Lendlease Corporation Limited ACN 000 226 228 & Anor v David William Pallas and Julie Ann Pallas as trustees for the Pallas Family Superannuation Fund & Anor
[2024] HCATrans 76
[2024] HCATrans 076
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
Sydney No S108 of 2024
B e t w e e n -
LENDLEASE CORPORATION LIMITED ACN 000 226 228
First Appellant
LENDLEASE RESPONSIBLE ENTITY LTD ABN 72 122 883 185 AS RESPONSIBLE ENTITY FOR LENDLEASE TRUST ABN 39 944 184 773 ARSN 128 052 595
Second Appellant
and
DAVID WILLIAM PALLAS AND JULIE ANN PALLAS AS TRUSTEES FOR THE PALLAS FAMILY SUPERANNUATION FUND
First Respondent
MARTIN JOHN FLETCHER
Second Respondent
GAGELER CJ
GORDON J
EDELMAN J
STEWARD J
GLEESON J
JAGOT J
BEECH‑JONES J
TRANSCRIPT OF PROCEEDINGS
AT CANBERRA ON TUESDAY, 5 NOVEMBER 2024, AT 10.00 AM
Copyright in the High Court of Australia
____________________
MS E.A. COLLINS, SC: May it please the Court, I appear for the appellants with MS C.G. WINNETT and MS B. LAMBOURNE. (instructed by Herbert Smith Freehills)
MR W.A.D. EDWARDS, KC: May it please the Court, I appear for the respondents with my learned friend MR R.J. MAY. (instructed by Maurice Blackburn Lawyers)
MS K.C. MORGAN, SC: May it please the Court, I appear with MS Z.L.M. HILLMAN as the contradictor. (instructed by MinterEllison)
GAGELER CJ: Thank you. Ms Collins.
MS COLLINS: Your Honours, this appeal raises, firstly, a discrete issue of practice and procedure, which I will say something about very briefly before I go on to deal more voluminously with the issue. The context, as your Honours will have seen from the written submissions, is a large open shareholder class action where it is very difficult, the evidence establishes, to work out the number and identity of the group members, the size of their claims, also very difficult to estimate reliably the number of group members that may ultimately come forward to participate in a settlement and thus very difficult to come to a negotiated resolution which reflects a fair outcome for all interest holders, the lead plaintiff, the defendant, and the group members and of such a nature that the court is likely to approve.
The specific issue which arises in this appeal is the ambit of the court’s power under Part 10 of the Civil Procedure Act, specifically under sections 175 and 176, to order that notice be given to group members of the matter, and to approve the content of such notice. I will come to, when I come to the statutory provisions, what we see to be the interaction between 175 and 176, and the work that each of them do,
specifically, whether or not the court has power to include in an opt out and registration notice – which I will take your Honours to – what we describe as a notification, foreshadowing the position that will be taken by at least my clients, in the event that there is a settlement, on an application to approve the settlement, which your Honours will recall is one of the two ways that class action proceedings may end, as provided for under the scheme.
GAGELER CJ: Is that with or without further notice to the class office?
MS COLLINS: It is with further notice, your Honour. There is a specific requirement – I think it is in 175 – I will take your Honour to it – that says there has to be another notice. So, may I say I accept at the outset that there will need to be – if a notice is to go out advising group members of opt‑out, which in the ordinary course it will once the question of power has been resolved – if there is a mediation, if there is a settlement, then there will need to be under the scheme another notice. I accept that.
Dealing with the question of power first, I should just emphasise that two matters are common ground. First, it is common ground that the court has power to approve a notice to group members which, in terms, calls for or exhorts group members to register to participate in the class action prior to a mediation or any settlement, and I will take your Honours to the decisions of the Court of Appeal in Haselhurst briefly, and also Wigmans briefly, and the Full Federal Court in Parkin I was not proposing to go to, but they accept that proposition as well.
GAGELER CJ: What does registration involve precisely?
MS COLLINS: Yes. So, what registration involves is providing details of the shares that were acquired by firstly establishing that they are a group member. Using the simplest example, if a nominee company sits on my client’s share register and has eight per cent of the shares, it holds the legal interest in the shares, undoubtedly there is probably thousands of people that sit underneath that. So, those persons would firstly identify that they are a group member because they hold the equitable interest in the shares, then they would provide details of the shares they acquired and the price they paid, then they would provide details of the date of disposal and the price of disposal.
GAGELER CJ: So, it is just a provision of information?
MS COLLINS: I think – yes.
GAGELER CJ: It involves no commitment of any kind?
MS COLLINS: Correct. Correct.
GAGELER CJ: Thank you.
MS COLLINS: Perhaps I ought clarify that. If it were the case that they had provided that information by registration, subject to the question of the date having arisen when opt‑out must have taken place, I do not see any impediment under the scheme for a group member saying, well, I know I registered and gave you some information but actually I have changed my mind, I would like to opt out. As I said, that – and that happens sometimes.
GAGELER CJ: Thank you.
GLEESON J: How does registration affect the question of costs?
MS COLLINS: In terms of group members, as your Honour knows, under the scheme there is no obligation on a – there is, in fact, a statutory protection on the group member in terms of costs. If your Honour is asking me about how the registration process feeds into costs, undoubtedly it is a costly exercise to work out who is registered and there is some, you know, effort that has to be put in by the group members to garner their information to provide it, but ultimately what the evidence says, and what we say to this Court, is that it is a cost which is worthwhile because it enables both parties on each side of the negotiating table to have a better apprehension of exactly what the total size of the claims are, which, at the moment, is simply just unknowable. I will take your Honour briefly to some of the evidence in that respect.
So, the second matter is that it is common ground that the court has power under 173 to approve a settlement and give judgment under section 179, binding all group members who have not opted out – sorry, that those powers include a power to bind unregistered group members to a settlement in which they will not receive a share of the proceeds. One of the matters of, perhaps, vernacular that we have adopted in our submissions is we have referred to that order that would be made at settlement as a settlement order, and we have referred to the order that is at issue in this appeal as a notification or the notice. The relationship between the two of them is this: the notification seeks to foreshadow that my client will, if there is a settlement, apply for a settlement order.
GAGELER CJ: There is a lot of jargon in this field.
MS COLLINS: I agree entirely.
GAGELER CJ: It is not necessarily bad, but you cannot assume that we know all the nuances of the languages used.
MS COLLINS: Yes. And what a careful review of these decisions reveals is that sometimes they are used differently ‑ ‑ ‑
GAGELER CJ: Yes.
MS COLLINS: ‑ ‑ ‑ which is one of the points that his Honour Justice Payne made in Haselhurst and with which I respectfully agree.
EDELMAN J: But you are referring to settlement orders to mean orders that will exclude unregistered members.
MS COLLINS: Yes, an order approving a settlement and delivering judgment, which we accept – let me go back a step. Haselhurst, in the Court of Appeal, stands for the proposition – and I will develop this in some detail, subsequently – that an order which extinguishes group members’ claims may only be made at the conclusion of the proceedings, not on the way through as part of the conduct of the proceedings. We did not cavil with that proposition below and we do not cavil with that proposition today on this appeal either. The Full Court in Parkin somewhat treated with the concept that, perhaps, they did not agree with what Haselhurst said, but we have not raised that point for this Court’s consideration.
STEWARD J: Can I ask a question, Ms Collins?
MS COLLINS: Yes.
STEWARD J: Do you say that you, having given notification already to Mr Edwards of what you plan to do, that he is under an obligation to tell group members anyway?
MS COLLINS: I think your Honour makes a very good point, and it is relevant to what we – yes, is the answer.
STEWARD J: As a fiduciary obligation?
MS COLLINS: I think that it is capable of being construed as part of something that ought be – yes, yes, I agree, and it feeds into the argument that we have put in our written submissions, which I will develop, and that is that the notice power carries with it, or it is a tool or a mechanism to give procedural fairness to group members, which I think answers directly the question your Honour Justice Steward has asked me.
BEECH‑JONES J: To put it another way ‑ ‑ ‑
STEWARD J: And, Mr Edwards – sorry, Mr Edwards, will you address that when you ‑ ‑ ‑
MR EDWARDS: Yes, your Honour.
STEWARD J: Yes, thank you. Sorry, Justice Beech‑Jones.
BEECH‑JONES J: That is all right. Do you say that there is anything that would stop you putting an advert in the paper saying: for everyone involved in this class action, please be aware that if this case settles, we are going to be seeking an order?
MS COLLINS: No.
BEECH‑JONES J: No.
MS COLLINS: I do not say there is anything stopping that. There is an interesting and – it has come up in one of the decisions that I think this Court in BHP referred to, which was a cartel case called Jarra Creek, and I think the facts in that case were the ACCC had made a statement about something and the court considered it necessary to issue a correcting notice to group members, because they considered that the statement – and I apologise if I have not got the facts entirely right – but so, in that way, there is nothing stopping anyone putting an ad in the paper saying something, but it is the court that obviously has an interest in making sure that group members properly understand and can exercise their rights in an environment understanding the correct position, and so the notice power, we say, is able to be exercised in those circumstances at the court’s discretion. It may, of course, not be appropriate, but it may be appropriate.
EDELMAN J: But it would not be an order, albeit in the court’s discretion, that required the notice to be given, it would be an order that permitted the notice be given. Or do you say the proper order would be an order that requires the notice to be given?
MS COLLINS: In terms of the difference between power and discretion, we say, on this appeal we are only concerning ourselves with power. As to the broad discretion that is given to the court to issue a notice or not to issue a notice, we have not treated with that issue in these submissions. I think in answer to your Honour Justice Edelman’s question, it would depend on the circumstances as to whether the court considered it was appropriate a notice, but they would have power to do so, we would say, in those circumstances, although not perhaps on the, what we say, quite restrictive reading of his Honour the Chief Justice in the New South Wales Supreme Court of Appeal.
GORDON J: Do you accept that one of the advantages of adopting the process provided for under the Act is that not only does the court have an involvement in it but it addresses and is able to address issues which are going to arise much later as part of that notification process, as distinct from advertising?
MS COLLINS: Yes, I do.
GORDON J: Is that the process that which you say is in effect achieved by giving this notice at this time, both in terms of information now and in the future?
MS COLLINS: Yes, it is one of the purposes that we ask the court, subject to the question of power, to give such a notice, because it will flag or foreshadow something that may happen in the future which may affect group members’ decisions about whether or not to opt in or register or do nothing, which are the three alternatives in the notice.
GORDON J: Then, the three carve‑outs are, of course, that a further notice can be given; second, the facts can change, and you could then have to give further notification for changed facts because here what is sought to be given by way of notice is the possibility of future events, not confirmation that they are going to occur.
MS COLLINS: In principle, I accept what your Honour Justice Gordon has said to me about the ability for a subsequent notice to be given to correct something. In the facts of this case, we say that there is no question of possibility arising because in the circumstances of a large, open, shareholder class action – which I will come to the facts in a moment – it is nigh on impossible to identify all the group members and all of their claims and, inevitably, there will not be, even with the best will in the world, every one of them which is identified, which give rise to a situation where even if you had 90 per cent of group members who registered, there is going to be 10 per cent that either could not be found or were not interested.
Therefore, there is a need for an order to bind them to the settlement because that would achieve, obviously – and one of the themes underlying our argument in this Court is there are various different objectives underlying the scheme which are at work. One of the things the Court of Appeal has done, it has inferred a legislative intention from a statement in Mobil I will come to much later on and said that that is, effectively, an all‑embracing or an all‑encompassing objective and tried to retrofit questions of power or questions of the operation of the scheme around that particular statement, but it is, we say, more complex than that because finality is important. My client will be – regardless of how many people register and how many people opt out, it will be asking for an order, an order under section 179 of the Act; binding group members will have the effect of binding everyone, not just those who have registered.
GORDON J: There is a carve‑out though, is there not? It is subject to a contrary court order – that is the note. You may come to it when you come to the notice, please.
MS COLLINS: Yes, I think your Honour might be right and, yes, I will come to it.
GORDON J: Thank you.
MS COLLINS: Thank you, your Honour. So, I think I probably made the point that my client seeks to send notification of that kind now because it has formed the view, supported by evidence given below by its experienced class action lawyers, that the notification will encourage the provision of information and the early participation of class members in a manner which assists the parties negotiating any resolution to the claim. I will come to this, but much later on, the Court of Appeal, we say ‑ ‑ ‑
GAGELER CJ: I am sorry, that is the reason for giving the notice now, is it? Is there another reason? I would be assisted at some stage if what underlies the giving of the notice is clearly articulated.
MS COLLINS: Yes, yes, perhaps I can answer your Honour the Chief Justice in this way now. His Honour the Chief Justice below found there were two purposes. The first of them was what I think he described as “exhorting registration”. Now, we accept that one of the purposes of the notice is to encourage registrants, but another purpose of the notice is exactly what I have just indicated, and that is that it will mean that we get sufficient information to enable the parties to negotiate and to come to a realistic view of what an appropriate amount they may be prepared to settle for is, because it will provide information.
They, I think, are the dual purposes, whereas I think his Honour the Chief Justice said the second of the purposes was something which perhaps had a more nefarious sort of – I am not sure that it does, but it was described in – I will come to it when I come to the judgment, but they are the two purposes that we would say are the issue of the notice. So, the Court of Appeal did construe the notice provisions narrowly, and your Honour knows that the way this proceeding has come to this Court is that the court below declined to find that the Court of Appeal’s earlier decision in Wigmans v AMP was plainly wrong and disagreed with the decision of the Full Court of the Federal Court in Parkin v Boral which had said that Wigmans was plainly wrong.
The chronology was, firstly, Haselhurst, which I will come to briefly, then Wigmans, which we say represents a wrong turning of a single line in the judgment of Haselhurst plucked out of Mobil, then there was Parkin v Boral, which said that Wigmans was wrong, then there was the decision below in Pallas. That is not unimportant to what I describe as the second question which arises in this appeal, and that is whether or not the plainly wrong test is appropriate in circumstances where there is a conflict between intermediate appellate courts. I propose to deal with that matter at the end, if I may, your Honours, because I think the way this all unfolded in terms of this might in fact inform the answer to the second question.
GAGELER CJ: It is not really a dispositive question in this Court, is it?
MS COLLINS: May I take that one on notice and come back to you? We say that on question 1 the Court should find there is a power to approve a notice to group members, including the notification, because we say that the Court of Appeal looked at the notice provisions from the wrong end, commencing with a priori assumptions as to legislative purpose, that the text was construed in a strained manner and that the interpretation given to the provisions was inconsistent with context and purpose and, in addition, conflated the question of power with the question of discretion. In relation to the second questions, we say that in a case where there is conflicting intermediate appellate authority, the Court should reconsider the matter for itself, not what we have described in the submissions and certainly not meant in a derogatory way, doubling down on their own decision which in fact was not the most recent in time, but one step further removed.
The structure of the argument I propose to present this morning is, firstly, I just want to set out some key facts. Secondly, I will go to the statutory scheme. Thirdly, I will develop four propositions which together we say support a construction of the notice provisions which would authorise the notification. Fourthly, I will go to the Court of Appeal’s judgment below and identify where we say the Court of Appeal went wrong, having regard to those four propositions. Then finally I will deal with the question of conflict between intermediate appellate courts.
In terms of the facts, I have said this is a shareholder class action. It is a large one, as his Honour the Chief Justice said below. The primary allegation, as is the case in so many of these types of cases, is that the defendant contravened continuous disclosure laws in some way or other. There is also an allegation of misleading or deceptive conduct, but it is the continuous disclosure case which is the focus. In this particular case, it is alleged that my clients failed to give disclosure of certain developments in their engineering business that had impacted upon the financial performance.
The class is defined as persons who acquired an interest in stapled securities or American deposit receipts during a roughly 13‑month period, 17 October 2017 to 8 November 2018, and have suffered loss or damage by reason of the conduct pleaded, including because, it is alleged, they acquired that interest at a time when the securities were trading at an inflated price. There are seven disclosures across that 13‑month period it is alleged that my clients ought to have made, starting on 17 October 2017 and ending on 22 August 2018, and there is a different alleged inflation which has been particularised as at different points in time, which we say is a fact which underscores the desirability of a registration process, so that one can work out quite what would apply at what point in time.
Publicly‑available data from Morningstar tells us that approximately 444 million shares are securities traded on ASX. The share register, as I have said, indicates the legal owners but not the beneficial owners. It follows that the number and identity of all group members is unknown and cannot be readily identified – which is common ground with the contradictor – as is the trading data, which is necessary to facilitate an assessment of the quantum of both the totality of claims and each individual group member’s claims.
I will come to this when I come to the decisions, but the Court of Appeal in Wigmans readily accepted that a registration process was apt to provide much more information concerning the claims of group members. In that case, over the opposition of Ms Wigmans – in many of these cases, there has not been opposition to a particular course; there was, importantly, in Wigmans opposition to that course. These proceedings, currently, are at a stage where the evidence is nearly complete. Opt‑out and registration is the agreed next step, prior to a meditation. It is common practice in these sorts of class actions to call for registrations at the same time as giving the statutory notice to group members of their right to opt out.
May I ask your Honours to take up the core appeal book, and I will just identify where the draft opt out and registration notice is. It is at page 67, so it was an annexure to the judgment below. I do not propose to go right through it – it goes for 15‑odd pages – except I will identify, your Honours see it starts on page 67 and identifies there are three options. Now, option 3 is a variation of the notification in respect of which this appeal is concerned. But the actual notification appears at page 75 at about point 6 on the page, paragraph 3, beginning:
Upon any settlement of this proceeding –
BEECH-JONES J: Ms Collins, just to be clear, there has been no prior notification of right to opt out. Is that right?
MS COLLINS: Not yet. That is right.
BEECH-JONES J: So, on any view, this is a 175(1)(a) notice.
