Dyczynski v Gibson
[2020] FCAFC 120
•7 July 2020
FEDERAL COURT OF AUSTRALIA
Dyczynski v Gibson [2020] FCAFC 120
Appeal from: Gibson v Malaysian Airline System Berhad (Class Membership) [2019] FCA 1399 File number: NSD 1501 of 2019 Judges: MURPHY, LEE AND COLVIN JJ Date of judgment: 7 July 2020 Catchwords: HIGH COURT AND FEDERAL COURT – Federal jurisdiction – jurisdiction of the Federal Court to determine the claims of all group members – meaning of “matter”
PRACTICE AND PROCEDURE – application for leave to appeal – procedural fairness – application to file cross appeal out of time – application to file notice of contention out of time
PRACTICE AND PROCEDURE –application of Civil Aviation (Carriers’ Liability) Act 1959 (Cth) – application of the Convention for the Unification of Certain Rules for International Carriage by Air (Montréal, 28 May 1999) – jurisdiction under Art 33 of Montréal Convention – consideration of limitations of actions and extinguishment of claim under Art 35 of Montréal Convention
REPRESENTATIVE PROCEEDINGS – procedure under Part IVA of the Federal Court of Australia Act 1976 (Cth) (Act) – meaning of “claims” under s 33C –requirements of s 33H – group membership and how a person may be excluded from group membership – requirement for notice under s 33X – representative applicant is only a privy in interest in relation to the common claims of group members and not their individual claims – whether orders made pursuant to s 33ZB sufficient and preferable to bind all group members – necessity of orders made under s 33V to bind group members to settlement – suspension of time under s 33ZE – supervisory role of the Court in relation to the interests of group members
COSTS – application of the overarching purpose under s 37M of the Act – consideration of the Australian Solicitors’ Conduct Rules 2015 (NSW) and the Uniform Conduct (Barristers) Rules 2015 (NSW) – failure to obtain instructions – failure to communicate with client – duty not to act contrary to a group member’s interests where no retainer – duty to avoid conflicts – indemnity costs
Legislation: Civil Aviation (Carriers’ Liability) Act 1959 (Cth) ss 9B, 9D
Evidence Act 1995 (Cth) s 136
Federal Court of Australia Act 1976 (Cth) ss 4, 33A, 33C, 33E, 33H, 33J, 33K, 33L, 33M, 33N, 33Q, 33S, 33T, 33V, 33W, 33X, 33ZB, 33ZE, 33ZF, 37M, 43, Pts IVA, VB
Judiciary Act 1903 (Cth) s 79
Trade Practices Act 1974 (Cth) ss 52, 74B, 74D, 82
Australian Solicitors’ Conduct Rules 2015 (NSW) rr 4.1.1, 4.1.3, 8.1, 9, 10, 11, 12
Legal Profession Uniform Conduct (Barristers) Rules 2015 (NSW)
Convention for the Unification of Certain Rules for International Carriage by Air (Montréal, 28 May 1999) Arts 17, 33, 35
Cases cited: Abram v Bank of New Zealand [1996] FCA 635; (1996) ATPR ¶41-507
Agtrack (NT) Pty Ltd v Hatfield [2005] HCA 38; (2005) 223 CLR 251
Allphones Retail Pty Ltd v Weimann [2009] FCAFC 135
Andelman v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2011] FCA 299; (2011) 213 FCR 345
Ashmore v Corp of Lloyd’s [1992] 2 All ER 486
Australian Competition and Consumer Commission v Giraffe World Australia Pty Ltd [1998] FCA 819; (1998) 84 FCR 512
Australian Securities and Investments Commission v Edensor Nominees Pty Limited [2001] HCA 1; (2001) 204 CLR 559
Bendigo and Adelaide Bank Ltd v Pekell Delaire Holdings Pty Ltd [2017] VSCA 51; (2017) 118 ACSR 592
BMW Australia Ltd v Brewster [2019] HCA 45; (2019) 374 ALR 627
Bray v F Hoffmann-La Roche Ltd [2003] FCAFC 153; (2003) 130 FCR 317
Bright v Femcare Ltd [2002] FCAFC 243; (2002) 195 ALR 574
Byrne v Javelin Asset Management Pty Ltd [2016] VSCA 214
Camilleri v Trust Company (Nominees) Limited [2015] FCA 1468
City of Swan v McGraw-Hill Companies, Inc [2016] FCA 343; (2016) 112 ACSR 65
Clark v National Australia Bank Limited (No 2) [2020] FCA 652
Clarke (as trustee of the Clarke Family Trust) v Great Southern Finance Pty Ltd [2014] VSC 516
Coshott v Parker [2018] FCA 596; (2018) 16 ABC(NS) 8
Courtney v Medtel Pty Limited (No 5) [2004] FCA 1406; (2004) 212 ALR 311
D’Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; (2005) 223 CLR 1
Davidson’s Settlement Trusts (1873) LR 15 Eq 383
Dillon v RBS Group (Australia) Pty Limited (No 2) [2018] FCA 395
Dillon v RBS Group (Australia) Pty Ltd [2017] FCA 896; (2017) 252 FCR 150
Essential Energy v Rose [2020] FCA 722
Ethicon Sarl v Gill [2018] FCAFC 137; (2018) 264 FCR 394
Femcare Ltd v Bright [2000] FCA 512; (2000) 100 FCR 331
Fencott v Muller [1983] HCA 12; (1983) 152 CLR 570
Giannareli v Wraith [1988] HCA 52; (1988) 165 CLR 543
Gibson v Malaysian Airline System Berhad (Class Membership) [2019] FCA 1399
Gibson v Malaysian Airline System Berhad (No 2) [2017] FCA 701
Gibson v Malaysian Airline System Berhad(Settlement Approval) [2019] FCA 1007
Gibson v Malaysian Airline System Berhad [2016] FCA 1476
Gill v Ethicon Sàrl (No 3) [2019] FCA 587; (2019) 369 ALR 175
Gulf Air Co GSC v Fattouh [2008] NSWCA 225; (2008) 230 FLR 311
Hamod v State of New South Wales [2011] NSWCA 375
In the Matter of Treasury Wine Estates Limited (No 4) [2019] FCA 804
Jenkins v NZI Securities Australia Ltd [1994] FCA 678; (1994) 52 FCR 572
Kelly v Willmott Forests Ltd (in liquidation)(No 4) [2016] FCA 323; (2016) 335 ALR 439
King v GIO Australia Holdings Limited [2000] FCA 617; (2000) 100 FCR 209
Laszczuk v Bendigo & Adelaide Bank Ltd [2020] VSCA 17
Lemoto v Able Technical Pty Ltd [2005] NSWCA 153; (2005) 63 NSWLR 300
Lewis v Ogden [1984] HCA 26; (1984) 153 CLR 682
Maguire v Makaronis [1997] HCA 23; (1997) 188 CLR 449
Melbourne City Investments Pty Ltd v Treasury Wine Estates Limited [2017] FCAFC 98; (2012) 252 FCR 1
Melbourne City Investments Pty Ltd v Treasury Wine Estates Limited (No 2) [2017] FCAFC 116
Minogue v Human Rights & Equal Opportunity Commission [1999] FCA 85; (1999) 84 FCR 438
Mobil Oil Australia Pty Ltd v State of Victoria [2002] HCA 27; (2002) 211 CLR 1
Newstart 123 Pty Ltd v Billabong International Ltd [2016] FCA 1194; (2016) 343 ALR 662
Petrusevki v Bulldogs Rugby League Ltd [2003] FCA 61
Prince Jefri Bolkiah v KPMG (a firm) [1999] 2 AC 222
Rajski v Scitec Corporation Pty Ltd (unreported, NSWCA, Kirby, Samuels and Mahoney JJ, 16 June 1986)
Ramsay v Pigram [1968] HCA 34; (1968) 118 CLR 271
Ridehalgh v Horsefield [1994] Ch 205
Saif Ali v Sydney Mitchell and Co [1980] AC 198
Silkfield Pty Ltd v Wong [1998] FCA 1488; (1998) 90 FCR 152
Steindl Nominees Pty Ltd v Laghaifar [2003] QCA 157; [2003] 2 Qd R 683
SZRUR v Minister for Immigration and Border Protection [2013] FCAFC 146; (2013) 216 FCR 445
Timbercorp Finance Pty Ltd (in liq) v Collins [2016] HCA 44; (2016) 259 CLR 212
Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28; (2015) 256 CLR 507
Trustee for The MTGI Trust v Johnston [2016] FCAFC 140
United Airlines Inc v Sercel Australia Pty Ltd [2012] NSWCA 24; (2012) 260 FLR 37
West v Rane (No 2) [2020] FCA 616
Wileypark Pty Ltd v AMP Ltd [2018] FCAFC 143; (2018) 265 FCR 1
Wong v Silkfield Pty Ltd [1999] HCA 48; (1999) 199 CLR 255
Zeims v The Prothonotary of the Supreme Court of New South Wales [1957] HCA 46; (1957) 97 CLR 279
Date of hearing: 12 May 2020 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Category: Catchwords Number of paragraphs: 415 Counsel for the Appellants: Ms S Kaur-Bains with Ms F McNeil Solicitor for the Appellants: Banton Group Counsel for the First Respondent: Mr C Barry QC with Mr J Rowe Solicitor for the First Respondent: LHD Lawyers Counsel for the Second Respondent: Mr A McInerney SC Solicitor for the Second Respondent: Clyde & Co ORDERS
NSD 1501 of 2019 BETWEEN: JERZY DYCZYNSKI
First Appellant
ANGELA RUDHART-DYCZYNSKI
Second Appellant
AND: CASSANDRA JANE GIBSON
First Respondent
MALAYSIAN AIRLINE SYSTEM BERHAD (ARBN 996 903)
Second Respondent
JUDGES:
MURPHY, LEE AND COLVIN JJ
DATE OF ORDER:
7 JULY 2020
THE COURT ORDERS THAT:
1.To the extent that the appeal concerns the orders to approve the settlement and dismiss the proceeding made by the primary judge on 26 June 2019, the time for filing the appeal be extended such that the appeal is made within time.
2.Leave be granted to the Appellants to file a further amended notice of appeal within seven days, reflecting the Remaining Group Members Ground set out at [142] and [318] of the reasons for judgment.
3.Leave be granted to the Second Respondent to file a notice of contention within seven days, reflecting ground three in the draft cross appeal.
4.Leave otherwise be refused to the Second Respondent to extend time to file and rely upon the notice of cross appeal and the notice of contention.
5.The appeal be allowed.
6.The declaration made by the primary judge on 28 August 2019 be set aside.
7.To the extent necessary, the Appellants be granted leave to withdraw the concession that the Court lacks jurisdiction to hear and decide their claim, made on behalf of the Applicant below (the First Respondent in the appeal) in submissions filed 5 July 2018.
8.Orders 1 and 2 made by the primary judge on 26 June 2019 be set aside and in lieu thereof order:
(a)Pursuant to s 33V of the Federal Court of Australia Act 1976 (Cth) (Act), the Court approves the settlement of this proceeding (Proceeding) on the terms set out in the release between the parties dated 5 June 2019 (Release) appearing at Confidential Annexure MH12 to the affidavit of Michael Hyland affirmed on 13 June 2019; and
(b)Pursuant to s 33ZB of the Act, the above s 33V order binds and affects the claims of all registered group members in the Proceeding other than Dr Jerzy Dyczynski and Ms Angela Rudhart-Dyczynski and the legal personal representatives of Mr Wilhelmus Theodorus Maria Grootscholten (deceased) and Ms Olga Ioppa (deceased), whose claims were not the subject of the Release.
