FEDERAL COURT OF AUSTRALIA
Davaria Pty Limited v 7-Eleven Stores Pty Ltd [2020] FCAFC 183
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Details
- Case
- [2020] FCAFC 183
- Decision Date
CaseChat Overview and Summary
In the case of Davaria Pty Ltd v 7-Eleven Stores Pty Ltd, the central issue involved the power of the Federal Court to make a 'common fund order' (CFO) upon the conclusion of a proceeding. The first respondent, Davaria Pty Ltd, sought a declaration that the Court lacked such power, and the Court was tasked with determining whether the Court had the authority to make a CFO on settlement or judgment, and if such an order could be made at all. This case brought into focus the legal framework surrounding representative proceedings under the Federal Court of Australia Act 1976 (Cth).
The legal issues before the Court encompassed whether the Court possessed the statutory authority to make a CFO under sections 33V, 33Z, or 33ZF of the Act, or otherwise. Additionally, the Court had to consider whether the making of a CFO was precluded by the principles established in BMW Australia Ltd v Brewster, and whether the hypothetical nature of the question regarding a judgment CFO warranted a response. The Court also had to assess the appropriateness of answering the question concerning a settlement CFO, given that no such order had been sought in the proceedings.
In its reasoning, the Court found that the exercise of judicial discretion inherently involves choosing between lawful but different courses of action. The Court concluded that the reserved question, as framed, should not be answered because the hypothetical nature of the inquiry into a judgment CFO made it unnecessary to respond. Furthermore, the Court deemed the question about a settlement CFO premature, as no such order had been applied for. Consequently, the Court dismissed the application for declaratory relief. The Court's decision underscored the importance of the timing and context in which questions regarding CFOs are considered within the framework of representative proceedings.
The final orders of the Court were as follows: the reserved question regarding the Court's power to make a CFO upon the settlement or determination of the proceeding should not be answered. Additionally, the application for declaratory relief was dismissed, and no order was made as to costs. These orders reflect the Court's careful consideration of the legal principles and procedural nuances involved in the case.
The legal issues before the Court encompassed whether the Court possessed the statutory authority to make a CFO under sections 33V, 33Z, or 33ZF of the Act, or otherwise. Additionally, the Court had to consider whether the making of a CFO was precluded by the principles established in BMW Australia Ltd v Brewster, and whether the hypothetical nature of the question regarding a judgment CFO warranted a response. The Court also had to assess the appropriateness of answering the question concerning a settlement CFO, given that no such order had been sought in the proceedings.
In its reasoning, the Court found that the exercise of judicial discretion inherently involves choosing between lawful but different courses of action. The Court concluded that the reserved question, as framed, should not be answered because the hypothetical nature of the inquiry into a judgment CFO made it unnecessary to respond. Furthermore, the Court deemed the question about a settlement CFO premature, as no such order had been applied for. Consequently, the Court dismissed the application for declaratory relief. The Court's decision underscored the importance of the timing and context in which questions regarding CFOs are considered within the framework of representative proceedings.
The final orders of the Court were as follows: the reserved question regarding the Court's power to make a CFO upon the settlement or determination of the proceeding should not be answered. Additionally, the application for declaratory relief was dismissed, and no order was made as to costs. These orders reflect the Court's careful consideration of the legal principles and procedural nuances involved in the case.
Orders
Orders of the court
1. The question reserved under s 25(6) of the Federal Court of Australia Act 1976 (Cth) for hearing and determination by the Full Court being:
Does the Federal Court of Australia have power pursuant to sections 33V, 33Z or 33ZF of the Federal Court of Australia Act 1976 (Cth) or otherwise to make a Common Fund Order upon the settlement or determination of this proceeding?
should be the subject of the following response:
The reserved question, as framed, should not be answered.
2. The application for declaratory relief in terms of prayer 2 of the first respondent’s interlocutory application dated 7 August 2020 be dismissed.
3. There be no order as to costs.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
As a general proposition, the exercise of a judicial discretion allows a judge to make a choice between lawful, but different courses of action and the concept necessarily implies choice. Given the way s 33V is expressed, if there is no power to make a Settlement CFO, that is because, irrespective of its precise terms or any other circumstance obtaining upon a settlement, a Settlement CFO is not within that conception of a settlement which could obtain approval on the basis that it is fair, reasonable and in the interests of all group members (s 33V(1)) or within the conception of a just order that could be chosen “with respect to the distribution of any money” (s 33V(2)).Judgment CFO Experience suggests that the three most likely outcomes of a class action are: (a) global settlement before an initial trial; (b) global settlement after an initial trial (if common issues are resolved in favour of the applicant); or (c) dismissal (if common issues are resolved adversely to an applicant). Rarely do class actions proceed to the entry of monetary judgment by an aggregate award or the payment of an individual judgment sum in favour of the applicant and/or group members. As a consequence, there has been no examination in the authorities as to the practical operation of Judgment CFOs, although many Commencement CFOs were previously (but mistakenly) made contemplating operation upon a judgment being obtained by an applicant or group member. A money judgment in favour of a person whose claim is the subject of a class action properly commenced under Pt IVA can occur either during the currency of the class action or, unusually, after the representative proceeding has come to an end. More specifically, and without seeking to exhaust all possibilities:(1)an applicant, a sub-group representative appointed under s 33Q(2), or an individual group member might obtain judgment upon determination of their individual claims at an initial trial pursuant to s 33Z(1)(e) (when common issues and so-called “issues of commonality” might also be determined): see Dillon v RBS Group (Australia) Pty Ltd [2017] FCA 896; (2017) FCR 150 (at 163–7 [62]–[75] per Lee J);(2)in determining “a matter in a representative proceeding”, pursuant to s 33Z(1)(e), the Court may 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, including by the constitution of a “fund” pursuant to s 33ZA;(3)group members might obtain an award of damages in an aggregate amount without specifying amounts awarded in respect of individual group members pursuant to s 33Z(1)(f) (while making provision for the payment or distribution of the money to the group members entitled pursuant to s 33Z(2));(4)without declassing the class action, if it appeared determination of the common issues would not finally determine the claims of all group members, the Court may give directions pursuant to s 33Q(1) including, as s 33R explains, to allow an individual group member to appear for the purpose of determining the group member’s claim; this was the approach initially adopted by Gillard J in Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (No 2) [2003] VSC 212 and allows an individual claim leading to the entry of judgment to be resolved within the structure of the class action;(5)alternatively to (4), and less commonly, an applicant and/or a group member might obtain judgment upon determination of their claim in an individual proceeding following a “declassing”; this “declassing” might occur pursuant to ss 33L, 33M or 33N (each of which sections provide discretions to “declass” arising in different ways); this determination of an individual claim might occur after an initial trial of common issues, or without such a trial having taken place prior to the “declassing”.
Ratio Decidendi
Legal Principle Established
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