MS COLLINS: Yes, absolutely. Your Honour is absolutely right. It is just whether or not we are permitted to include the notification in a notice that has to go anyway. So, the notification first appears on page 75; it then appears on page 77 under the heading “Option C – Do Nothing”.
The evidence below was that subject to the question of power, my client, as I indicated, will ask the court to make an order that the opt out and registration notice to be sent to group members include that notification. My client takes that view because the evidence establishes that inclusion of the notification will, firstly, encourage group members to register and provide share trading data; secondly, facilitate settlement discussions by ensuring a better understanding of the number of claimants who actually seek to participate in the proceeding and the potential size of the claim; and thirdly, ensure that any settlement, if one occurs, is on a final basis and precludes, to the extent possible, copycat claims. Your Honour, perhaps that is a third purpose, in answer to the two purposes I gave to your Honour the Chief Justice’s question earlier about the purposes of the notice.
GLEESON J: Where are those findings?
MS COLLINS: I was going to tell your Honour where in the evidence – they are not findings. Mr Betts – who is the partner on the record for my client – his affidavit is at the appellants’ book of further materials at page 30. This was the evidence that was before the Court of Appeal. So, the relevant part of this affidavit is pages 30 through to 34, particularly paragraph 27 through to 43. We would rely in particular on paragraph 29.
GLEESON J: So, you are asking us to make factual findings?
MS COLLINS: I am not, except that his Honour the Chief Justice below drew from the evidence below one purpose which we agree with, and that is the encourage of registrations, but then made a specific finding about something that we do not entirely agree with, and did not have regard to the rest of the evidence.
STEWARD J: Ms Collins, can I ask, to the extent that it is uncontroversial that there will be an opt out and registration notification given as the next step, that in and of itself will give your client a lot of information about what you are expecting to meet, as it were. Is that right?
MS COLLINS: The reason why I have gone to the evidence and why we rely on our submissions on the evidence, what it says is that if a – and I say this with respect to Mr Betts, but the affidavit falls into class action jargon, and it refers to a class closure order. But the gist of it is that the inclusion of this notification, it is anticipated, will lead to further registrations, so therefore a better ‑ ‑ ‑
STEWARD J: Yes, that would flow – it is like the icing on the cake. You will flush out hopefully as many people as possible.
MS COLLINS: Yes, that is so. But it is something that – it is evidence that he gives on his extensive experience in this area that it actually makes a difference. If I can use that expression, it is not a nice to have and he explains in his evidence the difficulties in parties actually negotiating a consensual position that might lead to a settlement in circumstances where what is entirely unclear is who might emerge upon the issue of the second notice, and that is the notice of a settlement. There have been cases where a large number of registrants have come forward only upon the issue of the second notice in circumstances where there was not this notification, and the AMP Case is an example of that.
STEWARD J: So, icing on the underdoes it?
MS COLLINS: I would not say it underdoes it, but if it is icing it is very, very thick icing ‑ ‑ ‑
STEWARD J: Thick icing.
MS COLLINS: ‑ ‑ ‑ which is very, very significant. It is the foundation of the cake, if I can use that ‑ ‑ ‑
STEWARD J: All right. Thank you.
GORDON J: Can I just ask pragmatically, does that mean it is, to adopt Justice Steward’s words, the flushing out of as many people as possible? Is that both identity of who they are, the number of who they are and their claims, or is the size of the claim not changed, given that you know who is on the register? So, as I understand the way you are putting it to us, it is more than just icing on the cake; one is actually getting from this process which you would not get from a normal classic 175(1)(a) notice specific identity of shareholders, numbers of shares, dates of shares, of acquisition and sale that you would otherwise not get?
MS COLLINS: That is exactly right – and the price.
GORDON J: Sorry, I meant to say, and the price.
MS COLLINS: I completely agree, your Honour. If I go back to my example of company XYZ which sits on my client’s share register as holding – XYZ nominees limited as holding a percent of the share register, it is impossible to identify from the share register, firstly, who they are and what their claims are and what the value of their claims are that sit underneath that, because the question of assessment of claims, as your Honours know, is a very difficult one in this area, without even going into different loss theories, and so on. One does not need to – but that is why it is important. So, yes, it is a foundation of the cake.
So, going back to your Honour Justice Gleeson’s comment – I will not read it out, but we rely, in particular, on what Mr Betts says at paragraph 29 and paragraph 32.
GLEESON J: I suppose, if the court has the power, then the question of the purposes of a particular notice would have to be decided in relation to that notice.
MS COLLINS: I am sorry, I just missed what you – if the court does have power?
GLEESON J: If the question for us is the question of power ‑ ‑ ‑
MS COLLINS: Yes.
GLEESON J: ‑ ‑ ‑ the question of purposes may feed into a decision about actually ordering the notice.
MS COLLINS: I completely agree, your Honour. I completely agree. That is one of the bases on which we say that there has been, with respect to their Honours below, some conflation of the concept of power with discretion because, again – and I will go very briefly to the Full Court’s decision in the Federal Court in the Treasury decision, of which your Honour Justice Jagot was one of the members of the court, and what they say about – I will come to that when I come to that.
Can I deal next with the statutory scheme. The Civil Procedure Act is at Part A, volume 1 of the joint book of authorities, tab 3. It starts at page 11.
GAGELER CJ: You can assume that we have separate copies of the Act.
MS COLLINS: Thank you, your Honour.
GAGELER CJ: If you just go to the section numbers rather than page numbers, that will be sufficient.
MS COLLINS: Yes. Your Honours know it was inserted into the Civil Procedure Act in, I think, 2010 or possibly did not commence until 2011. It was substantially modelled on Part IVA of the Federal Court ofAustralia Act, inserted in 1992 which, in turn, was inserted – and drew significantly from a report of the Australian Law Reform Commission, in report number 46 in 1988. I will go to some parts of the ALRC Report if your Honours wish to have to that to hand as well. That is at volume 5 of the joint bundle of authorities, tab 25, starting at 1042.
It will be recalled that this Court in Wigmans v AMP Limited (2020) 270 CLR 623 at 655, per Justices Gageler, Gordon and Edelman, confirmed that the introduction of Part 10 did not remove or dilute any of the court’s existing powers and that the CP Act must be read as an harmonious whole because the CP Act, unlike Part IVA of the Federal Court Act, did not have a provision to that specific effect, but that was the finding that was made in Wigmans. If I can take your Honour ‑ ‑ ‑
STEWARD J: Can I just ask about that?
MS COLLINS: Yes.
STEWARD J: Do you say that the Supreme Court of New South Wales has, in any event, an inherent power to direct the issue of whatever notices might be required to do justice in a proceeding?
MS COLLINS: In terms of notices to parties, yes. In terms of notices to group members, I think that is a bit of a grey area. May I come back to your Honour’s question?
STEWARD J: Yes, of course. Yes.
MS COLLINS: I am not sure – I think there might be some complexities in that regard, including because, of course, they do not know who they are. If your Honours go firstly to Part 4, which begins on section 25, page 34 of the joint bundle of authorities. I will not dwell on those sections, but your Honours will see that in Part 4 there are various proceedings about a mediation of the proceedings, including section 26, which gives the court power to refer a proceeding to mediation.
Now, these proceedings were referred to by Justice Payne in Haselhurst in the context of holding that section 183, or 33ZF in Federal Court parlance, permits orders such as registration to be made as a step directed to a settlement under 173. Section 56, your Honours will be well familiar with the “overriding purpose”; on page 46 of the joint bundle of authorities, section 57, “Objects of case management”; section 58, “Court to follow dictates of justice”.
Part 10 commences on page 96 of volume 1 of the joint book of authorities. Section 155 is definitional. I will just touch on what we see to be the key provisions. Section 157 is the gateway provision, and your Honours will note that section 157(1)(b) relates to or refers to:
the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances –
different to what the ALRC was, the position at common law, which may have required that there be the same question. And then (c):
the claims of all those persons give rise to a substantial common question of law or fact –
So, we say the gateway envisages that there may well be a mix of people with different issues, different interests, but they have a common question of law or fact in common, but a considerable amount of individual circumstances which may affect or motivate them in different circumstances. I will come to what the Court said in Timbercorp about that matter.
Section 159, consent is not required to be a group member, which reflects the legislative choice to adopt an opt‑out model rather than an opt‑in model. Section 162 is the right of a group member to opt out:
The Court must fix a date before which a group member may opt out of representative proceedings in the Court.
Subsection (3):
may, on application . . . fix another date so as to extend the period –
and subsection (4):
Except with the leave of the Court, the hearing . . . must not commence earlier than the date before which a group member may opt out of the proceedings.
This Court in Brewster, in the judgment of her Honour Chief Justice Kiefel, Justices Bell and Keane at paragraph 73, said that this particular provision or sub‑provision addresses:
the problem of “free riding” by group members who would seek to opt in to the proceeding only after a favourable outcome is –
known. Sections 164, 165 and 166 I will not read out, but we see them as the first of a suite of broad discretionary powers conferred on this Court, in this case to filter out claims which are not suitable, in the Court’s view, to continue as a representative proceeding. Without going to it, in the same judgment in Brewster at paragraph 62, it was held that the scheme makes, in those provisions:
specific provision for the role of the court in determining whether representative proceedings should or should not proceed and for the circumstances in which that intervention by the court may occur.
Sections 168, 169 and 170 is the next suite of sections which we say contain discretionary powers conferred on the court in relation to questions which are not common, or which are individual, and we note in particular section 169(1):
In giving directions under section 168, the Court may permit an individual group member to appear in the proceedings for the purpose of determining a question that relates only to the claims of that member.
Again, accepting that there will be interests of group members that are not the same as each other, as all the other group members – in fact, there may be significant diversity. This Court in the Timbercorp decision, which I will go to presently, confirmed that the lead plaintiff has a statutory agency to conduct only the common claims, not the group members’ individual claims. Section 171, “Adequacy of representation”, again contemplates:
If . . . it appears to the Court that a representative party is not able adequately to represent the interests of the group members, the Court may substitute –
on application by a group member. There is a mirror provision in subsection (2) to subsection (1). If the court does consider that it does appear that the:
representative party is not able adequately to represent the interests of –
group members, we say it is significant that this is not a matter which disentitles the lead plaintiff from continuing, it is a discretionary power conferred on the court, and in exercising the power to substitute it, it additionally:
may make such other orders as it thinks fit.
Section 173 is the provision which provides for the approval of the court being required for a settlement or discontinuance of proceedings. Subsection (2):
If the Court gives such approval, it may make such orders as are just with respect to the distribution of any money –
Note, in relation to subsection (2), there is no guidance in the provision as to the metes and bounds that the court may take into account in making:
such orders as are just with respect to the distribution of any money –
at least in the statute, although I accept it could not be done for an extraneous purpose in the statute.
As noted earlier, intermediate appellate authority accepts that the court has power under subsection (2) to distribute moneys in a manner which distinguishes between group members, or classes of group members. Some may receive one sum of money, some may receive another sum of money, and other group members may receive nothing at all. Section 179, which I will come to, will bind – a judgment will bind all group members other than those who have opted out. Now, sections 175 and 176 are at the heart of this appeal. Section 175(1):
Notice must be given . . . of the following matters –
(a) is:
the commencement of the proceedings –
And it says:
and the right –
We say that word is significant:
of the group members to opt out of the proceedings before a specified date, being the date fixed under section 162(1) –
Then (b):
an application by the defendant –
And then (c):
an application by a representative party –
Subsection (2):
The Court may dispense with compliance . . . if the relief sought . . . does not include any claim for damages.
If the relief seeks declaratory relief as to the invalidity of legislation is an example that springs to mind. Subsection (3):
If the Court so orders, notice must be given to group members of the bringing into Court of money –
Subsection (4):
Unless the Court is satisfied that it is just to do so, an application for approval of a settlement under section 173 must not be determined unless notice has been given to group members.
I think your Honour the Chief Justice asked me a question about that notice. That is the answer to that. Subsection (5), on its face, we say is a broad discretionary power:
The Court may, at any stage, order that notice of any matter be given to a group member or group members.
And this is at the heart of the issue in the Court of Appeal that we challenge in this Court. In (6), which the Court of Appeal relied on to read down the subsection (5):
Notice under this section must be given as soon as practicable after the happening of the event to which it relates.
Now, may I say something about section 176. Section 176 is ancillary to section 175, but we would say that the proper construction of these provisions read in the context of the Act is that one would need to have a matter under section 175, not in a constitutional sense but in the broad sense that I will take your Honours to the term was used in the ALRC, before 176 is enlivened, and then 176 then provides a series of controls about the notice that will actually be issued by the court, which would primarily arise, in answer to your Honour Justice Gleeson’s question or perhaps responsive to your Honour Justice Gleeson’s question, at the discretion stage of determining what, if anything, to put in a – what type of notice to approve and what to allow and what not to allow.
So, subsection (1), “must be approved by the Court”. Subsection (2), who is to give it and the way in which it is to be given. Subsection (3), may include provision “directing a party to provide information”, relating to costs. Subsection (4) I can pass over. Subsection (5) I can pass over. Subsection (6) we say is significant because it gives an indication as to the ambit of a matter under 175(5):
A notice that concerns a matter for which the Court’s leave or approval is required –
An example would be settlement:
concerns a matter for which the Court’s leave or approval is required must specific the period within which a group member or other person may apply to the Court, or take some other step, in relation to the matter.
Now, we say that is a significant – I will develop this when I come to it. Subsection (7) we also say is a significant indicator as to the intent in relation to the ambit of the power in 175:
A notice that includes or concerts conditions must specify the conditions and the period, if any, for compliance.
May I move on to section 177, “powers of the Court”, in particular in relation to a judgment. As your Honours know and will see, there are broad powers given to the court to make particular orders in relation to a judgment. May I dwell briefly on subsection (1)(f):
award damages in an aggregate amount without specifying amounts awarded in respect of individual group members.
As we understand that, that is intended to be if, for instance, the court is to say, I award damages in the sum of – insert bracket – $50 million – end of inserted bracket – without specifying amounts in respect of individual group members, subsection (2):
In making an order for an award of damages, the Court must make provision for the payment or distribution –
Subsection (3) says:
Subject to section 173 –
Which is the power to approve a settlement section:
the Court is not to make an award of damages under subsection (1)(f) –
Which is the aggregate amount one:
unless a reasonably accurate assessment can be made of the total amount to which group members will be entitled under the judgment.
We say that is significant, for reasons I will come to. Subsection (4):
If the Court has made an award of damages, the Court may give such directions (if any) as it thinks just in relation to—
(a)the manner in which a group member is to establish the member’s entitlement to share –
And “dispute”. Subsection 178(1):
the Court may provide for—
(a)the constitution and administration of a fund –
Then, over the page, subsection (3):
If the Court orders the constitution of a fund under subsection (1), the order must—
(a)require notice to be given to group members in such manner as is specified in the order, and
(b)specify the manner in which a group member is to make a claim for payment out of the fund and establish the group member’s entitlement to payment, and
(c)specify a day . . . and
(d)make provision in relation to the day –
Section 179 I have adverted to, and that is the effect of a judgment:
A judgment given in representative proceedings –
May:
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 proceedings under section 162.
GAGELER CJ: Can I just ask a very basic question?
MS COLLINS: Of course.
GAGELER CJ: The notice with which we are concerned in this proceeding is looking forward to a process which involves settlement. The settlement would be sought to be approved under section 173, and it would result in a consent judgment, would it?
MS COLLINS: Yes.
GAGELER CJ: Under section 177, which would then have the effect that section 179 provides for – is that the statutory anchor?
MS COLLINS: As we understand it, and the way that the Federal Court certainly has approached it, is that approval of the settlement is given under subsection 173(1), and there then is a judgment given under section 179, not under section 177 or 178, because it appears that 177 and 178 is in fact looking at – it says:
The Court may, in determining a matter –
So, it is looking to a circumstance where there has been – the conclusion of the proceedings has come about after there has been a hearing and a judgment by the court. But 179 – which I think is referred to in this Court’s decision in Timbercorp, it is certainly described in the Federal Court as the pivotal provision – describes or otherwise identifies the group members and:
binds all such persons –
So, it is paired with ‑ ‑ ‑
GAGELER CJ: So, the view has been taken that the word “determining” in section 177 is determining after a contested hearing, and not ‑ ‑ ‑
MS COLLINS: I think that is so.
GAGELER CJ: ‑ ‑ ‑ simply a final resolution.
MS COLLINS: The view has been taken that, in approving a settlement, if judgment is then entered, reliance ought be placed on 179, not on 177 or 178 – I think the answer to your Honour’s question is yes. When it says “in determining a matter”, if there has been a court approval under section 173(1), there is no determining of a matter.
GAGELER CJ: That is perhaps a contestable reading. It may not matter, but what would be the point of referring to section 173 in section 177(3), if ‑ ‑ ‑
MS COLLINS: Yes. I see what your Honour says. Yes. May I take that one on notice as well?
GAGELER CJ: Yes. Thank you.
MS COLLINS: I think it may not matter, but I will return to it.
GAGELER CJ: It would be a much cleaner solution ‑ ‑ ‑
MS COLLINS: Indeed.
GAGELER CJ: ‑ ‑ ‑ if judgment could be entered under section 177.
MS COLLINS: I accept that. The final section that I should go to, which is not irrelevant or not at the forefront of relevancy, is section 183, which is the State equivalent of section 33ZF, and which this Court considered in Brewster:
In any proceedings (including an appeal) conducted under this Part, the Court may, of it is own motion or on application by a party or a group member, make any order that the Court thinks appropriate or necessary to ensure that justice is done in the proceedings.
May I just foreshadow what I will come to when I deal with some of the authorities. I propose to deal with the text first as my first proposition, but there were authorities prior to Brewster, including the Full Federal Court in Treasury which dealt with what was described as a “class closure order” – in the sense that it was an order made at the anterior stage we are at now – giving notice to group members, but it purported to say, if you do not register you may not participate in the proceeds.