9.The Proceeding be adjourned to a case management hearing approximately three months from the date of these orders.
10.The solicitors for the Appellants provide the legal personal representatives of Mr Grootscholten and Ms Ioppa with a copy of these reasons forthwith. The legal personal representatives of Mr Grootscholten and/or Ms Ioppa have liberty to apply to vary these orders within one month of receiving notice of the orders. Any such application shall be made by notifying the associate to the presiding judge of the terms of the variation to the orders that is sought, and providing a copy of such notification to the solicitors for the Second Respondent.
11.If the Appellants seek to pursue their claim against the Second Respondent then, on or before 9 October 2020, the Appellants must file points of claim in relation to their claim against the Second Respondent, identifying the relief they seek against the Second Respondent and the asserted basis for that relief.
12.If points of claim are filed by the Appellants then, with effect from 9 October 2020:
(a)Dr Dyczynski and Ms Rudhart-Dyczynski be substituted as applicants in the Proceeding;
(b)upon substitution, provided the legal personal representatives of Mr Grootscholten and Ms Ioppa do not notify the Appellants that they oppose such an order, the Proceeding no longer continue under Part IVA of the Federal Court of Australia Act 1976 (Cth);
(c)the Proceeding be listed for mediation by a Registrar on a date after 9 October 2020. LHD Lawyers is directed to attend and participate in the mediation as a party. The Registrar is authorised to give directions as to the conduct of the mediation including as to the attendance of any persons the Registrar considers necessary for an effective mediation, and the provision of appropriate documents and/or position papers. In the event the matter does not settle, at the conclusion of the mediation and if appropriate, the Registrar conduct a case management conference to consider the best means of bringing the Proceeding to hearing and of conducting the hearing, at which conference the Registrar may give further directions; and
(d)the Proceeding be allocated to a judge other than the primary judge by the National Operations Registrar, in the usual way.
13.If points of claim are not filed by the Appellants, and the legal personal representatives of Mr Grootscholten and/or Ms Ioppa do not notify the Second Respondent that they oppose an order dismissing the Proceeding, then the Proceeding be dismissed.
14.If the legal personal representatives of Mr Grootscholten and/or Ms Ioppa notify the Appellants that they oppose an order that the Proceeding no longer continue under Part IVA of the Act or that they oppose an order dismissing the Proceeding, then the Proceeding be allocated to a judge other than the primary judge by the National Operations Registrar.
15.Subject to the terms of any further order made in accordance with these orders by which LHD Lawyers is ordered to pay part or all of the Appellants’ costs, the Second Respondent pay the Appellants’ costs of and associated with the interlocutory application dated 7 August 2019 and the appeal on a party/party basis.
16.LHD Lawyers show cause as to why they should not be ordered to pay the Appellants’ costs of and associated with the interlocutory application dated 7 August 2019 and the appeal, either on a party/party or an indemnity basis. In this regard:
(a)LHD Lawyers have leave to file any further affidavits, and written submissions limited to 10 pages, upon which they wish to rely on the question of costs within 21 days;
(b)in the event that LHD Lawyers seek an order that a proportion of those costs be payable by any counsel engaged for the applicant below, then counsel have leave to file any affidavit, and written submissions limited to 10 pages, upon which they wish to rely, within a further 21 days; and
(c)the Appellants and the Second Respondent have leave to file short responsive submissions (of no more than five pages) within 10 days thereafter.
If LHD Lawyers or counsel do not seek to be heard orally in relation to costs, the issue of whether they should be ordered to pay costs and on what basis shall be determined on the papers.
17.Any costs payable pursuant to these orders if not agreed are to be assessed on a lump sum basis in an amount and by a date to be determined by a Registrar and paid pursuant to rule 4.19(3) of the Federal Court Rules directly to the lawyers who appeared pro bono for the Appellants, save for the amount of any disbursements incurred personally and allowed in the assessment which shall be paid directly to the Appellants.
18.If it is necessary to assess costs:
(a)the Appellants may file and serve an affidavit constituting a Costs Summary in accordance with the Court’s Cost Practice Note (GPN-COSTS);
(b)within 14 days of service of the Costs Summary the party liable to pay the costs under these orders or any further orders do file and serve any costs proposal in accordance with GPN-COSTS; and
(c)if either party thereafter requests a determination of an appropriate lump sum figure then the matter shall be referred to a Registrar for determination of the lump sum on the papers.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
MURPHY AND COLVIN JJ:
The appellants in this heart-breaking case, Dr Jerzy Dyczynski and Ms Angela Rudhart-Dyczynski, are husband and wife. In 2014, their only child, Fatima Dyczynski, a graduate Aerospace Engineer and budding Space Systems entrepreneur, was completing a Master’s degree in Space Systems Engineering at Delft University of Technology in the Netherlands. Dr Dyczynski booked a return flight for Fatima to travel from Amsterdam to Perth, Western Australia for the purpose of making an application for Australian permanent residency. Theirs was plainly a loving family and the appellants eagerly awaited their 25 year old daughter’s arrival. On 17 July 2014 Fatima boarded Malaysian Airlines flight MH17 (MH17) to travel to Australia. Tragically, the plane was shot down over the Ukraine killing all 283 passengers and crew.
The appeal concerns orders made in a representative proceeding or class action under Part IVA of the Federal Court of Australia Act 1976 (Cth) (the Act) brought by Ms Cassandra Gibson as representative applicant, the first respondent in this proceeding, against Malaysian Airline System Berhad (Malaysian Airlines), the second respondent in the appeal. Ms Gibson sought damages under the Convention for the Unification of Certain Rules for International Carriage by Air (Montréal, 28 May 1999) (Montréal Convention or the Convention) on her own behalf and on behalf of certain other legal representatives of passengers who died on MH17 (group or class members).
Despite the complexity of issues raised and the extent of the affidavit material filed, the appeal boils down to understanding the consequences that flow from three matters:
(a)First, the same lawyers acted for both the representative applicant in the class action and the appellants in their individual claim and those lawyers failed to comply with their professional obligations;
(b)Second, in the conduct of the class action, both parties failed to conform to a proper understanding of the limitations on the authority of the representative applicant to deal with the individual issues relating to class members’ claim; and
(c)Third, the conduct of the class action by the parties failed to reflect a proper understanding of the difference between two distinct questions: whether the appellants make a claim which falls within the class description and are therefore a class member (on the one hand) and whether that claim is ultimately found to have merit such that the appellants are entitled to relief (on the other hand).
In these reasons, it is necessary to detail the failures of the appellants’ legal representatives in the conduct of the class action because it explains much of why the proceeding went so badly off the rails and why the appeal must be allowed. The solicitors for the first respondent were directed to file any affidavit material upon which they wished to rely in the appeal and they took up that opportunity. During the course of argument counsel who appeared for the first respondent in the appeal and below were also given the opportunity to address the concerns addressed in these reasons.
We have had the benefit of reading the draft reasons of Lee J and, as will become apparent, we are in substantial agreement.
Summary
As our reasons are lengthy, we provide the following summary of the key facts and the result, but reference should be made to the detailed reasoning which sets out the basis for our decision as to why the appeal should be allowed and relief of the kind sought by the appellants granted.
In January 2016 the appellants entered into a written retainer agreement with Sydney firm, LHD Lawyers (LHD), pursuant to which LHD accepted instructions to act on behalf of the appellants in relation to Fatima’s death, including to commence a claim under the Montréal Convention in a court of competent jurisdiction. Article 33 of the Convention provides various categories of jurisdiction such that, depending on the circumstances, courts in different countries may have jurisdiction to hear and determine a claim under the Convention.
On 1 July 2016 LHD commenced a class action in this Court, with Ms Gibson as the representative applicant. LHD advised the appellants that they met the class description in the statement of claim as filed and were therefore class members and could pursue their individual claim through that vehicle.
On 9 December 2016 the primary judge struck out the class description in the statement of claim in the class action but gave leave to replead it. His Honour subsequently granted leave for an amended class description with effect from 2 May 2017, and the class action continued on foot.
LHD continued to advise the appellants that they were class members and could therefore pursue their claim through the vehicle of the class action. On 16 November 2017 Mr John Rowe, a barrister instructed by LHD, conferred with the appellants in relation to the quantum of the appellants’ individual claim in the class action. To provide such advice he must have been briefed to represent their interests in relation to their claim, and we infer that he also considered them to be class members.
On 15 February 2018 the primary judge made class closure and claim preclusion orders which required class members to register their claim by 23 March 2018 if they wished to participate in any distribution of any amount agreed in settlement. The appellants lodged registration forms as provided by the orders and thereby became registered class members.
On 24 April 2018 the primary judge made orders setting out a procedure for the determination of Preliminary Questions concerning whether, in respect of registered class members in relation to whom Malaysian Airlines raised such an issue, there was jurisdiction under Art 33 of the Convention in respect of their claim. Malaysian Airlines relied upon an affidavit sworn on 8 May 2018 by Mr Paul Freeman, a solicitor in the global law firm engaged to represent its interests, in which he deposed that the appellants’ claim did not fall within any of the categories under Art 33 of the Convention; the implication of which was that the Court did not have jurisdiction in respect of their claim.
On 20 June 2018 Mr Christopher Barry QC and Mr Rowe prepared and signed submissions on behalf of the applicant for the hearing of the Preliminary Questions, in which they formally conceded that the Court did not have jurisdiction to decide the appellants’ claim because their claim did not fall within any of the categories in Art 33. LHD filed the submissions on 5 July 2018. As the class description followed the categories in Art 33 the concession was also to the effect that the appellants were not class members. At the hearing of the application for determination of Preliminary Questions on 2 August 2018 Malaysian Airlines accepted the concession, and the Preliminary Questions were not answered by the Court. Thereafter, the lawyers for the parties to the class action proceeded on the basis that the appellants were not class members. They did nothing to give legal effect to the concession such as, for example, obtaining orders to amend the class description or a declaration that the appellants are not class members.
However, Ms Gibson as the representative applicant had no authority under Part IVA of the Act to concede the merits of the appellants’ individual claim, nor did LHD and counsel in acting on her behalf. Further, LHD and counsel made the concession without instructions from the appellants; indeed without communicating with them at all about the procedure under the Preliminary Question to finally determine their individual claim or the possibility that the concession might be made. Inexplicably, to make things worse, LHD did not even tell the appellants that it had made the concession and for the next year the appellants continued to understand that they were class members, and continued to interact with LHD on that basis.
In June 2019 Malaysian Airlines reached an in-principle settlement with the applicant and identified registered class members. LHD acted for the applicant and each of the identified class members, and the settlement provided for individual settlement amounts for the applicant and each family group of identified registered class members. The settlement was not global in nature; that is, it did not purport to bind class members other than those identified. The appellants were not included in the settlement, we assume because the parties considered that they were not class members.
The application for settlement approval under s 33V of the Act came before the primary judge on 26 June 2019. Mr Rowe appeared for the applicant. He told the Court that the settlement covered all class members, that they all had given instructions to settle, and, significantly, that all class members were “before the Court”. Counsel sought orders for approval of the settlement and dismissal of the proceeding. The primary judge made the orders sought, doing so on the express basis that all affected class members were before the Court: Gibson v Malaysian Airline System Berhad(Settlement Approval) [2019] FCA 1007 (Gibson Settlement Approval).
