Brewster v BMW Australia Ltd

[2019] NSWCA 35

Court of Appeal

Supreme Court

New South Wales

• Summary available
• Amendment notes

Medium Neutral Citation:	Brewster v BMW Australia Ltd [2019] NSWCA 35
Hearing dates:	4 and 5 February 2019
Date of orders:	01 March 2019
Decision date:	01 March 2019
Before:	Meagher JA; Ward JA; Leeming JA
Decision:	1. Answer the question stated for separate determination as follows: Does the Court have the power to make Order 1 sought in the Notice of Motion filed by the Plaintiff on 14 August 2018 (Common Fund Motion)? Answer: “Yes”.  2. Grant leave to the parties and Regency Funding to supply to the Associate of Meagher JA within 14 days (a) agreed short minutes of order, or (b) proposed short minutes of order, and submissions not to exceed five pages in support of such further orders as each seeks, with a view to whether any further orders are made being heard and determined on the papers.
Catchwords:	CONSTITUTIONAL LAW – separation of powers –acquisition of property – whether common fund order contrary to separation of powers – whether common fund order acquisition of property other than on just terms – consideration of additional considerations in challenge to order made by Supreme Court pursuant to State legislation   REPRESENTATIVE PROCEEDINGS – common fund order – whether power to make interlocutory order binding group members and presumptively entitling funder to 25% of any judgment or compromise – power available
Legislation Cited:	Civil Procedure Act 2005 (NSW), ss 56, 157, 159, 162, 166, 173, 175–183, Part 10 Commonwealth Constitution, ss 51(xxxi), 96, Chapter III Competition and Consumer Act 2010 (Cth), Sch 2 – Australian Consumer Law Community Protection Act 1994 (NSW) Federal Court of Australia Act 1976 (Cth), ss 22, 33N, 33Z, 33ZF, 37M, Part IVA Federal Court Rules 1979, Order 6 r 13 Income Tax Assessment Act 1936 (Cth) Interpretation Act 1987 (NSW), s 31 Judicature Act 1873 (UK), s 24 Judiciary Act 1903 (Cth), ss 78B, 79 Maintenance, Champerty and Barratry Abolition Act 1993 (NSW), ss 3, 4, 6 Supreme Court Act 1970 (NSW), ss 23, 63 Supreme Court Rules 1970, Part 8 r 13 Trade Practices Act 1974 (Cth) Uniform Civil Procedure Rules 2005 (NSW), rr 1.21, 28.2, 42.1
Cases Cited:	Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175; [2009] HCA 27 Anthony Hordern & Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia (1932) 47 CLR 1; [1932] HCA 9 Attorney General v 2UE Sydney Pty Ltd [2006] NSWCA 349; (2006) 236 ALR 385 Aubrey v The Queen (2017) 260 CLR 305; [2017] HCA 18 Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270; [2000] HCA 30 Australian Capital Television Pty Ltd v Commonwealth (1992) 177 CLR 106; [1992] HCA 45 Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559; [2001] HCA 1 Australian Tape Manufacturers Association Ltd v Commonwealth (1993) 176 CLR 480; [1993] HCA 10 Bank of New South Wales v Commonwealth (1948) 76 CLR 1; [1948] HCA 7 Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334; [1999] HCA 9 Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386; [2006] HCA 41 Cardile v LED Builders Pty Ltd (1999) 198 CLR 380; [1999] HCA 18 Cash Converters International Ltd v Gray (2014) 223 FCR 139; [2014] FCAFC 111 Clunies-Ross v Commonwealth (1984) 155 CLR 193; [1984] HCA 65 Deputy Commissioner of Taxation v Clark (2003) 57 NSWLR 113; [2003] NSWCA 91 Dorajay Pty Ltd v Aristocrat Leisure Ltd (2005) 147 FCR 394; [2005] FCA 1483 Durham Holdings Pty Ltd v New South Wales (2001) 205 CLR 399; [2001] HCA 7 Ethicon Sàrl v Gill [2018] FCAFC 137 Falcke v Scottish Imperial Insurance Company (1886) 34 ChD 234 Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd (2005) 63 NSWLR 203; [2005] NSWCA 83 H A Bachrach Pty Ltd v The State of Queensland (1998) 195 CLR 547; [1998] HCA 54 Hall v Poolman (2009) 75 NSWLR 99; [2009] NSWCA 64 House v The King (1936) 55 CLR 499; [1936] HCA 40 ICM Agriculture v Commonwealth (2009) 240 CLR 140; [2009] HCA 51 Imperial Chemical Industries of Australia and New Zealand Limited v Commissioner of Taxation [1972] HCA 75; (1972) 46 ALJR 35 Industrial Relations Act Case (1996) 187 CLR 416; [1996] HCA 56 Jameson v Professional Investment Services Pty Ltd [2007] NSWSC 1437; (2007) 215 FLR 377 Jameson v Professional Investment Services Pty Ltd (2009) 72 NSWLR 281; [2009] NSWCA 28 JC Williamson Ltd v Lukey (1931) 45 CLR 282; [1931] HCA 15 Kable v Director of Public Prosecutions (1995) 36 NSWLR 374 Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51; [1996] HCA 24 Kirk v Industrial Court (NSW) (2010) 239 CLR 531; [2010] HCA 1 Lee v New South Wales Crime Commission (2013) 251 CLR 196; [2013] HCA 39 Lenthall v Westpac Life Insurance Services Ltd [2018] FCA 1422 Leon Fink Holdings Pty Ltd v Australian Film Commission (1979) 141 CLR 672; [1979] HCA 26 Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635; [2008] HCA 27 Minister for Immigration and Multicultural and Indigenous Affairs v Nystrom (2006) 228 CLR 566; [2006] HCA 50 Money Max Int Pty Ltd v QBE Insurance Group Limited (2016) 245 FCR 191; [2016] FCAFC 148 Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd (2007) 164 FCR 275; [2007] FCAFC 200 Owen Brewster v BMW Australia Ltd [2018] NSWSC 1602 Owners of the Ship “Shin Kobe Maru” v Empire Shipping Co Inc (1994) 181 CLR 404; [1994] HCA 5 Paliflex Pty Ltd v Chief Commissioner of State Revenue (NSW) (2003) 219 CLR 325; [2003] HCA 65 Parker v The Commonwealth (1965) 112 CLR 295; [1965] HCA 12 Precision Data Holdings Ltd v Wills (1991) 173 CLR 167; [1991] HCA 58 Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2018] HCA 4; (2018) 92 ALJR 248 R v Jogee and Ruddock v The Queen [2017] AC 387 R v Oregan; Ex parte Oregan (1957) 97 CLR 323; [1957] HCA 18 Re JRL; ex parte CJL (1986) 161 CLR 342; [1986] HCA 39 Re Macks; ex parte Saint (2000) 204 CLR 158; [2000] HCA 62 Rizeq v Western Australia (2017) 262 CLR 1; [2017] HCA 23 Roads and Maritime Services v Desane Properties Pty Ltd [2018] NSWCA 196 Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516; [2001] HCA 68 Shade Systems Pty Ltd v Probuild Constructions (Aust) Pty Ltd (No 2) (2016) 95 NSWLR 157; [2016] NSWCA 379 Targus Australia Pty Ltd v Targus Group (UK) Ltd [2019] NSWCA 9 The City of Chester (1884) 9 PD 182 The Owners – Strata Plan No 70798 v Bakkante Constructions Pty Ltd (2014) 88 NSWLR 513; [2014] NSWCA 410 Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150; [1981] HCA 48 Unions NSW v New South Wales [2019] HCA 1; (2019) 93 ALJR 166 United Salvage Pty Ltd v Louis Dreyfus Armateurs SNC (2007) 163 FCR 183; [2007] FCAFC 115 Walsh v Permanent Trustee Australia Ltd (1996) 21 ACSR 213 Wheat case (1915) 20 CLR 54; [1915] HCA 17 Wileypark Pty Ltd v AMP Ltd [2018] FCAFC 143; (2018) 359 ALR 43 Wong v Silkfield Pty Ltd (1999) 199 CLR 255; [1999] HCA 48
Texts Cited:	J Basten, “The Principle of Legality – An Unhelpful Label?” in D Meagher and M Groves (Eds), The Principle of Legality in Australia and New Zealand (Federation Press, 2017) J Rose, Maintenance in Medieval England (Cambridge University Press, 2017) P Sales, “Legislative Intention, Interpretation, and the Principle of Legality” (2019) 40(1) Statute Law Review 53 The Law Reform Commission, “Grouped Proceedings in the Federal Court” [1988] ALRC 46
Category:	Principal judgment
Parties:	BMW Australia Ltd (Applicant) Owen Brewster (Respondent) Regency Funding Pty Ltd (Intervener)
Representation:	Counsel: J Kirk SC and T Prince (Applicant) J Sheahan SC, E Holmes and M Swanson (Respondent) C Bova and B Lim (Intervener)   Solicitors: Ashurst LLP (Applicant) Quinn Emanuel Urquhart & Sullivan, LLP (Respondent) Watson Mangioni Lawyers Pty Ltd (Intervener)
File Number(s):	2018/332812
Publication restriction:	None

HEADNOTE

[This headnote is not to be read as part of the judgment]

Mr Brewster, on behalf of himself and other group members, commenced representative proceedings against BMW Australia Ltd for loss allegedly caused by the installation of faulty airbags in BMW vehicles. The litigation was funded by Regency Funding Pty Ltd. Mr Brewster sought by notice of motion what was described as a “common fund order”. The order was expressed to bind all group members immediately to the annexed Funding Terms, and presumptively provided that the funder would be entitled to 25% of any amounts received by group members by way of judgment or compromise.

BMW Australia challenged the Court’s power to make such an order. The main submission of Mr Brewster and the funder was that the Court had power to make the order pursuant to s 183 of the Civil Procedure Act 2005 (NSW) which provides that in representative proceedings a Court may make any order it thinks “appropriate or necessary to ensure that justice is done in the proceedings”.

The following separate question was removed into the Court of Appeal: “[D]oes the Court have the power to make Order 1 sought in the Notice of Motion filed by the Plaintiff on 14 August 2018 (the Common Fund Motion)?” The question was heard concurrently with an appeal from a decision of the Federal Court making a similar order.