GAGELER CJ: Is this a hard order or a soft order?
MS COLLINS: It depends who you ask, I think, your Honour, but I think if one was to ask his Honour the late Justice Lindsay Foster, hard closure would have referred to an order of that effect which extinguishes rights, which was an order which was made prior to an actual judgment in the proceedings, which I do not think anyone has said was something that was able to be done for quite some time. Then there was, I think, soft closure, which was considered to be an order of the type that Treasury dealt with,
and I will come to those decisions. The vernacular is a bit confusing.
Having gone through the Act, may I turn to the first proposition that we wish to make, and that is that we say on this appeal that textually the notice provisions – by which I mean sections 175 and section 176 – are not limited to events which have happened. In Brewster, your Honour the Chief Justice said, at paragraph 118, the notice provisions are generally concerned with giving procedural fairness to group members.
We embrace, with respect, that characterisation of them, or one of the characterisations of them, and I think in someone else’s judgment in Brewster they were described as an important part of the statutory scheme – sorry, your Honour Justice Gordon’s judgment described them as an important part of the statutory scheme. There is also a reference to the concept of giving procedural fairness in Wigmans in the High Court, at paragraph 122 in the judgment of your Honours Justice Gageler, as you then were, Gordon and Edelman.
What we say about the notice powers is that it would be counterintuitive in circumstances where they have a procedural fairness mechanism not to have power to give notice to group members of matters which are material to them, as well as counterintuitive for the court not to have power to give notice to group members of a step which may legitimately occur in the future.
Breaking that down – and perhaps putting it more clearly – firstly, one would expect if these notice powers are to be used as a mechanism to inform group members about their rights, they would be construed liberally not restrictively. Secondly, in a circumstance where – this is what I described as the settlement order, which would be an order made under section 179 in combination with approval of a settlement under 173, which has the effect of extinguishing the claims of unregistered group members – intermediate appellate authority accepts that that may legitimately occur, and it is not contested in this Court, it would be rather counterintuitive, we say, in construing the notice provisions to hold that the court is not entitled to give forewarning of something that may legitimately occur.
BEECH-JONES J: Ms Collins, can I ask you this. This notice, on any view, was giving notice of an event, being the commencement of the proceedings and the right to opt out.
MS COLLINS: Yes.
BEECH-JONES J: What we are talking about is, what else goes in it, is that right? Just the extra content?
MS COLLINS: Yes, yes.
BEECH-JONES J: Is there said to be some negative implication that you cannot – once you have got that event, you cannot say more about something that might happen in the future?
MS COLLINS: Perhaps I will just foreshadow where I am going, what was said below, as a question of construction, which I will deal with presently, was that the reference in 175(6):
Notice under this section must be given as soon as practicable after the happening of the event to which it relates.
in fact confined the proper construction of subsection (4), such that one would read reference to “any matter” in subsection (5) as being restricted to an event which has happened. So, in other words, it had to be a past event, not a future‑looking thing.
BEECH-JONES J: I understand that, but my point is – stepping back from that, what I am asking about is, regardless of that, we already had an event. So, we are just talking about the content of the notice of what else is told.
MS COLLINS: We agree, with respect, but ‑ ‑ ‑
BEECH-JONES J: But you say there is a broader question about – so, even if you did not look at that, if you had, theoretically, a case where you just moved to give them a member’s notice of a proposed intention to seek an order in the future, then the Court of Appeal’s construction of event would bite at that point.
MS COLLINS: That is right, and it is in his Honour the Chief Justice’s judgment, but the submission was put that even – I think we disputed subsection (6) being read so as to confine the power in subsection (5), but in the alternative we said the event – if one needs to have an event in the past – is the setting of the date for opt‑out and registration, and his Honour does consider that in his judgment, which I will go to. I think I have answered your Honour’s question, I am sorry if I have not.
BEECH-JONES J: Yes, yes.
EDELMAN J: Even if it is not that, why would the event not be the forming of an intention?
MS COLLINS: We say it could be. We say that an event can be. It does not need to be something that has happened in the past that is set in stone. It is at large.
GLEESON J: Do you say that the right to opt‑out is an event?
MS COLLINS: Yes. No, I am sorry. I am sorry, I spoke too soon.
GLEESON J: I mean, why would it ‑ ‑ ‑
MS COLLINS: The setting of the date of the right to opt‑out – the fixing of the date by which group members must opt‑out would be an event, but the right – a right to opt‑out, which is what section 175(1)(a) talks about – is not an event because it is future‑looking. It is a right and it is giving group members information about the circumstances in which they may exercise that right.
GORDON J: So, you have three. You have requirement to give notice for the commencement of the proceeding, the requirement for the setting of the date by which the group members must opt‑out – they are two events.
MS COLLINS: Yes.
GORDON J: Then you now, I think, add to it a third, which is notification of an intention in the future to set a settlement order if the matter settled. Each of those, on your construction, is sufficient to constitute an event, regardless of the way in which you construe 175(6).
MS COLLINS: It is certainly sufficient to amount to any matter under subsection (5) which may be given to group members. We do not see the work of subsection (6), with respect to the Chief Justice, as being something which was intended to curtail subsection (5). What it was saying is that, if there is an event that you are going to give notice of, if I go back to my cartel example in the Jarra Creek decision many, many years ago now, the event in that example was that there was something that was issued by the ACCC which was in the view of the Court not correct, therefore it needed to be corrected.
So, in that example, that was the event, and the work that subsection (6) does is that it says, you must give notice as soon as practicable after the happening of the event. But if one characterises an event as something that must have happened already, it simply – sorry, I withdraw that. It will only apply in circumstances where one has – or it will only bite in circumstances where one has the happening of an event.
GORDON J: Here, that event on the third limb is the intention or the foreshadowing of the intention?
MS COLLINS: Yes, we have characterised it as a matter – as falling within a matter, but if your Honours take the view that subsection (6) in fact does limit what is in subsection (5), I think it could be an event, the forming of intention ‑ ‑ ‑
GLEESON J: You have also made the point that under section 176(6) and (7) the legislation clearly contemplates content in the notice which is not restricted to events.
MS COLLINS: We agree entirely. May I ask your Honours to take up now the Australian Law Reform Commission Report, which is volume 5 of the joint book of authorities. It is at tab 25, for those who have tabs. It commences at page 1042. Before I get to what the ALRC said about the notice power, I need to just put something in context. If I can ask your Honours first to go to page 1063, paragraph 163, the heading in italics is “Principal applicant to have conduct”, and the first sentence reads:
The primary rule for the conduct of grouped proceedings is that the principal applicant has the conduct of all group members’ proceedings.
Now, pausing there, a difference between the ALRC – I think by far the most significant difference – and what ended up in Part IVA, is that in the ALRC, the Commission was concerned about whether or not – I think it was a jurisdictional concern but, in any event, they recommended that there be the commencement of a proceeding in the draft Bill – clause 16 of the draft Bill – would be that a group member would file an initiating process in the Federal Court in that instance which would as a matter of law constitute the lead plaintiff’s own proceedings, but in addition all the other proceedings of the group members. So, there was a vernacular used in the ALRC about group members’ proceedings which informed some of the discussion that I am going to come to. If your Honours go to 165 at the top of page 1064, page 73, that is why the first sentence says:
Circumstances may arise where it is appropriate for a group member to take a step in his or her own proceedings.
That is a reference – it was always envisaged in the ALRC that there only be one set of papers, if I can use that description: one application and one statement of claim presumably that would be filed. But as a conceptual matter, there would be the lead plaintiff’s proceedings and there would be group members’ proceedings. So, the ALRC needs to be read in that light, and that is where it is referring to ‑ ‑ ‑
GAGELER CJ: I cannot remember, was there a draft legislation attached to the report?
MS COLLINS: Yes. There was a draft Bill.
GAGELER CJ: And the draft Bill, was it substantially enacted?
MS COLLINS: It was substantially enacted, except – this is the most significant difference, and we can make copies of it available, if it would assist the Court, in the luncheon adjournment, but clause 7 of the draft Bill provided that it was lawful for an applicant to also commence, by the same application, group member proceedings, and then clause 16 of the draft Bill said the applicant has conduct of the group members’ proceedings and they are:
treated as one proceeding.
And then there was a reference in subparagraph (4)(b) which said:
Except as provided . . .
. . .
(b)the respondent may not, without the leave of the Court, require the group member to do anything personally –
And I will come to that, because that is reflected here, but that, I think, colours the expression take action on the part of a group member, and that is where it has come from.
GAGELER CJ: This is all a little obscure. What are we getting from it?
MS COLLINS: I am sorry. If your Honour will bear with me, I will keep going, and I hope that it becomes less obscure. Paragraph 166:
Similar problems could arise if a respondent could require a group member to do anything personally in relation to his or her proceeding. A respondent may wish to obtain discovery against a group member –
About four lines down:
If such steps are permitted as of right . . . the advantages of the principal applicant conducting group members’ proceedings will be undermined.
But then the Commission said:
fairness to respondents and group members indicates that the taking of such steps should be permitted where appropriate.
And that goes to my point about power versus discretion, because we say that the ALRC’s recommendation was to the effect that it may, in certain circumstances, be appropriate for the court to direct that group members – as opposed to the lead applicants – take some action. And if your Honour goes to the recommendation at the bottom of that page:
Where the principal applicant is conducting a group member’s proceeding, the group member should not be able to take a step in that proceeding without first obtaining the Court’s leave. Similarly, the respondent should not be able to require a group member to do anything personally in relation to his or her proceeding without first obtaining the Court’s leave.
So, discretion versus power to actually require the group member to do something. May I take your Honours next to page 1071, which deals with the ALRC’s recommendations, which were substantially enacted, which deals with notice. Paragraph 188, “When should notice be given to group members?”:
Because the consent . . . is not required to commence their proceedings, appropriate steps must be taken to inform them . . . and of any action they may take. Notice should therefore have to be given to group members in certain circumstances when the interests of group members are affected.
Then if your Honours go over the page, just before the three dot points, the sentence begins:
Many other circumstances may arise in the course of conducting grouped proceedings where consideration should be given to notifying group members.
A few examples are given. But then, under the three dot points:
In these, and in any other appropriate cases, the Court should have a discretion to order notice.
Which we rely on. Then the recommendation is:
The Court should have a general power to order notice at any time.
I observe on the way through that the first dot point relates to:
the commencement of the proceedings and the ways in which they can assume conduct –
must necessarily be a matter which would be future‑looking. If your Honours go over the page, paragraph 190 is relating to:
Who should give the notice and how should it be given?
But after the four dot points, at the top of paragraph 190, the second sentence:
The objective should be to find the most economical means of ensuring that the group members are informed of the proceedings and of their rights.
Again, an indication of the purpose for the provision of notice. Then if your Honours go to paragraph 195:
The notice should contain basic information sufficient to enable group members to exercise their rights in relation to the proceedings.
For completeness, if your Honours go to paragraph 196, talking about the “failure to receive notice”, in the third last line there is a sentence beginning:
Since a group member is not required to take any step in the proceedings, the absence of notice may not come to light until –
much later on. That is referable to the structure that was recommended by the ALRC which included as an integer a provision, clause 16, which said that without the leave of the court a group member is not required to take any step in the proceedings, but, again, that goes to my point about power versus discretion, and that really when one is reading sections 175 and 176, if it is a matter which affects group members’ rights there ought be power, in our respectful submission, the question of discretion as to whether or not it ought be notified is a matter reserved to the court.
GAGELER CJ: I am just going back to the bottom of page 1072, the last sentence is that:
Notice in relation to the commencement of proceedings should be given as soon as practicable after the first directions hearing.
That does not occur in practice, does it?
MS COLLINS: Your Honour, it does not. No, I have never seen it.
GAGELER CJ: Well, my point is that this is all very well and good, looking at what the ALRC had in mind, and we have how many years of practice now and case law?
MS COLLINS: Yes, 22. Yes, I accept that.
BEECH‑JONES J: But, at least on that, there has never been any discussion about any restriction arising from the word “event” until now, has there?
MS COLLINS: I agree. Your Honours, no doubt, are aware that the construction that the Chief Justice in the decision below adopted in relation to “event” and the inter‑relationship between subsection (6) and subsection (5) was not considered by the Court of Appeal in Wigmans and, it was therefore not considered by the Full Federal Court in Boral either. It has only come up in Pallas in the decision below.
BEECH-JONES J: Ms Collins, that clause in the footnote 47, just off the top of your head, do you know if it has the word “event” in it? Because that is the footnote to the ‑ ‑ ‑
MS COLLINS: Yes, I see – off the top of my head, I am afraid I do not, but I will check. So, that is all I wish to go to in the ALRC Report. Going back to the question of construction, section 175(5), I have said already, is expressed in very broad terms. We do rely upon Shin Kobe principle, which we have said in our written submissions. We say that the work done by subsection 175(6) is not to delimit the scope of the matters. I have indicated that we say that subsection 175(6) simply will not apply in circumstances where there is not an event which has happened, but it will apply in circumstances where there is an event which has happened. Your Honour Justice Gleeson asked me a question, or made an observation, about subsections (6) and (7), in section 176, which we entirely embrace. They are an important indication of the textual intention of the power in section 175.
So, for the reasons given, our first proposition is, we say, that the narrow construction adopted in the Court of Appeal below is not the preferred construction and, read in context, the statutory scheme confers various, unguided discretionary powers on the court as is appropriate, we would say, with a new procedure, and it would be incongruous to construe section 175(5):
The Court may, at any stage, order that notice of any matter be given –
in the limited way the majority of the Court of Appeal below found. I have indicated that we did put in the alternative that there was an event if the Court of Appeal was against us. In answer to your Honour Justice Beech‑Jones’ question, I am told that the draft Bill clause 18(1) does not refer to “event”, but I will come back to this and give a more fulsome answer after lunch, perhaps.
May I move to the second of the propositions and that is, we say, that the statutory context is that group members are largely passive but not entitled to be absolutely passive in order to share in any proceeds obtained through settlement or judgment. What we say is that there has been a wrong turning in the Court of Appeal with respect to their Honours in relying on a sentence in this Court’s decision in Mobil Oil at 40, which I will go to, as representing the, quote, “evident legislative intent”, end quote, of representative proceedings, which is what his Honour Justice Payne said in Haselhurst at paragraph 53. That was extended further in Wigmans in the Court of Appeal as being a basic precept of the scheme and followed in the court below in Pallas.
We accept, of course, that the opt‑out nature of the regime is an important part of the statutory context and we accept that, by design, the scheme does not provide for active participation by group members in the conduct of the common questions which is what, I think, your Honour Justice Gordon said in Timbercorp at paragraph 131. What we do not see in Part 10 is the conferral of an expressed statutory right on the part of group members to take no positive step in the prosecution of the proceedings and share in the proceeds. May I give at least three, possibly four, examples of why that is so.
The clearest example is the right to opt out. If group members do not take steps to exercise that right, and a judgment is given under section 179, that judgment binds those group members. So, in that very simple example, group members have to do something in order to extract themselves – jump off the ship, if I want to use the water analogy that has been adopted in some of the cases.
Secondly, if the group member considers that the lead is not able adequately to represent the interest of the group members, it must make an application to the court to substitute another group member – that is section 171, which talks about “on application by a group member”. Additionally, if the lead plaintiff settles its claim, and a group member takes the view that they do not want the proceedings just to disappear, but rather they want to substitute someone else for the lead plaintiff, the group member must make application to the court. That is section 174(3). Thirdly, this Court in Brewster said the reality is that:
group members will have to take action at some stage to obtain the actual payment of any monetary relief to which they have established an entitlement.
At paragraph 94. While this is along the lines of some of the language I took your Honour to, and your Honour the Chief Justice asked some questions about in sections 177(4) and 178(3)(b), we say that the stage in which group members may be required to take action to obtain the actual payment of monetary relief is not limited to a point in time after a judgment, if that is the proper construction of 177 and 178. We say there is at least two indicators of that.
The first is – I took your Honours to the reference in section 177(1)(f) and 177(4) to an award by the court of damages in an aggregate amount – say, X million dollars – the court may only:
award damages in an aggregate amount –
if a:
reasonably accurate assessment can be made of the total amount –
In a case such of this, we say it is plain that this would require knowledge of the identity and number of the group members, and also the trading data in order to identify what, if any, loss they have suffered.
The second indication is the assessment – which is required both for subsections (1) and (2) of section 173, which is the 33V or the power to approve a settlement – necessarily requires that the court be furnished with some information, because absent some information, it would be very difficult, in my respectful submission, for the court to give approval to a settlement because it would simply have no idea whether or not the X million dollars or X thousands of dollars is representative of an appropriate or a fair and just settlement for the particular claims in the proceedings.
We also say that the scheme confers power on the court to facilitate the provision of information through the notice provisions as properly construed. I will not repeat myself about we said about that, but we do rely in particular on section 175(5) and 176(6) and (7), which talk in terms of if:
A notice that that concerns a matter for which the Court’s leave or approval is required –
The notice:
must specify the period within which a group member . . . may . . . take some other step, in relation to the matter.
I was proposing now to go to some of the authorities. I note the time. Is it convenient that I just keep going for a while, or ‑ ‑ ‑
GAGELER CJ: Is this a natural break in your argument?