Mr Rowe also moved for an order that the requirement in s 33X(4) of the Act that notice of the settlement be given to group members be dispensed with, doing so on the basis that notice was unnecessary because all parties were before the Court. That was not, however, an accurate statement of the position. For the reasons we explain, we consider the appellants are class members. They were not given notice of the proposed settlement and thus not given the opportunity to object to it or to seek that they be included in it. They did not know that LHD and counsel had, without the applicant having authority and without their providing instructions, purported to concede that the Court lacked jurisdiction to hear and decide their claim. On the basis of the submission made by Mr Rowe, the primary judge made an order that the requirement in s 33X(4) was taken to have been satisfied. In consequence, the orders approving the settlement and dismissing the proceeding made on 26 June 2019 were made without notice to the appellants.
On 17 July 2019 the appellants discovered that the class action had been settled through an online media report, and they immediately made inquiries of LHD in that regard. To add insult to injury, notwithstanding that the appellants were clients of the firm and LHD had repeatedly advised them that they were class members, LHD refused to provide them with any information, telling them that the settlement was confidential. The appellants were concerned and, having lost confidence in LHD, they filed their own interlocutory application on 7 August 2019. Their application was drafted without legal assistance but it sought orders essentially directed to obtaining more information about the settlement and their being allowed to continue to pursue their claim through the class action either as representative applicants or as a sub-group.
The interlocutory application came before the primary judge on 28 August 2019 which was the first return date. The appellants represented themselves. Mr Rowe (for Ms Gibson as the applicant, instructed by LHD) and Ms C Gleeson (for Malaysian Airlines) both appeared to oppose the application. In opposing the application LHD and Mr Rowe acted against their former clients in the very matter in which they had been retained, and in doing so they must have relied on instructions they had been given by the appellants. Plainly, that was a breach of their professional obligations.
Mr Rowe provided little assistance to the primary judge and his Honour was left in the dark about what had taken place, including that:
(a)LHD had repeatedly advised the appellants that they fell within one or more of the categories under Art 33 of the Convention;
(b)LHD and Mr Rowe had acted for the appellants in their individual claim and yet were appearing against them in relation to the very matter in which they acted;
(c)LHD and counsel had conceded on behalf of the applicant that the appellants did not have a claim in Australia under the Convention when the applicant did not have authority to do so;
(d)LHD and counsel had made that concession without having any instructions from the appellants to do so; and
(e)to that day LHD had not told the appellants about the concession.
The primary judge was not provided with the full picture and his Honour proceeded to finally determine whether the appellants were class members within the class description in the amended statement of claim, doing so on the spot and without further evidence or submissions. His Honour took that course on the basis that he was exercising a jurisdiction to quell a dispute as to whether the appellants were class members and therefore bound by the settlement or not. But the appellants had not sought that question to be determined. Rather, the substance of their application was that they be appointed as representative applicants or as a sub-group in the class action, so that they could continue to pursue their claim through the proceeding. They were not before the Court as applicants in their own proceedings. Rather, they claimed to be class members who had not been notified of the application for settlement approval and dismissal of the proceeding and for that reason the class action should be allowed to continue.
The primary judge declared that the appellants are not class members within the meaning of the class description in the amended statement of claim. The declaration spoke at the time it was made, but was based upon reasoning to the effect that the appellants had never fallen within the amended class description. It was not based upon a consideration of the effect of the orders made on 26 June 2019 to approve the settlement and dismiss the proceeding. The primary judge looked behind those matters and concluded that the appellants were not class members within the amended class description because they could not demonstrate that they met any of the three subparagraphs of the description.
In the appeal, the appellants seek to set aside the declaration that they are not class members, and to set aside the order dismissing the proceeding so that they may continue with their claim against Malaysian Airlines. They do not however appeal against the primary judge’s approval of the settlement, and they do not seek to disturb the settlement between Malaysian Airlines, the applicant and identified class members.
To the extent it is necessary, the appellants also seek leave to withdraw the concession made in relation to their claim.
In the course of the appeal the respondents contended that three matters stood in the appellants’ way, namely:
(a)there is no factual basis upon which the appellants fall within the class description and therefore, irrespective of whether the claimants are registered group members, the Court has no jurisdiction to hear and determine the appellants’ claim;
(b)the concession by the applicant that the Court has no jurisdiction to hear and determine the appellants’ claim should be carried into effect; and
(c)the appellants’ claim has been extinguished because the amended class description only came into effect on 2 May 2017, after the two year limitation period under Art 35 of the Convention had run.
Significantly, the respondents did not contend that if those matters were not accepted then the primary judge’s order to approve the settlement and dismiss the class action stood in the way of the relief sought by the appellants. But even if they had made such a contention, those orders could not stand in the appellants’ way as, in our view, the appellants are class members and the orders were made without notice to them.
For the reasons we explain, none of the matters raised by the respondents in answer to the appeal are reasons why the appellants should not be allowed to proceed with their claim:
(a)in relation to the contention that there is no factual basis upon which the appellants fall within the class description, we disagree. The affidavit evidence on appeal discloses that there exist facts, circumstances and legal rights, anterior to and separately from the class action, which may ground the appellants having a right or entitlement to relief under subparagraph (iii) of the class description. The fact that they may not succeed at trial in showing that they fall within that subparagraph does not mean that they do not have a bona fide claim to do so. At this stage it is unnecessary for them to be able to establish a right or entitlement to relief;
(b)in relation to the purported concession:
(i)the appellants were not given notice of the application to determine the Preliminary Questions which would have the effect of finally determining the merits of their claim to fall within one or more of the categories under Art 33;
(ii)the representative applicant had no authority under Part IVA to make the concession; her authority was limited to the common claims in the proceeding;
(iii)the appellants did not give instructions to make the concession;
(iv)in any event, the parties took no steps to give legal effect to the concession by obtaining orders to amend the class description or to declare that the appellants are not class members; and
(v)Malaysian Airlines cannot now take steps to give legal effect to the concession, it having been apprised of the circumstances in which it was given. The appellants have demonstrated a proper basis to withdraw the concession as it was made without the applicant having authority or their having given instructions and there is no relevant prejudice to Malaysian Airlines or the applicant; and
(c)in relation to the contention that the appellants’ claim has been extinguished by operation of Art 35 of the Convention, that is an argument which Malaysian Airlines unsuccessfully ran before the primary judge at an earlier stage in the class action. It did not appeal from primary judge’s disposition of that argument and it should not be accepted as a reason why the relief sought in the appeal should not be granted. The appropriate course is for that argument to remain one that Malaysian Airlines may raise in answer to the appellants’ claim, when it is finally determined.
It is appropriate to make orders:
(a)to the extent that the appeal concerns the orders to approve the settlement and dismiss the proceeding made by the primary judge on 26 June 2019, to extend the time for filing the appeal such that the appeal is made within time;
(b)to grant leave to the appellants to advance a ground of appeal, advanced for the first time in the course of the hearing;
(c)to grant leave to Malaysian Airlines to file a notice of contention within seven days, reflecting ground three in the draft cross appeal;
(d)to refuse leave to Malaysian Airlines to extend the time to file and rely upon the notice of cross appeal and the notice of contention;
(e)to allow the appeal;
(f)to set aside the declaration of the primary judge on 28 August 2019 that Dr Dyczynski and Ms Rudhart-Dyczynski are not class members within the class description in the amended statement of claim;
(g)to grant leave to the appellants to withdraw the concession made on behalf of the applicant in submissions filed 5 July 2018;
(h)to set aside the order dismissing the proceeding so that the proceeding remains on foot;
(i)to vary the settlement approval order so that it expressly provides that it only concerns Malaysian Airlines, the applicant and the registered class members identified in the release referred to, and to also make an order under s 33ZB to clearly describe and define the persons bound by the settlement. Making those orders will leave the settlement between Malaysian Airlines, the applicant and the identified registered class members undisturbed;
(j)to allow the appellants, should they choose to do so within 3 months from the date of the order, to proceed with the class action by substituting the appellants as the applicants and then to order that the action no longer continue as a class action under Part IVA, pursuant to 33N of the Act on the basis that an order to de-class the proceeding is appropriate because the relief sought by the appellants is more appropriately obtained in an individual rather than a class action;
(k)to provide for the new proceeding to be docketed to another judge, in the usual way. We mean no criticism of the primary judge as he was left in the dark by LHD and counsel, but the appellants seek that the matter be allocated to a different judge, and in the interests of justice being seen to be done, it is appropriate to take that course; and
(l)in the exercise of the Court’s protective role in relation to class members’ interests, to provide for the legal personal representatives of two other passengers killed on MH17, in relation to whom it appears the concession also operated, to be given a copy of these reasons so that they may apply to the Court if appropriate. We do so because they may also have had their rights to make a claim conceded without authority or instructions.
In relation to costs, it is appropriate to order that Malaysian Airlines pay the appellants’ party/party costs of and associated with the appeal and the appellants’ interlocutory application. As to the unsuccessful opposition to the appeal by Ms Gibson, there is a question as to the appropriate costs order. In our view, an issue arises as to whether LHD or counsel should pay the appellants’ costs of and associated with the appeal and the appellants’ interlocutory application, and if so, whether the costs order should be made on a party/party or an indemnity basis.
As we have noted, LHD was afforded an opportunity to put on evidence in the appeal. But it was not heard on the question of costs. Therefore, the orders provide for LHD to show cause why it should not pay the appellants’ costs of and associated with the appeal and the appellants’ interlocutory application before the primary judge on either a party/party or an indemnity basis with any liability of Malaysian Airlines to meet those costs only to arise in the event that LHD fails to pay the costs. The orders also allow LHD to file evidence and short submissions in relation to costs within 14 days, and further provide that if LHD contends that counsel should contribute to such costs, then counsel should file evidence and short submissions within a further 14 days as to whether there should be any such contribution. The orders allow the appellants and Malaysian Airlines to file short responsive submissions within 14 days thereafter.
THE MONTRÉAL CONVENTION
To understand what went wrong in the conduct of the proceedings the subject of appeal, it is necessary to understand the requirements of the Montréal Convention, and how it applies in the circumstances of the present case.
Australia is a State party to the Montréal Convention. Pursuant to s 9B of the Civil Aviation (Carriers’ Liability) Act 1959 (Cth) (CACLA) subject to some qualifications which are not relevant for present purposes, the Convention has the force of law in Australia in relation to an international air flight for reward, irrespective of the nationality of the aircraft performing that carriage.
Article 17(1) of the Convention provides:
Article 17--Death and Injury of Passengers--Damage to Baggage
1.The carrier is liable for damage sustained in case of death or bodily injury of a passenger upon condition only that the accident which caused the death or injury took place on board the aircraft or in the course of any of the operations of embarking or disembarking.
Art 17(1) creates a cause of action rather than recognising a cause of action which exists independently: United Airlines Inc v Sercel Australia Pty Ltd [2012] NSWCA 24; (2012) 260 FLR 37 at 51 [47] per Allsop P (as his Honour then was).
Section 9D(2) of the CACLA provides that, subject to some exceptions which are not material, “the liability under the Convention is in substitution for any civil liability of the carrier under any other law in respect of the death of the passenger”. Unlike in some other States, in Australia civil liability for the carrier in respect of the death of a passenger is eliminated outside of the Convention.
Article 21 sets out a scheme of compensation in the case of a deceased passenger, and provides a first tier of compensation on a no fault basis and a second-tier of compensation having a full component with a reverse onus of proof on the airline.
Article 33 of the Convention provides various categories such that, depending on the circumstances, courts in different countries may have jurisdiction to hear and determine a claim under the Convention. Thus it sets out the necessary circumstances for a claim under the Convention to be brought in Australia. It provides:
Article 33 - Jurisdiction
1.An action for damages must be brought, at the option of the plaintiff, in the territory of one of the States Parties, either before the court of the domicile of the carrier or of its principal place of business, or where it has a place of business through which the contract has been made or before the court at the place of destination.