BMW Australia submitted that the question should be answered in the negative, because first, as a matter of construction, s 183 did not provide power for the order sought; secondly, if s 183 did authorise the making of such an order, it contravened Ch III of the Commonwealth Constitution and thirdly, it would also amount to an acquisition of property other than on just terms, contrary to s 51(xxxi) of the Commonwealth Constitution.

Held, by the Court answering the question in the affirmative:

1. Section 183 authorised the order sought by Mr Brewster. The principle in Anthony Hordern does not apply to s 183 as Part 10 does not confer only one power on a court to make interlocutory orders of the kind sought by the respondent. The principle of legality is inapplicable to the construction of s 183 in light of the legislative regime of Part 10 of the Civil Procedure Act which significantly alters group members’ rights: [56]–[61], [64]–[67].

Owners of the Ship “Shin Kobe Maru” v Empire Shipping Co Inc (1994) 181 CLR 404; [1994] HCA 5; Lee v New South Wales Crime Commission (2013) 251 CLR 196; [2013] HCA 39; Anthony Hordern & Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia (1932) 47 CLR 1; [1932] HCA 9; Minister for Immigration and Multicultural and Indigenous Affairs v Nystrom (2006) 228 CLR 566; [2006] HCA 50, applied.

2. The making of a common fund order under s 183 is an exercise of judicial power and does not contravene Chapter III of the Commonwealth Constitution. The common fund order did not, relevantly, create new rights, on a hypothetical basis, not based on legal principle or an objective standard, so as to render the exercise of power non-judicial: [96]–[103].

Precision Data Holdings Ltd v Wills (1991) 173 CLR 167; [1991] HCA 58; Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334; [1999] HCA 9, distinguished.

3. There was no law which could be characterised as an acquisition of property, and further there was no compulsive acquisition because group members retained the right to opt out before any liability to pay the funder crystallised: [104]–[110].

Clunies-Ross v Commonwealth (1984) 155 CLR 193; [1984] HCA 65; Industrial Relations Act Case (1996) 187 CLR 416; [1996] HCA 56; Paliflex Pty Ltd v Chief Commissioner of State Revenue (NSW) (2003) 219 CLR 325; [2003] HCA 65, applied.

4. Consideration of (a) the concurrent hearing of proceedings in the Supreme Court and the Federal Court: at [13]–[17], and (b) additional aspects of the constitutional arguments which were involved in the challenge to the power of the Supreme Court: at [83]–[95].

Judgment

1. THE COURT: Pending in the Equity Division of this Court are six representative proceedings brought pursuant to Part 10 of the Civil Procedure Act 2005 (NSW). All were commenced in 2017 and 2018. All are listed for hearing commencing on 2 March 2020, with an estimate of 12 weeks. Each proceeding relates to a make of automobile (BMW, Honda, Mazda, Nissan, Subaru and Toyota) supplied with airbags manufactured by Takata Corporation or a related company, as to which there have been a series of national product recalls.

2. Speaking very generally, the group members on whose behalf Mr Brewster’s proceeding is brought are persons who acquired BMW vehicles fitted with airbags which are the subject of the recall. The defendant, BMW Australia, is alleged to have contravened provisions of the Trade Practices Act 1974 (Cth) and the Australian Consumer Law by supplying the vehicles to group members (with the consequence that federal jurisdiction has been invoked from the outset). There is evidence that there may be in the order of 200,000 members of that class, which class is numerically the smallest of the six representative proceedings. Indeed, there is evidence that the six proceedings, if considered together, are “the largest collective legal action commenced in Australia to date”.

3. By October 2018, only 33 BMW owning group members had entered into a contract with Regency Funding Pty Ltd to fund the litigation, and only 116 had shown interest in doing so. That is a tiny proportion of the whole. Similarly, there is evidence that only a tiny fraction of owners of other vehicles have entered into a contract with Regency Funding.

4. It appeared to be common ground that this is a representative proceeding with a very large number of group members, each of whom has, at best, only a modest claim for damages.

5. The partner with carriage of the proceedings for the plaintiffs has given evidence not only that it is expensive to conduct a “bookbuild” (which is to say, undertake active efforts to persuade group members to enter into retainers with the firm and funding agreements with Regency Funding) but also that he has “ensured that publication and bookbuild activities regarding the Takata proceedings have been limited ... so as to avoid confusion being caused in the early stages of the recall process”. For the purposes of the determination of the issue removed into this Court, there is no challenge to that evidence.

6. In May 2018, Regency Funding paid into Court a first tranche of security for the defendant’s costs of $1.2 million ($200,000 in each of the six proceedings). The evidence does not disclose the likely total amount of security for costs which will need to be provided if the litigation proceeds to hearing and judgment.

7. By notice of motion filed on 14 August 2018, Mr Brewster sought an order in the following terms:

“Interlocutory orders sought – Common Fund Order

Upon the undertaking of each of Regency Funding Pty Ltd, the Plaintiff, and Quinn Emanuel Urquhart & Sullivan to each other and to the Court that they will comply with their obligations under the Funding Terms at Annexure A of these orders, the Court orders:

1. Subject to further order of the Court pursuant to section 183 of Civil Procedure Act 2005 (NSW) or the Court’s inherent jurisdiction, the Plaintiff and Group Members are bound by the Funding Terms at Annexure A of these orders and shall, in accordance with the Funding Terms, pay from the Resolution Sum:

(a) the Legal Costs (including Disbursements) and Administration Expenses;

(b) remuneration to the Funder in the amount of 25% of such amount of the Resolution Sum as remains after payment of the amounts specified in (a) above (or such other percentage as the Court considers reasonable at the time of approval of a settlement under section 173 or judgment under section 177 of the Civil Procedure Act 2005 (NSW)); and

(c) any GST payable in relation to (a) and (b),

prior to any distribution of the Resolution Sum to the Plaintiff and Group Members, in accordance with the Funding Terms.”

8. The Funding Terms which were annexed to the motion, to which each of Mr Brewster, his solicitors, Regency Funding, and all other group members would become bound if the orders sought were made, are also annexed to this judgment.

9. On 22 October 2018, a judge in the Equity Division (Sackar J) identified a question for separate decision, pursuant to r 28.2 of the Uniform Civil Procedure Rules 2005 (NSW), namely:

“[D]oes the Court have the power to make Order 1 sought in the Notice of Motion filed by the Plaintiff on 14 August 2018 (the Common Fund Motion)?”

10. Sackar J also removed that question into the Court of Appeal pursuant to r 1.21(1)(a), on BMW Australia’s application, which was unopposed, on the basis that it gave rise to “a discrete question of law of clear general public importance”: Owen Brewster v BMW Australia Ltd [2018] NSWSC 1602 at [24].

Overview of issues for determination

11. Three matters are relied upon in support of BMW Australia’s submission that the separate question should be answered in the negative. First, it is said that on their proper construction neither s 183 of the Civil Procedure Act nor s 23 of the Supreme Court Act 1970 (NSW) authorised such an order. If that be wrong, then it is said that order 1 would involve the purported exercise of a power by a Court exercising federal jurisdiction that is not within the judicial power of the Commonwealth or incidental thereto, or alternatively involves an acquisition of property other than on just terms, contrary to s 51(xxxi) of the Constitution.

12. The second and third aspects of BMW Australia’s submissions involve matters arising under the Commonwealth Constitution. Appropriately drafted notices pursuant to s 78B of the Judiciary Act 1903 (Cth) were circulated to the various Attorneys-General, none of whom wished to intervene.

13. The separate question was heard concurrently with an appeal from a decision of the Federal Court constituted by a single judge making a “Common Fund Order”: Lenthall v Westpac Life Insurance Services Ltd [2018] FCA 1422, in which the appellant/defendant (“Westpac”) raised substantially the same three submissions as to power, while also contending that the decision disclosed appellable error on House v The King grounds. This occurred in accordance with a procedure raised by Beazley P with the parties at a directions hearing held on 12 November 2018. At that hearing, Mr Kirk SC, who with Mr Prince appeared for BMW Australia both then and when the matter was heard, raised certain “concerns” about the Court of Appeal and Full Court of the Federal Court sitting concurrently. The concerns expressed fell short of an objection to the proposal, and nothing further was said by any party at the hearing. There was broad adoption by the representative parties, the defendants and the funders of the submissions made by their counterparts, and the hearing proceeded on the basis that counsel appearing for federal litigants were under no obligation to answer any questions asked by a State judge, and vice versa. As it happened, there were only a handful of questions asked by any judge of any counsel not appearing in the proceeding pending in his or her Court, all of which were answered without demur.

14. At the commencement of the hearing, the parties in the respective proceedings were advised that there would be no consultation between any member of this Court with any of the members of the Federal Court on the issues arising in the two matters (absent consent of the parties), but that it was intended and expected that judgments in each matter would be delivered at the same time. We have, of course, adhered to that approach, although it may well be one that is unduly cautious. Judicial officers must not, save in exceptional circumstances, communicate with a party or a party’s representative save with the consent or in the presence of the other side, but they are unquestionably free to consult other judges in their court who have no interest in the matter, and there is, to say the least, much to be said for that extending to judges of other courts before whom the same or similar issues arise: see Re JRL; ex parte CJL (1986) 161 CLR 342 at 350–351; [1986] HCA 39. Judges are personally accountable for their decisions, and must publish reasons for them, but they do not make decisions in isolation, and we doubt that any informed bystander would think it desirable that they do so. That said, it would be quite wrong for a judge to consult with an interested party, however well-informed, such as a lawyer who acted in class action litigation (whether for plaintiffs or defendants or funders).

11. There are a number of differences in the issues raised for determination by this Court and by the Federal Court. One is the fact that the question reserved for this Court is a pure question of power going to an application which has not as yet been heard on its merits, while the Federal Court is determining whether an actual exercise of power to make a “Common Fund Order” purportedly pursuant to the cognate provisions of Part IVA of the Federal Court of Australia Act 1976 (Cth) is beyond power or otherwise discloses error. Another is that the constitutional arguments operate differently (for example, s 79 of the Judiciary Act is central to the submissions in this Court, but inapplicable in the Federal Court appeal). A third is that there are some textual differences between Part 10 of the Civil Procedure Act and Part IVA.

