would be directly affected by a decision in the proceeding must be entitled to intervene to protect them (e.g. in PROBATE and admiralty cases) but not every person whose rights would be affected can be allowed to intervene as of right. Intervention may be denied if rights are only indirectly affected, or if it will merely result in repetition of the same argument that parties in the case are themselves putting: Australian Railways Union v Victorian Railways Commissioners (1930) 44 CLR 319. Cf AMICUS CURIAE.[29]

[29]Ibid ‘intervention’.

Neither my researches, nor those of counsel, revealed judicial discussion of the interplay between the roles of contradictor, amicus curiae and intervener.

The Full Court of the Federal Court of Australia in United States Tobacco Company v Minister for Consumer Affairs[30] considered the distinction between the roles of amici and interveners. The court observed that although a court’s function is determine disputes that are brought by the parties who appear before it, adduce evidence and make submissions, the court has an inherent or implied power, exercised occasionally, to ensure that it is properly informed of matters which it ought to take into account in reaching its decision. Particularly this is so in judgments which may affect the community generally or persons other than the parties who are before it.[31]
[30](1988) 20 FCR 520.
[31]Ibid 534.

Distinguishing between the position of amici and interveners, the court observed, first, there is no prescription of the circumstances in which it may or may not be proper for a court to hear an amicus. Well known examples are where the interests of an infant or other disadvantaged person might not otherwise have been protected and where counsel for the Attorney‑General makes submissions in the public interest.

Secondly, the general principle is that the parties are entitled to carry on their litigation free from the interference of persons who are strangers to the litigation.[32] But there is an overriding right of the court to see that justice is done. An amicus may be heard if good cause is shown for doing so and if the court thinks it proper. The court emphasised that it should not be understood to be delimiting or restricting the availability of or effectiveness of this valuable tool.
[32]United States Tobacco Co v Minister for Consumer Affairs (1988) 20 FCR 520, 536.

Thirdly, the court reflected on the history and use of the procedure in the United States as discussed in an article by Professor Krislov,[33] where the procedure has been used mainly in public interest litigation particularly in appellate courts. At trial level, courts in the United States have shown reluctance to permit strangers to the litigation to intermeddle.
[33]The Amicus Curiae Brief From Friendship to Advocacy (1963) 72 Yale LJ 694.

In United States Tobacco Co v Minister for Consumer Affairs, the primary judge permitted a third party to take part in the proceedings as an amicus. The court concluded:

It will be seen that AFCO, a public interest group, was permitted to appear in its own name as amicus at trial level. Yet, his Honour did not identify precisely what part AFCO was to play in the proceedings as an amicus. His Honour was in doubt that AFCO would have any evidence to tender but left that matter open for future debate. His Honour assumed that costs would not be payable for or against the amicus, but … ordered that AFCO as amicus curiae be entitled to inspect documents discovered by the parties. This was an unusual order, for there was no obligation as to discovery placed upon AFCO. The order went well beyond the limited role usually conferred upon an amicus.[34]

[34]Ibid 538–9.

The court ordered that AFCO be joined as a party in the proceedings.

Those cases that have considered the role of contradictor, as opposed to whether one should be appointed, situate the concept firmly within a context of applications for declaratory relief. In Merit Protection Commissioner v Nonnenmacher,[35] the Federal Court said:

The use of the term “contradictor” appears to have confused the issue to some extent. As we understand it, the notion of a contradictor comes from a line of decisions concerned with the appropriateness of declaratory relief. See, for example, Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 at 473-438 per Gibbs J (as his Honour then was), where his Honour approved the following passage from Russian Commercial & Industrial Bank v British Bank for Foreign Trade Ltd [1921] 2 AC 438 at 448:
“The question must be a real and not a theoretical question; the person raising it must have a real interest to raise it; he must be able to secure a proper contradictor, that is to say, someone presently existing who has a true interest to oppose the declaration sought.”

The rule was designed to ensure that merely theoretical questions or requests for advisory opinions were not brought to the court under the guise of applications for declarations. The intention was to ensure that any issue brought for adjudication would relate to a genuine dispute. The term “contradictor” describes the person with whom the applicant for relief is in dispute. That person must be joined in the proceedings as a party thereto, but it is not necessary that he or she attend to resist the application. If he or she does not do so, a binding order may still be made. The requirement for a “contradictor” is not designed to secure actual opposition…[36]

[35](1999) 86 FCR 112.

[36]Ibid 116 [11]–[12] (emphasis added).

In ACCC v MYS Technology Pty Ltd (No 2),[37] Perram J considered the origins of term contradictor, again in the context of an application for a declaratory judgment. Perram J referred to both Forster v Jododex Australia Pty Ltd[38] and Russian Commercial & Industrial Bank v British Bank for Foreign Trade Ltd,[39] noting that Lord Dunedin in Russian Commercial & Industrial Bank was stating the Scottish law in relation to contradictors. With the imprimatur of the High Court in Forster, it is Scottish law that forms the basis of the Australian law in this area.
[37](2011) 279 ALR 609.
[38](1972) 127 CLR 421.
[39][1921] 2 AC 438.