2.In respect of damage resulting from the death or injury of a passenger, an action may be brought before one of the courts mentioned in paragraph 1 of this Article, or in the territory of a State Party in which at the time of the accident the passenger has his or her principal and permanent residence and to or from which the carrier operates services for the carriage of passengers by air, either on its own aircraft, or on another carrier’s aircraft pursuant to a commercial agreement, and in which that carrier conducts its business of carriage of passengers by air from premises leased or owned by the carrier itself or by another carrier with which it has a commercial agreement.
3.For the purposes of paragraph 2,
(a)“commercial agreement” means an agreement, other than an agency agreement, made between carriers and relating to the provision of their joint services for carriage of passengers by air;
(b)“principal and permanent residence” means the one fixed and permanent abode of the passenger at the time of the accident. The nationality of the passenger shall not be the determining factor in this regard.
4.Questions of procedure shall be governed by the law of the court seized of the case.
Art 33 therefore permits actions for damages for a death or injury of a passenger to be brought before a court in one of five potential locations.
(a)First, the State where the carrier is domiciled. In the present case that is Malaysia, not Australia;
(b)Second, the State where the carrier has its principal place of business. In the present case that is Malaysia, not Australia;
(c)Third, the State where the carrier has a place of business through which the contract of carriage was made. Dr Dyczynski purchased Fatima’s ticket online. He was in Australia when he did this and he (and we infer LHD) thought that the contract of carriage was therefore through Malaysian Airlines office in Australia. But on its face the Travel Itinerary Receipt issued by Malaysian Airlines (the ticketing itinerary) indicates that the ticket was issued through the Malaysian Airlines’ office in Amsterdam;
(d)Fourth, the State which is the place of destination. Dr Dyczynski (and LHD) thought that because Fatima was travelling from Amsterdam to Perth, that Australia was the place of destination. That was not so. The decision of the New South Wales Court of Appeal in Gulf Air Co GSC v Fattouh [2008] NSWCA 225; (2008) 230 FLR 311 (Gulf Air) establishes that, for the purposes of Art 33, the destination of a return ticket is the place of return. Fatima was booked on a return ticket from Amsterdam to Perth and thus the place of destination was the Netherlands.
(e)Fifth, the State where the passenger had his or her “principal and permanent residence” at the time of the accident and to or from which the carrier operated services, either on its own aircraft or on another carrier’s aircraft pursuant to a commercial agreement, and from which the carrier conducts its business of carriage of passengers from premises leased or owned by the carrier or another carrier. The appellants put on substantial evidence in the appeal in support of the contention that Australia was Fatima’s principal and permanent residence at the time MH17 was shot down. Malaysian Airlines put on evidence to show that it was not and foreshadowed cross examination. For the reasons we explain, it is inappropriate for the Court sitting in its appellant jurisdiction to decide that contested issue of mixed fact and law. It is a matter for decision on the final determination of the appellants’ claim.
Article 35 of the Convention provides:
Article 35 - Limitation of Actions
1.The right to damages shall be extinguished if an action is not brought within a period of two years, reckoned from the date of arrival at the destination, or from the date on which the aircraft ought to have arrived, or from the date on which the carriage stopped.
2.The method of calculating that period shall be determined by the law of the court seised of the case.
Any claim for damages by the appellants was therefore required to be brought by 18 July 2016, or the right to do so would be extinguished. The proceeding by Ms Gibson on her own behalf and on behalf of the class members was filed on 1 July 2016, but the class description in the statement of claim was poorly drafted and it was struck out. Leave to amend was given, but only with effect from 2 May 2017. Malaysian Airlines contends that as at 2 May 2017 all class members’ claims had been extinguished by operation of Art 35.
THE EVIDENCE
The appellants rely upon a lengthy affidavit of Dr Dyczynski affirmed 1 April 2020, which largely goes to the procedural history of the class action, and the correspondence and dealings between the appellants and LHD. The appellants also seek to rely upon another lengthy affidavit of Dr Dyczynski affirmed 1 April 2020 and seven other affidavits going to the issue of whether Australia was Fatima’s principal and permanent place of residence at the time of the incident.
Malaysian Airlines and Ms Gibson opposed leave to adduce further evidence going to Fatima’s principal and permanent place of residence on the basis that: (a) it was available to be put before the primary judge, but was not; and (b) it was not capable of leading to a different conclusion to that reached by the primary judge. But if leave is granted, Malaysian Airlines seeks to rely on affidavit material in reply. The evidence in respect to that question is contested and cross examination was foreshadowed.
On 17 March 2020 Lee J ordered that if the legal representatives for Ms Gibson disputed aspects of the affidavits filed by the appellants they had leave to file and serve any affidavits upon which they wished to rely. Mr Michael Hyland, denoted as special counsel in the employ of LHD, filed an affidavit made 15 April 2020 which also goes to the procedural history of the class action, and the correspondence and dealings between the appellants and LHD.
Shortly prior to the commencement of the hearing the Court informed the parties that it had formed the preliminary view that, irrespective of the outcome of the appeal, it did not propose to determine and hence make findings in relation to whether Australia was Fatima’s principal and permanent place of residence at the time of the incident. As a consequence the Court proposed to grant leave for the following affidavits to be relied upon subject to any specific objections which would be ruled upon:
(a)affidavit of Dr Jerzy Dyczynski (111 paragraphs) affirmed 1 April 2020;
(b)affidavit of Michael Hyland affirmed 15 April 2020;
(c)affidavit of Miles Bryant affirmed 20 April 2020; and
(d)affidavit of Miles Bryant affirmed 22 April 2020.
It was proposed that such leave would be subject to a general limitation made pursuant to s 136 of the Evidence Act 1995 (Cth) that it does not constitute evidence as to Fatima’s principal and permanent place of residence at the time of the incident, but rather is evidence admissible only as to the other asserted facts deposed to in the affidavits, including: (a) the procedural history of the class action proceeding below; (b) the fact of the assertion made by the appellants that they have a claim against Malaysian Airlines; (c) communications made to the appellants in relation to the class action and its conduct; and (d) the fact and content of communications between the appellants and their lawyers.
The Court also expressed the preliminary view that leave would not be granted to rely upon a further nine affidavits filed by the parties which were directed to the question of Fatima’s principal and permanent place of residence at the material time. Those affidavits are:
(a)affidavit of Dr Jerzy Dyczynski (67 paragraphs) affirmed 1 April 2020;
(b)affidavit of Auguste Angela Rudhart-Dyczynski affirmed 1 April 2020;
(c)affidavit of Rosaria Giglia affirmed 1 April 2020;
(d)affidavit of John Bryan Bond affirmed 1 April 2020;
(e)affidavit of Tamryn Barker affirmed 1 April 2020;
(f)affidavit of Jane Clough affirmed 1 April 2020;
(g)affidavit of Denise Cooper affirmed 1 April 2020;
(h)affidavit of Auguste Angela Rudhart-Dyczynski affirmed 28 April 2020; and
(i)affidavit of Miles Bryant affirmed 8 May 2020.
The appellants however sought, and the respondents did not oppose, those affidavits also being admitted into evidence, subject to the limitation that they were admissible only to prove the nature of the evidence regarding Fatima’s principal and permanent place of residence that could have been adduced by the appellants. The appellants sought to rely upon that evidence only to show they had suffered practical injustice for the purposes of a procedural fairness ground of appeal.
No party sought to be heard in opposition to the Court’s preliminary view and the case proceeded upon the basis that all of the affidavits filed are admissible, subject to the limitations expressed above.
At the commencement of the appeal hearing the parties were informed that, unless any party wished to be heard on the question, the Court proposed to proceed on the basis that, through Mr Hyland’s affidavit, LHD had said all that it wished to say about the procedural history of the class action and the communications between the appellants and LHD. No party sought to be heard.
THE FACTS AND PROCEDURAL HISTORY
In large part the facts and procedural history is uncontentious and we have drawn the following from the affidavits of Dr Dyczynski, Mr Hyland and Mr Bryant.
The retainer of LHD
Mr Hyland deposed that in or around August 2014 LHD commenced to receive instructions from persons in respect to the death of people who were passengers on MH17 and their families.
On 13 August 2015 the appellants conferred in Perth with Mr Jerry Skinner, a US-based aviation law attorney working as a consultant with LHD. A few days after the meeting LHD sent the appellants a proposal for the appellants to retain LHD to act for them in a claim for damages in relation to Fatima’s untimely death, and provided a “Final Conditional Standard Costs Agreement” for the appellants to sign and return.
The appellants entered into the Conditional Standard Costs Agreement with LHD (the Retainer) on 15 January 2016. The scope of the Retainer includes “any claim for compensation pursuant to the Montréal Convention and/or any other potential claim which is now, or may in the future be, available” to the appellants. Under the Retainer LHD was required to:
Complete a claim for damages and compensation in a court or courts of competent jurisdiction where all of the culpable parties responsible for the destruction of MHA17 where they may be subject to jurisdiction.
It will be recalled that, subject to some exceptions which are not material, s 9D(2) of the CACLA eliminates civil liability for international air carriers for reward in respect of the death of a passenger outside of the Montréal Convention. Therefore, the only claim for damages that the appellants could bring in Australia was a claim under the Convention. Pursuant to the Retainer LHD was obligated to investigate the factual circumstances in relation to the appellants’ claim, act with professional skill, care and competence in deciding which of the grounds under Art 33 permitted their claim to be heard in Australia, decide whether their claim could be commenced in Australia or whether it was better that it be in a court in another country allowed under Art 33 and provide advice to the appellants in that regard.
On 14 May 2016 Mr Hyland, at the time an associate in the employ of LHD, wrote to the appellants and noted that a two year limitation period applied to claims under the Convention. He said that to “ensure that your position is protected we will be commencing proceedings by filing a Statement of Claim in the NSW Supreme Court prior to 17 July 2014”. The reference to 2014 was obviously just an error. The letter contained a list of documents that LHD required to establish the appellants’ claim in respect to Fatima’s death, including:
Itinerary for 2014 Malaysian Airlines flights and any documents associated with the booking and payment for those flights.
LHD did not request information about Fatima’s “principal and permanent residence” under the Convention.
The appellants responded on 19 May 2016 providing, amongst other things, a copy of the ticketing itinerary for Fatima’s travel on MH17 and the credit card record for Dr Dyczynski’s online purchase of the ticket. The ticketing itinerary clearly showed that Fatima’s flight on MH17 was to be from Amsterdam to Perth via Kuala Lumpur and return. We infer that Mr Hyland did not understand the significance of that in relation to the relevant category of jurisdiction under the Convention.
On 23 May 2016 Mr Hyland and Mr Skinner conducted a Skype conference call with the appellants. The conference focused on questions in relation to the appellants’ financial dependency, if any, on Fatima. Mr Hyland’s file note of that conference records the appellants’ instructions that Fatima resided in Delft in the Netherlands and intended to apply for Australian residency.
Commencement of the class action
On 28 June 2016 the appellants wrote to Mr Hyland requesting a copy of the proposed pleading of their claim against Malaysian Airlines so they could review it before it was filed. Mr Hyland did not respond.