12. Even so, it was helpful to hear the submissions of all parties, which were of a high calibre, and with minimal overlap. That, however, was not the principal reason for the procedure, which was driven by a concern to avoid the practical difficulty which would arise insofar as the court which would deliver judgment first would be accorded the deference associated with Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 at [135], which might in turn require an opportunity for further submissions, and might give rise to a perception that the result was in part determined by a caprice of timing. There are ample precedents for hearing proceedings which raise similar issues concurrently: see for example The Owners – Strata Plan No 70798 v Bakkante Constructions Pty Ltd (2014) 88 NSWLR 513; [2014] NSWCA 410 at [16]. Recently, the separate appeals to the Supreme Court of the United Kingdom and the Privy Council in R v Jogee and Ruddock v The Queen were heard concurrently and determined in a single judgment: [2017] AC 387. There, of course, both appellate tribunals were constituted by the same judicial officers. That cannot easily be the case here given the restrictions imposed by Chapter III of the Commonwealth Constitution, but there is no compelling reason standing in the way of separately constituted courts proceeding in a similar fashion. And there is good reason to avoid both the actuality and the appearance of a race to judgment, which cannot enhance the administration of justice. There can surely be no impediment to taking administrative steps to facilitate the concurrent hearing of both proceedings in a federation in which the administration of justice is enhanced by having the Federal Court of Australia and the Supreme Court of New South Wales located in the same building in Sydney, both of which are courts that form part of the integrated system of justice mandated by Chapter III, and are subject to substantially the same overarching obligations to regulate their procedure so as to facilitate the just, quick and cheap resolution of the real issues: Civil Procedure Act, s 56; Federal Court of Australia Act, s 37M.

13. Indeed, we would respectfully agree with what was said by Allsop CJ in Wileypark Pty Ltd v AMP Ltd [2018] FCAFC 143; (2018) 359 ALR 43 at [11]:

“I wish to express, emphatically, my complete agreement with the Chief Judge that comity between the Supreme Courts of the States and Territories and the Federal Court in the concurrent exercise of federal jurisdiction is of the utmost importance. Indeed, to put it thus may be to suffer understatement. In an integrated federal judicature such comity is a Constitutional assumption of the utmost practical and institutional importance.”

18. The remainder of this judgment addresses the following topics:

1. The legal effect of the order sought in the motion;

2. The regime established by Part 10 of the Civil Procedure Act;

3. BMW Australia’s and Westpac’s submissions;

4. Consideration of submissions on construction;

5. Constitutional submissions – the threshold issue of the application to Part 10 of the State Act;

6. Judicial power;

7. Acquisition of property on unjust terms?

8. Orders.

The legal effect of the order sought in the motion

19. The starting point is an analysis of the legal effect of the order sought in Mr Brewster’s notice of motion.

20. As things presently stand, Mr Brewster and a small number of other BMW owning group members have entered into litigation funding agreements with Regency Funding, in which they agree, inter alia, to retain “Quinn Emmanuel Trial Lawyers”. Regency Funding is subject to an obligation to pay “Claim Costs” as and when they are incurred, including “Adverse Costs Orders”, but subject to its right to terminate the agreement on 21 days’ written notice for any reason. Simplifying the position slightly, in the event that the litigation results in a judgment or settlement, then Regency Funding is to be reimbursed all amounts paid, together with 30% of the gross proceeds of the claim before payment of “Adverse Costs” and “Claim Costs”.

21. The orders sought in the notice of motion are conditional upon the giving of undertakings by Regency Funding, Mr Brewster and his solicitors, both to each other and also to the Court, that they will comply with their obligations under the Funding Terms. The legal and practical effect of the order sought by Mr Brewster cannot be analysed without regard to the Funding Terms.

22. The Funding Terms are materially different from the existing litigation funding agreements. The most important differences are that:

1. Regency Funding, speaking generally, becomes bound to fund the litigation until its conclusion (see cl 6 “Funder’s obligation to fund the Proceedings”, which is subject to a court sanctioned termination pursuant to cll 24 and 25), in lieu of its existing right to terminate without cause on 21 days’ notice, and

2. Regency Funding is entitled to be paid 25% of the net proceeds realised by judgment or settlement, with a right to an additional amount in the event there is an appeal, but subject to the qualification that it may instead be entitled to such other percentage as the Court considers reasonable at the time settlement is approved or judgment entered (that qualification occurs both on the face of the order, and in identical terms in cl 8(b) of the Funding Terms).

23. The orders sought in the notice of motion will cause all “Group Members” to be “bound” by the Funding Terms, with the consequence, inter alia, that any funds received by them by way of settlement or judgment are to be paid to Mr Brewster’s solicitors for distribution in accordance with the terms: see cl 11. It is by that means that Regency Funding will receive some 25% of the net amounts which otherwise would have been paid to all group members participating in a settlement or judgment.

24. “Group Members”, defined in the Funding Terms as persons in the class who do not opt out of the proceedings by the time specified by the Court for doing so, are immediately “bound” the Funding Terms. Little attention was given in argument to the nature of the binding effect of the order, if made, or the identity of the group members to whom it applied.

25. Seemingly, the effect of the order, if made, is to give rise to a possible sanction of contempt, rather than the non-consensual imposition of contractual rights and obligations upon group members (the position may be contrasted with what occurs when an order for what Dixon J described in JC Williamson Ltd v Lukey (1931) 45 CLR 282 at 297; [1931] HCA 15 as “specific performance, in the proper sense” compels a party to execute a contract).

26. Further, although there is perhaps scope for a submission that a person was not a “Group Member” as defined until such time as the time for opting out has come and the person has failed to do so, the better view is (and argument proceeded on this basis) that all members of the class were “Group Members” as defined and immediately “bound”, even before they had opted out (or had knowledge of their right to do so), subject to an ability on their part to cease being bound by opting out. No attention was given to the nature of liabilities incurred by persons while a member of the class but who subsequently opt out – for example, do such persons continue to be bound by the obligation of confidentiality attaching to communications to them by the solicitors? Nothing in these reasons is to be understood as addressing such questions.

27. The motion as framed is less than a model of clear legal drafting. There is a great deal of surplusage in the main point of concern, namely, the liability on the part of the “Group Members” to pay, and the correlative entitlement on the part of Regency Funding to receive, 25% of the “Resolution Sum” less “Legal Costs” and “Administration Expenses”. That liability and correlative entitlement flow (a) from the substantive terms of paragraph 1, (b) also from the use of the words “in accordance with the Funding Terms” which appear doubly redundantly both at the beginning and at the end of that paragraph and (c) separately from the foregoing, from the fact that the “Plaintiff” and “Group Members” are to be bound by the Funding Terms (in particular, they are bound by cl 8 “Funder’s Remuneration”). Indeed, as presently advised, most of the words in paragraph 1 of the motion are otiose, and it would suffice if the paragraph read:

“Subject to further order of the Court pursuant to section 183 of the Civil Procedure Act 2005 (NSW) or the Court’s inherent jurisdiction, the Plaintiff and Group Members are bound by the Funding Terms at Annexure A of these orders.”

28. Thus while the label “Common Fund Order” and the unnecessary repetition in the body of the motion tend to focus attention on the liability of group members to pay, and the entitlement of the funder to be paid a percentage of any judgment or settlement, in truth the order operates much more widely, requiring all group members to be subject to the same regime, subject to their right to opt out. But no party submitted that that somehow undercut or was antithetical to the basic idea of open classes in Parts IVA and 10 of the regimes established to deal with representative proceedings, or indeed addressed any significant criticism to any vices the order sought by Mr Brewster might have (any such submission would have to confront s 166(2), which is considered below). Instead, BMW Australia’s and Westpac’s submissions were confined to the pecuniary consequences of the order. This judgment takes the same course, and nothing in it should be taken to determine any other potentially problematic aspects of the binding of all “Group Members” to the Funding Terms.

The regime established by Part 10 of the Civil Procedure Act

29. BMW Australia’s submissions on construction turned upon what, in its contention, were limitations upon the “general power of Court to make orders” pursuant to s 183 (the near equivalent of s 33ZF of the Federal Court of Australia Act). Section 183 provides:

“183 General power of Court to make orders (cf s33ZF FCA)

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

30. Section 33ZF(1) is in identical terms to s 183. However, there is no counterpart in Part 10 to s 33ZF(2), which provides that subsection (1) does not limit the operation of s 22 of the Federal Court of Australia Act. Section 22 is the judicature provision conferring power to grant all remedies in respect of any legal or equitable claim, “so that, as far as possible, all matters in controversy between the parties may be completely and finally determined and all multiplicity of proceedings concerning any of those matters avoided”. Section 63 of the Supreme Court Act is in materially identical terms to s 22. Their progenitor, s 24(7) of Selborne’s Judicature Act 1873 (UK), served a number of purposes, notably, the avoidance of a multiplicity of proceedings in separate courts (see Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150 at 161; [1981] HCA 48), but the purpose extends to avoiding a multiplicity of proceedings in the same court: Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175; [2009] HCA 27 at [17]. This incidentally is an example of a statute “always speaking”, to which principle of construction reference will later be made.

31. The point of a provision such as s 33ZF(2) is to fend off a submission that some other generally worded provision is limited by s 33ZF(1). It will ordinarily (although not invariably) be effective to do so: see Leon Fink Holdings Pty Ltd v Australian Film Commission (1979) 141 CLR 672; [1979] HCA 26. Such a provision does not of itself expand the operation of the provision which is said not to have limiting effect. In any event, no party placed reliance on the absence from s 183 of a counterpart to s 33ZF(2). Rather, submissions were made based on the relationship between s 183 and other provisions within Part 10.