MS COLLINS: No, I can keep – perhaps I will start with some of the authorities which hopefully will not take me too long. The first authority I wish to go to briefly is the decision of this Court in Wong v Silkfield. Now, this is in volume 3 of the joint bundle of authorities, at tab 13, it begins at page 593. Now, I will not dwell on this provision, but I will simply draw your Honours’ attention to, in a quite different context, this Court at the bottom of page 260 of the report, page 598 of the appeal book, said:
Part IVA provides its own more detailed regime. Like other provisions conferring jurisdiction upon or granting powers to a court, Pt IVA is not to be read by making implications or imposing limitations not found in the words used –
And then it goes on to talk about the section at issue in that case, which was section 33C. May I go then, briefly, to paragraph 20, simply because it is a convenient place that has extracted the second reading speech for the Bill for the Federal Court of Australia Amendment Act which introduced Part IVA, which is referred to in some of the other judgments. What we see in the extract – this is at page 602 of the bundle of authorities:
“The Bill gives the Federal Court an efficient and effective procedure to deal with multiple claims . . . needed for two purposes. The first is to provide a real remedy where, although –
I will not read it all out. This is what I might describe as the access to justice purpose. But secondly:
The second purpose of the Bill is to deal efficiently with the situation where the damages sought by each claimant are large enough to justify individual actions and a large number of persons wish to sue the respondent. The new procedure will mean . . . will be able to obtain redress and do so more cheaply and efficiently than would be the case with individual actions.”
One of the matters that we did not see in the decision below, with respect to their Honours, is one of the other purposes which underlined the introduction of these provisions into, first, the Federal Court of Australia Act and then into the Civil Procedure Act in New South Wales, and that is the purpose of ensuring finality to the extent possible which, in circumstances where there is an open class action which is allowed by the scheme, will be necessary to prevent what I might describe as copycat litigation.
To describe it another way – and I will come to this when I go to the Court of Appeal’s decision below – if it were the case that at some stage the plaintiff applied to, and there was a restriction of the group member definition so as to change the group definition to only apply to people who have registered, then that would not achieve what we say is another objective of this scheme, and that the importance of making sure there is one final binding decision, not copycat litigation which may then be commenced after ‑ ‑ ‑
GAGELER CJ: Anyone who opts out can engage in copycat litigation, can they not?
MS COLLINS: I accept that is right.
GORDON J: But by knowing that they have opted out, that is an assessment of risk and able to be taken by the defendant in determining what amount to settle for.
MS COLLINS: Yes.
GORDON J: So it has two purposes, both positive and negative, does it not?
MS COLLINS: Yes, I accept that as well. Is that a convenient time, your Honour?
GAGELER CJ: Have you finished with Wong?
MS COLLINS: I have finished with this judgment, yes.
GAGELER CJ: Thank you. Yes, it is. We will take the morning adjournment.
AT 11.15 AM SHORT ADOURNMENT
UPON RESUMING AT 11.30 AM:
MS COLLINS: Your Honours, may I next go to the decision of this Court in Mobil Oil Australia v The State of Victoria (2002) 211 CLR 1. It is in volume 3 of the joint bundle of authorities, tab 9, starting at 371. Now, Mobil was a challenge to the validity of the Victorian equivalent of Part 10, which is called Part 4A, number A, of the Supreme Court Act 1986 (Vic). Chief Justice Gleeson’s decision starts at 389 of the bundle, 19 of the report. Over the page, paragraph 1 explains the two grounds of the challenge to the validity of that legislation. Paragraph 6, so page 391, towards about point 9 on the page, his Honour talks about the history of representative proceedings:
examined by this Court in Carnie v Esanda . . . The purpose of more modern provisions . . . was explained in Wong v Silkfield Pty Ltd. Subject to the capacity of the court managing representative proceedings to control the proceedings in such a manner as to ensure fairness, a capacity usually conferred by wide discretionary powers in relation to the conduct of the action –
And we emphasise the reference to the “wide discretionary powers”, which is how we characterise the scheme. The majority judgment starts at paragraph 26, which is page 398, the decision of Justices Gaudron, Gummow and Hayne. At 35, which is on page 400 of the bundle, there is consideration under the heading:
Part 4A –
Number 4, not roman number:
4A of the Supreme Court Act –
I will not read all of it, but if your Honours go over to paragraph 37 their Honours said:
The persons who commence the proceeding are the plaintiffs . . . those who are named as plaintiffs . . . must know of and require the commencement . . . They stand to gain from any benefit obtained . . . but they are at risk of bearing the burden of costs.
Then in 38 their Honours said:
The position of the plaintiffs in the proceeding may be contrasted with those whom they represent – the group members. Subject to some exceptions that do not matter . . . consent . . . is not required. Group members may neither know of the commencement . . . nor wish that it be brought or prosecuted –
Then there is a reference to the notice:
(among other things) the commencement of the proceeding.
Paragraph 39:
The Supreme Court may dispense –
Which is a provision that is the equivalent of 175 – section 175, 33X is the State equivalent, which is the same as the federal equivalent. About halfway through paragraph 39:
Unless the Supreme Court is satisfied that it is reasonably practicable, and not unduly expensive, to do so –
That is, give notice:
the Court may not order that notice of the proceeding is to be given personally to group members. There is, therefore, a real possibility that some group members would remain “perfectly ignorant of the proceedings, and of what is really going on”. That is, some of those who would benefit from success in the proceeding (but thereby lost the opportunity to pursue their individual claim in some way, or to some effect, different from the group proceeding) may have their rights affected without their knowing or consenting to that being done.
In paragraph 40:
So much follows from the fact that Pt 4A provides for what is sometimes called an “opt out”, rather than an “opt in”, procedure. That is, persons who are a group members may opt out of the proceeding and, if they do, they are taken never to have been a group member (unless the Court otherwise orders). Group members –
And this is the sentence that is being picked up by the Court of Appeal:
Group members, however, need take no positive step in the prosecution of the proceeding to judgment to gain whatever benefit its prosecution may bring.
They then go on to talk about other provisions in the scheme; paragraph 41. They then go on to talk about the question of jurisdiction and, in particular, the connection with the State of Victoria. At paragraph 44 – and I do not need to go to the reasons for this – their Honours stated that the:
contention that s 13 of the Courts Legislation Amendment Act was beyond the power of the Parliament of Victoria and invalid rested upon two propositions –
Both of which – and I will not go to the rest of it – were rejected by the Court. If your Honours then go over the page to 404 of the bundle, paragraph 49 records a submission that was put by Mobil. Their Honours at paragraph 50 then said:
This is not an accurate representation of the operation of Pt 4A.
Then, further down in that paragraph:
It is right to say that a judgment obtained in the proceeding would bind those who had not opted out but to say that such persons had “no control” over their part in the proceeding falls well short of fully describing the way in which Pt 4A works.
Then, in 51:
may affect the rights both of those who know of and support . . . and of those who do not know of it, Pt 4A does not compel the unwilling to continue to remain a group member. The unwilling may seek to opt out.
Now, I have dwelled on paragraph 50 because it is referred to in the Timbercorp decision, which I will come to presently. What we say about paragraph 40 – and that the last line of paragraph 40, which has been picked up and described variously in now three decisions in the Court of Appeal of New South Wales – is that, with respect to their Honours, it is somewhat overread when one considers what the Court was actually considering in this decision – that is, a challenge to the validity of the legislation – and we say that the Court was not purporting to lay down a rule that group members can never be required to take a step in the proceedings in order to share in any proceeds.
The reason why that must follow is that section 33ZG has always been present in the Victorian form of the legislation. Can I go very briefly to that. It is at volume 2 of the joint bundle of authorities, at page 167. It is not clear from the judgment of their Honours in Mobil, but it is clear when one tracks back to the history of the legislation. So, at page 167 of volume 2, this is the Victorian Part IVA in the form it was at the time Mobil was decided. Section 33ZG:
Except as otherwise provided by this Part, nothing in this Part –
I am sorry, I have made a mistake. I am sorry, I am in the wrong – my apologies, that is the Federal Court legislation. I am sorry, your Honours. Page 185, which is behind tab 5, is the Victorian legislation. Section 33ZG:
Order may specify a date by which group members must take a step
Without limiting the operation of section 33ZF, an order made under that section may—
(a) set out a step that group members or a specified class of group members must take to be entitled to—
(i) any relief . . .
(ii) any payment out of a fund . . . or
(iii) obtain any other benefit arising out of the proceeding—
irrespective of whether the Court has made a decision on liability or there has been an admission by the defendant on liability –
Then, over the page, in (b):
specify a date –
Of course, there is no such equivalent to this Victorian provision – 33ZG – in either the federal legislation or in the New South Wales legislation, hence the debate that has taken place in the three Court of Appeal decisions, and which leads me to the second proposition that we put.
GAGELER CJ: Can I just ask, then, does that provision in Victoria answer the question for Victoria?
MS COLLINS: I think it does, yes.
GAGELER CJ: Has that been considered in Victoria?
MS COLLINS: The Victorian sitting to my right will perhaps be in a better position to answer than I will.
GAGELER CJ: Thank you.
MS COLLINS: I believe it has, has it not? It was considered in the Court of Appeal in a decision called Regent which I will come to after lunch in reply if I need to. But, yes, it would answer the question, but it is just not in our legislation and, of course, what the Victorian Parliament decided it was appropriate to do cannot really inform, we say, as a matter of principle upon the proper construction of different legislatures.
STEWARD J: But you ask us to read paragraph 40 in Mobil in that context?
MS COLLINS: I do, your Honour, yes. I am sorry not to be clear. When I come to the Court of Appeal decisions, what your Honours will see is that firstly in Haselhurst, that last sentence in paragraph 40 was said to represent the legislative intent of representative proceedings. We do not, with respect, accept that. But then it was taken further in Wigmans and then confirmed in Pallas by saying that it represented a basic precept of the scheme, which, we say, is reading it out of what this was really about, and in context where there was in that legislation at all times 33ZG. That cannot be what their Honours had in mind they were referring to, if that answers your Honour Justice Steward’s question.
STEWARD J: Thank you.
MS COLLINS: The next decision I would ask your Honours to take up is Timbercorp. It is in the same volume, which is volume 3. It is behind tab 10 at page 455, Timbercorp Finance Pty Ltd v Collins (2016) 259 CLR 212.
The facts that gave rise to these proceedings were that there had been a class action in the Supreme Court of Victoria against Timbercorp, or a Timbercorp entity, which had failed. Financiers then commenced proceedings against some persons who were borrowers, who were also group members in those proceedings which had failed. An Anshun estoppel point was raised, which made its way up to this Court. The group members specifically raised issues in their defences that Timbercorp argued firstly, the lead plaintiff could have raised but did not, and therefore they were estopped in the class action; alternatively, the group members themselves could have raised or opted out and argued for the same conclusion, that is, that there was an Anshun estoppel.
Can I ask your Honours to go to – I was just proposing to go to Justice Gordon’s judgment, which begins at 124. I am sorry, I have the pages – page 493.
STEWARD J: Could you give the paragraph number?
MS COLLINS: Yes, I am sorry, your Honour. I have made a mess of this. Paragraph 124, not page 124.
STEWARD J: Thank you very much.
MS COLLINS: Page 493 of the bundle, paragraph 124, under the heading “No active role for respondents in group proceeding”, her Honour said:
There is no basis to say that a group member must avail themselves of the case management powers . . . to litigate any individual claims.
I think I indicated in opening at the outset that in Timbercorp it was established that there are common claims and there are individual claims, and the lead plaintiff is the privying interest of the group members only in respect of common claims, not in respect of individual claims. That was why, ultimately, Timbercorp failed in the High Court. So, that is the reference to individual claims there:
The appellant submits that those powers are there to be used, and it is unreasonable not to have done so –
Her Honour said:
That submission mischaracterises the nature of those powers and their role in the statutory scheme.
Paragraph 125:
consent . . . is not required.
There then is a reference to paragraph 39 of Mobil, in paragraph 125:
group members may remain “perfectly ignorant of the proceedings, and of what is really going on”.
Then, in 126, her Honour said:
There are few provision s in Pt 4A that contemplate an active role for, or give control to, group members –
Then gives two examples, which is 171 in the New South Wales legislation, and I think 174 is 33T. I took your Honours to those when I went through the legislation, because they provide that:
“on an application by a group member –
And over the page, at the end of paragraph 126:
It contemplates a group member making an application in the context –
Then, in 127, her Honour said:
Section 33Q is enlivened based on what “appears to the Court” . . . giving directions . . . 33R clearly contemplates a role for a group member –
Then, 128 I will not read out. Paragraph 129:
None of the above should be taken to suggest that the Act prevents a group member from seeking directions; rather, the simple point is that the Act does not oblige a group member to seek directions in relation to each and every issue that relates to their specific claim, nor is there any indication that the Act expects them to do so.
Now, what we take from this part of her Honour’s judgment, with respect, is that it acknowledges that the scheme contemplates the possibility that group members might wish to take some sort of action, which is, we say, inconsistent with the notion that there is – and I will come to the construction point – a basic precept that they need not take any action until after there has been a judgment or there has been a settlement. In 131, her Honour said there is a challenge to:
the Court of Appeal’s conclusion that the group members “had no control –
Her Honour said:
that conclusion was correct: except in limited circumstances, the statutory scheme does not contemplate group members having an active role in, or control over, the conduct by the lead plaintiff of a group proceeding. Having no active role in, or control over, the conduct by the lead plaintiff . . . is distinct from what Gaudron, Gummow and Hayne JJ were referring to in Mobil Oil Australia Pty Ltd v Victoria when their Honours explained that it was inaccurate to say that group members have no control “over their part in the proceeding”. A group member does have control over their part in a group proceeding; if they do not wish to be a part of it, they can opt out –
And then, over the page, 132:
A group proceeding . . . is conducted by the lead plaintiff on behalf of the group members. Aside from the few limited exceptions considered above, Pt 4A is not designed to encourage active participation by group members in the course of a group proceeding.
So, what we take from that is – and we accept that Part 10, by design, is not intended to require group members to take an active role in the conduct by the lead plaintiff of the common claims, but the critical point relevant to this question of power on this appeal is that they might – if they wish to, they may, if there is something that they wish to do.
In the same volume, I will go now to this Court’s decision in BMW v Brewster (2019) 269 CLR 574. It is at page 231 of the same volume. Your Honours will well recall, no doubt, that this Court held by majority in that decision that section 183, which is the equivalent of section 33ZF, did not authorise the making of a common fund order at the commencement of the proceedings. May I just draw attention to certain paragraphs of it which will be important for when I go to some of what the Court of Appeal said.
May I firstly ask your Honours to go to paragraph 45 which is on page 256, or 599 of the report. So, this is in the section of the judgment of her Honour Chief Justice Kiefel and Justices Bell and Keane, talking about the construction of section 33ZF. So, halfway down the page:
Section 33ZF has been invoked to support a wide range of procedural orders such as reinstating group members after they exercised the right to opt out . . . requiring discovery from group members, regulating multiple class actions –
et cetera. Now, if your Honours look at footnote (103), there is a reference to his Honour Justice Finkelstein’s decisions in P Dawson Nominees v Brookfield Multiplex Ltd [No 2] [2010] FCR 176, which I will take your Honours to because it also appears in the decision of the Chief Justice in the court below.
If I can ask your Honours to then go in Brewster to paragraph 68. At paragraphs 68 to 81, their Honours set out a textual analysis of the relevant provisions of Part IVA of the Federal Court of Australia Act and Part 10 of the Civil Procedure Act. Relevantly, in paragraph 68, it is said that those provisions:
expressly provide for the making of orders distributing any proceeds of a representative proceeding . . . the occasion for the making of such an order is the conclusion of the proceeding.
Then about halfway down that paragraph:
That stage is the appropriate occasion for orders for meeting and sharing the cost burden of the litigation –
Pausing there, and foreshadowing where I will go, that statement was interpreted by the Court of Appeal in Haselhurst to mean that an order which purported to extinguish – they said “contingently extinguish”, but for present purposes we will just talk about extinguishing – the rights of group members cannot be made until the conclusion of the proceedings.
We do not challenge that proposition in this Court. What we say is that while in Haselhurst that was the basis on which the Court of Appeal overturned the decision of the primary judge, we are seeking to do something quite different by a different power, that is, the notice provisions are foreshadowing a step that my client will ask the Court to take in the event there is a settlement and there is an application for settlement approval. As a concept, there is no issue taken in this appeal with the concept that the extinguishment of some group members, no doubt unregistered group members’ claims, is something that would have to be done at the end, not during the conduct of the proceedings.
That explains, hopefully, some of what their Honours in the Court of Appeal go on to say. Can I ask your Honours then to go to paragraph 72, on page 263 of the bundle, where their Honours said:
The provisions of Pt IVA of the FCA and Pt 10 of the CPA envisage the identification of all group members so far as that is possible. That identification facilitates the distribution of any proceeds –
Which it does, and which his Honour the Chief Justice below records in his judgment. But what we say is that their Honours there were not purporting to say that that can be the only reason that the court may make an order requiring group members to come forward and identify themselves and provide trading data.
If your Honours then go to paragraph 73, referring to the fixing of a date for opt‑out which, in the New South Wales provisions, is section 162 – and I referred, I think, in opening to addressing the problem of a different type of “free riding” as is addressed in a CFO context here. Your Honours will note that at about line 4:
As this Court has noted, the opt out model adopted by Pt IVA of the FCA and Pt 10 of the CPA is designed so that a representative proceeding may continue even if group members are unaware of it –
And there is a reference given to Mobil Oil at [38] to [40], but not the relevant sentence that found its way into the Court of Appeal:
and group members “are under no obligation to identify themselves”.
And there is a reference given to the decision of Justice Finkelstein in P Dawson Nominees, which I will come to presently:
That said, both legislative schemes do allow identification of all group members . . . in order to distribute any proceeds. That this is so is apparent from ss 33V, 33X(3)‑(4), 33Z and 33ZA –
Materially, 33X is 175. So, what their Honours there have contemplated is that the identification of group members is allowed, and one of the provisions that makes that apparent is section 175, which is at issue in these proceedings. That is all I wish to go to in the decision in Brewster.
