PRACTICE AND PROCEDURE – application to permanently stay proceedings under s 23 of the Federal Court of Australia Act 1976 (Cth) or r 1.23 of the Federal Court Rules 2011 (Cth) – where the representative applicant is self-represented – where the representative applicant is also the executive director and sole shareholder of the litigation funder – where the representative applicant is a legal practitioner but is not acting as a solicitor in the proceeding – where the representative applicant has financial interests in the outcome of the proceeding separate to his claims as a representative applicant – whether a permanent stay is required to prevent the administration of justice from being brought into disrepute – Held: application granted.
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
Continue reading Hamilton v Meta Platforms, Inc
Sign in free to access the full text
Details
AGLC
Hamilton v Meta Platforms, Inc [2023] FCA 1148
Case
[2023] FCA 1148
Decision Date
CaseChat Overview and Summary
In the Federal Court of Australia, the case of Hamilton v Meta Platforms, Inc centred on the applicant, Mr Hamilton, who sought to represent a class in a proceeding against the respondents, Meta Platforms, Inc, and Google. Mr Hamilton, who resides in Israel, claims damages arising from alleged contravening conduct of the respondents which, according to him, caused a substantial reduction in advertising opportunities for cryptocurrency-related goods and services. The respondents argue that Mr Hamilton's numerous roles, including being the representative applicant, executive director, sole shareholder of the litigation funder, and a legal practitioner, create pervasive conflicts of interest. They contend that these conflicts are so severe that they necessitate a permanent stay of the proceeding to prevent the administration of justice from being brought into disrepute.
The court was required to decide whether the pervasive conflicts of interest arising from Mr Hamilton's various roles warranted a permanent stay of the proceeding. Additionally, the court had to consider whether these conflicts were so significant that they rendered Mr Hamilton incapable of adequately protecting the interests of the group members. The respondents further sought a de-classing order under section 33N of the relevant Act on the basis that Mr Hamilton could not adequately protect the group members' interests due to these conflicts.
The court concluded that permitting the proceeding to continue in its current form would bring the administration of justice into disrepute. The court found that the conflicts inherent in Mr Hamilton's multi-faceted interests were incapable of being appropriately managed, including by the means he had proposed. Consequently, the court granted the application for a permanent stay of the proceeding. The court did not find it necessary to consider the alternative application for a de-classing order. The final orders included a permanent stay of the proceeding, with provisions for the applicant to pay the respondents' costs and to notify group members and token holders of the court's decision.
Orders
Orders of the court
1. This proceeding (NSD899/2020) is permanently stayed.
2. For the avoidance of doubt, the permanent stay of this proceeding does not prevent the claims the subject of this proceeding from being brought by the applicant or group members in another proceeding.
3. The applicant pay the respondents’ costs of the interlocutory applications as agreed, or failing agreement as assessed by a Registrar of the Court on a lump sum basis.
4. The parties be granted leave to apply to vary order 3 by filing and serving submissions (of no more than 3 pages) in support of any variation they contend for within 5 business days of these orders.
5. In the event that a party applies to vary order 3 by filing and serving submissions under order 4:
(a) The opposing party or parties is/are to file and serve any submissions in response (of no more than 3 pages) within 5 business days of service on them of the submissions under order 4;
(b) The party or parties served with submissions under paragraph (a) is/are to file and serve any submissions in reply (of no more than 2 pages) within 3 business days of service on them of the first mentioned submissions.
6. The submissions referred to in Orders 4 and 5 should be easily legible using a font size of at least 12 points and one and a half line spacing throughout, including in any footnotes and annexures.
7. The applicant is to give notice to Group Members and SUFB Token Holders of the orders which I have made in determining the present applications and provide a link to the reasons for judgment when published on the Court’s website.
8. The form in, and means by, which the notice in Order 7 is to be given are to be agreed by the parties and a proposed short minute of order in relation thereto is to be provided to my Associate within 5 business days of these orders, with any areas of disagreement to be indicated in mark up.
.Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Mr Hamilton relies on two affidavits. First, his own affidavit sworn 20 November 2022 and an exhibit thereto. Secondly, an affidavit of David Hans Lange sworn 20 November 2022 and the annexure thereto. Mr Hamilton also relies on an amended conflicts of interest policy dated 3 February 2023 for JPB Liberty and tendered on 3 February 2023. Mr Hamilton’s evidence was admitted without objection. Mr Hamilton’s evidence is an amalgam of evidence and submission and I will treat it as such. In the course of the hearing, Mr Hamilton also read in the whole of tab 20 of the court book, being the Applicant’s Concise Court Book for service application dated 14 July 2021, which included his affidavits sworn on 27 August 2020, 6 September 2020, 10 December 2020, 1 March 2021 and 12 July 2021. Google objected to various portions of the material seeking limitations for those portions to be treated as submission. Mr Hamilton agreed to those limitations and I will treat those portions as submissions. FACTUAL BACKGROUNDOverview of Mr Hamilton’s involvement and interest in the proceeding At the heart of this application is the respondents’ attack on Mr Hamilton’s pervasive conflicts arising from his numerous duties and interests. To elucidate the nature and extent of the conflicts it is useful to begin by enumerating the various roles Mr Hamilton has in, or in connection with, the proceeding. First, Mr Hamilton is the representative applicant, he is referred to as the Representative in the LFA. He resides in Israel. It is convenient to extract the broad description of Mr Hamilton’s claims from Hamilton (Service Out) at [22]:22Mr Hamilton’s overarching contention is that the Ad Ban Provisions caused a substantial reduction in advertising opportunities for cryptocurrency-related goods and services which resulted in a substantial reduction in demand for those goods and services. Mr Hamilton contends that the operation of the Ad Ban Provisions has resulted in the loss of a “substantial economic benefit” from the cryptocurrency industry, which has in turn caused group members to suffer loss or damage, of which his personal claim is an example. Broadly, and without being exhaustive, Mr Hamilton claims he suffered loss occasioned by: (1) a reduction in the profitability of cryptocurrency mining, which was the primary business of Green Freedom Limited (Israel), a company wholly owned by Mr Hamilton; (2) diminution in the value of his investment in STEEM, a cryptocurrency, which Mr Hamilton contends experienced severe decline following the introduction of the Ad Ban Provisions; (3) loss of the business opportunity to operate a successful cryptocurrency consulting practice specialising in investment in the cryptocurrency industry which Mr Hamilton says he established with his wife under the name, Grant Hamilton Crypto Advisory, before introduction of the Ad Ban Provisions; and (4) a reduction in the value of his unsold cryptocurrency holdings. Mr Hamilton frames his claim as a claim for damages, including aggravated damages and exemplary damages, under s 82(1) of the CCA and s 22 of the Act respectively, declaratory relief under s 163A of the CCA and/or s 21 of the Act, a permanent injunction under s 80 of the CCA requiring the respondents to cease the alleged contravening conduct and other relief under s 87(1) of the CCA including a public apology and the provision of certain services to group members at no cost, and without restriction, for a period of time equal to the period of the alleged contravening conduct. An asserted source of loss included in the [FASOC] is a claim for “loss of amenity for users of blockchain based social media platforms”. Mr Hamilton submits that his cryptocurrency holdings were relatively small (under A$10,000) compared to other Funded Class Member who had holdings in the US$1 to 10 million range in the early 2018 period for which the majority of market based causation damages are claimed. This submission is advanced by Mr Hamilton in the context of seeking to justify his various interest in any litigation proceeding derived from the funding arrangements in place.