32. Part 10 has six Divisions. The first contains definitions and an application provision. Division 2 (ss 157–174) deals with commencement of representative proceedings. Speaking generally, s 157 provides for the commencement of representative proceedings if certain criteria are satisfied (essentially, 7 or more persons having the same or similar claims against the same defendant) and express provision is made in s 159(1) for most persons to be joined as group members without consent. Being a group member means that a person may be bound by a judgment (s 179), unless the person has exercised the right to opt out conferred by s 162. That right is reinforced by the right to be given notices of certain matters in ss 175 and 176, including the right of group members to opt out. Sections 175 and 176 comprise the whole of Division 3, which is directed to notices, which serve the important purpose of informing group members who need not consent and might not otherwise even learn that they are group members of their rights.

33. Those provisions disclose that while, on the one hand, the “open class” representative proceeding may and often will extend to persons who do not consent and may not even know of the litigation, with the potential of binding them, the regime also makes provision for that eventuality by imposing mandatory rights to opt out, supported by mandatory mechanisms for notification so as to make that right one that is meaningful and informed.

34. Returning to Division 2, settlement or discontinuance requires the approval of the Court, pursuant to s 173(1), and s 173(2) provides:

“173 Approval of Court required for settlement and discontinuance (cf s33V FCA)

…

(2) If the Court gives such approval, it may make such orders as are just with respect to the distribution of any money, including interest, paid under a settlement or paid into the Court.”

35. Although both s 173 (in Division 2) and s 183 (in Division 6) confer powers upon the Supreme Court, Division 4 is titled “Powers of the Court”. It comprises ss 177, 178 and 179, each of which concerns judgments. Attention was especially focussed upon the powers conferred upon the Court where a representative proceeding was compromised, or determined by judgment, in ss 177 and 178, with a view to contrasting those sections with s 183. Sections 177 and 178 provide as follows:

“177 Judgment—powers of the Court (cf s33Z FCA)

(1) The Court may, in determining a matter in representative proceedings, do any one or more of the following:

(a) determine a question of law,

(b) determine a question of fact,

(c) make a declaration of liability,

(d) grant any equitable relief,

(e) make an award of damages for group members, sub-group members or individual group members, being damages consisting of specified amounts or amounts worked out in such manner as the Court specifies,

(f) award damages in an aggregate amount without specifying amounts awarded in respect of individual group members.

(2) In making an order for an award of damages, the Court must make provision for the payment or distribution of the money to the group members entitled.

(3) Subject to section 173, the Court is not to make an award of damages under subsection (1) (f) unless a reasonably accurate assessment can be made of the total amount to which group members will be entitled under the judgment.

(4) If the Court has made an award of damages, the Court may give such directions (if any) as it thinks just in relation to:

(a) the manner in which a group member is to establish the member’s entitlement to share in the damages, and

(b) the manner in which any dispute regarding the entitlement of a group member to share in the damages is to be determined.

178 Constitution etc of fund (cf s33ZA FCA)

(1) Without limiting the operation of section 177 (2), in making provision for the distribution of money to group members, the Court may provide for:

(a) the constitution and administration of a fund consisting of the money to be distributed, and

(b) either:

(i) the payment by the defendant of a fixed sum of money into the fund, or

(ii) the payment by the defendant into the fund of such instalments, on such terms, as the Court directs to meet the claims of group members, and

(c) entitlements to interest earned on the money in the fund.

(2) The costs of administering a fund are to be borne by the fund, or by the defendant in the representative proceedings, or by both, as the Court directs.

(3) If the Court orders the constitution of a fund under subsection (1), the order must:

(a) require notice to be given to group members in such manner as is specified in the order, and

(b) specify the manner in which a group member is to make a claim for payment out of the fund and establish the group member’s entitlement to payment, and

(c) specify a day (which is 6 months or more after the day on which the order is made) on or before which the group members are to make a claim for payment out of the fund, and

(d) make provision in relation to the day before which the fund is to be distributed to group members who have established an entitlement to be paid out of the fund.

(4) The Court may allow a group member to make a claim after the day fixed under subsection (3) (c) if:

(a) the fund has not already been fully distributed or applied in accordance with an order under subsection (5), and

(b) it is just to do so.

(5) On application by the defendant after the day fixed under subsection (3)(d), the Court may make such orders as it thinks fit for the payment from the fund to the defendant of the money remaining in the fund.”

36. Section 179 provides that a judgment must describe or otherwise identify the group members who will be affected by it, and binds all group members other than those who have opted out.

37. Section 177 deals with powers at the time the court “determines” the “matter”. The court’s determination is to be contrasted with the discontinuance or settlement to which s 173 refers, which occurs by the conduct of the litigants. At least in large measure, the powers conferred pursuant to ss 177 and 178 reflect orders which may be made following a final hearing, for example, the power to make a declaration of liability or make an award of damages.

38. The power in s 178 is premised upon provision being made for the distribution of money following an award of damages pursuant to s 177(2). Accordingly, that power for almost all practical purposes necessarily follows a final hearing. (Conceivably, a defendant might consent to a judgment for liability in an aggregate amount, and leave it to the court to constitute a fund and to make orders for distribution to group members, but such a case would seem more clearly to fall under s 173(2).)

39. Division 5, which comprises s 180, deals with appeals. The critical provision for present purposes is s 183 within Division 6 titled “Miscellaneous”. Division 6 also contains a prohibition upon the ordering of costs against group members save in specified circumstances (s 181), and suspends the running of limitation periods in relation to group members until and unless they opt out (s 182). Both ss 181 and 182 confer important rights on group members, and are readily seen as important aspects of the legislative scheme.

36. We will return to the antecedents of Part 10 and Part IVA subsequently in these reasons.

BMW Australia’s and Westpac’s submissions

41. BMW Australia adopted Westpac’s submissions to the extent they were relevant and not inconsistent with its own oral and written submissions. While different counsel gave different emphasis to different aspects of the arguments, no useful purpose is served by a separate summary. What follows summarises the totality of the submissions advanced insofar as is relevant to the question reserved for separate determination by this Court, in an order which approximately reflects the oral submissions.

42. BMW Australia and Westpac acknowledged the force of the general principle, commonly associated with Owners of the Ship “Shin Kobe Maru” v Empire Shipping Co Inc (1994) 181 CLR 404; [1994] HCA 5, that a power conferred on a court, such as s 183, should not be read as subject to some implied restriction or limitation. The gravamen of their submissions was directed to identifying a basis for such an implication.

43. First, it was submitted that the “principle of legality” applied to the construction of s 183. It was said that if s 183 authorised a common fund order, that necessarily involved an interference with property rights (namely, the causes of action the subject of the litigation and any fruits thereof which might be achieved, whether by settlement or by adjudication). A contrast was drawn between the general language of s 183 and the unequivocal language of s 159(1), which, with the requisite clarity and lack of ambiguity, did make it plain that group members’ causes of actions were to be regulated by the regime without their consent. But it was said that s 33ZF (and therefore s 183) lacked the requisite clarity:

“But nowhere in 33ZF is there any sort of equivalent of that unambiguous intention that one sees in 33E(1). That alone, we submit – that is, the principle of legality – is sufficient to dispose of the construction argument in our favour.”

44. Secondly, there were a series of submissions which may conveniently, adopting the language of the parties, be labelled Anthony Hordern submissions, after the High Court’s decision in Anthony Hordern & Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia (1932) 47 CLR 1; [1932] HCA 9. These were the most detailed of the submissions advanced. The general principle, as stated by Gavan Duffy CJ and Dixon J at 7, is that:

“When the Legislature explicitly gives a power by a particular provision which prescribes the mode in which it shall be exercised and the conditions and restrictions which must be observed, it excludes the operation of general expressions in the same instrument which might otherwise have been relied upon for the same power.”

45. Thus emphasis was given to the more elaborately drafted and qualified powers conferred on the Court to make provision for the constitution of a fund and payment of costs out of that fund elsewhere in Part 10, notably, ss 173, 177 and 178. Some of those provisions were expressed in mandatory terms, including s 177(2), which provided that when an order for an award of damages was made, “the Court must make provision for the payment or distribution of the money to the group members entitled”. This was said to tell against s 183 supplying power in two respects. One was because the generality of s 183 should not undercut the specific provision in s 177(2), which it would do if, in substance, well in advance of any determination of liability or damages some 25% of any such amounts were putatively vested in the funder. Another was because of the time at which the order was made. It was put thus:

“[W]e ask rhetorically would the legislature have contemplated at all that the court should have a power enabling it to inject itself into the process of the way settlement money or judgment money should be distributed, months or perhaps even years – months or perhaps even years prior to that settlement money or the money by way of an award of damages even coming into existence.”

46. Considerable attention was given to the way in which s 177 (and s 33Z) regulated the award of “damages”. It was submitted that the references to “damages” extended to all forms of pecuniary relief, whether or not compensatory, and included equitable compensation for breach of fiduciary duty, and accounts of profits ordered in equity, and civil penalties, such as had been available under the Consumer Credit Codes. On the other hand, the respondents submitted that such breadth of language was hard to reconcile with the words in s 177(1)(d) (and s 33Z(1)(d)) “grant any equitable relief”, and disputed that what had been said at first instance in Walsh v Permanent Trustee Australia Ltd (1996) 21 ACSR 213 was applicable to the legislation. The reason for this exchange was the powers conferred and duties imposed upon the Court which were connected with making orders for an award of damages, in s 177(2) and s 178(1). To the extent that the reference to “damages” included all forms of pecuniary relief, and was linked with other provisions conferring qualified powers and imposing obligations when damages were awarded, the argument based upon Anthony Horden was said to be strengthened.

47. There was necessarily some minor differentiation in these submissions, because there is no counterpart in s 177(1) to paragraph (g) of s 33Z(1) (“make such other order as the Court thinks just”), which is apt to detract from the submission that the references in paragraphs (e) and (f) to awards of “damages” are to be read as exhaustive of all pecuniary remedies. That said, as Mr Hutley SC submitted on behalf of the funder in the Federal Court proceedings, it will not be necessary to resolve this aspect of the construction of each statute, although there is, with respect, a deal to be said for the position being that the specifically protective provisions in the legislation dealing with the administration of a fund apply to all funds, including funds to which awards of equitable compensation contribute, rather than merely funds comprising amounts of damages. The presently significant point is that all of the provisions relied upon are framed so as to deal with powers and duties at the time final pecuniary relief has been ordered.