Your Honours should have received, I think, last night, two further decisions, which I propose to go to very briefly. The first of which is the decision of Justice Finkelstein in P Dawson Nominees v Brookfield Multiplex. This shareholder class action, I should say at the outset, was a closed shareholder class action. If your Honours go to paragraph 14 on page 4 of the judgment, your Honours can see that the defendant, Multiplex, seeks orders for discovery, and what they asked for were:
(1) litigation funding agreements and (2) certain trade information.
In paragraph 15, his Honour indicated that before he would consider the documents, it was:
necessary to consider whether –
there was:
power to order discovery –
And his Honour said that:
Section 33ZF –
which is the equivalent to section 183 in the State Act:
is a source of such power.
Then, in paragraph 16, his Honour said:
Although there is a power to make the orders sought under s 33ZF(1), it is another matter whether that power should be exercised. The starting point is that the class actions regime . . . is designed to require little or no active involvement –
I will not read the rest of it out, but your Honours can see what his Honour said. When I go to his Honour the Chief Justice’s judgment in the decision below, his Honour extracted paragraph 16 from this decision, but he did not extract the first sentence. The extract in his judgment begins:
The starting point is that the class actions regime –
Over to paragraph 17:
Given the intent of the class action regime, there must be some compelling reason demonstrated before a court will order group members to go beyond their otherwise essentially passive role.
So, in a different context, what his Honour was indicating in this judgment is that, as a matter of power, he could do so, but as a matter of discretion, there were some serious considerations he had to give before being persuaded to exercise that discretion.
What his Honour ultimately did do is that he ordered that the group members produce the litigation funding agreements, for reasons that perhaps do not matter, but in paragraph 23 we can see he says it is appropriate for them:
to disclose copies of the sixteen litigation funding agreements.
It was relevant to an issue which had arisen in those proceedings. He then deals with the claim for trading information. Then, if your Honours go to page 7, paragraph 31, his Honour said:
it is a common, if not an inevitable, feature of class actions that the defendant will be faced with uncertainty . . . This is partly because of the essentially passive role of group members, already discussed.
Partly:
because the identity . . . is not known.
I will not read the rest of paragraphs 31, 32 or 33 out, but they are all of some significance to this appeal.
GORDON J: Your short point is that there was no point adopting this discovery route in this kind of action because the class is not closed and even if you sent a notice, you would not know who to send it to – it is seeking discovery.
MS COLLINS: Yes. I think where your Honour is going is where we are going, with respect. We have proposed to go down the notice route. What I am relying on this decision for is the proposition that there is power to ask group members to do something in this case to give discovery. But your Honour is absolutely right, we do not know who they are. So, we cannot ask for an order for discovery by all the group members to produce their trading data because we do not know who they are.
GORDON J: So, to put it in a negative term, what you are seeking by this notice route is, in effect, discovery of that information. The same effect – that is, you will get produced to you information of – what we talked about before – dates, times, trading information, price.
MS COLLINS: Only in respect of those group members who choose to register.
GORDON J: Sorry, that is true.
MS COLLINS: What we will not obviously get is those people who have absolutely no interest in the class action and who, like many people I know, receive a notice – such as a notice issued under 175 – and just put it in the bin. That will not be produced. But in the ones of those who register, yes, it will be information which, firstly, identifies them and, secondly, gives details as to what their share acquisition’s price, disposals, loss, et cetera, were. I hope that answers your Honour’s question.
In paragraph 35 – just to complete the reference to this case – his Honour, Justice Finkelstein, said:
If the mediator were to be of that opinion –
that lack of information about quantum is standing in the way of settlement:
I would be inclined to make some kind of order requiring the provision the provision of funding information –
So, the relevance of this case is just that these are, obviously, matters that go to discretion and we would accept entirely that they would be matters that the Court would take into account in exercising its discretion. But, as to the question of power, and what ended up being described as a basic precept in the Court of Appeal, we say that they are inconsistent with that.
May I go now very quickly to the decision of the Full Court of the Federal Court in Treasury, which, again, should have been handed to – it should have been provided to your Honours’ associates. I am sorry for the late notice last night. This is a decision of the Full Court of the Federal Court comprising their Honours Justices Jagot, Yates and Murphy. It is reported at 252 FCR 1, and I will try and avoid getting dragged into the jargon, but may I perhaps explain first the nature of the order that was under consideration.
If your Honours go to paragraph 70, I might just take your Honours to what their Honours said there. Class closure orders generally – and to put in context, the appeal in this case arose in a context where there had been a class closure order made prior to a mediation or a settlement, so we were not talking about the exercise of a power under section 33V or 173 in approving a settlement, we were talking about steps leading up to the taking of a mediation.
Their Honours at paragraph 70 note – and his Honour the Chief Justice below said it was obiter and I accept it was – given the abandonment of a contention it is actually necessary to deal with the arguments lacking power. However, given they raise important issues – they then set out, some considerations. If your Honour may jump over to paragraph 72, on page 21 of the report, their Honours refer to the Commonwealth Parliament and the ALRC Report – to which I have taken your Honour to some parts – then the second reading speech. Their Honours said:
It must be accepted that the requirement for class members to take active steps to “register” in order to share in a settlement of a class action undercuts to some extent the opt out rationale underpinning the Pt IVA regime.
There is then a reference to the same last sentence at paragraph 40 in Mobil Oil. Then in paragraph 73 their Honours said:
Class proceedings are intended to require little or not active involvement by class members and class members participate principally for the limited purpose of taking the benefit or suffering the burden –
There is then again a reference to the P Dawson Nominees Case which is the one I have taken your Honours to. Then at the end of paragraph 73:
There must be a good reason to exercise the discretion to make a class closure order which may operate to deny the benefits . . . who do not opt out –
Again, this hits what we say is the difference between discretion and power. Just to perhaps give some context, if your Honours go back to paragraph 32, the order that was in question is there set out, and hopefully this will make the points I am making a little less obscure. So, there was in that decision an order, as part of a suite of orders that were made. Leading up to a mediation of the matter, an order was made:
Pursuant to 33ZF of the Act, any group member who does not opt out and who is not a Registered Group Member:
(a)Remain a group member for all purposes, including . . . being bound . . . but
(b)Subject to any further order of the Court, will not be entitled to receive a distribution from any settlement of this proceeding.
So, that is the context which is, we say, a quite different context to what we are considering in this appeal, and which, as I will come to, the Court of Appeal in Haselhurst disagreed with. Going back to paragraph 73, paragraph 74 on page 21 of this judgment:
Having said this, if a class closure order operates to facilitate the desirable end of settlement, it may be reasonably adapted to the purpose –
And I will not read all of those paragraphs out, but paragraphs 74, 75 and, I think, 77, are extracted in the judgment of the Court of Appeal below. I note in 77 again the proposition that:
Caution should also be exercised in relation to the stage at which a class closure order is made.
Then, in 79:
Whether it is appropriate to order class closure is a question of balance and judicial intuition. The Court must take into account the interests of the class as a whole in requiring class members to take steps to facilitate settlement –
That is all I wish to go to in that judgment – again, the point being that in a different context, a Full Court of the Federal Court took the view that under section 183, or 33ZF, there was power to require group members register, but that there would be discretionary questions which would arise about whether or not it was appropriate for them to order to do so, which we accept.
May I turn now, briefly, to the decision in Haselhurst. This is in volume 4, it is at tab 16, it begins at page 717. It is the decision of the Court of Appeal of New South Wales in Haselhurst v Toyota Motor Corporation (2020) 101 NSWLR 890. This considered a form of class closure order – by which I mean a different form of the order I just took your Honours to in the decision of the Full Court in Treasury. One can see at paragraph 25 the order that the Court was concerned with is set out. So, paragraph 25 on page 724 of the book:
Pursuant to s 183 of the Act, any Group Member who neither opts out . . . nor registers . . . shall remain a Group Member –
I will not read it all out. But if a settlement is reached which is approved:
shall be bound by the terms of the settlement agreement and barred from making any claim against the Defendant in respect of or relating to the subject matter of this proceeding –
There was a challenge below to the court’s power to make such an order. His Honour Justice Sackar below held there was such power and made the order which then went on appeal to the Court of Appeal. The Court of Appeal set aside the order and held there was not power. One may see from the terms of the class closure order here set out in section 25 that it was what I might describe as a more muscular form of class closure order which was the subject of some adverse comment by the court. In particular, in relation to the reference to:
bound by the terms of the settlement agreement and barred from making any claim –
do not appear in the Treasury order and were not viewed favourably by the Court of Appeal.
The Court of Appeal in this case considered what this Court in Brewster had said about the time for making of orders, distributing any proceeds being a conclusion of the proceedings, and, as I indicated earlier, applied that to a situation where there was an extinguishment of claims. So, the question of principle was that if you are going to extinguish claims, then equally one needs to look to what Brewster says about the proper time at which such an order can be made, and that that was not at a pre‑mediation stage, which was what the facts were here.
GAGELER CJ: So, you do not challenge Haselhurst?
MS COLLINS: That is right. We do not challenge the part I have just been dealing with. We do not challenge the proposition that if you are going to extinguish group members’ claims, that is, in essence, analogous to a distribution of proceeds in Brewster terms.
GAGELER CJ: Given that we are concerned with a difference of view between two courts, has Haselhurst been accepted in the Federal Court?
MS COLLINS: No, it has not. So, there is some criticism of Haselhurst in the decision of the Full Federal Court in Parkin v Boral, which is what led – so, in terms of sequencing there was firstly, obviously, this Court’s decision in Brewster; then the Court of Appeal’s decision in Haselhurst, which is this one; then Wigmans, in fact, looked at the notice power, and it said there was no power under 175 to issue what I have described as the foreshadowing order or the notification; then the Full Court of the Federal Court in Parkin v Boral said Wigmans was plainly wrong.
What they said about Haselhurst was they distinguished it because of what I have described as the more muscular form of the class closure order – and I am not going to go into that; it is not relevant to the application. But then we went back to the Court of Appeal in Palas, the decision below, and said, well, in light of what the Full Court of the Federal Court said in Parkin v Boral, please, can you reconsider Wigmans. That was what has led us to here.
But what I should take your Honours to is paragraph 53 of Haselhurst, which we do challenge and did challenge. Specifically, we challenged the application of this reference to Mobil, to that same last sentence in paragraph 40 of Mobil, the reference to an application in a different context in Wigmans. So, at paragraph 53, on page 730 – perhaps just to introduce this, in 52 his Honour is making some criticisms in relation to order 16, which is the class closure order, including a reference to the “barred”, and then in 53, his Honour said:
An order having such an effect is permitted in two circumstances: approval of settlement (s 173) and judgment –
We accept that. Then his Honour went on to say:
As the High Court explained about the then‑existing version of Pt 4A . . . in Mobil . . . the evident legislative intent of representative proceedings is that:
“[40] . . . Group members, however, need take no positive step in the prosecution of the proceeding to judgment to gain whatever benefit its prosecution may bring.”
What we complained about, and what we complain about, is the characterisation of that last sentence as the “evident legislative intent of representative proceedings”. I have taken your Honours to some of the explanatory material and to what this Court has enunciated or described as the underlying purpose, or objective, or intent of representative proceedings, which are in terms different to what his Honour has picked up from Mobil. His Honour then, at 54, said:
The same remains true of Pt 10 . . . Group members need take “no positive step” in the prosecution of the proceeding to judgment to gain whatever benefit its prosecution may bring, whether that benefit arises by a settlement (s 173) or a judgment (s 177).
STEWARD J: Ms Collins, would you submit that in this area, the approach of the court below in New South Wales – it is a bit like they have adopted the rejected equity of the statute doctrine. Namely, we have an assumed concept in the back of our minds of an a priori class action, and we are going to read the plain, clear words down to bring it back under control.
MS COLLINS: Yes. Yes. May I give your Honour a more considered response after the luncheon adjournment, but I think yes, I think that is, in substance, what we are saying.
EDELMAN J: That is in a little tension with your acceptance of the result in Haselhurst.
MS COLLINS: We say it is not, with respect, in tension with our acceptance of the result, because a proper application, we say, of the Court’s decision in Brewster and how the statutory scheme provides for the timing of certain aspects to be taken, explains the result in Haselhurst. In particular, what we say is, because we do not challenge the result of Haselhurst, that does not mean that I am bound to accept each and every word or sentence that appears in this judgment. When I come to go through what happened in the decision in Wigmans, your Honour will see that there is, effectively, a step up again of that concept. That is what we have complained about, and did complain about, in the court below.
EDELMAN J: Yes. It may be matters of degree then, but the submission that you are making about paragraph 53 might be made about the approach taken in Brewster as well.
MS COLLINS: Well, I am not so sure about that, your Honour, with respect. We think Brewster was – there is a reference to Mobil in Brewster, but it was in a quite different context, and we think, read conceptually, there is not any impediment in Brewster upon – let me retrace my steps. We do not see any need, nor do we attack anything that was said in Brewster as part of our attack upon the Court of Appeal’s decisions, because we do not think we have to, and we have accepted, as obviously we must in an unqualified manner, what this Court said in Brewster.
GORDON J: Your proposition is, as I understand it, a reference to that last sentence in Mobil. They recognise that group members need to take no positive step under the statutory scheme, but the statutory scheme recognises they may.
MS COLLINS: Yes.
GORDON J: And your third limb is, and there is power to compel them to take a step.
MS COLLINS: In certain circumstances.
GORDON J: In certain circumstances.
MS COLLINS: Yes, exactly. That is why I went to Treasury and why I went to P Dawson Nominees, and while considering a separate limb of power – a separate head of power – that is what those decisions are; authority for the proposition that there is power, albeit that when exercising the discretion, there are various important matters that one would need to take into account. Really, what this part of Mobil, we say, directly relates to are questions of discretion about whether or not, given the nature – the context of scheme – one would require a group member to take a positive step.
Moving forward, or perhaps jumping ahead, the position we are in here is that my client wishes to issue the opt out and registration notice and wishes to include the notification and it is not opposed – well, at least at the moment it is not opposed. Certainly, there is no opposition to the question of power. I do not know what ‑ ‑ ‑
GORDON J: Do you go so far to suggest that if there is no power to issue a notice of this kind foreshadowing the order, and seeking information of the kind you have described, it would frustrate the statutory scheme?
MS COLLINS: Yes, I do, your Honour, because one of the legitimate bases in which a settlement may come to an end under the scheme is through a settlement, and I indicated it seems to us that when the court is exercising its decision to approve or not to approve a settlement, one needs to have regard to the interests of group members – that is clear – and whether or not the scheme is fair and reasonable, and one needs to know a certain number of things before one can make that decision. I mean, in one case X dollars may be entirely fair and reasonable for a class, and in another case it may be completely unreasonable.
BEECH-JONES J: Ms Collins, to pick up the answer you gave to Justice Gordon, you do not actually seek an order compelling the production of information; you just want to tell them, in perhaps strong terms, it is a really good idea if they do.
MS COLLINS: Yes, that is exactly right, and to some extent when I am going through all of this it sort of begs the question as to why is this relevant, but when one gets to Wigmans that is exactly what was adopted and applied to the notice power, so I have sought really just to ground what the reasoning process was and then to explain the question of application.
Just before I leave Haselhurst, there is just one other reference I should direct your Honours’ attention to at paragraph 87, and that is on page 736 of the bundle at about point 4:
A group member bombarded with detailed information . . . need take no positive step –
It is the same point. Then his Honour said:
Once there is an amount of money available, whether by judgment or settlement, the group member will then have to take a positive step to share in the proceeds.
Now, that seems, with respect to his Honour, to be suggesting that there is only power to require group members or to ask group members to provide information in the form of registration data either once a claim has settled – it is not clear whether he would mean the settlement approval and then that has got the circular problem that I have identified earlier about how a court would be able to settle – or after a judgment, and that would relate to the provisions of 177 and 178.
GAGELER CJ: Was P Dawson dealt with in this judgment?
MS COLLINS: May I just ask someone. I do not remember is the answer. Someone, perhaps, could look that up.
GORDON J: It is dealt with at paragraph 71.
MS COLLINS: Thank you, your Honour. Yes, thank you, your Honour, but in the slightly different context of talking about redefining or altering the class definition so that it becomes a closed class, not an open class. But the question of power ‑ ‑ ‑
GORDON J: Is in 94, I think, where Justice of Appeal Payne takes Treasury and then quotes from that decision, which itself picked up paragraph 73 to which you took us in ‑ ‑ ‑
MS COLLINS: Yes, your Honour is entirely right. Thank you. So, it is on page 738 of the report in quoting Treasury, which I did take your Honours to. May I go – and I will try and move more speedily – the third proposition we make in this Court is that the court’s power to approve a notice to group members is not subject to, first, ensuring that there is no actual or potential conflict of interest between the representative plaintiff or its solicitors and the group members, which, again, was a matter that had some attention in the Court of Appeal.
Your Honours will be aware that as between my clients who seek to issue the opt out and registration notice containing the notification, regardless of the position that the plaintiffs ultimately take, there is no question of conflict because we are just adversaries in litigation, but what we say is the court’s power under sections 175 and 176 to order that notice to be given and to approve the terms is not subject to an implied legislative requirement that they first be satisfied that all actual or potential conflicts on the other side of the record have been eliminated.
If the converse was the case, we say that in the context of a large class action a notice could never be issued to group members because it is a constituent part of the scheme that the scheme recognises that there will be group members with a common interest with other group members but they will have their own individual interests which may, of necessity, depart from others within the scheme or from the lead plaintiff or both.
By analogy, we would say that if it were the case that a power under Part 10 could never be exercised without having first eliminated or ensured that there was no conflict involved, the power under section 173(1) to approve a settlement could never be exercised in circumstances where there was a body of group members who were unknown and who had not come forward, and on approving the settlement, necessarily, they will not be entitled to benefit whereas the others will. We do accept that the existence of a conflict is relevant to the discretion, whether or not to order a notice be given of a particular matter but not power. I will, perhaps, otherwise leave that for Mr Edwards to take up.