Evidence
Evidence Before The Court
Having reached this conclusion, it is not necessary to consider the respondents’ applications in the alternative for a de‑classing order pursuant to s 33N of the Act. EVIDENCE In support of its application, Meta relies on two affidavits of Mark Anthony Wilks, solicitor for Meta, affirmed on 8 November 2022 and 6 December 2022. Meta also tendered two exhibits to those affidavits. Google relies on an affidavit of Leon Chung, solicitor for Google, affirmed on 12 October 2022, and one exhibit thereto. Google and Meta’s evidence was admitted without objection. Evidence in one application is evidence in the other. Mr Hamilton relies on two affidavits. First, his own affidavit sworn 20 November 2022 and an exhibit thereto. Secondly, an affidavit of David Hans Lange sworn 20 November 2022 and the annexure thereto. Mr Hamilton also relies on an amended conflicts of interest policy dated 3 February 2023 for JPB Liberty and tendered on 3 February 2023. Mr Hamilton’s evidence was admitted without objection. Mr Hamilton’s evidence is an amalgam of evidence and submission and I will treat it as such. In the course of the hearing, Mr Hamilton also read in the whole of tab 20 of the court book, being the Applicant’s Concise Court Book for service application dated 14 July 2021, which included his affidavits sworn on 27 August 2020, 6 September 2020, 10 December 2020, 1 March 2021 and 12 July 2021. Google objected to various portions of the material seeking limitations for those portions to be treated as submission. Mr Hamilton agreed to those limitations and I will treat those portions as submissions. FACTUAL BACKGROUNDOverview of Mr Hamilton’s involvement and interest in the proceeding At the heart of this application is the respondents’ attack on Mr Hamilton’s pervasive conflicts arising from his numerous duties and interests. To elucidate the nature and extent of the conflicts it is useful to begin by enumerating the various roles Mr Hamilton has in, or in connection with, the proceeding. First, Mr Hamilton is the representative applicant, he is referred to as the Representative in the LFA. He resides in Israel. It is convenient to extract the broad description of Mr Hamilton’s claims from Hamilton (Service Out) at [22]:22Mr Hamilton’s overarching contention is that the Ad Ban Provisions caused a substantial reduction in advertising opportunities for cryptocurrency-related goods and services which resulted in a substantial reduction in demand for those goods and services. Mr Hamilton contends that the operation of the Ad Ban Provisions has resulted in the loss of a “substantial economic benefit” from the cryptocurrency industry, which has in turn caused group members to suffer loss or damage, of which his personal claim is an example. Broadly, and without being exhaustive, Mr Hamilton claims he suffered loss occasioned by: (1) a reduction in the profitability of cryptocurrency mining, which was the primary business of Green Freedom Limited (Israel), a company wholly owned by Mr Hamilton; (2) diminution in the value of his investment in STEEM, a cryptocurrency, which Mr Hamilton contends experienced severe decline following the introduction of the Ad Ban Provisions; (3) loss of the business opportunity to operate a successful cryptocurrency consulting practice specialising in investment in the cryptocurrency industry which Mr Hamilton says he established with his wife under the name, Grant Hamilton Crypto Advisory, before introduction of the Ad Ban Provisions; and (4) a reduction in the value of his unsold cryptocurrency holdings.
Decision
Reasons for decision
As an alternative form of relief, the respondents seek a de-classing order under s 33N of the Act on the basis that Mr Hamilton is not capable of adequately protecting Group Members’ interests. The respondents submit that there are two reasons why Mr Hamilton cannot adequately protect Group Members’ interests. First, he is prevented from doing so because of his pervasive conflicts of interest. Secondly, because he is not equipped to do so having regard to the way in which the claims advanced in this proceeding are framed, coupled with the complexities inherent in representative proceedings generally, and the specific complexity of the present proceeding. Mr Hamilton resists the de-classing order, contending that s 33N does not provide a general power to de-class due to alleged conflicts of interests arising from litigation funding arrangements. He further submits that it would not otherwise be in the interests of justice to de-class the proceeding. CONCLUSION IN SUMMARY FORM For the reasons which follow, I am satisfied that this proceeding should be permanently stayed for the first reason advanced by the respondents. To permit the proceeding to continue in the current form would bring the administration of justice into disrepute. Although Mr Hamilton sought to advance a number of ways in which the proceeding may be managed so as to mitigate the issues identified by the respondents, I am not satisfied that the conflicts