48. Thirdly, it was put that the location of the provision in a Division titled “Miscellaneous” told against it having a construction capable of supporting the order sought: “It would be unlikely to include a provision which has the immense scope which the respondents say it has in a Division called ‘Miscellaneous’”.

49. Fourthly, it was put that the decision of the Full Court of the Federal Court in Money Max Int Pty Ltd v QBE Insurance Group Limited (2016) 245 FCR 191; [2016] FCAFC 148 was plainly wrong, or alternatively distinguishable.

50. Fifthly, BMW Australia advanced some additional nuanced submissions on construction. It was put that the words “appropriate or necessary” in s 183, especially when used in a context involving the verb “ensure” amounted to an hendiadys, such that the power turned upon the court being of the view that the order was necessary. It was also put that s 183 “presupposes and requires the existence of a proceeding”, so that “the order must be to achieve justice in the proceeding. That is not to do with promoting proceedings.” That, so it was said, meant that an order as was sought in Mr Brewster’s notice of motion was outside power because it would promote future proceedings rather than resolve existing proceedings:

“It is no role of the courts to promote themselves as facilitators of dispute resolution. It is no role of the court to make themselves attractive to commercial venturers seeking to pursue investment opportunities. It is not within the terms of section 183. It is within access to justice only if expressed at a very high level of generality which is not an answer to the issue of statutory construction.”

51. It was also submitted that the order would invariably be made at a time when many things (the strength of the case, whether it had been conducted efficiently or wastefully, whether a settlement was imminent or whether the litigation would proceed to an expensive trial) were unknown. It was said that there would always be substantial uncertainties, which supported the conclusion that such an order fell outside the power conferred by s 183. No separate submissions were made orally on s 23 of the Supreme Court Act.

52. It is not necessary to summarise the submissions made by the lead applicants and the funders. Two particular aspects may be noted.

53. First, submissions were made in support of analogous cases where the law imposed a liability other than pursuant to contract upon persons who benefited from the actions of another. Most attention was directed to salvage in admiralty, whereby a highly discretionary power (“there is no jurisdiction known the administration of which is more within the discretion of the judge who has to administer it”) is conferred to award for salvage reward, as an example of a court order whereby all owners were required to contribute to the cost of an intervention by another to their collective benefit: see United Salvage Pty Ltd v Louis Dreyfus Armateurs SNC (2007) 163 FCR 183; [2007] FCAFC 115 at [32], quoting The City of Chester (1884) 9 PD 182 at 187.

54. Against this, Mr Kirk submitted that such cases were best regarded as exceptions to the general rule of the law as stated by Bowen LJ in Falcke v Scottish Imperial Insurance Company (1886) 34 ChD 234 at 248 that “work and labour done or money expended by one man to preserve or benefit the property of another do not according to English law create any lien upon the property saved or benefited, nor, even if standing alone, create any obligation to repay the expenditure.” In Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635; [2008] HCA 27 at [80], the joint judgment emphasised Bowen LJ’s statement, “Liabilities are not to be forced upon people behind their backs any more than you can confer a benefit upon a man against his will.”

55. Secondly, some of the respondents went so far as to submit that the various forms of common fund orders reflected the effectuation of the “original intent” underlying the enactment of Part IVA. Reference was made to the “evolution” of representative proceedings, involving (a) the recognition that a Court could “close” a class on terms that all members had entered into a funding agreement, (b) the change in public policy in Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386; [2006] HCA 41 sanctioning the use of litigation funders and (c) various forms of common fund orders. Thus it was said that a construction which supported a common fund order “gives effect to the original intent of the class action process, which was that these were envisaged as being open classes and people would opt out”.

Consideration of submissions on construction

56. The starting point is the legislative text. Section 183 is worded in the utmost generality (“in any proceedings”, the Court “may ... make any order”) and confers power on a superior court of record. It therefore attracts the principle of construction in Shin Kobe Maru at 421:

“It is quite inappropriate to read provisions conferring jurisdiction or granting powers to a court by making implications or imposing limitations which are not found in the express words.” (Citations omitted.)

57. That a generally worded power conferred on a court should not be narrowly construed nor confined by fine distinctions was described as a “basic rule of statutory interpretation” by this Court in Hall v Poolman (2009) 75 NSWLR 99; [2009] NSWCA 64 at [54]; see also to the same effect, in the context of Part IVA, Cash Converters International Ltd v Gray (2014) 223 FCR 139; [2014] FCAFC 111 at [23] and Ethicon Sàrl v Gill [2018] FCAFC 137 at [49]. As Mr Gleeson SC submitted, the same principle was applied by the High Court in relation to the power conferred by s 447A of the Corporations Law in Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270; [2000] HCA 30 at [17]. In fact, the High Court applied the same principle to Part IVA of the Federal Court of Australia Act itself in Wong v Silkfield Pty Ltd (1999) 199 CLR 255; [1999] HCA 48 at [11]. After referring to the traditionally worded provisions in Pt 8 r 13 of the Supreme Court Rules 1970 and Order 6 r 13 of the Federal Court Rules 1979, a unanimous High Court said:

“Part IVA provides its own more detailed regime. Like other provisions conferring jurisdiction upon or granting powers to a court, Pt IVA is not to be read by making implications or imposing limitations not found in the words used; this is so even if the evident purpose of the statute is to displace generally understood procedures.” (Citations omitted.)

Principle of legality inapplicable

58. The so-called “principle of legality” does not undercut the foregoing. Essentially that is because s 183 is located in a legislative regime where there is clear adjustment of represented parties’ right to litigate a cause of action, counterbalanced by a detailed series of protective provisions. Once it is seen that s 183 is but one part of the legislative adjustment to the position at general law, there is no sound basis for invoking the “principle of legality” to construe one element of the regime narrowly.

59. Part 10 effects a significant alteration to the rights of persons with a cause of action. They may be made group members without their consent. There is a correlative impact to the right of potential defendants, who may be sued in representative proceedings brought on behalf of a large number of group members without their consent.

60. If persons are made group members, then (even if they are entirely unaware of the litigation) there are immediate effects upon them, including the suspension of time for limitation purposes and the risk of being bound by a judgment. The legislative scheme makes elaborate provision for the consequences. In large measure, that is through conferring important rights to opt out and to receive notice of certain matters. But it is also accompanied by broadly worded powers conferred on courts whose task will be to enable representative proceedings to be litigated in a way that is fair to all.

61. There is a difficulty in accepting, on the one hand, that Part 10 imposes a new regime on the causes of action of group members, even without their consent, but, on the other hand, adopting a construction which narrows the scope of the parts of that regime. Once it is accepted that property rights have been interfered with, insofar as a group member’s cause of action can be litigated without his or her consent, then it would be incongruous to apply the “principle of legality” so as to narrow the protections which Parliament has put in place to regulate the new regime. The position is akin to that identified by Gageler and Keane JJ in Lee v New South Wales Crime Commission (2013) 251 CLR 196; [2013] HCA 39 at [314]:

“The principle of construction is fulfilled in accordance with its rationale where the objects or terms or context of legislation make plain that the legislature has directed its attention to the question of the abrogation or curtailment of the right, freedom or immunity in question and has made a legislative determination that the right, freedom or immunity is to be abrogated or curtailed. The principle at most can have limited application to the construction of legislation which has amongst its objects the abrogation or curtailment of the particular right, freedom or immunity in respect of which the principle is sought to be invoked. The simple reason is that ‘[i]t is of little assistance, in endeavouring to work out the meaning of parts of [a legislative] scheme, to invoke a general presumption against the very thing which the legislation sets out to achieve’.” (Citations omitted.)

62. That passage was reproduced and applied in this Court in Roads and Maritime Services v Desane Properties Pty Ltd [2018] NSWCA 196 at [193]; (2018) 358 ALR 785.

63. That is sufficient to resolve this aspect of the argument. That is not to say that there are not other more general difficulties with the submission, as to which see Shade Systems Pty Ltd v Probuild Constructions (Aust) Pty Ltd (No 2) (2016) 95 NSWLR 157; [2016] NSWCA 379 at [38]–[47] (Basten JA, Macfarlan and Leeming JJA agreeing). Indeed, aspects of the submission appeared to reflect the caution expressed by Basten JA, writing extra-judicially:

“[O]ne might happily conclude that ‘the principle of legality’ is a label without clear content and having the capacity to mask an expansive view of the judicial function. It tends to distract attention from a considered analysis of the proper relationship between the judiciary and the legislature”: “The Principle of Legality – An Unhelpful Label?” in D Meagher and M Groves (Eds), The Principle of Legality in Australia and New Zealand (Federation Press, 2017), 74 at 91.

That said, a more circumscribed articulation of the principle of legality may be found in P Sales “Legislative Intention, Interpretation, and the Principle of Legality” in (2019) 40(1) Statute Law Review 53 at 61–63.

Anthony Hordern

64. Turning to the submissions based on the principle of construction associated with Anthony Hordern, in Minister for Immigration and Multicultural and Indigenous Affairs v Nystrom (2006) 228 CLR 566; [2006] HCA 50 at [59], Gummow and Hayne JJ summarised the authorities as follows:

“Anthony Hordern and the subsequent authorities have employed different terms to identify the relevant general principle of construction. These have included whether the two powers are the ‘same power’, or are with respect to the same subject-matter, or whether the general power encroaches upon the subject-matter exhaustively governed by the special power. However, what the cases reveal is that it must be possible to say that the statute in question confers only one power to take the relevant action, necessitating the confinement of the generality of another apparently applicable power by reference to the restrictions in the former power. In all the cases considered above, the ambit of the restricted power was ostensibly wholly within the ambit of a power which itself was not expressly subject to restrictions.” (Citations omitted.)

65. The short answer to this submission is that Part 10 does not confer “only one power to take the relevant action”. That is so irrespective of whether the power is characterised temporally or by reference to subject matter.

66. The powers in ss 173, 177 and 178 are linked to proceedings being determined consensually or at the time of judgment. In contrast, the power in s 183 expressly extends to the exercise of powers after judgment (by the words “including an appeal”). There is no temporal limitation on the face of the provision, and nothing to suggest that it does not extend to interlocutory orders prior to any settlement or judgment.