Perram J said:

This raises the question of what a contradictor is and that brings one back to Lord Dunedin’s summary of the Scottish law recited in [Russian Commercial & Industrial Bank]. Ordinarily I would not regard a detour through the state of Scottish practice in 1921, when Lord Dunedin was speaking, as a useful exercise…however…it is legitimate in seeking to ascertain what a contradictor is to look to the Scottish law of which our present rule appears to be but an instantiation…
The concern thus disclosed was the necessity of ensuring that the declaration would bind all persons with an interest in the outcome so as to generate a res judicata…
[T]he Scottish practice as at the time Lord Dunedin was writing in 1921 was one which required the presence of a party in respect of whom there could be a meaningful res judicata and that this is what Scottish law meant by the notion of a “contradictor”. [40]

[40]Ibid 617–8 [33]–[37].

In these cases, the analysis is focused on whether a contradictor is necessary to enable a judgment for declaratory relief. It is not focused on identifying inherent limitations on a contradictor’s powers. That said, the rationale for the contradictor doctrine – the need for res judicata – is instructive in the class action context. If a contradictor is, as the non‑parties submitted, limited to making of submissions on the established evidentiary base, a court may not fully consider all relevant issues joined in the controversy. This would compromise the character of a res judicata that would follow on finalisation of the proceeding.

The language in the judgments reinforces the adversarial nature of the contradictor’s role. The contradictor is ‘the person with whom the applicant for relief is in dispute’.[41] He or she ‘has a true interest to oppose the declaration sought’.[42] Unlike amici curiae, to be next considered, a contradictor’s role is to maintain the adversarial nature of the court’s processes. Even though these features of a contradictor’s role are identified in the different context of declaratory judgments, an analogy with the class action context is apt.
[41]Merit Protection Commissioner v Nonnenmacher (1999) 86 FCR 112, 116 [12].
[42]Russian Commercial & Industrial Bank v British Bank for Foreign Trade Ltd [1921] 2 AC 438, 448.

The non‑parties submitted that the term ‘contradictor’ describes the task, not the office, and that a contradictor is in fact a category of amici curiae. The non‑parties cited many of the key authorities on amici curiae and interveners. There were relevant features of the role of amicus that constrained a contradictor. They submitted that a contradictor is not a party, has no entitlement to lead or file evidence, and should not take the proceeding to new factual issues, and has no entitlement to make allegations.

Developing the contention that a contradictor is not a party, the comparison becomes one between a contradictor and an intervener. I was referred to Corporate Affairs Commission v Bradley,[43] a proceeding for declaratory relief:

A person accepted as an intervener becomes a party to the proceedings with all the privileges of a party. Thus he can appeal, tender evidence and participate fully in all aspects of the argument. His position is quite different from that of an amicus curiae. Interveners have been allowed to appeal.[44]

[43][1974] 1 NSWLR 391.

[44]Ibid 396.

The non‑parties submitted this was significant in a number of respects. First, it indicates what an intervener can do, including tender evidence and participate fully in the proceeding in all respects as a party. By contrast, an amicus can do none of those things.

In Bradley, Hutley JA elaborated:

It was suggested by counsel for the Commonwealth that some support for intervention of the Commonwealth could be gained from the practice of the court in hearing an amicus curiae. An amicus curiae has been permitted to argue a case: Morelle Ltd. v. Wakeling. The Attorney-General appeared as amicus curiae to argue among other things that a previous decision of the court had been given per incuriam. This is a case where the Crown sought to be made a party, which application was refused. There is no definition in this case of the role of an amicus curiae, but Jowitt’s Dictionary of English Law at p. 114 defines amicus curiae as follows: “A friend of the Court, that is to say a person, whether a member of the Bar not engaged in the case or any other bystander, who calls the attention of the Court to some decision, whether reported or unreported, or some point of law which would appear to have been overlooked”. A similar definition appears in Black’s Law Dictionary, 4th ed., an American publication, and a detailed statement of the position of an amicus curiae is set out in the judgment of the appellate court of Indiana in Re Perry where the court said: “Courts undoubtedly have the right to allow an attorney, or other person, to appear as a friend of the court in a case, to act as an adviser of the court, and to make suggestions as to matters appearing upon the record, or in matters of practice. An amicus curiae has no rights in the matter. He can file no pleadings or motions of any kind. He can reserve no exception to any ruling of the court, and of course cannot prosecute an appeal. It has been held in this state that an amicus curiae may, on leave, file briefs, argue the case, and introduce evidence.” The last sentence is not consistent with the law of this State, and there is no provision for an amicus curiae making any contribution to the record.[45]

[45]Ibid 398–9.

The non‑parties’ submissions drew my attention to the final part of this extract.