The fourth and final proposition, we say, is that the existence of an alternative procedure to the class closure order does not inform the question of power. When I come to the Court of Appeal presently, your Honour, and there is some reference – I have taken your Honours to in Haselhurst – to what, using a description that perhaps is my words and not their words, the court considers would be a reasonable alternative to, in Haselhurst, a class closure order or, in Wigmans and the decision below, a notification. The preference – if I can use again my word, not their word – that the Court of Appeal has indicated that they would have, which they say would solve the problem, would be to amend the group definition so that it became a closed class.
What we say about that is that there is no principle of statutory interpretation, with respect to their Honours, that the court has no power to order X if Y in the court’s view is more desirable. Although, again, it may be a matter that goes to discretion. My clients’ clear position has always been that we wish to have finality so that there are no – to the extent possible, and I accept your Honour Justice Gordon’s comments about opt‑outs, but to the extent possible, we wish to have finality. I was going to, finally, just go to the decision below. It is in the core appeal book ‑ ‑ ‑
JAGOT J: Could I just raise an issue which is your – the distinction between “discretion” and “power” may not be black and white in certain cases. If, on the facts, as they are – which are clear – no exercise of discretion could ever be proper, it would be necessarily an improper exercise of discretion for the same reasons that are put against you in relation to power. Does the label “discretion” and “power” have some significance? Justice Finkelstein’s basic point was, look, you cannot really do this unless there is some compelling reason which might arise out of all sorts of factual contexts that cannot be predicted, but in this case we know the precise factual context.
MS COLLINS: Yes.
JAGOT J: I am just wondering – this constant distinction between there is power but, maybe as a matter of discretion, whoever is deciding would not do it.
MS COLLINS: Yes. May I say I admit to the possibility that your Honour Justice Jagot has adverted to, and that is that there will be such a case that it is so obviously something that ought not be done that it becomes a question that the power could not possibly have contemplated that, but we say this is not such a case. What we know is that there are – the parties on both sides of the Bar table wish to obtain further information so that they may discuss the possibility of a settlement. That will be a matter relevant to discretion. In the Multiplex decision I took your Honours to, the application for discovery was vigorously opposed by the plaintiffs. We have a different situation here, but I accept the possibility that there will be a case.
JAGOT J: But the only purpose of the orders in this case is to protect your client against a long unknown tale of liability and possibly then increase the recovery of the people who do register at the expense of the people who do not register and who will thereby have their claims extinguished in circumstances where the class could be closed before the mediation in the sense – or by amendment of the claim to exclude people who have not registered. I mean, would those basic facts – you would say it was – well, that there was a discretion. It might be on those basic facts that you can never lawfully exercise a discretion to make this kind of order.
MS COLLINS: We say, with respect, that they are not the facts in this case. The facts in this case are my client – and I think the plaintiff; I will let him speak for himself – wishes to encourage people to register. That was the original purpose that we had put to the Court of Appeal. Additionally, the evidence to which I went very quickly of Mr Betts was that we wished to obtain information necessary to enable a proper assessment of the value of claims. Absent some form of registration process we cannot, either of us, identify whether it is a claim with X or a claim with Y, taken on its best day and ‑ ‑ ‑
STEWARD J: As I understand it though, the registration bit of the order is not in issue. Is that not right?
MS COLLINS: That is exactly right, your Honour.
STEWARD J: All that is in issue is you can also add in your warning.
MS COLLINS: Yes, that is exactly right, but the Court of Appeal took the view that, although the Court of Appeal accepted that registration was not in issue and there is power to order registration, they did not like the notification and they said that inclusion of the notification made the order approving the notice or authorising the issue of the notice beyond power.
JAGOT J: Sure, nobody has an issue with you exhorting people to register. There is no issue with that at all. It is only with: you will apply for this order. That is all.
MS COLLINS: Yes. That is the precise issue that applies in this Court, but the evidence below, which is in Mr Betts’ affidavit, is that this notification makes a difference in terms of – if it did not make a difference, then we would not be here having this debate, but it does make a difference, because if it is there, it encourages more people, rather than putting the notice that they get in the bin, they think, maybe I will do it now as opposed to later, and avoid a situation whereby, perhaps, on the basis of a certain population of registrants, the parties agree that X is an appropriate amount to settle the proceedings, then a notice of settlement is issued and the registrants triple or quadruple or even more, and all of a sudden, X becomes completely inadequate. That is one of the reasons. Yes, the information available prior to the negotiation process is important, for that reason.
BEECH‑JONES J: Ms Collins, if there is no notation that you will apply for the order, but there is something about registration, what is the – the scenario that would unfold would be, there is a mediation that might reach a settlement. You then stand up at the time of approval and say, we seek an order to this effect. Notice will then have to be given of the settlement, presumably of the fact of that order at that stage, would it not?
MS COLLINS: I think the timing would be: we issue a notice asking for registrations. There is a mediation, assuming there is a settlement in principle. Then one goes to the court and tells them there is a settlement in principle, and the judge then authorises the issue of the notice telling people of the settlement, which is one of the statutory requirements, to tell them about the settlement. But the problem is if, then, a whole lot of people come out of the woodwork and register, it might invalidate the number that the parties have agreed upon. That is the difficulty.
BEECH‑JONES J: But as part of that process, when the judge is then told about the settlement, you would then foreshadow the order you would seek, would you not?
MS COLLINS: Yes, and I would think it would be in the notice of settlement as well.
GORDON J: What did you just say then? It would be in the what?
MS COLLINS: It would be in the notice of settlement as well.
GORDON J: Thank you.
MS COLLINS: Because it would be an important matter, because it would tell group members about their rights. But what we are really seeking to do is to just bring that step forward, which we say is authorised by the notice power, because it has the practical benefit of the parties having a better appreciation of the size of the class and the amount that is necessary to come to a proper settlement.
BEECH‑JONES J: And on that scenario, where it is notified in the settlement, it might depend on the settlement, but if the settlement was capped at an amount, then the question would be whether the court would approve it in light of, perhaps, more people coming forward ‑ ‑ ‑
MS COLLINS: Precisely.
BEECH‑JONES J: ‑ ‑ ‑ or whether, if it is perhaps not capped, your client turning around and saying, that is not the settlement we agreed to.
MS COLLINS: That is absolutely a possibility. What the evidence was, was that the notification, which the evidence describes as a form of class closure order with respect to Mr Betts, is a bit distracting, but the notification helps avoid or reduce uncertainty. And that is the reason why we say it matters, for all of those reasons.
JAGOT J: Well, there are other ways to reduce uncertainty, but you say that does not go to power.
MS COLLINS: We do, and if your Honour has in mind the redoing of the group definition, we do say that does not go to power, but, in addition, it would not give effect to one of the objects of the scheme, which is achieving one single, binding decision, because it would – excepting, as your Honour Justice Gordon raised with me, there will be people that have opted out, but at least we know who they are, and we can check what the nature of their claim is, but we will not otherwise know who might seek to – if there is an amended group definition confining it to those who have registered for X dollars, what will come out after that, and how many people will say, if they were prepared to pay X for that, then I would like some more, and I will institute some more proceedings – which is a matter which is important to my clients, and which is one of these many competing purposes underlying what is, undoubtedly, a statutory scheme which has within it a number of compromises.
We say the existence of the different imperatives behind the scheme underscore the desirability of discretion because the court then can make decisions about what is appropriate in the circumstances of the particular case.
JAGOT J: Also, the form of the particular wording. Your wording is, you will apply. Other wordings could be more open. You are saying, well, if there is discretion, it can allow for whatever seemed to be appropriate in the circumstances.
MS COLLINS: Yes, and I mean, your Honour Justice Jagot will know better than anyone, often judges at first instance completely redo notices that go out because they do not like the notice that the parties have handed up. I mean, at the moment, the notice says, Lendlease will apply, because that is the position my client takes, for the reasons that I have explained about the need to ensure finality.
I note the time. I was just going to very briefly draw your Honours’ attention to those parts of the judgment of the court below that we say are in error. Firstly, in core appeal book page 18, paragraph 12 – this is the decision of his Honour the Chief Justice – his Honour indicated that there are two purposes which inform and underlie. Firstly, the encouragement – and then I think this is the point your Honour Justice Jagot raised with me – the second, unstated purpose is to put us in a position of saying that they ought not participate at the end.
Now, we do not accept, with respect, that that was a purpose of it, although I accept that that is possibly an effect, or a consequence, of it. In paragraph 13 – and his Honour accepts that:
From a commercial perspective, it is tolerably clear that Lendlease wishes to go into any mediation having an appreciation of the number of group members who would be bound by any settlement –
He then talks about Haselhurst. May I ask your Honours then to go to 23. This is the second issue in the appeal which I might just rely on what we have said in writing about that, but your Honour will see at page 23, paragraph 23, his Honour is dealing with the sequencing that there was first a decision in Wigmans, second a decision of the Full Federal Court in Parkin v Boral which said Wigmans was plainly wrong on this point, and what the Court of Appeal ought do in that situation – and his Honour said:
what a Court is to do in circumstances where neither of two competing interpretations can be said to meet the onerous threshold of being “plainly wrong”. Where one of those decisions is that of the same Court which has previously expressed a view on the matter, that Court should adhere to its previously expressed view.
Now, may I go back to a question your Honour the Chief Justice asked me at the start of ‑ ‑ ‑
EDELMAN J: Who makes the – sorry, finish your point.
MS COLLINS: Your Honour asked me if one or other of the questions were dispositive. I think we need to succeed in relation to both of them in order for – in other words, if your Honours do not accept the ground 2 – that is, the test that is enunciated in paragraph 23 was not the correct test – then we will be left in a position where the Court of Appeal will just say, well, we prefer our own decision and that is what Wigmans have done as opposed to what the Full Court in the Federal Court has done.
GAGELER CJ: We are concerned with what is the proper construction of the legislation.
MS COLLINS: Yes, quite, but I think your Honour asked me a question about whether issue 1 was dispositive, and I think, in fairness, I have to say that I probably need to succeed on both of them.
GAGELER CJ: Yes, and I am not sure I accept that.
EDELMAN J: It may even be that issue 2, on one view, is not even a question for this Court. It may be that questions about the rules of precedent in an intermediate appellate court are rules for the intermediate appellate court.
MS COLLINS: Yes. May I come back to that one. I will take that question on notice if I may, your Honour. Can I ask you ‑ ‑ ‑
GAGELER CJ: I think you had decided just to rely on your submissions on the second ground.
MS COLLINS: Yes, but I do not think we have addressed specifically the question that his Honour Justice Edelman has just put to me. At paragraph 66, there is a reference to Wigmans, and I will not read it out because I am out of time, but there is then another reference in 67 where his Honour the Chief Justice outlines what Wigmans said. Your Honours can see that in 67, in particular, the Court continued using the language referred to in Mobil that what was contemplated by the parties in those proceedings would offend a basic precept of the scheme and then give rise to a conflict between those who are registered and who are not.
May I then take your Honours to the consideration which starts at page 45, paragraph 93. Paragraph 96, there is reference to the decision of this Court in Brewster. I will not read all of paragraphs 96 through to 100 out, but what we say about them is that they evidence the Court of Appeal having addressed what we describe in the submissions as a top‑down analysis, which we say was the wrong approach in that the Court of Appeal identified a basic precept based on one statement in one paragraph of Mobil Oil and then used it as a controlling mechanism when it, in least in the court below, went on to consider questions of text, context and purpose. So, we say that was the wrong way around. In paragraph 99 on page 47, the Chief Justice said:
There is a world of difference between what is already a closed class and an open class of the kind with which the High Court in Mobil Oil was dealing.
With respect to his Honour, we do not see that that is the case when it comes to the question of power. It cannot be that there is power under section 175 to include a notification where there is a closed class, but there is no power to include a notification where there is an open class. For reasons including sometimes, as your Honour the Chief Justice in particular will know, class actions commence as a closed class, then they open, then the close again, and that would then be a rather invidious position of understanding what the position was.
In paragraph 102, the Chief Justice referred to that passage of P Dawson Nominees that I took your Honours to, but he has not extracted the first sentence, which was the point that went to power. If I can ask your Honours then to go to 104 and 105, reference to turning the statutory scheme on its head:
requiring group members to opt in to the group prior to any settlement –
If your Honours then go to 107, there is a reference to the conflict of interest which his Honour was concerned about and said went to power. If your Honours then go to paragraph 110, there is a difficulty, we would say, with respect, in relation to this paragraph in that what his Honour at paragraph 110 was directing himself to was a situation which will apply at an application for approval of a settlement. So, the third sentence in fact in paragraph 110:
If the representative plaintiff and defendant are jointly seeking an order which results in registered group members obtaining compensation, and unregistered group members receiving nothing and being barred . . . the same insoluble conflict is present.
That may well be so, but that is a question which arises at the section 173 stage of approving a settlement, not at the notice section. In that respect, his Honour, with respect, seems to have conflated different stages and different powers which appear in the statutory scheme. Paragraph 115 and following deals further, and his Honour talks about:
a conflict which is created by the orders being sought.
If there is a conflict – and we do not accept at the stage of issuing the notice that there is necessarily a conflict – it is created by the registration process, not by the orders, we would say, which would relate to the inclusion of the notification. Then at 117, there is a reference again to what his Honour describes as a:
ready solution to the difficulty.
of amending the class definition. Then at 119 and following, his Honour gives his textual analysis which I have really outlined in my positive case. Finally, may I ask your Honours to go to the decision of Justice Leeming – the part of it begins at page 59, paragraph 139. Page 63, paragraph 153, his Honour said:
Fundamental precepts also play a role in statutory construction.
I will not read the rest of that out. What we would say about what his Honour has said is that there may well be cases where something like a fundamental precept or a basic precept is a matter that needs to be considered. It is not all cases. But what the difficulty with the Court of Appeal’s decision in Wigmans and the decision below is, is that they used basic precept as a controlling factor for the other canons of statutory construction: text, context, purpose.
In other words, they have drawn it out from Mobil, and they have then sought to use it as a controlling influence when one looked at the proper construction of the text, the context and the purpose. Your Honours will just note that at 156, his Honour accepted that:
It was not deployed to connote an “absolute rule”.
Then, 157 and 158 I will not read out, but which are, likewise, significant. May I just go back in relation to what I said about both issue 1 and issue 2. We do not succeed on issue 2. If we succeed on issue 1, then that will be sufficient because your Honours will have articulated what resolves the controversy as a matter of principle between the intermediate appellate courts. But if we succeed on section 2, that will not be dispositive of the appeal because the underlying issue, which is issue 1, will not have been determined.
I am sorry, I have gone a bit over time. Unless there is anything further, those are my submissions.
GAGELER CJ: Thank you, Ms Collins. Mr Edwards.
MR EDWARDS: May it please the Court. The representative plaintiffs submit that the court has power. They wish to address separately one aspect of the Court of Appeal’s reasoning, namely, the contention that there is a lack of power because the making of orders for notification, it is said, would create an insoluble conflict of interest for them. Chief Justice Bell addressed his reasons to that at about paragraph 115, and he emphasised those words, if your Honours take up the core appeal book, at paragraph 52.
The contention that the giving of notification creates a conflict, in our submission, cannot be correct. The plaintiff has undertaken no act at that time. There is no firm intention on its part to take one course rather than another; it has reserved its position. My learned friend’s client has, it would seem, no firm intention to seek such an order at the end of the proceedings, but that is not the plaintiffs’ ‑ ‑ ‑
GLEESON J: But the notice does suggest a firm intention on the part of the plaintiff. I am not saying that means that the notice would create the conflict, but is that not the language of the notice?
MR EDWARDS: It is framed in the alternative at appeal book 75, your Honour. It says:
the parties, alternatively, Lendlease, will seek an order –
as your Honour has seen. But, as was recorded in the President’s decision, at paragraph 128, at core appeal book page 56, while that may come close to suggesting that there is such an intention, as her Honour says:
notification in the present case is drafted with the alternative that the application might only be made by the defendant might suggest that there is not yet such a firm intention at present on the part of the representative plaintiff.
That was the position that was communicated both in correspondence and to the Court of Appeal.
We say that when one steps back from it, the occasion for notification – whether one calls it a “matter” or an “event” – may arise simply because of the defendant’s intention, even if that was not in any way in contemplation, shared by the plaintiff – even if it were firmly rejected by the plaintiff. To answer your Honour Justice Steward’s question, the representative plaintiff would want to notify that to group members. It would be a proper thing to do. That, in my submission, indicates that the presence or absence of a conflict of the kind described by the Chief Justice really cannot go to power.
The circumstances which may give to a conflict might exist already. They might come into existence at a later point in time. Your Honours have heard something about how registration processes occur in these cases, but there are plenty of people who hear of a proceeding publicly by various means who indicate that they are interested – they choose to register. They might do so absent prompting. They might do so all the way through the case. Their information may be informative. Our friends say it is necessary, but it may be merely informative. But the fact of that situation does not, of itself, mean that a representative plaintiff ceases to consider the interests of all group members. With respect to his Honour the Chief Justice ‑ ‑ ‑
GAGELER CJ: Let us just step back a little here. There will be a difference in the interest of the representative plaintiff and the non‑registrant group members, will there not?
MR EDWARDS: Potentially, yes.
GAGELER CJ: Which will have to be managed.
MR EDWARDS: It will have to be managed. But it should not be presumed, we would say – as the Chief Justice, with respect to him, does – that the plaintiff is going to throw away the interests of the unregistered group members.
GLEESON J: The problem arises from the state of mind of the representative plaintiff. It does not arise from the fact that the court orders a notice informing of the fact.