67. Perhaps the more persuasive way of putting this aspect of the submission advanced by BMW Australia and Westpac is to say that there is only a single power to deal with amounts which are paid by way of damages, and that power is qualified as set out in ss 177 and 178. But even if that be so (and it is not necessary to express a concluded view on that issue), that would not stand in the way of s 183 supporting an interlocutory order which presently bound group members to the Funding Terms, and which also made provision, contingently, for what was to happen in the event damages were ordered. Such an order does not qualify, let alone prevent, the exercise of the power in ss 177 and 178 if and when there is an award of damages.

Original intent of legislative regime?

68. That said, the submission advanced by some respondents to the effect that the power to make a common fund order represented the culmination of the “original intent” underlying Part IVA and Part 10 goes too far. (Of course, any “intent” is the objective intention to be imputed to the Legislature having regard to the words enacted, read in their context.) No party pointed to any extrinsic material suggesting as much. Indeed, in this respect there is a significant difference between the regimes established by Part IVA and Part 10, because the former, but not the latter, was enacted at a time when maintenance and champerty were unlawful, and many litigation funding agreements could not be enforced as a matter of public policy.

68. Funding, and profiting from, the litigation of others has been a concern of the law for many centuries. Professor Rose concludes his recent work with the ironic observation that the twentieth century saw the end of almost a millennium of statutes directed to maintenance and other abuses of curial process: J Rose, Maintenance in Medieval England (Cambridge University Press, 2017), p 366, reviewed [2018] 77 Cambridge Law Journal 402.

69. Part IVA was enacted in 1991, at a time when both maintenance and champerty continued to be a tort and a crime, as well as contrary to public policy, and when the Australian Law Reform Commission’s earlier recommendation to abolish the tort and crime had not been implemented. The ALRC report which led to the introduction of Part IVA did not itself address the funding of representative proceedings in terms, but merely referred to its earlier recommendation, which it “re-affirmed” (ALRC 46, paragraph 317). In 1993, the NSW Parliament abolished the tort and crime of maintenance and champerty, although whether public policy precluded the enforceability of such an agreement was left for the courts: Maintenance, Champerty and Barratry Abolition Act 1993 (NSW), ss 3, 4 and 6. Then, in 2006, a majority of the High Court confirmed what this Court had previously held, namely, that public policy did not stand in the way of litigation funding: Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd (2005) 63 NSWLR 203; [2005] NSWCA 83, Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386; [2006] HCA 41.

70. Those decisions opened the way for litigation funders which had no existing commercial interest in litigation to enter into litigation funding agreements. Beforehand, solicitors had been doing so, which had led to a sharp divergence of views as to whether a “closed class” confined to clients of a particular solicitor was inconsistent with Part IVA and, therefore, an abuse of process. That submission was upheld at first instance in the Federal Court of Australia and (in relation to the traditional representative proceedings permitted by Pt 8 r 13 of the Supreme Court Rules) the Supreme Court of New South Wales: Dorajay Pty Ltd v Aristocrat Leisure Ltd (2005) 147 FCR 394; [2005] FCA 1483 at [125] and Jameson v Professional Investment Services Pty Ltd [2007] NSWSC 1437; (2007) 215 FLR 377 at [100]–[105]. In both cases, intermediate appellate courts disapproved what had been said at first instance: Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd (2007) 164 FCR 275; [2007] FCAFC 200 and Jameson v Professional Investment Services Pty Ltd (2009) 72 NSWLR 281; [2009] NSWCA 28.

71. This led to a minor but significant textual difference between Part IVA and Part 10 of the Civil Procedure Act when the latter was enacted in 2010. Section 166 in other respects closely resembles s 33N of Part IVA, dealing with the Court ordering the proceedings no longer continue under this Part, including in cases where it is inappropriate that the claims be pursued by means of representative proceedings: s 166(1)(e). However, subs (2) provides:

“166 Court may order discontinuance of proceedings in certain circumstances (cf s33N FCA)

…

(2) It is not, for the purposes of subsection (1) (e), inappropriate for claims to be pursued by means of representative proceedings merely because the persons identified as group members in relation to the proceedings:

(a) do not include all persons on whose behalf those proceedings might have been brought, or

(b) are aggregated together for a particular purpose such as a litigation funding arrangement. ”

73. The Attorney General explained in his second reading speech that:

“The ... rule clarifies that it is not inappropriate for representative proceedings to be brought on behalf of a limited group of identified individuals. This is consistent with the view taken by the Full Court of the Federal Court in relation to the operation of the Federal part IVA in Multiplex Funds Management Ltd v Dawson Nominees Pty Ltd ...”: New South Wales Legislative Council, Parliamentary Debates (Hansard), 24 November 2010 at 28067.

74. Thus, by s 166(2), the Legislature has unambiguously precluded any submission that the default open class policy reflected in Part 10 is incompatible with a class defined by a particular funder. It has also in terms recognised litigation funding in the context of representative proceedings.

75. Although the history falsifies the submission based on the “original intent” of Part IVA, the same result may be reached by orthodox principles of construction. There is a general presumption that legislation is “always speaking”, so that expressions may extend to things not contemplated at the time of enactment. Thus a statutory reference to “mining operations” was held to encompass a novel technological procedure for bringing subterranean pockets of brine to the surface to produce salt, which procedure was not in use at the time the Income Tax Assessment Act 1936 (Cth) was enacted: Imperial Chemical Industries of Australia and New Zealand Limited v Commissioner of Taxation [1972] HCA 75; (1972) 46 ALJR 35 at 43. Of this and other examples of statutes being construed in an ambulatory fashion, Spigelman CJ wrote in Deputy Commissioner of Taxation v Clark (2003) 57 NSWLR 113; [2003] NSWCA 91 at [142]:

“Where, as here, Parliament has chosen a formulation which is of indeterminate scope and of a high level of generality, a court should interpret the provision on the basis that the intention of the original enactment was that the particular application of the provision may vary over time.”

76. More recently, in Aubrey v The Queen (2017) 260 CLR 305; [2017] HCA 18 at [29], Kiefel CJ, Keane, Nettle and Edelman JJ said that “[t]he approach in this country allows that, if things not known or understood at the time an Act came into force fall, on a fair construction, within its words, those things should be held to be included.”

77. That presumption is reinforced by (a) the remedial and beneficial nature of Part IVA and Part 10, and (b) the generality of the text of s 183. On well settled principles of construction, the broad words empowering “any order that the Court thinks appropriate or necessary to ensure that justice is done in the proceedings” are apt to sustain a broader class of orders in circumstances where, after 1993, the tort and crime of maintenance and champerty were abolished and, after 2006, the unenforceability of litigation funding agreements as a matter of public policy was confirmed no longer to exist.

Remaining submissions on construction

78. BMW Australia’s and Westpac’s remaining submissions on construction are readily dealt with. Courts have and regularly exercise power to make interlocutory orders, which may be highly intrusive upon defendants, at an early stage in litigation, and without the benefit of findings as to the ultimate facts. Asset preservation orders (or Mareva injunctions) are supported by the conferral in s 23 of the Supreme Court Act of “all jurisdiction which may be necessary for the administration of justice in New South Wales”; irrespective of the submission that they are to be regarded as an hendiadys, the words “appropriate or necessary” in s 183 are no narrower. True it is that the power is to be used for an appropriate purpose: see Cardile v LED Builders Pty Ltd (1999) 198 CLR 380; [1999] HCA 18 at [41]. However, the only question presently for determination is the existence of power.

79. The submission that orders of this kind promote litigation rather than are appropriate or necessary in existing litigation distracts from the question posed by statute. It may be that the availability of such a power has the practical effect of making representative proceedings more attractive to funders. But its exercise in all cases turns on there being an existing representative proceeding, and the court being satisfied of the purpose stated in s 183 itself.

80. The submissions based on the closeness or otherwise of a salvage award are directed to the appropriateness in a particular case of the exercise of a power (which is in issue in Westpac’s appeal) rather than to its existence. In any particular case, a common fund order may be more or less analogous to a salvage award. But the closeness or otherwise of the analogy does not bear on the existence of the power to make the order.

81. In summary, litigation funding was not lawful when Part IVA was enacted, although it was lawful when Part 10 was enacted. But if a court forms the view that an interlocutory order, including one binding group members to a common regime relating to funding, is appropriate or necessary to ensure that justice is done in the proceedings, s 183 is sufficient to supply power to make such an order. The general words in s 183, read fairly, enable orders extending to the rights of litigation funders, including an order binding group members to a regime whereby in exchange for a commitment to fund the entirety of the litigation, including any adverse costs orders the funders are presumptively entitled to a proportion of a judgment or settlement when and if it is obtained. The principle of legality and the other considerations flowing from the text and structure of Part 10, do not detract from the scope of the power in s 183 to make such an order.

82. It follows that there is no occasion to doubt the conclusion or reasoning in Money Max in any respect relevant to the existence of power. Nor is it necessary to consider whether s 23 of the Supreme Court Act would support the order sought by Mr Brewster if s 183 did not.

Constitutional submissions – the threshold issue of the application to Part 10 of the State Act

83. As noted at the outset, BMW Australia and Westpac also relied on submissions based on the separation of powers and s 51(xxxi) of the Commonwealth Constitution. The parties’ submissions in the two proceedings tended to assimilate the constitutional issues, overlooking the significant differences in each case.

84. The Supreme Court of New South Wales when exercising federal jurisdiction is ordinarily not subject to the same limitations derived from Chapter III of the Constitution as a Federal Court: hence, for example, the differences in the doctrines relating to the separation of powers at the Federal level and the restrictions associated with Kable at the State level. Further, while it would be sufficient for Westpac to demonstrate that s 33ZF itself contravened s 51(xxxi), the only Federal law applicable to the BMW representative proceeding is s 79 of the Judiciary Act, insofar as it picks up and renders applicable to the Supreme Court in the exercise of Federal jurisdiction the powers of the Civil Procedure Act.

