Dyczynski v Gibson

Case [2020] FCAFC 120

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…

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Dyczynski v Gibson [2020] FCAFC 120
Case
[2020] FCAFC 120
Decision Date

CaseChat Overview and Summary

In Dyczynski v Gibson, the appeal was heard by the High Court of Australia, involving a dispute concerning the class action filed by Ms Gibson on behalf of the victims' families of the Malaysia Airlines flight MH17 disaster. The central legal issues were the binding of non-party group members to a settlement and the jurisdiction of the Federal Court to determine the claims of all group members. The Court examined whether the orders made under s 33V of the Federal Court of Australia Act 1976 (Cth) were sufficient and preferable to bind all group members to the settlement and whether orders made under s 33ZE were necessary to suspend time and bind group members. Additionally, the Court considered the application of the Civil Aviation (Carriers’ Liability) Act 1959 (Cth) and the Convention for the Unification of Certain Rules for International Carriage by Air (Montréal, 28 May 1999) and the limitations of actions and extinguishment of claim under Art 35 of the Montréal Convention.

The Court held that orders made settling a class action under s 33V should be accompanied by s 33ZB orders to bind group members to the settlement, as per Courtney v Medtel Pty Limited (No 5). The Court also found that s 33ZB orders are necessary to suspend time and bind group members to the settlement, and the Federal Court has jurisdiction to determine the claims of all group members through the operation of statute. The Court granted leave to appeal, set aside the primary judge's orders, and made orders for the settlement and binding of group members, while also addressing costs and procedural matters. The Court emphasised the importance of the statutory scheme in binding non-parties to an order made by the Court and the need to avoid confusion in the application of s 33ZB.

Orders

Orders of the court

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.

Background

Background to the litigation

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.

Evidence

Evidence Before The Court

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.

Decision

Reasons for decision

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).

Ratio Decidendi

Legal Principle Established

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.