Bropho v Tickner[46] concerned judicial review of the refusal of a Commonwealth minister to make certain declarations. The non‑parties relied on Wilcox J’s conclusion that any latitude given to an amicus was of a very limited nature. Wilcox J said:
An amicus curiae has no entitlement to lead evidence: see Corporate Affairs Commission v Bradley [1974) NSWLR 391 at 399. The role which he or she may play is a matter entirely within the discretion of the court: see United States Tobacco Co v Minister for Consumer Affairs (1988) 20 FCR 520 at 534-535. In Australia, as distinct from the position in the United States, the intervention of an amicus curiae is a relatively rare event; the amicus' role normally being confined to assisting the court in its task of resolving the issues tendered by the parties by drawing attention to some aspect of the case which might otherwise be overlooked. I do not dispute that it may sometimes be appropriate to allow an amicus curiae to complete the evidentiary mosaic by tendering an item of non-controversial evidence; although I would prefer to reserve my opinion whether this should be permitted to be done over the objection of one or more of the parties. But it is another matter where the proposed evidence would be complex and controversial. To allow the tender of that type of evidence may be to allow the amicus curiae effectively to hijack the parties' case, taking it off into new factual issues which may greatly extend its length and thereby impose significant additional costs and disadvantages upon the parties. Rarely, if ever, should this course be permitted.[47]

[46](1993) 40 FCR 165.

[47]Ibid 172–3.

Most critically, the non‑parties submitted that what a contradictor is not to do is to act like a protagonist by alleging a positive case. The fact that the court may have the capacity to do so of its own motion, or might direct a contradictor to do so, does not alter this position. They contended that the role of a contradictor could not be said to be entirely within the discretion of the court, because how that discretion could be properly deployed has limits. These limits can be said to be defined by the fact that a contradictor is not liable for costs and is not a party. Any conduct by a contradictor that would be inconsistent with those features of the role would be impermissible.

However, I am unable to accept this submission, which, based in the authorities on the role of an amicus, assumes that the limitations on the role of an amicus transfer to an amicus who is a contradictor. The submission draws on the distinction between amici and interveners. The latter generally have an interest in the outcome of the proceeding and are joined as parties generally becoming liable for costs and enjoying a right of appeal.

Levy v the State of Victoria (Levy)[48] raised the constitutional implied freedom of communication concerning government and political matters. A number of media organisations applied for leave to intervene or to appear as amici curiae. Considering the distinction between interveners and amici curiae, Brennan CJ stated:

…where a person having the necessary legal interest to apply for leave to intervene can show that the parties to the particular proceeding may not present fully the submissions on a particular issue, being submissions which the Court should have to assist it to reach a correct determination, the Court may exercise its jurisdiction by granting leave to intervene. The grant may be limited, if appropriate, to particular issues and subject to conditions, as to costs or otherwise, as will do justice between all parties. In that situation, intervention may prevent an error that would affect the interests of the intervener…[49]

[48](1997) 189 CLR 579.

[49]Ibid 603.

Further on, the Chief Justice observed:

The hearing of an amicus curiae is entirely in the Court's discretion. That discretion is exercised on a different basis from that which governs the allowance of intervention. The footing on which an amicus curiae is heard is that that person is willing to offer the Court a submission on law or relevant fact which will assist the Court in a way in which the Court would not otherwise have been assisted. In Kruger v The Commonwealth, speaking for the Court, I said in refusing counsel's application to appear for a person as amicus curiae:
‘As to his application to be heard as amicus curiae, he fails to show that the parties whose cause he would support are unable or unwilling adequately to protect their own interests or to assist the Court in arriving at the correct determination of the case. The Court must be cautious in considering applications to be heard by persons who would be amicus curiae lest the efficient operation of the Court be prejudiced. Where the Court has parties before it who are willing and able to provide adequate assistance to the Court it is inappropriate to grant the application.’

It is not possible to identify in advance the situations in which the Court will be assisted by submissions that will not or may not be presented by one of the parties nor to identify the requisite capacities of an amicus who is willing to offer assistance. All that can be said is that an amicus will be heard when the Court is of the opinion that it will be significantly assisted thereby, provided that any cost to the parties or any delay consequent on agreeing to hear the amicus is not disproportionate to the assistance that is expected.[50]

[50]Ibid 604–5.

Levy contemplates that both interveners and amici curiae would apply to the court for leave to appear, as opposed to being appointed by the court. In the application of the identified principle, Brennan CJ favoured the grant of conditional leave to intervene to the media proprietors, the refusal of leave to the industrial association and the receipt of written submissions from the amici.

Next, the Contradictor contended that s 28 of the Civil Procedure Act is engaged, permitting the court to take into account any contraventions of overarching obligations that are established when exercising its powers under Part 4A.

The Contradictor further contended that the consequences of all contraventions of overarching obligations can and should be brought into account in assessing AFPL’s claim for costs and commission, including the claim for delay costs. To defer such claims as a separate enquiry could significantly disadvantage group members. The key allegation is that AFPL, through Mr Elliott, was knowingly involved in all of the conduct that is relevantly alleged. It is to the advantage of debenture holders for the court to resolve the implications of this conduct on AFPL’s claim against the settlement sum. The Contradictor submitted there is every prospect that a single inquiry directed to assessing all of the conduct in which AFPL is complicit is in the best interests of debenture holders.