Instead, on 1 July 2016 LHD commenced a class action with Ms Gibson as the representative applicant. Ms Gibson’s daughter had also been killed on MH17 and the originating application said that she brought the claim in a representative capacity “on behalf of the representatives of the deceased passengers”. The class description in paragraph seven of the statement of claim provided as follows:
The group members are:
a.residents of Australia who are the legal representatives of a passenger who was killed on MH17; or
b.not being resident in Australia, who are the legal representatives of a passenger who was killed on MH17 and express the desire to take the benefit of the action (Civil Aviation (Carrier’s Liability) Act 1959 (Cth), Section 9D(6)(b)).
The appellants fell within the first limb of the class description and were thus class members.
On 12 July 2016 the appellants wrote to Mr Hyland saying that they had not received the pleading despite their earlier request and they were concerned about the time left to file it. They asked for a draft as soon as possible. It appears that at that point the appellants understood that LHD would file an individual proceeding for them.
On 13 July 2016, five days before the limitation period under Art 35 expired, Mr Hyland wrote to the appellants. Amongst other things, he said:
To protect the position of you and our other MH 17 passenger family clients, we have commenced representative proceedings, a class action in the Federal Court of Australia (‘the Court’). We enclose for your perusal a copy of the Application and Statement of Claim filed in the Federal Court.
You will note that the Lead Applicant is Cassandra Gibson. Ms Gibson’s mother the late Liliane Derden had a contract of carriage with the defendant to fly Sydney-Kuala Lumpur-Amsterdam-Kuala Lumpur-Perth
Rather than filing a Statement of Claim for each individual client the most cost effective mechanism for each LHD client is for a compensatory damages claim against the defendant to be pursued as a class-action. For the matter we have briefed John Rowe Barrister and Chris Barry QC. It is likely that we will request you to confer with one or both Barristers in the future.
The Lead Applicant Cassandra Gibson will play a critical role in the class-action. Ms Gibson will be responsible for instructing us in the liability case against the defendant.
You are one of the ‘group members’ referred to in paragraphs 16 and 17 of the Statement of Claim.
That was the first time Mr Hyland told the appellants that their claim for damages in respect of Fatima’s death would be brought within a class action rather than as an individual proceeding. While there were likely to be some cost advantages for the appellants in having their claim conducted through a class action, it had the drawback that class members in a representative proceeding are not parties to the proceedings and do not direct the conduct of the proceeding: Mobil Oil Australia Pty Ltd v State of Victoria [2002] HCA 27; (2002) 211 CLR 1 (Mobil Oil) at [37]-[38], [40], and [50] (Gaudron, Gummow and Hayne JJ). The materials show that the appellants took a very close interest in the litigation and for them it was about more than money. There is nothing to show that LHD sought instructions from the appellants in this respect or explained to the appellants that they would be unable to direct the conduct of the class action.
The application to strike out the class description
On 19 September 2016 Malaysian Airlines applied to strike out the class description in paragraph seven of the statement of claim (and also other parts not presently relevant). The class description (set out above at [57]) had two defects:
(a)the class description was framed by reference to the place of residence of the legal representative of a passenger killed on MH17, whereas under Art 33 the only jurisdictional requirement by reference to residence concerned the principal and permanent residence of the passenger, not his or her legal representative; and
(b)subparagraph (b) purported to require class members to “opt in” to the class action by requiring that they “express the desire” to take the benefit of the action. Commonwealth Parliament made a deliberate choice in enacting an opt out regime and the purported requirement to opt in was invalid, but this defect in the class description was not the subject of the application.
On 9 December 2016 the primary judge struck out the class description but granted the applicant leave to replead: Gibson v Malaysian Airline System Berhad [2016] FCA 1476. The strike out application did not require the primary judge to decide whether claims made by class members in the proceeding were or were not arguable, and his Honour did not do so. His Honour said at (at [27]) that the application was “not concerned with the viability of the claims which the legal personal representatives or family members have arising from the death of a passenger per se in some court.” The issue in the strike out was the drafting of the class description and whether it included persons who could not bring claims under the Convention in Australia.
His Honour said (at [27]) that the applicant was not required to plead facts establishing the Court’s jurisdiction in respect of class members’ claims, but the class description was badly drafted and it included claims “not cognisable under the Montréal Convention by this Court” (at [9]). His Honour said (at [25]) that the class description defined the class:
…in a way which does not have the effect of ensuring that Art. 33 is engaged. The class is therefore defined in a way which means that group members need not have rights which this Court has jurisdiction to enforce.
In effect the primary judge concluded (and we would respectfully agree) that while the class description included persons with a claim for damages in Australia under the Convention, it also included persons who could not have had such a claim; for example, persons who could not claim to satisfy one or more of the categories of jurisdiction in Art 33.
Malaysian Airlines also argued that Art 33 expressed jurisdictional requirements that must form part of any claim, and that they must be able to be identified as the foundation for a claim that is brought within time. It contended that if the Court found that the statement of claim was defective in not pleading the jurisdictional requirements, that was a defect that could not be remedied by the time of the strike out application because the two year limitation period under Art 35 had expired, and a claim not brought within two years was extinguished. It submitted that the difficulty with the class description was that it did not identify any of the jurisdictional requirements as being met by class members, and the proposed amendment to the class description could only take effect from the date of amendment. It contended that class members’ claims were extinguished by that time by the operation of Art 35.
The primary judge did not at that point decide the date from which any amended class description would take effect. His Honour said (at [37]) that “[w]hilst I can see an argument that the notional claims of any new class members will be statute barred, I am not presently prepared to say that this is an inevitable result.” His Honour granted leave to the applicant to file an amended statement of claim within six weeks so that the class description met the requirements of Art 33 but said (at [9]) that the applicant would “need to demonstrate on that application for leave to amend that the class definition does not result in claims which are inevitably statute barred.”
Mr Hyland did not inform the appellants of the result of the strike out application and the appellants only learned of it through a media report on 15 December 2016. That day the appellants sent an email to Mr Hyland stating:
Please find attached the copy of the press article from 15 December 2016 in the West Australian.
We request from you the explanation of our claim and our legal situation and the full information about the next steps you are planning.
Is it a class action you have involved us still an option for us or do we need urgent a different claim?
Mr Hyland responded by email the same day stating that “[w]hile the judgment is a setback, it is not fatal to the claim.”
By letter to Mr Hyland on 16 December 2016 the appellants said that they had not been provided with a copy of the decision on the strike out and did not have “the details of the definition of class member”, but they assumed that their claim in relation to Fatima’s death could not be brought within the class action and therefore they would need to make a separate individual claim. They asked LHD to draft such a claim and provide it to them at least one week before 19 January 2017, which they understood to be the cut-off date for any amendment contemplated by the primary judge’s orders.
On 4 January 2017 Mr Hyland sent an email to the appellants. Relevantly he said:
I also take this opportunity to address your December 2016 email concerns that you and Mrs Rudhart-Dyczynski are not group members in the Federal Court of Australia Representative Proceedings. With respect, you have been unnecessarily alarmed by the article appearing in the West Australian (which was not written by a lawyer) shortly after the Court entered orders on 9 December 2016 in respect to the respondents Interlocutory Application
Fatima’s contact of carriage with MAS ended in Perth, Western Australia. Perth was therefore the “place of destination”.
Australia is a signatory to MC99 [ie the Montreal Convention]. Under Article 33(1) of MC99, Jurisdictions in which an action for damages must be brought include “before the court at the place of destination.”
MC99 is incorporated into Australian Law under the Commonwealth Civil Aviation (Carriers Liability) Act 1959 (“CACL”) As the CACL is federal legislation, the Federal Court of Australia is the appropriate jurisdiction for a damages claim to be pursued.
The respondent’s Interlocutory Application was designed to exclude from the Representative Proceedings MH 17 passenger victim’s families in the circumstances which applied to the majority of the passengers on the aircraft, namely the “place of destination” of the majority WAS NOT Australia. The only paragraph of the Applicant’s Statement of Claim struck out was paragraph 7 which provided a definition of Group Members.
(Emphasis added.)
The email concluded by stating that senior and junior counsel had drawn an amended statement of claim “which provides a far more detailed definition of Group Members”.
Thus Mr Hyland advised the appellants that they were able to bring a claim for damages in Australia under Art 33 because the place of destination of Fatima’s travel was Australia, and they were class members in the proceeding. We expect that the appellants were reassured by that advice but it was wrong. For the purposes of claims for damages under the Convention for the injury or death of a passenger, the destination on a return ticket is the destination of the travel: Gulf Air. A cursory examination by LHD of the ticketing itinerary would have revealed that the ticket was for a return journey to Amsterdam.
Pursuant to the Retainer LHD was obliged to commence the appellants’ claim to damages under the Montréal Convention “in a court or courts of competent jurisdiction where… the culpable parties responsible…may be subject to jurisdiction”. At least in relation to jurisdiction under Art 33 based on the “place of destination”, the proper place for LHD to commence, or recommend the commencement of, the appellants’ case was in the Netherlands. There is nothing in the evidence to show that LHD provided any advice to the appellants in that regard. As a result, despite instructing LHD well within time, the appellants lost their opportunity to bring a claim in the Netherlands.
On 8 April 2017 the appellants sent an email to Mr Hyland asking for an update. Mr Hyland responded by email on 10 April 2017 and informed the appellants that an application had been filed for leave to amend the statement of claim and there would be a hearing of that application on 2 May 2017. Mr Hyland reiterated his advice that the appellants were class members in the class action and said that once the procedural hurdles had been overcome:
…we can then focus on evidentiary preparation required for our individual group member claims, including the claim for you and Mrs Rudhart-Dyczynski.
The application to amend the class description
On 2 May 2017 the primary judge heard the applicant’s application for leave to amend the class description, which was opposed by Malaysian Airlines. On 23 June 2017 his Honour granted leave to file an amended statement of claim containing a revised class description: Gibson v Malaysian Airline System Berhad (No 2) [2017] FCA 701 (Gibson No 2).
The amended class description provided as follows:
The group members are personal representatives of passengers:
(i)Whose destination on the contract of carriage was Australia;
(ii)Whose contract of carriage was made in Australia where the Respondent has a place of business through which the contract was made; or
(iii)Where Australia was the passenger’s principal and permanent place of residence at the time of the accident and to or from which the Respondent operated services on its own or using another carrier’s aircraft by commercial agreement and from which the Respondent conducts its business or carriage of passengers from premises leased or owned by the Respondent (or other carrier).
Malaysian Airlines accepted that this class description satisfied the jurisdictional requirements of Art 33 of the Convention but argued that leave to amend should not be granted as: (a) no class members’ claims had been pleaded in the class description in the original statement of claim which invoked a jurisdictional basis under the Convention for a claim by class members; and (b) when the amended class description came into effect on 2 May 2017, the two year limitation period under Art 35 had already expired, with the result that the rights of class members to bring their claims for damages had been extinguished, citing the High Court decision in Agtrack (NT) Pty Ltd v Hatfield [2005] HCA 38; (2005) 223 CLR 251 (Agtrack).
His Honour noted the complexities that arose in considering whether the claim as amended meant that class members’ claims were out of time because of the defect in the original pleading, but dealt with that by making clear that the amendment took effect from 2 May 2017 (at [40]). In granting leave, the primary judge observed that the application to amend the class description was made outside the two year period prescribed by the Convention (at [9]), and said that the amendment should take effect from when it was proposed, being 2 May 2017 (at [34]). He concluded that if 2 May 2017 was the date when those class members’ claims were first raised, then those claims were out of time and it would be futile to grant leave to amend (at [35]-[36]).