inherent in Mr Hamilton’s multi-faceted interests in the proceeding are capable of being appropriately managed, including by the means he has put forward in his submissions on this application. Having reached this conclusion, it is not necessary to consider the respondents’ applications in the alternative for a de‑classing order pursuant to s 33N of the Act. EVIDENCE In support of its application, Meta relies on two affidavits of Mark Anthony Wilks, solicitor for Meta, affirmed on 8 November 2022 and 6 December 2022. Meta also tendered two exhibits to those affidavits. Google relies on an affidavit of Leon Chung, solicitor for Google, affirmed on 12 October 2022, and one exhibit thereto. Google and Meta’s evidence was admitted without objection. Evidence in one application is evidence in the other. Mr Hamilton relies on two affidavits. First, his own affidavit sworn 20 November 2022 and an exhibit thereto. Secondly, an affidavit of David Hans Lange sworn 20 November 2022 and the annexure thereto. Mr Hamilton also relies on an amended conflicts of interest policy dated 3 February 2023 for JPB Liberty and tendered on 3 February 2023. Mr Hamilton’s evidence was admitted without objection. Mr Hamilton’s evidence is an amalgam of evidence and submission and I will treat it as such. In the course of the hearing, Mr Hamilton also read in the whole of tab 20 of the court book, being the Applicant’s Concise Court Book for service application dated 14 July 2021, which included his affidavits sworn on 27 August 2020, 6 September 2020, 10 December 2020, 1 March 2021 and 12 July 2021. Google objected to various portions of the material seeking limitations for those portions to be treated as submission. Mr Hamilton agreed to those limitations and I will treat those portions as submissions. FACTUAL BACKGROUNDOverview of Mr Hamilton’s involvement and interest in the proceeding
Ratio Decidendi
Legal Principle Established
The CMP includes the following information:2.1JPB Liberty provides litigation management services and possibly financial services for funded litigation schemes involving class actions.2.2In providing financial services, JPB Liberty is exempt from the requirements that would otherwise apply under Chapter 7 (Financial Services and Markets) of the Corporations Act 2001 (Cth) (“Corporations Act”) provided JPB Liberty complies with the Regulations and maintains adequate practices for managing any conflicts of interest that may arise in relation to any funded litigation.2.3JPB Liberty has this conflicts management policy which stipulates the principles, practice and procedures to be followed by JPB Liberty in relation to identifying and managing any conflicts of interest that may arise in relation to, and as a result of, JPB Liberty’s funding of litigation (“Policy”). This policy is available by request to compliance@jpbliberty.com. The relationship between JPB Liberty and Mr Hamilton is described as follows (cl 2.6 CMP)2.6The legally experienced self-represented applicant currently bringing the Crypto Class Action proceedings is Andrew Hamilton who is also the sole shareholder of JPB Liberty Pty Ltd. Andrew Hamilton is bringing proceedings on the basis that that the Court grants him an order under s 82 (4) of the Competition and Consumer Act 2010 (Cth) that he not be liable for any legal costs of the respondents in the proceedings. If this order is not granted, proceedings will be discontinued and may be refiled later on another basis. Clause 3 is a lengthy clause which is headed “Conflicts of Interest”. The following potential conflicts are identified: (1)A divergence of interest between JPB Liberty, individual Group Members and “the lawyers” in relation to the funded litigation: cl 3.1, CMP.(2)A divergence of interest between Mr Hamilton as representative applicant, JPB Liberty and individual Group Members: cl 3.1, CMP.(3)A divergence of interest between Token Holders and other stakeholders on the applicant’s side of the record: cl 3.2, CMP. A basic illustration of the potential conflicts of interests is provided in cl 3.3, CMP:3.3ASIC considers that a divergence of interests may arise because:3.3.1. JPB Liberty wishes to keep the legal and administrative costs of the funded litigation low to maximise its return;3.3.2.the lawyers have an interest in maximising their fees; and3.3.3. you have an interest in minimising the returns of both JPB Liberty and the lawyers. A representation qualifying the likelihood of such conflicts manifesting is made in cl 3.4, CMP: 3.4In many instances your interests, our interests, the applicant’s interests and those of the Token Holders will be aligned. This is because the applicant, JPB Liberty and the Token Holders do not receive any payment unless you recover damages or a settlement and our & the Token Holders’ return is normally a percentage of any Litigation Proceeds. It is not in our interests for your claim to be resolved for an amount that does not reflect a reasonable settlement or to be pursued in a way which does not maximise the chances of successfully resolving it.