85. Despite questions from the Bench, both Mr Brewster and Regency Funding were content to proceed on the basis that the State regime would stand or fall with the federal regime. That is not an unprecedented approach to legal argument. For example, in the context of a separation of powers submission directed to a State Legislature, a unanimous High Court in H A Bachrach Pty Ltd v The State of Queensland (1998) 195 CLR 547; [1998] HCA 54 said at [14]:

“However, Kable took as a starting point the principles applicable to courts created by the Parliament under s 71 and to the exercise by them of the judicial power of the Commonwealth under Ch III. If the law in question here had been a law of the Commonwealth and it would not have offended those principles, then an occasion for the application of Kable does not arise. The submissions for the first and third defendants and for the interveners correctly proceeded on that footing.”

86. Spigelman CJ observed that it is often helpful when deciding such questions in the context of State legislation first to ask the question whether the matter in issue would fail to comply with the stricter requirements of Chapter III in its application to Commonwealth legislation: Attorney General v 2UE Sydney Pty Ltd [2006] NSWCA 349; (2006) 236 ALR 385 at [71]. More generally, Kiefel CJ, Bell and Keane JJ have said that it is a “well-recognised aspect of judicial method” to take an argument at its highest, when doing so provides a path to a more efficient resolution of a matter: Unions NSW v New South Wales [2019] HCA 1 at [38]; (2019) 93 ALJR 166.

87. Mr Brewster and Regency Funding are ably represented, and are free, subject to some constraints, to choose the particular issues to submit to the Court’s decision. However, lest it be thought in some other case that it is accepted that the same constraints apply at both State and Federal levels, it is as well to note the following.

88. First, the separation of powers found in Chapter III of the Commonwealth Constitution does not apply to a State: Kirk v Industrial Court (NSW) (2010) 239 CLR 531; [2010] HCA 1 at [69]. Hence, as the High Court reaffirmed last year, a State tribunal which is not a court may conclusively determine questions of law: Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2018] HCA 4; (2018) 92 ALJR 248. A State law may validate or invalidate a State court’s decision: Re Macks; ex parte Saint (2000) 204 CLR 158; [2000] HCA 62; H A Bachrach Pty Ltd v The State of Queensland (1998) 195 CLR 547; [1998] HCA 54. Conventionally, that is reflected in the fact that challenges to federal regimes conferring functions upon federal courts invoke the separation of powers under Chapter III, while challenges to state legislation conferring functions upon state courts rely on the principle derived from Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51; [1996] HCA 24, the latter being narrower than the former.

89. Secondly, it may be doubted whether the elision of any distinction between State and Federal levels is consistent with authority. It is to be recalled in Kable that the Supreme Court of New South Wales was exercising federal jurisdiction when orders were sought under the Community Protection Act 1994 (NSW). The validity of that statute was elaborately challenged at first instance and in the Court of Appeal on a variety of grounds which were not pressed in the High Court: see Kable v Director of Public Prosecutions (1995) 36 NSWLR 374 at 384–388, where submissions based on the implied freedom of political communication in Australian Capital Television Pty Ltd v Commonwealth (1992) 177 CLR 106; [1992] HCA 45 and the express right to trial by jury under s 80 are summarised, but where no mention was made of the concepts founding Mr Kable’s subsequent success in the High Court, namely, any essential characteristic of the Supreme Court as a court capable of being invested with federal jurisdiction. If the same separation of powers as is applicable to Federal Courts applies to State Supreme Courts when exercising federal jurisdiction, it would seem that the innovative principle in Kable would not have been needed, especially in circumstances where the submissions extended to one that “Chapter III means that the separation of the judicial from the legislative power applies to courts created by the Constitution and by Commonwealth and State legislatures”: (1996) 189 CLR 51 at 55; [1996] HCA 24.

90. Thirdly, Mr Kirk relied on what had been said in Rizeq v Western Australia (2017) 262 CLR 1; [2017] HCA 23 as to the incapacity of a State Parliament to enact a law which governs the exercise of federal jurisdiction by a court, including a law conferring a discretionary power. The submission accords with what was said in Rizeq as to the extent of the “gap” in State legislative power in the exercise of federal jurisdiction, especially at [84], [103] and the endorsement at [93]-[98] of what had been said in R v Oregan; Ex parte Oregan (1957) 97 CLR 323; [1957] HCA 18, Parker v The Commonwealth (1965) 112 CLR 295; [1965] HCA 12 and Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559; [2001] HCA 1 about State laws conferring powers to make orders concerning the welfare and custody of children, the assessment and apportionment of compensation and remedial orders under the Corporations Law. Insofar as the submission extended to s 23 of the Supreme Court Act, it necessarily extends to the proposition that there is a gap in State legislative power to enact that provision in its application to federal jurisdiction. The correctness of that proposition will be assumed for the purposes of this judgment.

91. Fourthly, while Westpac submitted that insofar as s 33ZF might authorise a common fund order, it was invalid as contravening s 51(xxxi), BMW Australia faced an additional hurdle, because s 51(xxxi) is a limitation on federal legislative power, and it is accepted that there is no corresponding limitation upon State legislative power. In Durham Holdings Pty Ltd v New South Wales (2001) 205 CLR 399; [2001] HCA 7 at [14], Gaudron, McHugh, Gummow and Hayne JJ confirmed, with the agreement of Callinan J, that that had been the settled position since the Wheat case (1915) 20 CLR 54; [1915] HCA 17. The problem is akin to that faced by the plaintiffs whose bore licences were replaced by less valuable entitlements by State law in ICM Agriculture v Commonwealth (2009) 240 CLR 140; [2009] HCA 51, of which French CJ, Gummow and Crennan JJ said at [9]:

“The starting point is the text of s 51(xxxi), which is directed to laws made by the Parliament of the Commonwealth with respect to the acquisition of property on just terms from any State or person for any purpose in respect of which that Parliament has power to make laws. In the present case, where is there in play any relevant law of the Commonwealth?”

92. The plaintiffs in ICM Agriculture relied on earlier dealings between the Commonwealth and the State, in connection with a grant pursuant to s 96 of the Constitution. BMW Australia was driven to submit that (a) the claims of Mr Brewster and other group members against it were matters in federal jurisdiction; (b) s 183 of the Civil Procedure Act conferred a power on the Supreme Court and was only available insofar as s 79 of the Judiciary Act picked it up rendering it applicable; (c) s 79 was itself only applicable when the Constitution did not otherwise apply; and (d) accordingly, s 79 would not pick up and make applicable a State law which would, if enacted by the federal Parliament, contravene s 51(xxxi). BMW Australia also submitted that s 79 was “pro tanto invalid as contravening s 51(xxxi)” insofar as it supported a common fund order.

93. Finally, BMW Australia advanced a submission in the alternative. It was said that even if there was no constitutional limitation upon State legislative power, then as a matter of construction the State statute would still be read down to the same extent as it would be had it been enacted by the Commonwealth Parliament and applied to the Federal Court:

“[E]xcept to the extent there are material differences between Part 10 and Part IVA, one would construe Part 10 consistently with Part IVA because ... one would presume the New South Wales Parliament, except where it said otherwise, was seeking to give effect to – in the way that Victoria also has done – the federal Act. And so, if the federal Act is read down, so too for the State Act.”

94. Once again, this was not disputed by Mr Brewster or Regency Funding. But once again, the submission is, with respect, not free from difficulty. If indeed there are constitutional difficulties with the federal regime, which have not hitherto surfaced in almost three decades of its operation, why should there be imputed an intention that the plainly remedial Part 10 be subject to the same limitations? Further, s 31(1) of the Interpretation Act 1987 (NSW) is to the contrary. It provides:

“31 Acts and instruments to be construed so as not to exceed the legislative power of Parliament

An Act or instrument shall be construed as operating to the full extent of, but so as not to exceed, the legislative power of Parliament.”

95. True it is that the presumptions in the Interpretation Act may be displaced in the event that a contrary intention is demonstrated. It is unnecessary to express a view whether in some fashion s 31 has been displaced in the way that Mr Kirk contended, just as it is unnecessary to resolve any of the matters outlined above, which were not the subject of submissions.

Judicial power

96. BMW Australia’s and Westpac’s submissions on judicial power were much more concise than those on construction. The submission was essentially threefold. It was said, by reference to the distinctions drawn in Precision Data Holdings Ltd v Wills (1991) 173 CLR 167 at 189; [1991] HCA 58, that rather than resolving an existing dispute, a common fund order would create new rights and obligations. It was said that there was no legal principle or objective standard against which a court could determine whether to make a common fund order, and if so on what terms, in advance of judgment. And it was said that the making of a common fund order departed from the exercise of judicial power, because it was hypothetical (given that there was not and might never be any damages awarded or settlement entered into).

97. There is no reason to think that when Mr Brewster’s notice of motion is heard and determined in the Equity Division, it will not occur on the basis of evidence (including as to actual and anticipated costs and risks) and the ordinary incidents of the curial process. Courts are well accustomed to making orders, including orders that “create” new rights (such as the rights and obligations accompanying any interlocutory injunction) on the basis of limited and imperfect evidence.

98. For example, a court may make an order that a third party who stands behind a plaintiff must give security for the defendant’s costs, or that a third party’s assets be charged by way of security for those costs. A court may also require a third party standing behind an impecunious applicant for an interlocutory injunction to give the usual undertaking as to damages as the price of relief. The principles were recently mentioned in Targus Australia Pty Ltd v Targus Group (UK) Ltd [2019] NSWCA 9 at [13]. The rights thereby created are real and immediate, albeit interlocutory and subject to variation, yet the undertaking may never be called upon and the defendant may not ever obtain a favourable costs order in respect of which the defendant’s rights against the third party may be exercised. But those considerations do not prevent the order from being an exercise of judicial power.

99. Insofar as it is said that there is no standard against which the funder’s fee is to be assessed, courts are also well accustomed to making determinations on what is a reasonable rate of return (a recurring example is the approval given to a liquidator in entering into a funding arrangement). The jurisdiction to make an award of salvage is another example. These are exercises of judicial power, to be exercised in light of the evidence and the parties’ submissions. Mr Brewster has already served evidence bearing upon what is said to be comparable rates charged in comparable cases.