His Honour however rejected the contention that all class members’ claims were inevitably statute barred. Instead, he found (at [36]) that it was likely, and certainly at least arguable, that persons who fell within the original class description which was struck out (inter alia, “residents of Australia who are the legal representatives of a passenger who was killed on MH17”) and also within the new class description (inter alia, “personal representatives of passengers…whose destination on the contract of carriage was Australia) had commenced their claims within time. In effect, his Honour granted leave to amend on the basis that Malaysian Airlines’ limitation argument could be made when class members’ claims came on for final hearing.
The opt out notice
On 5 September 2017 the primary judge made orders for the provision of an opt out notice to class members and to require that any class member who wished to opt out must do so by 28 November 2017. The opt out process was subsequently deferred and the date for filing an opt out notice extended to 9 February 2018. The opt out notice stated:
Are you are a class member?
You are a class member if you are the personal representative of a passenger or passengers who were on board flight MH17 on 17 July 2014, an aircraft operated by the Respondent, if in respect of those passenger(s):
(i) the passenger’s destination on the contract of carriage was Australia; or
(ii) the passenger’s contract of carriage was made in Australia; or
(iii)Australia was the passenger’s principal and permanent place of residence at the time of the accident on 17 July 2014.
If you are unsure whether or not you are a class member, you should contact LHD Lawyers on [telephone number] or email [Mr Hyland’s email address] or seek your own legal advice without delay.
That description reflected the class description in the amended statement of claim.
Paragraph seven of the opt out notice provided that, if the class member did not opt out, he or she would be bound by the result and entitled to share in the benefit of any order, judgment or settlement in favour of the applicant and class members. Paragraph eight informed the recipient class member that if they wished to remain as such “there is nothing you need to do at the present time”. Importantly, the notice informed class members that the applicant would bring the proceeding on the class members’ behalf “up to the point where the Court determines those questions that are common to the claims of the applicant and the class members”.
On 1 October 2017 the appellants wrote to Mr Hyland seeking a conference in mid-November. They requested copies of all relevant documents including the application, the statement of claim and the defence in order to make an informed decision as to whether to opt out.
On 9 October 2017 Mr Hyland sent an email to the appellants stating, amongst other things:
We confirm our recent advice that we have overcome the jurisdictional hurdles placed in front of us by the defendant carrier in the Federal Court of Australia Class Action. Unsurprisingly, the respondent has now expressed a keen interest in negotiating a resolution of individual claims.
The email proposed arrangements for the appellants to undergo medical examinations to assist in establishing that they had suffered recognisable psychological injuries as a result of Fatima’s death. Having regard to what later transpired Mr Hyland’s statement that the jurisdictional hurdles raised by Malaysian Airlines had been overcome was obviously wrong.
On 10 October 2017 the appellants wrote to Mr Hyland again seeking copies of the pleadings so that they could make an informed decision about whether to opt out. On 11 October 2017 Mr Hyland sent a letter to the appellants attaching a copy of the pleadings and informed the appellants that a conference had been arranged with Mr Rowe of counsel on 16 November 2017 at counsel’s chambers in Sydney. The same day Mr Hyland sent another letter to the appellants which said, amongst other things:
Prior to the expiry of the limitation period we commenced class action proceedings in the Federal Court of Australia in the matter of Cassandra Gibson v Malaysian Airline Systems Berhad.You are group members in the class action and as such your position has been protected by way of the commencement of proceedings.
(Emphasis added.)
He thus reiterated his earlier advice that the appellants were class members and entitled to recover damages in the proceeding. The letter went on to describe the heads of damages to which the appellants may be entitled as class members.
On 15 November 2017 Mr Hyland wrote to the appellants and again said:
We confirm that you are a class member in the class action and as such are entitled to claim damages in respect to the loss of the Late Fatima Dyczynski.
The letter attached an opt out notice, and recommended that the appellants should closely read it and raise any questions with Mr Hyland. The letter said:
We stridently recommend that you do not complete and forward the Opt-out notice to the Federal Court. If you were to do so, as the two year limitation period in respect to a damages claim under the Montréal Convention 1999 has expired, you would be statute barred from pursuing an alternative damages claim against Malaysian Airlines System Berhad.
The conference with counsel
On 16 November 2017 Mr Rowe of counsel and Mr Hyland conferred with the appellants in Mr Rowe’s chambers in Sydney. Mr Hyland’s file note of the meeting shows that:
(a)the appellants wished to receive advice so they could make an informed decision about whether to opt out of the class action;
(b)counsel advised that it was likely that Malaysian Airlines would admit liability and the main issue in the case would be the quantum of the damages payable;
(c)the purpose of the conference was to explore evidence to establish the quantum of the appellants’ claim. One aspect of the evidence explored was the possibility of the appellants recovering damages based on the loss of support they would have received through a Space Systems start-up company that Fatima had established, and for which Ms Rudhart-Dyczynski had worked as the Quality Manager;
(d)counsel advised that the class action could be resolved by way of a global sum or through individual settlements by each class member; and
(e)the appellants provided instructions that Fatima had wanted to apply for permanent residency in Australia. .
Following up from the conference, on 28 November 2017 Mr Hyland wrote to the appellants setting out the detailed information he requested that the appellants provide to establish the quantum of their claim.
The file note of the conference and LHD’s letter of 28 November 2017 makes it clear that Mr Hyland as a solicitor, and Mr Rowe as counsel, were both acting for the appellants in respect of their individual claim as class members.
On 17 December 2017, the appellants sent an email to LHD and Mr Rowe of counsel setting out their view that the reply filed by the applicant in the class action provided insufficient detail as to the negligence of Malaysian Airlines. The nine page letter contained detailed allegations of negligence and the appellants requested that the reply be amended to cite that material. On 19 December 2017 Mr Hyland responded by an email, stating amongst other things:
We refer to your email dated 17 December 2017 and thank you for your contribution. However, it is important that we place you on notice that in a class-action we take instructions from the lead Applicant and not group members, except in relation to the group member’s individual claims.
We further advise that we are aware of the matters raised by you in your email as are the Respondent. However, it would be inappropriate and unprofessional to include liability evidence to support a case in the pleadings filed and correspondence.
That brought home the consequence of LHD’s failure to obtain the appellants’ instructions as to whether to bring their claim within a class action or in an individual proceeding.
The appellants however continued to attempt to direct the conduct of the class action. On 20 December 2017 the appellants wrote to the primary judge, copying in Mr Hyland and counsel for Malaysian Airlines. They sought a discovery order against Malaysian Airlines in relation to alleged outages of the GPS signal over Eastern Ukraine on and before 17 July 2014. Quite correctly, the associate to the primary judge wrote to the appellants on 11 January 2018 stating that his Honour could not consider a discovery application made by a class member because the procedure under Part IVA contemplates that the representative applicant has responsibility for how the class action is run. The letter suggested that the appellants contact LHD who had carriage of the proceeding as the solicitors for the applicant on the record, or alternatively that the appellants seek independent legal advice.
The class member registration process
On 16 February 2018 the primary judge made class member registration and class closure orders which required class members to complete a registration form by 23 March 2018 if they wished to participate in a distribution of any amount agreed in settlement. The orders provided that any class member who neither opted out nor registered would remain a class member for all purposes and be bound by any judgment, including being entitled to participate in any award of damages made if the proceeding did not settle and proceeded to trial. Subject to any further order of the Court, any class member who did not register would not be entitled to receive a distribution from any settlement reached in the proceeding. The orders provided that a class member was deemed to have registered if the class member had engaged LHD in writing in connection with the proceeding.
On 20 February 2018 Mr Hyland wrote to the appellants attaching a copy of the class closure and claim preclusion orders and stating that at that stage, the appellants did not need to take any steps in response to the orders. The letter also said:
We also take this opportunity to refer to our letter of 28 November 2018 and again urge you to reconsider your decision to instruct us to not proceed to scheduling independent medical examinations on your behalf with…consultant psychiatrist.
We also urge you to provide your updated written instructions together with copies of relevant documents in respect to evidentiary issues 1-9 particularised in our letter of 28 November 2018. In the absence of your instructions and requested copies of documents, we cannot obtain evidence to support your claim for compensatory damages.
On 14 March 2018 LHD requested the appellants to complete and submit registration forms. It is not clear to us why that request was made as the appellants were deemed to have registered by reason of their having retained LHD in writing. On 15 March 2018 the appellants sent LHD completed registration forms and, as requested by LHD, indicated by a tick which of the options on the registration form applied in relation to their claim for Fatima’s death. The three options on the form were as follows:
(i)The passengers destination on the contract of carriage with Malaysian Airlines was Australia, and/or;
(ii)The passengers contract of carriage was made in Australia, where the Respondent has a place of business through which the contract was made and/or;
(iii)Australia was the passengers’ principal and permanent place of residence at the time of loss of MH17.
The appellants ticked options (i) and (ii), and not option (iii). On the evidence that is the last occasion upon which LHD took steps to obtain information or instructions from the appellants or to provide them with any information or advice as to the performance of the Retainer.
When this appeal was first filed, a referral was made in order to procure the assistance of pro bono counsel for Dr and Mrs Dyczynski. During the course of the appeal, the Court has been assisted by the written submissions prepared by Ms Kaur-Bains and Ms McNeil, and the oral submissions presented by Ms Kaur-Bains, and is grateful for their involvement and the involvement of their instructing solicitors, Banton Group, who are experienced class actions solicitors, and who have also acted on a pro bono basis. Dr and Mrs Dyczynski have suffered a tragedy beyond comprehension. It is a matter of profound regret that until the involvement of pro bono legal representation, they have been let down by those in whom they reposed their trust to look after their interests.
N RELIEF
N.1 Settlements and finality
It is then necessary to come to the not uncomplicated question of relief. One aspect is clear: the declaration made that Dr and Mrs Dyczynski were not group members within paragraph 7 of the amended statement of claim ought to be set aside. It was common ground that this declaration was directed to the time the application was made for settlement approval pursuant to s 33V. To reflect the correct position as to the status of Dr and Mrs Dyczynski at that time, a declaration should be made that they were group members at the time the s 33V application was made.
But making this declaration then directs attention to a more complicated issue: what was the effect of the s 33V order and the dismissal of the class action in relation to their claim? The precise orders made by his Honour on 26 June 2019, at the conclusion of the s 33V application, were as follows:
1.Pursuant to s 33V of the [Act], the Court approves the settlement and dismissal of these proceedings (Proceedings) on the terms set out in the Release between the parties dated 5 June 2019 (Release) appearing at Confidential Annexure MH12 to the affidavit of Michael Hyland affirmed on 13 June 2019.
2.Pursuant to ss 37AF and 37AG(1)(a) of the [Act], until further order of the Court, in order to prevent prejudice to the proper administration of justice, the affidavit of Michael Hyland affirmed on 13 June 2019, together with its annexures, be treated as confidential, not be published or made available and not be disclosed to any person or entity except as permitted by the Release or by order of the Court.
3.The requirement in s 33X(4) of the [Act] that notice of the settlement be given to group members is taken to have been satisfied.
4.All previous costs orders in the proceedings be vacated.
5.There be no order as to the costs of the proceedings.
Importantly, as can be seen, no order was made pursuant to s 33ZB. That section is in the following terms:
33ZB Effect of judgment
A judgment given in a representative proceeding:
(a)must describe or otherwise identify the group members who will be affected by it; and
(b)binds all such persons other than any person who has opted out of the proceeding under section 33J.
The term judgment is defined in s 4 of the Act as follows:
judgment means:
(a) a judgment, decree or order, whether final or interlocutory; or
(b) a sentence;
and includes a conviction.