Turning to issues of procedural fairness, the Contradictor noted that the non‑parties had not attacked the substance of the Particulars, confining their contentions to procedural issues.

The Contradictor contended that the court clearly has power to seek an explanation for its own officers for their conduct and that it ought to exercise that power to obtain a full and frank explanation of the conduct of officers of the court where a prima facie basis for seeking such an explanation has been established.

Careful analysis of the terms of the funding agreement demonstrate that whether AFPL had actually paid the legal costs said to have been incurred was clearly relevant, because under the terms of the funding agreement it otherwise was not entitled to recover those costs. Further, the funding commission was to be assessed by looking at the degree to which AFPL have actually financed the case. It wasn’t entitled to 30% of the resolution sum. Rather, it was entitled to a maximum sum of 30% calculated by reference to the degree to which it had performed its obligations and in particular the extent of the financing it had provided.

The starting premise is that AFPL was the litigation funder and it had actually provided litigation funding. It is then of great significant to assess whether the litigation funding was in fact provided by the SPRs and by the non‑parties. Ordinarily, as it could not be certain that it would win the case, it was in AFPL’s self-interest to appropriately manage costs to ensure that financial risk was constrained to strict and appropriate limits. However the arrangements that appear to have been in place between AFPL and the non‑parties meant that AFPL had little incentive to manage costs and was party to an arrangement that created a clear incentive for the non‑parties to maximise their personal benefits in the litigation. It was accordingly absolutely critical for the assessment of whether the costs were fair and reasonable, including by the expert costs consultant, to understand precisely the arrangements that were in place.

The Contradictor contended that its particulars demonstrated that that transparency was lacking.

The non‑parties’ submissions are not persuasive. The power found in s 33ZF to make any order the court thinks appropriate or necessary to ensure that justice is done in the proceeding is characterised by its width, amplitude and flexibility. Rather than hinting at restriction it defines very broadly the considerations that inform the jurisdiction under s 33V.[83] I doubt that the power would permit the Contradictor to prosecute causes of action that might sound in damages payable by AFPL (or more widely by the non‑parties) but that is not, as the non-parties contended, the purpose or effect of the allegations. The Contradictor made clear in submissions that such relief is not sought and it should also be made clear in the RL Issues.
[83]Westpac Banking Corporation v Lenthall (2019) 366 ALR 136.

I accept that circumstances established to be in breach of a fiduciary obligation owed by the non‑parties to the group members, assuming that this scantly considered question that was not specifically addressed in submissions resolved at trial in favour of the group members, can establish or identify a normative standard to be appropriately or necessarily applied in the assessment of the claims for costs and commission to ensure that justice is done in the proceeding.

It is, for like reasons, open on the remitter for the Contradictor to contend that I ought to assess whether conduct that may give rise to disciplinary sanctions or consequences also contributes in defining that normative standard. It is not the court’s role to enforce professional disciplinary standards as laid down in the conduct rules that apply to barristers and solicitors. The Uniform Law sets out a clear framework to be followed for the pursuit of claims for professional misconduct or unprofessional conduct. The power to receive complaints and prosecute a breach is conferred on the Victorian Legal Services Commissioner.[84] In the context of this statutory regime, it is not appropriate for the court to enter into any assessment of allegations of breach for the purpose of enforcing compliance with that framework. That said, to permit the Contradictor to draw an analogy between a legal professional’s conduct in breach of the Uniform Law as a consideration relevant to the assessment of whether the payments being claimed for the settlement sum are fair and reasonable may arguably be an appropriate metric.[85]
[84]Uniform Law ss 267(1), 300.
[85]Compare Huang v Attapallil (No.2) [2017] NSWSC 1382 [126].

It is not untenable for the Contradictor to allege that there have been, in the circumstances, either breaches of fiduciary duty or conduct that could give rise to disciplinary sanction if clearly and distinctly addressed, not to the private or regulatory remedy that might ordinarily follow, but to demonstrating a normative standard by reference to which the court is invited, acting judicially, to exercise its discretion to approve payments to be deducted from a settlement sum as fair and reasonable. I consider that such enquiries are not beyond the scope of the issues properly arising on the remitter.

There is a further category into which the conduct identified by the Contradictor in the Particulars is arguably more directly relevant to the issues for consideration on the remitter. Most, if not all, of the particular conduct identified by the Contradictor is alleged to constitute breaches of overarching obligations under the Civil Procedure Act. Sections 28 and 29 provide:

28 Court may take contravention of overarching obligations into account
(1)In exercising any power in relation to a civil proceeding, a court may take into account any contravention of the overarching obligations.
(2)Without limiting subsection (1), in exercising its discretion as to costs, a court may take into account any contravention of the overarching obligations.