MR EDWARDS: I would accept that, your Honour. And we say that that is an error in his Honour’s judgment, at paragraph 115.
BEECH‑JONES J: Do you say the time to manage it would be when the order is sought, say, by Lendlease, and if that means appointing a separate representative of the non‑registered claimants, so be it?
MR EDWARDS: Yes, your Honour. And could I invite your Honours to take up the Full Court’s decision in Parkin, which is at the joint book of authorities at 833, because this is dealt with expressly by their Honours. If your Honours have the joint book of authorities at 865, which is paragraph 126 of the reasons – this is in the reasons of Justices Murphy and Lee. His Honour Justice Beach concurred in a one‑line judgment, so it is the judgment of the Full Court unanimously. At paragraph 126, what their Honours record is the contradictor’s submission in that case:
that the practical effect of the proposed order would be to create an “insoluble conflict” of interests.
And then, about halfway through that paragraph, their Honours say this:
Part IVA contemplates that the conflicts will be addressed through the representative applicant’s duty not to act contrary to the interests of the group members and, critically, by the Court exercising its protective role in relation to group members’ interests.
And then, after citing something his Honour Justice Beach had said in another case, at 127 their Honours say:
It is fundamental to how Pt IVA works, and cardinal to a representative applicant’s role, to be able to deal with the “claims” of group members (to use that word in its specific, Pt IVA sense) by settling them, subject to the approval of the Court under s 33V, while the Court is exercising a supervisory and protective role (accompanied by an order being made by the Court pursuant to s 33ZB to bind the non‑party group members to the Court‑approved quelling of the dispute by way of settlement).
The exercise of power that the court will be engaged in at the end is one which is approving the settlement and making orders with respect to its distribution. Section 33V or 173 directly circumscribes the representative’s capacity to effectuate a hypothetical future situation which is in conflict, because the court must look at whether the settlement is just or ought to be approved; whether the distribution is just or ought to be approved.
GAGELER CJ: So, you are really better off not denying the conflicts, but saying that the notice is part of the tool that is used to manage the conflict.
MR EDWARDS: And I am coming to that. We would accept that the circumstances that might give rise to a conflict exist. Views may differ about whether there is, in fact, a conflict at any given time. It should not be presumed that the representative plaintiff will act in breach of his fiduciary duty but, as their Honours say ‑ ‑ ‑
GORDON J: But is it not any more than to recognise, as the court does, that conflicts can and do arise?
MR EDWARDS: Yes.
GORDON J: There is a duty that the representative plaintiff has. The court has an overriding supervisory jurisdiction, and it has a bundle of tools – to pick up the Chief Justice’s question – available to address conflicts, including changing the definition of the group member definition, dividing the group members into different classes and appointing different people to represent them, appointing different people to represent particular aspects both at settlement and otherwise, in order to ensure that their interests have been protected.
MR EDWARDS: My point, your Honours, is it is not just a question of what the court might do. When we are dealing with settlements – and this is the context in which this whole debate arises – something the court must do, section 33V, as their Honours Justices Murphy and Lee say in paragraph 128:
Either way, there must be an exercise of power by the Court under s 33V –
There is no situation in which there will not be an exercise of such power. And their Honours go on to say – and it is, in my submission, worth dwelling on, given the experience of, particularly, these judges with this kind of jurisdiction – in paragraph 130:
If and when the Court is preforming the function of considering a s 33V application, it will be focussed upon the determinative question as to whether the proposed settlement is “fair and reasonable having regard to the claims made on behalf of the class members who will be bound by the settlement” and “has been undertaken in the interests of class members, as well as those of the applicant, and not just in the interests of the applicant and the respondent(s)” –
And the court, in the practice note to which it has been referred, has developed – and it is reflected in the Supreme Court’s practice as well – procedures for ensuring that information is placed before the court by independent counsel, in a sense, counsel acting as officers of the court rather than as mere advocates, to provide the court with the information that it requires in order to make that judgment.
GAGELER CJ: Now, presumably, one of the factors that will be taken into account under section 33V in asking, is this settlement fair and reasonable, is the fact that notice has previously been given to non‑registrants, giving them the opportunity and the encouragement to register.
MR EDWARDS: Yes, yes.
GAGELER CJ: So, this notification factors into the ultimate balancing?
MR EDWARDS: It most certainly does. And as their Honours go on to say – at paragraphs 133 and 134 of this decision, they first say:
By deferring to the s 33V stage the question of what should happen to the claims of Unregistered Group Members, any suggested “insoluble conflict” must be considered in the context of a legislative scheme guarding against precisely such conflicts –
Then they say in terms:
it may be that the existence of a conflict of interest is a reason why the Court decides that it is appropriate to order –
the notice.
GORDON J: What paragraph is that, Mr Edwards?
MR EDWARDS: It is paragraph 134 at 867.
GORDON J: Thank you.
MR EDWARDS: This is an important passage because ‑ ‑ ‑
GAGELER CJ: Mr Edwards, how long will the balance of your submission be?
MR EDWARDS: A couple of minutes your Honour.
GAGELER CJ: Take the couple of minutes now.
MR EDWARDS: It is an important proposition, your Honour, because what their Honours are saying, particularly in paragraph 127, is that, if we are talking the language of fundamental precepts or otherwise, something that is fundamental to Part IVA and to Part 10 is the supervisory jurisdiction of the court directed to protecting group members’ interests.
With the greatest respect to his Honour the Chief Justice, his Honour does not engage with that in his Honour’s reasons. His Honour refers to the conflict of interest argument. His Honour asserts that the making of the order creates it. But his Honour – with the greatest respect to him – does not engage with this long line of jurisdiction about the fundamental role of the court in this kind of proceedings, which is quite different from other
sorts of proceedings, so that when his Honour says, as his Honour does in paragraph 114:
The conflicts arising in such circumstances are familiar. They arise in all civil litigation –
Well, perhaps, but this is a particular kind of litigation with particular statutory protections through the role of the court and, given that this is in the settlement context, requiring the role of the court.
May it please the Court.
GAGELER CJ: Thank you, Mr Edwards. The Court will take the luncheon adjournment.
AT 12.53 PM LUNCHEON ADJOURNMENT
UPON RESUMING AT 2.15 PM:
GAGELER CJ: Ms Morgan.
MS MORGAN: Thank you, your Honour. Your Honours, the question for this Court is not about the collection of data to assist at a mediation. There is no issue that group members can be asked to provide the data the parties are seeking. My friend has described that request as asking group members to, quote, “participate” in the class action. We would not adopt that description.
In an opt‑out regime, a group member, by definition, is participating in the class action unless and until they opt out. A voluntary request for information is not asking that a group member “participate”, in Ms Collins’ language, it is merely seeking information that the parties are of the view will assist in the mediation. The question for this Court is whether a notice could be issued subject to section 175(5) to notify a group member that, if they fail to register, they are at serious risk of being bound to the result, extinguishing their claims, and yet barred from sharing in the proceeds of settlement.
Our primary position is that is inconsistent with the opt‑out scheme created by Part 10 because that creates an opt‑in mechanism when the scheme only requires opt‑in at the time of a settlement, after the issue of a notice, or at the time of judgment – also after the issue of a notice. The proposed notice requires opt‑in prior to either settlement or a judgment. We say, there is nothing in the text of Part 10 or in the text of 175(5) which would empower a court to issue such a notice.
What I propose to do, your Honours, is to go to the notice in a little bit more detail than Ms Collins, identify aspects of the scheme that we say are important, and also take your Honours to a few more paragraphs in Brewster that we say will assist your Honours in interpreting the “power” question that is before you.
GAGELER CJ: Do you support all of the reasoning of the Court of Appeal?
MS MORGAN: Yes, your Honour. I think that is my role as contradictor. I place a different emphasis – as your Honours will have realised – on the opt‑out nature of the scheme, but I also have adopted, in my written submissions, and will deal with whether the text of 175 is sufficient to give power and whether 176 can give more work to do to 175 – I will deal with that very briefly. But our primary position is that, following Brewster, we say, does not permit the court to use 175 in this way.
So, turning to the notice, if I could ask your Honours to look at appeal book page 67. As your Honour Justice Beech‑Jones pointed out, this notice also is to satisfy section 175(1)(a), in the sense group members – although this was commenced many, many years ago – still do not know that this – have not been notified that this class action has commenced, and this will also operate as the notice in relation to opt‑out. If your Honours start with the first page of the notice at 67, you will see at the top of the notice it is described as an:
OPT OUT AND REGISTRATION NOTICE –
Next, underneath the proceedings title, where the group members are told, in the event they receive or they see this notice, that the notice is:
ISSUED PURSUANT TO AN ORDER OF THE SUPREME COURT –
So, it is telling group members that someone has looked at this in the court who is looking after their interests and has permitted this notice to issue. Then we get a description of what is described as the options. They are described here as 1, 2 and 3. They are later identified as “Option A”, “Option B” and “Option C”. The very first option is described as:
Register to participate in the class action –
Now, we say there is no concept of registering to participate in the class action. That is exactly what the scheme does not let you ask a group member unless and until their settlement and unless and until there is judgment. You are a group member, you are participating, and so asking them to participate through this process, we say, is beyond power.
STEWARD J: Just pausing there one moment, I am sorry, Ms Morgan.
MS MORGAN: Yes, Justice Steward.
STEWARD J: Ms Collins said that the registration and opt‑out bits of the notice were not objected to. That is wrong? You do object to the registration?
MS MORGAN: We do not object to the registration – which is how I started – if it was a voluntary registration, which is not telling you if you do not register you are not participating in the class action and we propose to have your claims extinguished and you will not share in the settlement.
STEWARD J: So, the form of this registration request is what you object to?
MS MORGAN: Correct, because that is how the so‑called notification – so, it came up to the Court of Appeal with just a notification in the separate question, the Court of Appeal said, well, we need more than just that. This notice was then drafted after the hearing and written submissions were sought on the form of the notice that was before them, which is now appendix A.
STEWARD J: So, you see, the essence of what you find offensive and inconsistent with Part 10 and Part IVA really starts with the form of registration. That is, you must ‑ ‑ ‑
MS MORGAN: Compulsory.
STEWARD J: ‑ ‑ ‑ register and you will then get that benefit.
MS MORGAN: Correct.
STEWARD J: You opt‑out, you will not get that benefit and then the warning.
MS MORGAN: And you do nothing, you do not get to share, and you get your claims extinguished.
STEWARD J: Well, no, there will be a submission put that you do not get to share.
MS MORGAN: Well, we know, from what Lendlease has said, is the settlement will be called off if it does not get approved in that form.
STEWARD J: I am not aware of that. Is that a finding that is made below?
MS MORGAN: Well, the instruction is that this settlement in the mediation is on the basis that registered group members will share in the benefit and unregistered group members will not share in the benefit and will be subject to ultimate extinguishment of their claims. That is ‑ ‑ ‑
GLEESON J: That is ‑ ‑ ‑
MS MORGAN: Sorry, your Honour, I will just finish the answer. So, Lendlease wants all this information, to give it information to resolve the mediation. It is inconsistent with that position that it should turn up to a settlement, and in the event – I was going to get to this, but I will address it now – Justice Beech‑Jones suggested a contradictor could come to the settlement hearing and act for unregistered group members.
So, if we step through those options, we come to a settlement hearing. Lendlease and the representative plaintiff say, we have settled, here is the settlement deed, it provides for registered group members to share, no one else, and ultimately will need an order under section 179 binding everyone to that result. The court listens to the contradictor and the court says, no, I want you, Lendlease, to put in another $100 million. That was not the term of the settlement, so that element falls over. The court says ‑ ‑ ‑
BEECH-JONES J: The court does not say that. The court just says I do not ‑ ‑ ‑
MS MORGAN: Sorry, the contradictor says, we need another $100 million because people have popped up between mediation and settlement, we need $100 million to cover those people. The court says, well, I do not approve the settlement. That is one option. Second option – your Honour Justice Gordon suggested – the court says, I hear what the contradictor is saying, I am going to close the class based on registered participants. Again, Lendlease does not want the tail risk. It says, terms of the settlement, we are not going to settle on that basis.
The third option is that registrants come in – the non‑registrants come in. So, we have a set value of money, but we have, say, double the number of people. That is not the basis upon which the representative plaintiff settled. So, the terms of the settlement are then not what was decided at the mediation. That is a third reason why a court might say, thank you contradictor, heard your submissions, agree, we now have twice as many people, so either we change the settlement to increase those people, or I do not approve the scheme.
Our whole point is the so‑called protections about a conflict of interest, or for unregistered group members, does not help you at a settlement hearing, because the very reason Lendlease is doing that, although Ms Collins resisted that in oral argument, is the effect of the notice is they can stand up and say to a judge, we have given procedural fairness to these registrants, even though they did not know what the settlement figure was, which is what section ‑ ‑ ‑
EDELMAN J: But they could stand up and say that to a judge anyway ‑ ‑ ‑
MS MORGAN: That is my point ‑ ‑ ‑
EDELMAN J: ‑ ‑ ‑ without notice. They can make those submissions, and then bring that application without the notice.
MS MORGAN: I am sorry, which notice, your Honour, are you referring to?
EDELMAN J: The notice in issue.
MS MORGAN: That is correct. That is correct.
GORDON J: I mean, as a trial judge, they can come along – I have had it, and they have said, sorry, there is a group here that needs special consideration and we would like a contradictor appointed to look after their interests and to consider the terms of the settlement. That happens, regardless of whether this notice is offered or not.
MS MORGAN: Yes. Yes, and, your Honour, what I was trying to – and I obviously have not done a very good job – is I have tried to then step through what happens next. If the contradictor convinces a judge that this settlement has failed to take into account a class of unregistered group members who were not represented at the mediation and whose interests were not protected, what is the next step? What happens then? Just their mere fact of being there ‑ ‑ ‑
GORDON J: What I do not understand is how that impacts upon the argument we have here about whether there is power to send the notice in the form in which it is currently in, because if you go to page 75 of the book which has got, what you call, “Option A”, which is the registration process, it is telling, as I read it, listen, yes, you must participate. So, I understand you do not object to registration, you object to the form of registration, but it is telling them that, upon settlement, that they are going to seek an order in terms, which is set out in paragraph 3 – and I think I raised this with Ms Collins – that if it is made, it will have the effect of providing that any group member who is not registered and who has not opted‑out will remain:
but shall not, without leave of the Court –
So, this is what aspect you are just talking about now:
be permitted to seek any benefit . . . (subject to Court approval) –
MS MORGAN: Your Honour, I do not cavil with that.
GORDON J: So, you do not object to paragraph 3?
MS MORGAN: Sorry, I do object to paragraph 3.
GORDON J: Right.
MS MORGAN: I do not cavil with your Honour’s description of the scheme, that there is an opportunity at a settlement hearing, as is required by the legislation, for group members to attend or provide objections and their taking into account. What I say the scheme does not permit is exclusion of a group for failing to register before a settlement is reached. What your Honour is identifying is the notice is given to group members after a settlement is reached, so group members are then told these are the terms, these are the terms of the settlement that have been agreed on your behalf by the representative plaintiff; if you do not agree, you come along to the hearing and you try and convince the court why the court should not make it. That is after the terms of settlement are determined.
What is being proposed here is to exclude a group from the mediation process who will then – if they then turn up and say, we object because we were not included, Lendlease, and possibly the representative plaintiff, says no, no, no, we gave them procedural fairness. They were told before the mediation, but we say the scheme only provides for that settlement. So, the number is known, the terms of settlement are known.
EDELMAN J: Why are they excluded from the mediation process? They have not been excluded from the class, so why does the group representative not still represent them at the mediation process?
MS MORGAN: They do in theory, but the way in which they are being represented in the mediation process is: we have come to this mediation, as we have told you in the notice, on the basis that if you do not register, you will get no money, but even though you do not get any money, we will apply to exclude you from the settlement and still extinguish your claims.
EDELMAN J: If the mediation were to be run like that, then that may be a question of how the mediation itself is managed, whether there needs to be an additional representative at the mediation.
MS MORGAN: There are a few answers to that. One is: how do you get the consent of registered group members that there is going to be someone acting there for another part of the group? How do you get consent for non‑registered group members? What are those non‑registered group members representatives doing? Lendlease only wants to settle if they get zero, and their claims are extinguished. So, what do they say? No settlement. No settlement, because my group, who I represent, will have their claims extinguished. There is no settlement on this basis, no recovery, no claims. There is no positive outcome of a mediation where an independent person within the mediation is somehow acting for unregistered group members ‑ ‑ ‑
GLEESON J: But, Ms Morgan, are you suggesting that if this notice were not sent, Lendlease might try and negotiate on a different basis that is more favourable to unregistered group members?
MS MORGAN: Yes, your Honour. Mr Betts’ affidavit talks about exactly that – what has been done in the past. So, there are a few things that they can do. They can say, we are going to characterise claims in this way. Whoever comes along can have a share based on the number of shares, the price they bought, when they bought, what they were exposed to in the continuous disclosure case. So, whoever comes at that point and registers, up to a cap, say, and in a particular timeframe, they then get certainty. They get all members of the class who, once that settlement is approved, come through the settlement process, opt in – which is when you are supposed to opt in – they then get finality. That is one way.
The second way is to pay a premium for a lump sum. You try and estimate based on what you know. You work out how many have registered. We have been in these cases before, let us add a percentage to that. Then we have a notice that is settlement. People have to then – they have to opt in. And you either still are within the settlement bounds, so in the settlement agreement you say up to another $50 million for ‑ ‑ ‑
STEWARD J: But, Ms Morgan, is there not an air of unreality about all of this? Once you accepted that you allow a form of registration which requires disclosure information like a form of de facto discovery, to use Justice Gordon’s analysis, Lendlease have already communicated a given notice of what they are going to do at any hearing to have the settlement approved. Mr Edwards has conceded that he is under a duty to tell everyone in his group, and Lendlease are entitled to run any mediation in its interests in any way it feels like. Has the cat not already bolted, as it were?