100. Insofar as it is said that any order would be hypothetical, that submission is belied by the fact that all group members would immediately be bound to the Funding Terms, subject to their right to opt out.

101. It is to be borne steadily in mind that what is sought in the notice of motion is an interlocutory regime. No rights are being finally determined or created. The strictures upon which the submissions of BMW Australia and Westpac relied, particularly those in Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334; [1999] HCA 9, were directed to final determinations on hypothetical facts. That is not the present case. If an order is made, and the representative proceedings are subsequently compromised or determined by judgment, it may be expected that the Court will review the fairness and reasonableness of the Funding Terms in light of up to date information. That is, of course, no different from any other interlocutory order, which may be revisited in the event of a material change of circumstances.

102. It may be that a judge is not satisfied, on the basis of the evidence and submissions, that it is appropriate or necessary to ensure that justice is done to make an order of the kind sought by Mr Brewster. But the (unstated) premise of the submissions based on judicial power is that the power is available as a matter of construction, and thus that there is evidence leading a court to the view that the order is appropriate or necessary to ensure that justice is done in the proceedings.

103. For those reasons, if the separation of powers mandated by Ch III of the Commonwealth Constitution applies to the order sought from the Supreme Court by Mr Brewster, then it is not contravened.

Acquisition of property on unjust terms?

104. No differently from the submission based on judicial power, the premise of these submissions was that s 183 (or s 33ZF) supported the making of a common fund order, and thus that there was a basis on which the Court could think that it was appropriate or necessary to ensure that justice is done in the proceedings. That observation of itself illustrates the difficulty confronting this submission, even assuming s 51(xxxi) applies – not lightly would one conclude that an order which, ex hypothesi, is appropriate or necessary in order to ensure that justice is done, is one that effects an acquisition of property other than on just terms.

105. Section 51(xxxi) of the Commonwealth Constitution contains what has been described as a “constitutional guarantee of just terms”, which is “to be given the liberal construction appropriate to such a constitutional provision”. That language is found in the joint judgment in Clunies-Ross v Commonwealth (1984) 155 CLR 193 at 201–202; [1984] HCA 65 and has regularly been repeated. Two aspects of the liberal construction of the guarantee are reflected in (a) the need to look to the practical operation or effect of the federal law as well as its legal form and (b) the width of the “property” whose acquisition other than upon just terms is precluded. Thus it has been said that the provision protects against the acquisition, other than on just terms, of “every species of valuable right and interest including ... choses in action”: Industrial Relations Act Case (1996) 187 CLR 416 at 559; [1996] HCA 56.

106. BMW Australia and Westpac emphasised that common fund orders took part of the fruits of existing group members’ rights to sue, in the event that they became amounts of money through judgment or compromise, and transferred them to the litigation funder. It is clear law that s 51(xxxi) is not confined to acquisitions by the Commonwealth or its agencies: see Australian Tape Manufacturers Association Ltd v Commonwealth (1993) 176 CLR 480 at 510–511; [1993] HCA 10 and the authorities there cited. The funder’s acquisition occurred compulsively, so it was said, in circumstances where group members had not contracted with the funder.

107. For completeness, it may be noted that no submissions were directed by any party or intervener to the questions of reading down that would be involved if s 51(xxxi) were infringed. On any view, s 183 (and s 33ZF) sustains a raft of procedural and substantive orders which do not offend s 51(xxxi). Such questions were considered at some length in a not dissimilar context by Dixon J in the Bank of New South Wales v Commonwealth (1948) 76 CLR 1 at 368–375; [1948] HCA 7, but on the view we take, it is unnecessary to take this any further, because the submission fails at an anterior point.

108. Whether or not s 51(xxxi) is engaged turns upon the characterisation of the law. Let it be assumed that s 79 of the Judiciary Act makes s 183 applicable in federal jurisdiction. Is s 183 a law with respect to the acquisition of property? The short answer is that it is not. Rather, it is a law which confers a general power upon a Court, which is available when the Court is of the view that its exercise is appropriate or necessary to ensure that justice is done in the proceedings.

109. Separately from the above, it is to be recalled that no group member needs ever be bound to pay any amount to Regency Funding. If the litigation proceeds to judgment, all group members will be notified of their right to opt out. If the litigation is to be settled, that may only occur with the Court’s approval (s 173), and the application for approval must not be determined until notice has been given to group members, unless the Court is satisfied that it is just to proceed without notice (s 175(4)). There is no reason to think that a group member would not be permitted to opt out of a settlement with which the member is dissatisfied. Through those mechanisms, even if an order is made such that group members become bound to the Funding Terms in the meantime, all retain the right to opt out prior to the obligation to pay a fee to Regency Funding crystallising. True it is that there may be group members who through inertia, or some failure in the notification process, fail to exercise a right to opt out. Even so, the order does not operate compulsively, as opposed to consensually. Section 51(xxxi) has no application where the acquisition is the product, not of the exercise of powers of compulsion, but of agreement: Paliflex Pty Ltd v Chief Commissioner of State Revenue (NSW) (2003) 219 CLR 325; [2003] HCA 65 at [41].

110. It follows that on each of those bases, even if it be assumed that s 51(xxxi) applied to an order made by a State court under the State Act, such an order does not amount to an acquisition of property other than on just terms.

Orders

111. The only question for determination today is one of power. As was emphasised during the hearing, there may be sound reasons not to make the order sought by Mr Brewster, or to delay making it at this stage in the proceedings. Nothing set out above in these reasons is to be understood as bearing upon, let alone dictating an answer to, the motion when it is heard and determined on its merits.

112. At present, there is some evidence as to the range of percentage returns which have been approved in the past. There are some matters that may tell against the weight to be given to such evidence. The first is that the classes of group members in the present litigation are numerically extremely large, while at the same time it may be doubted that the same individualised questions of reliance will arise in the same way as, say, investors suing on a negligently prepared or misleading prospectus. Secondly, it may be that the questions going to liability (as opposed to quantum) are relatively straightforward (comparable to, for example, those of the tobacco retailers in Fostif who could rely on the High Court’s decision in Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516; [2001] HCA 68). Third, it may well be that the judge considers that it is too soon to make such an order.

113. It is likely that a judge hearing the motion would be assisted by evidence going to the matters summarised in the annexure to Lenthall v Westpac Life Insurance Services Ltd [2018] FCA 1422, relating to the likely incidence of litigation costs, their amount and timing, and the various possibilities as to the likely return. There is also no reason to doubt that in many cases the non-exhaustive list of likely relevant considerations would include the matters identified by the Full Court of the Federal Court in Money Max Int Pty Ltd v QBE Insurance Group Ltd (2016) 245 FCR 191; [2016] FCAFC 148 at [80]:

“(a) the funding commission rate agreed by sophisticated class members and the number of such class members who agreed. That can be said to show acceptance of a particular rate by astute class members;

(b) the information provided to class members as to the funding commission. That may be important to understand the extent to which class members were informed when agreeing to the funding commission rate;

(c) a comparison of the funding commission with funding commissions in other Part IVA proceedings and/or what is available or common in the market. It will be relevant to know the broad parameters of the funding commission rates available in the market;

(d) the litigation risks of providing funding in the proceeding. This is a critical factor and the assessment must avoid the risk of hindsight bias and recognise that the funder took on those risks at the commencement of the proceeding;

(e) the quantum of adverse costs exposure that the funder assumed. This is another important factor and the assessment must recognise that the funder assumed that risk at the commencement of the proceeding;

(f) the legal costs expended and to be expended, and the security for costs provided, by the funder;

(g) the amount of any settlement or judgment. This could be of particular significance when a very large or very small settlement or judgment is obtained. The aggregate commission received will be a product of the commission rate and the amount of settlement or judgment. It will be important to ensure that the aggregate commission received is proportionate to the amount sought and recovered in the proceeding and the risks assumed by the funder;

(h) any substantial objections made by class members in relation to any litigation funding charges. This may reveal concerns not otherwise apparent to the Court; and

(i) class members’ likely recovery ‘in hand’ under any pre-existing funding arrangements.”

114. There is also much to be said for imposing a further order capping the funder’s share of the proceeds of litigation to an amount based upon a multiple of the total amount paid by the funder (being the cost of the provision of security, and the costs and disbursements paid), so as to prevent the order from yielding a benefit which is out of all proportion to the capital deployed and the risk. It is to be borne in mind that the power is to be exercised to ensure that justice is done in the proceedings, and it may be doubted that an interlocutory order such as that sought by Mr Brewster, whereby a funder becomes contingently entitled to a return which might be out of all proportion to the capital deployed and put at risk, is one which is appropriate or necessary to ensure that justice is done.

115. But those matters go to whether the power is to be exercised, and, if so, on what terms. We conclude that there is power to make the order sought. The question posed for separate determination should be answered “Yes”.

116. Neither the written nor oral submissions extended to costs. Prima facie, in accordance with UCPR r 42.1, BMW Australia should pay Mr Brewster’s costs of the notice of motion. The terms (if any) upon which Regency Funding was permitted to be heard separately in support of the same outcome are not before the Court. This may well be a case where BMW Australia should only be ordered to bear the costs of the party, and not the intervener. However, the parties and Regency Funding will be permitted to be heard by further submissions on costs by the orders the Court will make.

117. The Court orders:

1. Answer the question stated for separate determination as follows:

Does the Court have the power to make Order 1 sought in the Notice of Motion filed by the Plaintiff on 14 August 2018 (Common Fund Motion)?

Answer: “Yes”.

2. Grant leave to the parties and Regency Funding to supply to the Associate of Meagher JA within 14 days (a) agreed short minutes of order, or (b) proposed short minutes of order, and submissions not to exceed five pages in support of such further orders as each seeks, with a view to whether any further orders are made being heard and determined on the papers.

Funding Terms (456 KB, pdf)

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Amendments

04 March 2019 - Headnote - Holding 1 - "it" deleted

[25] - "compelling" changed to "compels"

[47] - "s 33Z" changed to "s 33Z(1)"

[84] - first sentence, "relating" changed to "relating to"

[84] - second sentence, "would" changed to "would be"

Decision last updated: 04 March 2019