29 Court may make certain orders
(1)If a court is satisfied that, on the balance of probabilities, a person has contravened any overarching obligation, the court may make any order it considers appropriate in the interests of justice including, but not limited to—
(a)an order that the person pay some or all of the legal costs or other costs or expenses of any person arising from the contravention of the overarching obligation;
(b)an order that the legal costs or other costs or expenses of any person be payable immediately and be enforceable immediately;
(c)an order that the person compensate any person for any financial loss or other loss which was materially contributed to by the contravention of the overarching obligation, including—
(i)an order for penalty interest in accordance with the penalty interest rate in respect of any delay in the payment of an amount claimed in the civil proceeding; or

(ii) an order for no interest or reduced interest;
(d)an order that the person take any steps specified in the order which are reasonably necessary to remedy any contravention of the overarching obligations by the person;
(e)an order that the person not be permitted to take specified steps in the civil proceeding;
(f)any other order that the court considers to be in the interests of any person who has been prejudicially affected by the contravention of the overarching obligations.

(2)       An order under this section may be made—
(a)       on the application of—
(i)        any party to the civil proceeding; or
(ii)any other person who, in the opinion of the court, has a sufficient interest in the proceeding; or

(b) on the court's own motion.
(3)This section does not limit any other power of a court to make any order, including any order as to costs.

The allegations that there may have been contravention of the overarching obligations are not said to be fanciful and remain a matter to be resolved at trial. There is no basis on which they might be struck out. For present purposes I proceed on the assumption that the Contradictor can establish on the balance of probabilities contravention of overarching obligations by AFPL. The overarching obligations apply to AFPL.[86] A finding of a contravention is relevant to the issues on the remitter by reason of s 28 of the Act, because the court in exercising power under s 33V to approve the settlement is exercising a power in relation to a civil proceeding. Further, the court is exercising its discretion as to costs.
[86]Civil Procedure Act, s 10(1)(d)(ii).

Once satisfied that an overarching obligation has been contravened, the court may make any order it considers appropriate in the interests of justice. This power is, for all practical purposes, identical with the power granted by s 33ZF.

Subject to identifying that costs or expenses arose from the contravention of the overarching obligation or were materially contributed to by the contravention of an overarching obligation, the court has wide powers to order that the contravener pay some or all of legal costs or other costs and expenses or pay compensation to any person for any financial loss or other loss. These powers would permit the court to require the person in contravention to indemnify the debenture holders or to restore funds against which the debenture holders are legitimately entitled to share were those funds have been depleted by reason of a contravention. These powers would also permit the court to set off against the payments claimed by AFPL from the settlement sum amounts assessed pursuant to s 29 as caused by AFPL’s contraventions.

Finalising the Revised List of Issues

In the context of these observations I will give the following direction to the Contradictor in respect of the RL Issues.

Paragraph 7 should be reframed:

In respect of the applications by Mr Bolitho and AFPL for payment to AFPL from the settlement sum for legal costs and disbursements, and/or for funding commission, has there been any conduct by AFPL, its directors, employees or agents, by reason of which -
(a) AFPL has contravened an overarching obligation under the Civil Procedure Act.

(b) the court should reduce or disallow AFPL’s claims for those payments.
(c)the court should order that AFPL pay any and if so what sum to the Settlement sum.[87]
(d)the court should order that AFPL indemnify debenture holders in any and if so what sum.

Particulars
[Particulars should be provided of the conduct, the overarching obligations breached and the order considered appropriate in the interests of justice.]

[87]Settlement sum should be defined.

The following further changes should be made to the RL Issues.

(a) Paragraph 2 should read ‘Should the legal costs be referred out for assessment by an independent expert or referee or by the Costs Court? If no, in what sum is AFPL entitled to recover legal costs and disbursements from the settlement sum’.

(b) Rearrange the subparagraphs to paragraph 3 so that (b) becomes (a), (c) becomes (b) and (a) becomes (c).

(c) Paragraphs 4(d)(iii) and (iv) should be deleted.

(d) Paragraph 6 (both parts) should be replaced with the following:

Is the commission sought by AFPL reasonable and proportionate having regard to the overall settlement sum and the amount that will remain for distribution to group members? If no, in what sum is AFPL entitled to recover funding commission from the settlement sum.

The particulars of issue 7 provided by the Particulars should be reformulated in accordance with these reasons, particularly, to clarify against whom the court is being invited to make a finding that a person has contravened an overarching obligation. The Particulars should identify the contravener and whether, in the circumstances, the Contradictor will contend that other persons, who are not parties to the proceeding, have contravened an overarching obligation that may be taken into account by the court in exercising its jurisdiction under s 33V. Those particulars should make clear that compensation orders, costs orders or indemnities are not sought against the non‑parties, if that be the case, and that such relief is being sought against AFPL in the manner contemplated above.

Once these allegations are clearly and distinctly articulated, it will be appropriate to consider whether joinder of further parties into the proceeding is necessary, how procedural fairness will be afforded to all relevant parties and how the final hearing of the substantive issues in the remitted proceeding is to be conducted.

In summary, the Civil Procedure Act permits the court to take account of the conduct of AFPL and its director and agents on any one or more of the following basis:

(a) Contraventions of overarching obligations can be taken into account when the court exercises a power in relation to a civil proceeding, which exercise under Part 4A of the Supreme Court Act is invoked on this remitter by AFPL.