Properly analysed, the way that the statutory scheme works to bind non-parties to an order made by the Court, is by operation of s 33ZB. Orders made settling a class action under s 33V should, in order to bind group members in relation to the individual claims, be accompanied by s 33ZB orders: see Courtney v Medtel Pty Limited (No 5) [2004] FCA 1406; (2004) 212 ALR 311 (at 321 [54] per Sackville J); Dillon v RBS Group (Australia) Pty Limited (No 2) [2018] FCA 395 (at [48]–[49] per Lee J). As I observed in Clark v National Australia Bank Limited (No 2) [2020] FCA 652 (at [24]) in relation to group member claims the subject of a s 33V settlement, the:
… non-party claims are “settled” not through the operation of common law principles upon dismissal of a proceeding, but through the operation of statute. The reason why the group members although non-parties are bound to the s 33V settlement order is by the making of a s 33ZB order, which means the settlement order binds group members who did not opt-out.
I am aware that there has been some differences in approach to the binding of group members to a settlement. In the early days of Pt IVA, it was common for respondents to seek contractual releases from group members or procure deed polls. The releases and indemnities procured sometimes purported to seek releases for claims that went beyond the scope of the claim the subject of the class action. This practice has been deprecated (see Dillon v RBS Group (Australia) Pty Limited (No 2) (at [58]–[59])) and seems to have thankfully fallen into desuetude.
But despite the operation of s 33ZB in its application to settlements binding group members being explained by Sackville J 16 years ago in Courtney v Medtel, there appears to remain some residual confusion. It is not unusual to see applicants executing deeds which require them to seek orders pursuant to s 33ZF of Act purporting to authorise applicants “nunc pro tunc to enter and give effect to” a settlement deed for and on behalf of group members, which deed includes releases and indemnities. Such orders can be seen in cases such as Laszczuk v Bendigo & Adelaide Bank Ltd [2020] VSCA 17 (at [49]–[62] per Whelan, Hargrave and Emerton JJA); Newstart 123 Pty Ltd v Billabong International Ltd [2016] FCA 1194; (2016) 343 ALR 662 (at 673–674 [55]–[62] per Beach J); Camilleri v Trust Company (Nominees) Limited [2015] FCA 1468 (per Moshinsky J) and in City of Swan v McGraw-Hill Companies, Inc [2016] FCA 343; (2016) 112 ACSR 65 (at 75 per Wigney J). An order of this type was also sought and made in Clarke (as trustee of the Clarke Family Trust) v Great Southern Finance Pty Ltd [2014] VSC 516 (per Croft J) and was later considered by the Victorian Court of Appeal in Byrne v Javelin Asset Management Pty Ltd [2016] VSCA 214 (at [55]–[58] per Hansen, Ferguson and McLeish JJA) and Bendigo and Adelaide Bank Ltd v Pekell Delaire Holdings Pty Ltd [2017] VSCA 51; (2017) 118 ACSR 592 (at 608–9 [58] per Santamaria, Ferguson and McLeish JJA).
In Byrne (at [55]–[56]), the Victorian Court of Appeal observed:
Section 3(1) of the Supreme Court Act defines ‘judgment’ to include an ‘order’. The parties contended that an order approving a settlement under s 33V is therefore a ‘judgment given in a group proceeding’ within the meaning of s 33ZB, with the result that when an order approving a settlement is made group members are bound, not only by the order, but by the settlement itself. There is obviously much to commend this result, as it is not to be supposed that the legislature contemplated that a settlement approved by the Court would not bind group members, in the same way as a judgment would have if the proceeding had not been compromised. That was also the view taken by Sackville J in Courtney v Medtel Pty Ltd [No 5]. At the same time, it is common for orders to be made declaring that a plaintiff, group members and other parties are bound by the settlement pursuant to s 33ZF, which provides for the Court to make any order it thinks ‘appropriate or necessary to ensure that justice is done in the proceeding’. Alternatively, there are many instances, of which the present case is one, where the Court has made an order authorising a plaintiff to enter into and give effect to the settlement on behalf of group members. Again, s 33ZF is an available source of power for such an order. In approving the present deed of settlement, Croft J ordered, among other things, that the plaintiffs in the group proceedings ‘have the authority’ of the group members ‘nunc pro tunc, to enter into and give effect to the deed of settlement and the transactions contemplated thereby for and on behalf of’ the group members.
In the circumstances, it is not necessary to decide whether, in the absence of an order such as those that might be made under s 33ZF, a settlement of a group proceeding is binding upon group members once approved by the Court, by operation of s 33ZB. It suffices that the present settlement was binding on group members by virtue of the orders made by the Court in this particular case.
(citations omitted)
Further, in Pekell (at 608–9 [58]), the Court noted that a s 33ZF order supplies the privity which would otherwise be absent in respect of a judgment binding group members, with the result that the group proceedings may be settled “on whatever terms the parties have agreed and the Court has approved”.
For my part, and with respect to the Victorian Court of Appeal who appeared to harbour some doubts as to the issue, I do not think there is any doubt whatsoever about the operation of s 33ZB in binding group members to a settlement. Further, the notion that it is open for applicants to settle claims of group members beyond the claim the subject of a class action is not one which can be reconciled with the foundational notion that an applicant is only entitled to deal with any other person’s rights to the extent that the applicant is representing those rights, and that it is wrong in principle for an applicant to presume to deal with the rights of third parties except to the extent that they are empowered by statute to deal with those rights: see Dillon v RBS Group (Australia) Pty Limited (No 2) (at [60]–[61]). Those rights can be adequately dealt with upon a settlement by the quelling of the claim of a group member by the making of a s 33ZB order. It is inconsistent with the nature of the role of a representative party under Pt IVA of the Act, as part of seeking to resolve a representative proceeding, to seek to settle all individual claims of group members howsoever arising against a respondent (in contradistinction to the claim the subject of the class action).
Returning more specifically to the practice of seeking s 33ZF orders, if a s 33ZB order is made, then these s 33ZF orders are at best surplusage, and should be seen as inconsistent with the statutory scheme. Indeed, they appear often to be sought as a mechanism or device whereby releases can be procured by a respondent which may go further than the claim (as the word is to be understood in its s 33C sense).
Having said this, two points of qualification should be made as to where s 33ZF orders could be appropriate. First, there may, of course, be cases, perhaps in class actions involving a relatively small number of group members who are represented, where the Court can be satisfied that individualised instructions have been given by group members to give releases which travel beyond the claims the subject of the proceeding. Questions of authority of the representative do not then arise. Secondly, there may also be cases where it may be within the scope of the authority of a representative applicant to give releases authorised by the Court to a privy of the respondent, but this complication need not be explored: see for example the discussion in Newstart 123 Pty Ltd (at 673 [57]); see also In the Matter of Treasury Wine Estates Limited (No 4) [2019] FCA 804 (per Foster J at [59]–[62]).
This preferable approach of making s 33ZB orders is consistent with what the High Court was saying in Timbercorp (at 235–236 [53]– [54]) where, as I noted in Dillonv RBS Group (Australia) Pty Limited (No 2) (at 17 [39]), the plurality explained that a group member has a privity of interest with an applicant in the claim the subject of the class action and so “must claim under or through the person of whom he is said to be a privy”: see also Ramsay v Pigram [1968] HCA 34; (1968) 118 CLR 271 (at 279 per Barwick CJ).
Before leaving this topic, I should note that although some s 33V settlement approvals do not appear to have been accompanied by a s 33ZB order (a course which, in my view, should be deprecated) or even a s 33ZF order of the type identified above, this does not mean that group members in those settled class actions would be somehow free to agitate their claims. The privy of those group members settled the case and, in most of those cases, after notice was provided to group members. Although it is not possible to generalise, it is difficult to see why a group member who has been notified of a proposed s 33V application by his privy and does nothing, would be entitled to assert that the settlement does not bind him. But that it is not this case.
Further, it is important to recall that Dr and Mrs Dyczynski were not unique. Other registered group members were the subject of a “concession” at the time of the hearing of the Preliminary Questions. As with the primary judge, in ordinary circumstances, one would assume that such admissions were made on the firm foundation after the solicitors purportedly acting on their behalf had made adequate inquiries and taken instructions from their client. Given what has been revealed in the present case, to make such an assumption here would be unsafe.
It is well established that the Court has a protective and supervisory role in relation to the interests of group members. It is a modern and far more specific mirror of Chancery’s parens patriae jurisdiction, whereby courts of equity could make a diverse range of orders for the protection of children and persons historically regarded as incapable (who could not be heard in a suit before the Court). For my part, it would be inconsistent with this protective role to ignore the non-fanciful possibility that some other registered group members might be in the same position as Dr and Mrs Dyczynski, being the Three Additional Registered Group Members.
In these circumstances, my preliminary view is that the appropriate course is for a notice to be sent to the Three Additional Registered Group Members informing them that, to the extent that they have been told that their claim has been extinguished, this may be incorrect, and that if they did wish to pursue any claim against Malaysian Airlines, then they should seek independent legal advice as to whether they are in a position to do so. If the solicitors for Dr and Mrs Dyczynski are willing to act, the notice can invite them to contact those solicitors if they wish to obtain further information. In raising this prospect, I am conscious of the fact that such a communication may be unwelcome to persons who have suffered a loss such as they have, but the Three Additional Registered Group Members did take a positive step to register to advance their claims, and it seems to me that it is right that they be provided with accurate information concerning the status of their claims.
This is not a matter that was raised during the course of written or oral submissions on the appeal. Accordingly, the appropriate course is for the parties to make any submissions they wish concerning the prospect of making orders facilitating the provision of such a notice to the Three Additional Registered Group Members, which can then be considered prior to any order being made.
N.2 Costs
Given their success on the appeal, there is no reason why Dr and Mrs Dyczynski should not have their costs paid by Malaysian Airlines, which resisted the notion that they were group members at the time of the settlement approval; indeed, it incorrectly resisted the notion that they were group members at all.
There is no reason, however, to consider that a costs order should be made personally against the representative applicant, Mrs Gibson. Having noted this, when it became apparent no relief would be sought to set aside the settlement as it applied to those bound and paid pursuant to its terms, the appropriate course for Mrs Gibson would have been to file a submitting appearance save as to costs. It is plain, however, that she was not properly advised given solicitors with an obvious conflict appeared on the record.
The legal representatives of Mrs Gibson fall into a different category.
The Court’s power to award costs, including against non-parties, derives from s 43 of the Act, which is a broad discretion limited only by the need to act judicially and by the obligations imposed by Pt VB of the Act. Recently, in West v Rane (No 2) [2020] FCA 616, I observed (at [71]–[76]):
The concession by the Solicitors that the introduction of ss 37M and 37N of the Act may have broadened the circumstances in which the Court may make a personal costs order against a lawyer is well founded.
In Kadam v MiiResorts Group 1 Pty Ltd (No 4) [2017] FCA 1139; (2017) 252 FCR 298 at 300–1 [1]–[4], I observed in relation to Part VB that:
An informed participant or observer would likely conclude that the conduct of modern litigation reflects a number of interrelated developments, several of which are relevant for present purposes. The first is the increased complexity and size of litigation. The second, connected to the first, but also partly explained by technological innovation, is the size and scale of the evidentiary material placed before courts in the process of quelling disputes. The third is the commercialisation of the law, discussed by a number of economic analysts of civil procedure who have observed that the primary modern method of remuneration of lawyers provides an incentive to maximise work and perform tasks that may genuinely be thought desirable or justifiable, but are unnecessary for the determination of the true issues in proceedings. The fourth is that the courts are an arm of government dependent upon public resources at a time of focus on efficient allocation of those resources.