(b) AFPL may be ordered to pay some or all of the costs of the SPRs and the Contradictor arising from or materially contributed to by a contravention of an overarching obligation, to ensure that debenture holders are not required to pay those costs.

(c) AFPL could be ordered to compensate debenture holders for a financial loss materially contributed to by a contravention of an overarching obligation. Such compensation could include an assessment of delay costs. A compensation order could be set off against AFPL’s assessed claims or an order made that AFPL restore the full and proper value of the settlement sum.

Penalty privilege

The non‑parties advanced a further contention that the affidavit order would impermissibly require them to give evidence and/or provide documents in circumstances where they might be exposed to a penalty. Mr O’Bryan advanced a like submission in respect of the subpoena that I will come to in due course.

I do not think that the rights of a witness when giving evidence can be conflated with the obligation to make discovery that now will sit with AFPL as a party as a result of the variation that I propose to make to the affidavit order. That is a short answer to the issue of penalty privilege. If the non‑parties were compelled to attend trial and give evidence, it will be at that time any question of entitlement to decline to answer any question should be determined. I need presently say no more about that. The court cannot anticipate what may occur at trial.

The privilege against exposure to penalties is a procedural rule that requires a party to prove its case without any assistance from the opposing party. Its application is liable to overstatement.

In Rich v ASIC,[88] the High Court stated the applicable principle in these terms:

Although the privilege against exposure to penalties had its origins in the rules of equity relating to discovery, when discovery and interrogatories were provided for under the rules made under the Judicature Act, the Court of Equity's principle (that an order for discovery or for the administration of interrogatories in favour of the prosecutor, whether the prosecutor was the Crown or a common informer or some other person, should not be made where the proceeding was of such nature that it might result in a penalty or forfeiture) was applied more generally[89]. As was further pointed out in the joint reasons in Daniels Corporation[90], the privilege against exposure to penalty now serves the purpose of ensuring that those who allege criminality or other illegal conduct should prove it[91]. That is not to say that the privileges against exposure to penalties or exposure to forfeitures are substantive rules of law, like legal professional privilege, having application beyond judicial proceedings[92]. In the present matter, however, the only issue is about the application of these privileges to discovery in judicial proceedings. No wider question arises.[93]

[88](2004) 220 CLR 129.

[89]Naismith v McGovern (1953) 90 CLR 336, 341–2.

[90](2002) 213 CLR 543, 559 [31].

[91]See Trade Practices Commission v Abbco Iceworks Pty Ltd (1994) 52 FCR 96, 129.

[92]Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543, 559 [31].

[93](2004) 220 CLR 129, 142 [24].

At issue was whether the appellant could be required to make discovery of documents and the court held that once it is determined that the proceedings expose a person to penalty the proper course is to refuse the order for discovery. Assuming for present purposes that the remitter proceeding will have that consequence for the non‑parties, the discovery obligation imposed by the affidavit order, in its amended form, is on the applicant AFPL, which has not taken this objection. It cannot be said at present that any wider question arises. It is plainly open for AFPL to respond, or further respond, to the affidavit order in its amended form and whether it informs that response by reference to evidence, whether oral or documentary, that might be given at trial by the non‑parties is a matter for it. AFPL must make proper inquiries and determine what is in its possession, custody or power. It is not the case that the non‑parties are strangers to the issues on the remitter.

More recently in Sadie Ville Pty Ltd v Deloitte Touche Tohmatsu (a firm) (No 3),[94] Moshinsky J reviewed the cases and briefly stated the following principles as relevant.[95]
[94](2018) 357 ALR 695.
[95]Ibid 716–18 [92]–[102].

(a) In summary, the rule is that no one is bound to answer any question or produce any document if the answer or the document would have a tendency to expose that person to the imposition of a civil penalty or to conviction for a crime.

(b) The privilege against self-incrimination and the privilege against exposure to penalties are distinct, although they are often said to be based on the same rationale and are developed into their modern day form by analogy and on the same principles.

(c) The privilege against self-incrimination is a substantive common law right. The privilege against exposure to penalties serves the purpose of ensuring that those allege criminality or other illegal conduct should prove it.

(d) Both privileges are available only to natural persons.

(e) Only the person who is exposed to the risk of prosecution or the imposition of a penalty can invoke the privileges.

(f) As a general rule, in the absence of exceptional circumstances, a party to non‑penalty civil proceedings is not to be excused in limine from giving discovery, but should instead be left to object to producing particular documents on the grounds that such production might tend to expose him or her to criminal liability or a civil penalty.

(g) The gist of the privileges is that the giving of answers or the production of documents would tend to expose the claimant to the apprehended consequence.

(h) The claimant must establish that the act of providing information or documents would give rise to a ‘real and impressionable’ risk of prosecution or of the institution of proceedings for civil penalty.

(i) In some cases the act itself has provided a basis on which to infer that the act of providing information or documents would give rise to a real and appreciable risk of criminal prosecution.

Regarding AFPL, the applicable principle is that a party to non‑penalty civil proceedings is not to be excused in limine from giving discovery, but should instead be left to object to producing particular documents on the grounds that such production might tend to expose him or her to criminal liability or a civil penalty.

So far, I have assumed that this remitter proceeding might expose the non‑parties to a penalty, but it is not readily apparent that this assumption is appropriate. The Contradictor has, both in correspondence and in court, disavowed any intention to seek any sanction or relief against the non‑parties. However the non-parties submitted that the Contradictor’s actions nonetheless raised the prospect of exposure to a penalty in two respects.

First, there may be the prospect of disciplinary action by separate proceedings brought by the Victorian Legal Services Commissioner for breach of professional standards rules. Secondly, there is the prospect of the exercise by the court of its jurisdiction under s 29 of the Civil Procedure Act. Beyond these issues, the remitter is an application by AFPL for legal costs and disbursements and a funding commission out of the settlement proceeds and it is not readily apparent how the proceeding might expose the non‑parties to a penalty.

In assessing whether penalty privilege can be claimed, the cases speak of the necessity to distinguish between a civil action to prevent or redress a civil injury on the one hand and a civil action to recover a penalty on the another.[96] In an action of the latter type, where the whole object of the proceeding is to impose a penalty, the defendant need not establish the existence of a risk that he will be subject to the penalty by providing the information sought by the plaintiff.
[96]ASIC v Mining Projects Group Limited (2007) 164 F CR 32, 36 [7]; Derby Corporation v Derbyshire County Council [1897] AC 550, 552; Refrigerated Express Lines (Australasia) Pty Ltd v Australian Meat & Livestock Corporation (1979) 42 FLR 204, 207.

On the remitter, no claim is made for a penalty, which casts on to the person claiming the penalty, an obligation to show that providing the information requested would tend to subject him to a penalty in separate proceedings before he can rely on the privilege. The Contradictor submitted that the conduct of the non‑parties was raised defensively in response to AFPL’s claim for costs and commission in order to inform the way in which the court should exercise its discretion under s 33V. The Contradictor submitted that the non‑parties were not entitled to invoke the penalty privilege in limine, rather to the extent that exposure to a penalty is invoked, that should occur by objection to answering particular questions or producing particular documents with the court being provided with a basis to be satisfied that the objection is well taken.

It is not yet necessary to form a concluded view as to whether the privilege against penalties has any application in the present context and I will reserve consideration of it to an appropriate occasion.[97]
[97]In a proper case, and this may be one, the paramount duty to the court to further the administration of justice may not give way to a procedural rule in the form of the privilege against exposure to penalties.

On the basis of the indications given during the hearing, the issues raised by the Contradictor do not constitute this proceeding as one in which the non‑parties are exposed to the imposition of a penalty. Neither an order that compensation be paid, if that be sought, nor an order that a person pay some or all of the legal costs or other costs and expenses of another person would constitute the imposition of a penalty. That said, as I earlier acknowledged, a finding that a person to whom the overarching obligations under the Civil Procedure Act apply has been guilty of a contravention of such obligations may adversely affect that person. The same observation might be made about a finding of a breach of professional conduct standards. Further, I will assume for present purposes such findings might result in proceedings under the Uniform Law.

I must take care to afford proper procedural fairness and the precise content of what is necessary to ensure fairness in the procedures to be adopted in relation to paragraph 7 of the RL Issues cannot be precisely determined at this point. What is necessary is, firstly, that the Contradictor distinctly identify, as explained above, whether the allegation of contravention of overarching obligations, and the relief sought in respect of such contraventions, is confined to the conduct of the applicant, AFPL, albeit by fixing AFPL with responsibility for the conduct of the non-parties. If the Contradictor proceeds on that basis, it will be clear that no relief is sought against the non‑parties although, for reasons already stated, they might choose to seek to be joined into the proceeding to contest the allegation of conduct in which AFPL is alleged to be complicit.

On the other hand, if the Contradictor considers it appropriate to pursue allegations of contravention of overarching obligations and claims for relief based on such contraventions directly against the non‑parties, they must be joined as parties to the proceeding.

Particularly because of the consequences that may flow in the further conduct of the remitter, AFPL and the non‑parties are entitled to precision in the allegations that are being made by the Contradictor. More precise definition of the issues will permit the parties, the non-parties, and the court to consider whether joinder of the non‑parties into this proceeding is necessary and convenient. If the non‑parties retain that status, they will not be bound by any findings that the court makes and no order could be made affecting them. Whether they give an explanation or produce documents will in the first instance be a matter for them to resolve with any party that requires a non‑party to do so.

On the basis that the RL Issues remains substantially in the form discussed in these reasons, with the clarifications I have suggested are necessary, my preliminary view is that it will likely be appropriate for the non-parties to be joined to the proceeding to respond to the issues. That may occur either through the non-parties choosing to seek joinder, being joined by a party to the proceeding or by the court on its own motion.