The response to these and related developments has caused what might be described as a revolution in case management. Over the last 20 years, almost every Australian jurisdiction has introduced a provision by either legislation or by way of Rules of Court, setting out the ‘overriding’ or ‘overarching’ purpose of procedural rules…
Of course, this stress on active case management is not entirely new nor has it arisen spontaneously. In 1935, the Supreme Court of the United States appointed an Advisory Committee comprised of academics and lawyers (including a former Senator), to prepare a unified system of general rules for federal courts. The procedural rules that resulted, two years later, provided that the rules were to be construed and administered “to secure the just, speedy and inexpensive determination of every action and proceeding”: Federal Rules of Civil Procedure (US), r 1. More recently, in 1996, the report by Lord Woolf, Access to Justice: Final Report to the Lord Chancellor on the Civil Justice System in England and Wales, highlighted how considerations of public and private efficiency necessitated major reform, and the regulatory result of the Woolf Report (Civil Procedure Rules 1998 (UK), r 1.1) was the immediate progenitor of the various Australian case management reforms.
The developments in modern litigation which partly spurred this case management revolution have deep roots. Like turning a battleship, it is to be expected that there is some ‘time lag’ before the changes sought to be wrought by the procedural reforms become fully realised…
Part VB sought to drive behavioural change (and make the battleship turn somewhat more quickly) by, among other things, placing direct obligations on lawyers and by making compliance with the overarching purpose obligation central to determining issues as to costs. This is reflected by s 37N(2) of the Act requiring a party’s lawyer to take account of the duty imposed on the party by the overarching purpose obligation, and to the further obligation to assist the party to comply with that duty. Further, s 37N(4) provides that in exercising the discretion to award costs, the Court must take account of any failure of a lawyer to comply with these obligations. Similarly, s 37M(3) provides that all civil practice and procedure provisions must be interpreted and applied, and any power conferred must be exercised or carried out, in a way that best promotes the overarching purpose.
The position in the Federal Court is to be contrasted to that which applies in New South Wales. Section 99 of the Civil Procedure Act 2005 (NSW) deals with the liability of legal practitioners for unnecessary costs. By reason of s 99(1), the section applies:
… if it appears to the court that costs have been incurred –
(a)by the serious neglect, serious incompetence or serious misconduct of a legal practitioner, or
(b)improperly, or without reasonable cause, in circumstances for which a legal practitioner is responsible.
By the operation of this section, the circumstances in which costs are to be awarded against a lawyer by reason of the failure to comply with the cognate obligations which are imposed on the legal practitioner by state legislation, are specified. These provisions expressly incorporate the necessity for the court to be satisfied that conduct of a particular kind has occurred, being the sort of conduct referred to in the previous case law. Part VB has approached the same problem somewhat differently. In exercising a discretion to award costs, the relevant mandatory obligation is to take account of any failure to comply with the obligations of the lawyer, coupled with the requirement to facilitate the overarching purpose in exercising any power including the power to award costs.
Although it is unnecessary for me to form a definitive view for the purposes of this application, it seems to me arguable that the pre-Part VB cases dealing with awards of costs against practitioners need to be approached with some degree of caution to the extent that they are said to delimit the circumstances in which costs can be awarded against Solicitors notwithstanding the proof of a failure to comply with the statutory obligation on lawyers imposed by s 37N(2) of the Act. Put another way, it is arguable the bar has been somewhat lowered in this Court as compared with that applying in New South Wales by reason of s 99(1) of the Civil Procedure Act 2005 (NSW). The reason why this is an issue that is unnecessary to decide, is that I think the conduct of the Solicitors in the present circumstances does rise to the level of unreasonable and unjustifiable conduct within the meaning of those earlier authorities.
Again, in the circumstances of this case, my preliminary view is that the question as to the relevance of pre-Pt VB authorities does not arise because of the level of unreasonable and unjustifiable conduct evident from the history of LHD’s dealings with Dr and Mrs Dyczynski. Costs orders are not a punitive measure, but there is no reason why those that incurred legal costs on behalf of Dr and Mrs Dyczynski should not be fully compensated for the costs of doing so: see Melbourne City Investments Pty Ltd v Treasury Wine Estates Limited (No 2) [2017] FCAFC 116 (at [3]–[5] per Jagot, Yates and Murphy JJ). The real reason why Dr and Mrs Dyczynski are in the position in which they find themselves is through the failure of their legal representatives to attend properly to looking after their interests and dealing with the class action in a way consistent with the overarching purpose pursuant to s 37M of the Act.
At an early stage of the case management of the appeal, the Court had a concern about what had occurred and afforded the opportunity to Mr Hyland and LHD to put on any evidence they wished to adduce in relation to explaining their dealings with Dr and Mrs Dyczynski and the class action generally. At the commencement of the hearing of the appeal, the Court made plain that it was working on the assumption that everything that Mr Hyland and LHD wished to say about what had occurred had been advanced in the affidavit material. There was no suggestion that this was not the case. Despite this, and notwithstanding my preliminary view that an order should be made that LHD pay the costs of Dr and Mrs Dyczynski on the appeal on an indemnity basis, I consider that prior to making such an order it is appropriate to consider any further material that LHD wishes to rely upon by way of further evidence or submissions. Apart from anything else, it may be that LHD seeks an order that counsel briefed by LHD bear a proportion of the costs that would otherwise be payable by LHD pursuant to any order. Obviously enough, if such an order is sought by LHD, it would be necessary to hear from any person who may be affected by any cost order.
If such a costs order is ultimately made against the legal representatives, as matter of practical reality, this cost burden will be partly shared by Malaysian Airlines but will ensure that those acting for Dr and Mrs Dyczynski are fully compensated.
N.3 Futility
Two related points were advanced as to the futility in granting relief even in the event error is demonstrated, connected to the merits of the underlying claim of Dr and Mrs Dyczynski. These have already been dealt with above. The first was that any claim of Dr and Mrs Dyczynski is now statute barred (an assertion which rests on the arguments as to the operation of federal jurisdiction and s 33ZB rejected above); the second, is that the claim of Dr and Mrs Dyczynski being themselves within the class of persons who, on a final hearing of their claim, are able to maintain a Montréal Convention action, must fail. But, as noted above, this is not the point. The evidence they rely upon has not been examined and findings have not been made. It may be when all the relevant evidence is before the Court, the claim may fail; but Dr and Mrs Dyczynski are entitled to procedural fairness and are entitled to their day in Court if they wish to pursue their claim. If they propose to do so, one lesson to be drawn from this appeal is the sense of the suggestion made to Dr and Mrs Dyczynski that they retain legal representatives committed to acting in their interests.
N.4 Orders and Further Observations
In these circumstances, the orders I would make are that:
(1)The appeal be allowed.
(2)Leave be granted to extend time to file a notice of contention within seven days reflecting ground three in the document provided to the Court entitled “draft cross appeal”.
(3)Leave otherwise be refused to extend time to file and rely upon the notice of cross- appeal and the form of notice of contention provided to the Court.
(4)The declaration made by the primary judge on 28 August 2019 be set aside.
(5)Malaysian Airlines pay the costs of Dr and Mrs Dyczynski of the appeal on a party and party basis.
(6)The solicitors for Mrs Gibson, the applicant in proceeding NSD 1067 of 2016 (applicant), show cause as to why they should not be ordered to pay the costs of Dr and Mrs Dyczynski of the appeal on an indemnity basis and, in this regard, the solicitors have leave to file any further affidavits or written submissions (limited to five pages) they rely upon within seven days.
(7)In the event that the solicitors for the applicant seek an order that a proportion of those costs be payable by counsel, then counsel have leave to file any further affidavits or written submissions (limited to five pages) they rely upon within a further seven days.
(8)In the event that the legal representatives of the applicant do not indicate a request to be heard orally in their written submissions filed pursuant to orders 6 or 7, the issue of whether the legal representatives of the applicant should be ordered to be pay costs and on what basis be determined on the papers.
(9)Any costs payable are to be assessed on a lump sum basis and be paid pursuant to FCR 4.19(3) directly to the pro bono lawyers who appeared for Dr and Mrs Dyczynski.
(10)Within seven days the parties to the appeal are to provide any further submissions (limited to three pages) as to whether the Full Court should make any of the following orders:
(a) Set aside orders 1 and 2 made by the primary judge on 26 June 2019, and in lieu thereof order:
(i)Pursuant to s 33V of the Federal Court of Australia Act 1976 (Cth) (Act), the Court approves the settlement of these proceedings (Proceedings) on the terms set out in the Release between the parties dated 5 June 2019 (Release) appearing at Confidential Annexure MH12 to the affidavit of Michael Hyland affirmed on 13 June 2019.
(ii)Pursuant to s 33ZB of the Act, that the s 33V order made by order 1, binds and affects the claims of all group members in the Proceedings other than Dr and Mrs Dyczynski and the legal personal representatives of Wilhelmus Grootscholten and Olgal Ioppa, whose claims were not the subject of the Release.
(b)Order the Proceedings be adjourned for a period of two months from the date of these orders (Adjourned Date).
(c)Pursuant to s 33ZF of the Act, the Proceedings be ordered to be dismissed on the Adjourned Date unless, prior to the adjourned date, Dr and Mrs Dyczynski or the legal personal representatives of Wilhelmus Grootscholten and Olgal Ioppa (Remaining Group Members) file points of claim in relation to their claim against the second respondent, Malaysian Airlines, identifying the relief they seek against Malaysian Airlines and the asserted basis for that relief.
(d)In the event points of claim are filed and the Proceedings are not dismissed:
(i)an order substituting Dr and Mrs Dyczynski as applicants in the Proceedings;
(ii)following substitution, an order pursuant to s 33N that these Proceedings no longer continue under Pt IVA;
(iii)leave be granted to Dr and Mrs Dyczynski or any other Remaining Group Member to approach the Associate to the primary judge for the listing of a case management hearing.
(e)Any Remaining Group Members (other than Dr and Mrs Dyczynski) have leave to apply, by approaching the Associate to Murphy J, to vary orders (c) and (d), with such liberty to be exercised prior to the Adjourned Date.
Since drafting and circulating the above reasons, I have had the opportunity of reading the separate reasons in draft of Murphy and Colvin JJ. As their Honours note, we are in substantial agreement and the orders of the Court will be as their Honours have indicated. I agree that an order facilitating mediation and a lump sum assessment should be made and, as I apprehend it, the only differences from the orders I proposed are: (a) I do not consider it is necessary for leave to be granted to withdraw the “concession” purportedly made on behalf of Dr and Mrs Dyczynski, as it was made without authority and would be plainly inadmissible against them as an admission; (b) I would not make any order which has the effect of requiring the proceeding to be docketed to a judge other than the primary judge; and (c) I would give the parties leave to address further in writing on consequential relief.
The only additional point I would make is that reference has been made in the joint reasons to the “conclusive” nature of the decision of the New South Wales Court of Appeal in Gulf Air Co. As I read it, that case is relevantly authority for the propositions that: (a) the place of destination is as identified on the ticket, unless rebutted by material contradicting the ticket as evidence of the concluded contract and its terms (at 332–3 [93]); and (b) the mutual contractual intention is evidenced in the first instance by, and generally governed by, the ticket issued to the passenger (at 325 [59]). It would seem to me that this does not foreclose evidence being adduced (if it was available and admissible in accordance with usual principles) in an attempt to rebut the prima facie position as to the content of the agreement between the carrier and passenger as indicated on the ticket.
I certify that the preceding one hundred and fifty-four (154) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lee. Associate:
Dated: 7 July 2020
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