The subpoena

Mr O’Bryan submits there are four reasons why the subpoena should be set aside. His first objection was that the Contradictor has no right or power either at common law or by reference to the Supreme Court (General Civil Procedure) Rules to issue a subpoena. This contention turns upon the submissions already considered about the proper role of the Contradictor and I reject it for the reasons give above. Further, it is plainly within the court’s powers to expressly authorise the Contradictor to use the subpoena powers generally available under the Rules if considered appropriate to do so.

Secondly, Mr O’Bryan submitted that the subpoena was objectionable on two bases, being that it does not demonstrate a legitimate forensic purpose having regard to the proper scope of the issues that arise on the remitter, and, secondly, that the subpoena is oppressive.

Dealing with that later objection, it was based on an affidavit by a solicitor sworn on belief from information received from Mr O’Bryan. That information appeared to be in very general terms, and without more, I am not prepared to conclude that the subpoena is oppressive or unreasonably burdensome.

Mr O’Bryan submitted that the subpoena lacked a legitimate forensic purpose because it was directed to the production of documents evidencing Mr O’Bryan’s fees and charges, costs agreements, invoices and communication regarding the terms of his engagement in other proceedings apart from this proceeding. The terms of the subpoena were set out earlier in these reasons and the matters in respect of which production of those documents is sought are described as the ‘Elliott Matters’. The submission correctly proceeds on the basis that the subpoena is widely drawn.

Mr O’Bryan contended that these documents could have no bearing on the question whether the claim for legal costs being considered on the remitter is fair and reasonable. The manifest purpose of the subpoena, he contended, is that the Contradictor is seeking the documents to make good allegations of disentitling conduct in other proceedings, the conduct of such further investigation demonstrates that its purpose was not a legitimate forensic purpose.

The Contradictor disputed this contention. There was, it submitted, an issue in the remitter as to the reasonableness of Mr O’Bryan’s fees charged in these proceedings during the relevant period. The Contradictor pointed to two considerations that supported the existence of legitimate forensic purpose. First, documentary evidence suggested that Mr O’Bryan was in court on other matters on dates when he charged time to the Bolitho proceeding. Evidence suggested that Mr O’Bryan had a busy practice over the relevant period and that he worked on 50 or 60 other matters over that time. It appears that he was in court not infrequently in the relevant period, including in several trials when time was charged to the Bolitho proceeding. The Contradictor contended that the fees charged by Mr O’Bryan to the 50 or 60 other matters that he worked on in the relevant period will assist the court in resolving the issues that arise as to the reasonableness of the fees that he charged to the Bolitho proceeding.

Secondly, there is an issue as to the terms upon which Mr O’Bryan acted in the Bolitho proceeding, he contended that he was retained on his ‘usual terms’. The Contradictor submitted that the subpoena was directed to establishing the ‘usual terms’ on which Mr O’Bryan acts when retained by or on behalf of Mr Elliott or his associated entities, particularly with respect to whether he is usually retained on a conditional fee basis. This is relevant to the assessment of AFPL’s funding risk and, therefore, it is commission.

I am not persuaded that the Contradictor has a legitimate forensic purpose in investigating Mr O’Bryan’s practices in other and different proceedings in this manner. The purpose of the subpoena is essentially investigative. I am not persuaded that it is desirable for the Contradictor to be seeking access to documents in proceedings other than the remitter proceeding. There is a substantial risk of irrelevant collateral issues being exposed that might draw the parties (and the court) away from the real nub of the dispute.

Accordingly, I will set aside that subpoena. The Contradictor foreshadowed an intention to issue a like subpoena to Mr O’Bryan’s clerk. For the reasons I have given, I direct that a subpoena in like terms should not be issued to Mr O’Bryan’s clerk.

The remaining grounds contended for by Mr O’Bryan to set aside the subpoena were, firstly, the application of the principle of penalty privilege and procedural fairness more generally, and, secondly, the want of waiver of legal privilege in the communications contained in the documents likely to be produced under the subpoena. It is unnecessary to consider these arguments.

Conclusion

On Mr O’Bryan’s first summons, I will order that the subpoena to Mr O’Bryan filed 11 April 2019 be set aside.

Each of the summonses filed by Mr O’Bryan, Mr Symons and Mr Zita are dismissed.

I will declare that on and from the date of appointment the Contradictor has, on behalf of and for the benefit of group members, the rights and powers of a party to the dispute.

I will amend the affidavit order as proposed earlier in these reasons.

I am satisfied that the Contradictor has a proper basis for making the allegations particularised under issue 7 of the RL Issues.

I will give the Contradictor leave to further amend the RL Issues as it may consider proper and appropriate in accordance with these reasons and to file and serve that document by a date to be fixed.

I will fix the proceeding for further case management after the parties have received the further revised list of issues when any applications for joinder of parties or for directions to ensure procedural fairness for any person who may be affected by the issues to be resolved is not compromised and any further directions for trial preparation can be considered.

I will reserve the costs of each summons and of the case management conference/directions hearings.

[2019] VSC 653

26 September 2019