MS MORGAN: But the registration that I have agreed is an obvious one for a settlement of this kind is voluntary participation by a group member. That is the difference, your Honour. We say that is a significant difference because under the scheme opting out is a positive step a group member has to take – that is one thing that is imposed on them.
STEWARD J: But that might mean that what you are really complaining about is just three‑options form of the way in which the notification takes place. But if it was different – if it simply said I want to have registration to get information; if it simply said, you can also opt out, and this is how you do that, and thirdly, by the way, Lendlease will make this submission at any hearing to have settlement approved.
MS MORGAN: That is not quite the notification. The notification is ‑ ‑ ‑
STEWARD J: I know that it is not what it says at the moment, but if it said that, would that be objectionable to you?
MS MORGAN: But it is also not the notification that is said in the version that went to the Court of Appeal. My submission is, if the notification effects a mandatory registration process which ‑ ‑ ‑
STEWARD J: I do not think Ms Collins said it was mandatory. I know the word “will” is there but I thought when she was asked about that she said it was not intended to be mandatory.
MS MORGAN: So, as I understand what your Honour is asking me, the notification is to give group members warning that an application will be made that if a group ‑ ‑ ‑
STEWARD J: If there is any settlement.
MS MORGAN: Of course. If a group member has not registered as a voluntary – has not taken a voluntary step to register ‑ ‑ ‑
STEWARD J: Yes.
MS MORGAN: ‑ ‑ ‑ Lendlease proposes to ask a court at the settlement hearing to only permit the people who were registered to share. That means when a settlement notice goes out and the registrants double, Lendlease will still say to the court, we say we have given enough notice, and you should not include the registrants who have approached the court after.
STEWARD J: But they have already given notice. That is the air of unreality here. They have given notice, and Mr Edwards has agreed he has to tell his group.
MS MORGAN: Well, your Honour, I will address that point about Mr Edwards. I had understood you had asked that question of Ms Collins. A representative plaintiff is not required in terms of fiduciary obligations to tell the group of Lendlease’s intentions. Once there is a settlement, or a proposed settlement, the representative plaintiff would have to tell the group about that.
STEWARD J: So, is your complaint one about not letting Lendlease have the forensic advantage of saying, we gave lots of notice?
MS MORGAN: Not lots of notice; we gave definitive notice that if you do not register, this is what will happen. Whereas, what your Honour is describing is a much more watered‑down version of what is being proposed certainly in this notice, because it does not eliminate the tail risk that Ms Collins and Lendlease are concerned about.
GORDON J: Do we take into account at all that, absent this form of notification, which you call “positive registration” – I put this to Ms Collins – in effect, would frustrate the scheme because it would prevent a settlement? You started by saying this is not about information, this is not about names, shareholdings, tradings, prices, but in a sense, it is because what they are asking you to do is positively register to provide that information to facilitate a pretty important purpose of the scheme, which is promote settlement of large class actions of this nature. Absent this, this could not happen. Do you accept that?
MS MORGAN: I do not accept that, your Honour, for the very reason that Mr Betts had put that information. He has put in his affidavit the other ways this is done. The way it is not frustrated is Lendlease pays for it. Lendlease pays to protect the tail risk by protecting unregistered group members. At the moment, what is happening is Lendlease is getting the benefit of a smaller class of who they pay – registered group members – and they are getting the benefit of a massive class who are bound to the result.
GAGELER CJ: But we do not know the numbers. We do not know the relative numbers.
MS MORGAN: We know that there is a different – well, then why have the mandatory system?
GAGELER CJ: Your essential point is that this notice is setting out a second‑class group within the group members. So, you have participants, who will get money from the settlement, and you have non‑participants, who are going to be the subject of this application for exclusion at the time of the settlement, before judgment is entered. And do you say that the giving of the notice is an essential element in setting up that dichotomy that you say is inconsistent with the scheme?
MS MORGAN: Yes. We say it is inconsistent with the scheme prior to settlement or judgment.
GAGELER CJ: Yes.
MS MORGAN: We accept that the scheme requires an opt‑in act at some point. It just does not require it prior to settlement. That is the issue.
GAGELER CJ: Now, you say it is inconsistent with the scheme. How is somebody worse off, as a result of it? I understand you say the scheme is the scheme, but looking beyond that to the interests of the group members, are they not given their chance?
MS MORGAN: Well, your Honour, if you think that someone receiving this notice would understand what they are supposed to do, a rational group member would, looking at this notice ‑ ‑ ‑
GAGELER CJ: Who buys and sells shares, Ms Morgan?
MS MORGAN: Lots of mums and dads out there are buying and selling shares, on the instructions or financial advisors, who may have little or no understanding or knowledge of the share market, Chief Justice. So, I do not think we can assume that.
BEECH‑JONES J: But why are they going to have any greater knowledge at this time than when they get it after the settlement is done?
MS MORGAN: Well, they will know what the settlement is, and we say that is what is in the scheme. The scheme requires specifically in 175(3) and 175(4) that notice is provided to group members at that time, and that is when, we say, the opt‑in requirements of the legislation are triggered.
BEECH‑JONES J: But does it not just come down to – so, they will find out what the settlement is then, and they will be told, unless you register, you probably will not get a dollar, and now they are being told beforehand by the other party who does not owe them a duty, look, if you do not register, you are at risk of not getting a dollar, if we settle it. That is the difference? That is the two scenarios, really?
MS MORGAN: I agree, although I think it is a bit higher than how your Honour describes the notice, when one looks at the language of participating in the class action, that is, we say, inconsistent with the scheme, which is, at a fundamental level, an opt‑out scheme. So, on that basis, your Honour, if your Honours – I was going to take your Honours through the notice, but it sounds like your Honours have considered the notice in detail already, so I will move on to the various paragraphs of Brewster that we say support our position in relation to the notice.
Actually, before I go to Brewster, your Honours, we have said this in our written outline, there are some matters that we say are left out of the notice, and we say that feeds into Justice Jagot’s question of Ms Collins earlier about discretion and whether, on a discretionary basis, the notice should not be issued, but that would mean there was not power to issue the notice.
We say there are four things which are left out of the notice, and the four things that are left out of the notice are: what is the representative plaintiff doing at the mediation? If you are not registered, the representative plaintiff, we say, cannot act in the interests of unregistered group members because at the mediation their position will be to advocate for a favourable settlement and that necessarily ‑ ‑ ‑
STEWARD J: How do we know that when Mr Edwards has reserved his position?
MS MORGAN: In terms of what a registered plaintiff is doing at a mediation, we are only – sorry, representative plaintiff is doing, as a matter of logic, if there is to be a mediation – a settlement, I should say ‑ ‑ ‑
STEWARD J: But in the face of Lendlease’s proposed application, it would be open for Mr Edwards to say, I know you have sent that notice out, but as far as I am concerned, I am here to represent registered and unregistered.
MS MORGAN: And that could be in the notice. At the moment, that is not in the notice.
GLEESON J: The notice does say that there may or may not be another opportunity to register, so presumably the representative plaintiff has to attend the mediation on the basis of that.
MS MORGAN: Well, we would just say as a matter of logic that if the representative plaintiff is attending a mediation which follows a notice of this kind, which is structured to assist an application to approve a settlement, the best outcome for the representative plaintiff or registered participants is a favourable settlement for registered ‑ ‑ ‑
JAGOT J: We are only concerned with the issue of principle, though, which is whether there is power to issue this notice, not whether the notice could be improved in some way. I mean, we are not approving this notice. All we are saying is there either is or is not power. There are things missing. That is what you would address, would you not, below?
MS MORGAN: Well, I am not sure who would address that because these matters are – so, the four things that I had in mind ‑ ‑ ‑
JAGOT J: But if the court were concerned about it they could have a – I am just not sure how we get into what is missing, unless it goes to the power issue, and I just do not see how it – the power issue is already crystallised in the notice as it exists. As in, can you give a notice that is telling people that the defendant will make an application to the effect that is set out in the notice, irrespective of the particular wording of the notice, which is not the issue.
MS MORGAN: Well, of the four things that we say are missing from the notice, we say they then go to actually articulating what the purpose of having the notification is, and that is not articulated in the notice.
EDELMAN J: But, even if you are right about all of that, it would not change the answer one way or the other to the separate question, would it? Because the separate question does not even focus upon the terms of this notice. It just focuses upon the notation that would be contained in the notice.
MS MORGAN: Well, it could be, your Honour. One aspect that we think is an important one that is not included in the notice is the commercial benefit to Lendlease to settle with a smaller class and to potentially effect at a settlement approval binding a larger group. So, nowhere are ‑ ‑ ‑
EDELMAN J: So, is that then a submission that the separate question might be answered with a speaking answer that might say, yes, there is power, provided that the following is contained? Is that the submission?
MS MORGAN: No, we would say that the inclusion of that – attempting to include that, we say, means that the notation itself would be beyond power. One has to – because it would be ‑ ‑ ‑
EDELMAN J: I see.
BEECH‑JONES J: So, that is ‑ ‑ ‑
MS MORGAN: We would say it would not be possible – sorry, Justice Beech‑Jones.
BEECH‑JONES J: Sorry. But are you saying the notice should include a statement, Lendlease wants to settle it as cheaply as they can?
MS MORGAN: No, much more expressly than that. Two parts to that. One, Lendlease wants to settle with only registered group members. If you are an unregistered group member, Lendlease will obtain the forensic advantage before a settlement court where your rights would be extinguished even though you do not get a share of the settlement figure.
GAGELER CJ: This argument is not really going to what is in or out of the notice, it is a rhetorical device. You are saying, what is really going on here are the things that you identify in paragraph 4?
MS MORGAN: Yes, your Honour. We say that illustrates the purpose which shows 175 does not have the power to issue the notice.
GAGELER CJ: Yes.
MS MORGAN: So, your Honour, just to touch on – I think Justice Gordon, Justice Jagot and your Honour the Chief Justice asked Ms Collins what the purpose of the notice was, and the purpose was described as the – using the evidence of Mr Betts, that in his incredible experience in relation to class actions, he has found that requiring a mandatory registration process gives you a better response than a voluntary registration process. No surprises there. When a group member is threatened with the extinguishment of their claims, they are more likely to register, in the language of the notice, to participate in the class action. We say they are more likely to opt in at that time.
But there was an additional purpose, which I understood Ms Collins to accept as an “effect” – I do not think the language of “purpose” or “effect” matters – and that was that found by his Honour the Chief Justice below, which was the forensic benefit of being able to argue on an application to bind unregistered group members to a settlement in which they reach no compensation, that the unregistered group members should be treated as forewarned of the risk of an outcome that is unfavourable to them.
We had understood that that was accepted by Ms Collins because that is the procedural fairness argument. They have been given procedural fairness. We have told them of the risk of the potential sanctions. So, when Lendlease turns up at a settlement hearing, they can rely on the failure register to characterise what should be approved by the court at the settlement hearing.
GAGELER CJ: I think we were told that that was in Parkin v Boral, as part of the reasoning of the Full Court of the Federal Court in justification for giving them notice there. I may be wrong.
MS MORGAN: Certainly, the Chief Justice made that finding. That it was a purpose – we do not think it matters whether it was a purpose or an effect. Having that effect, we say, is part of the reason that the group members are to be sent this notice. So, your Honours, if I could now turn to – before I go to Brewster, I will just very quickly take your Honours to aspects of 175.
STEWARD J: Have we got all your four matters?
MS MORGAN: The four matters that were not in the notice?
STEWARD J: Yes. Have we got them all?
MS MORGAN: Yes. Sorry, two of them were in relation to the representative plaintiff and their potential conflict and who they were representing.
STEWARD J: Yes.
MS MORGAN: The two important ones are in relation to Lendlease and their commercial advantage and their forensic advantage. We have set them out in our written note for oral argument.
STEWARD J: Got it. Thank you.
MS MORGAN: Thank you, Justice Steward. So, your Honours, next, before we go to the statute, I was going to go to Brewster, and just go to a few more paragraphs. It is BMW v Brewster (2019) 269 CLR 574, and to start with paragraph 43 of the joint judgment of the Chief Justice and Justices Bell and Keane. So, at the opening sentence of paragraph 43:
The determination of the true construction of s 33ZF –
which your Honours know:
and s 183 . . . requires consideration of the text of these provisions in their context and having regard to the mischief that . . . Pt 10 . . . were intended to remedy.
Their Honours pick that up again in paragraph 48, in the very opening line of 48:
In the resolution of this issue, textual and contextual considerations must be addressed together with considerations of purpose.
Your Honour, we say this supports our analysis of how section 175(5) fits within the scheme. And if your Honours then turn to paragraph 70, the comments on the bottom‑half of paragraph 70 are about section 183, but we say they apply equally to section 175(5):
The work which the respondents require s 183 . . . to do is beyond the scope of the other provisions of the scheme. As will be seen, those other provisions are engaged upon a different occasion and address materially different circumstances –
Stopping there, your Honour, we say the same in relation to asking a group member to opt in. The scheme provides for a notice at the time of settlement – section 175(4); it applies to a notice of a fund in judgment in 175(3), so the scheme already provides for opt‑in. To use 175 in this way, in the same way that the joint judgment referred to section 183, we say, is beyond the scope of section 175(5). So, the final two sentences:
Section 183 . . . cannot be given a more expansive construction and a wider scope of operation than the other provisions of the scheme.
EDELMAN J: And that scope is to be determined by fundamental precepts, is it?
MS MORGAN: Your Honour, I am reluctant to use a phrase that seems to have got people a bit concerned, both at the Bar table and in other intermediate appellate courts. We would say the opt‑out scheme is a fundamental principle upon which Part 10 is based. I do not think that I am saying anything more than what was said – even Ms Collins would accept that is what Mobil says, and what every judgment, all the reasons in Brewster would accept that as a proposition. The Law Reform Commission had an option, recommend opt‑in or opt‑out, it recommended opt‑out. So, we have to start from that proposition. And if the scheme provides for opt‑in, which it does, that is when opt‑in occurs. One cannot move opt‑in earlier and effect that through a notice under 175(5).
If I could then ask your Honours to look at 173, which I think ‑ ‑ ‑
GORDON J: Is that paragraph 173?
MS MORGAN: Yes, thank you, your Honour. I think Ms Collins already took your Honours to 73, so I will not repeat that, and then – actually, I withdraw that. If your Honours look halfway – that is at page 264 of the bundle – halfway down the paragraph in paragraph 73, their Honours there say after footnote (123), which is where the joint judgment refers to Justice Finkelstein’s decision in P Dawson Nominees:
That said, both legislative schemes do allow identification of all group members (as far as is possible) in order to distribute any proceeds. That this is so is apparent from –
And converting these provisions to Part 10:
33V –
Section 173:
33X(3)‑(4) –
Section 175(3) and (4). So, there their Honours have specifically referred to the very provisions I am talking about, which are the notice provisions which effect opt‑in. At that moment is when group members can be asked to identify themselves, and that is what the scheme provides for, and we say that is what the joint judgment acknowledges:
Reference to the terms of these provisions confirms that the legislative scheme contemplates that the occasion for the making of orders in relation to distribution of the proceeds of the action is its successful completion.
Then if your Honours look at paragraph 82, there their Honours have just picked up both of the objectives of the scheme as a whole, Part IVA and Part 10, which is both “access to justice” and also:
the administration of justice by allowing a common binding decision –
which was described by my learned friend as finality. Then if I could just quickly, your Honours, go to part of your Honour Chief Justice’s reasons in Brewster at paragraph 108, which is page 275 of the bundle. Noting, of course, that your Honour is talking about section 183, your Honour says:
it is important to recognise at the outset that the power the provision confers is applicable only in . . . Pt IVA.
Or Part 10 proceedings. Then your Honour goes through:
The nature of such a proceeding –
Then over the page, about three lines down, starting with “Subject”, your Honour says:
Subject to powers conferred on the Court to order that the proceeding not continue as a representative proceeding –
Ms Collins took you to those provisions earlier:
or to order that another group member be substituted as the representative party or to make such other orders as it thinks fit –
et cetera:
a representative proceeding once commenced is permitted to be continued by the representative party who commenced it so as to result in a judgment which, for better or for worse, binds all group members who have not exercised a right to opt out of the proceeding. The representative party takes the group members in tow, and they sink or swim together.
Your Honours, we say this applies to – that conceptually applies to what is being asked of the Court here. The moment at which a group member has to take action is either to opt out, or when there is a settlement, or when there is a judgment. Otherwise, the representative party takes the group members in tow. Now, the representative party will not be taking the group members in tow if the representative party has this notice sent out and attends a mediation where the intention of Lendlease and possibly the representative plaintiff is to settle so that only registered group members share in the proceeds, but all group members’ claims will ultimately be extinguished. That is not taking the group members, we say, in tow.
Then, talking about section 183 at the bottom of paragraph 109, we would say your Honours’ comments that are in relation to section 183 apply equally to 175. The notion extends to ensuring that procedural justice and substantive justice are done as between the representative party and the group members in the conduct of the representative proceedings. So much is confirmed by the ability of the court to exercise the power of its own motion or an application by any party or any group member.
So we say, your Honours, until you get to a settlement where you are explaining to the court why different group members might have different claims, so different quantum claims – might be because they bought shares at a different time, they might have only seen some of the continuous disclosure material – there will necessarily be classes of – sorry, there will be subgroups within the group that will be entitled to a different share. That will be likely to be in a settlement agreement that will be considered by a court. That is one distinction between group members that is quite clear. Only the common claims will be ‑ ‑ ‑
GAGELER CJ: That is assuming that you have information about the group members.
MS MORGAN: Yes, of course.
GAGELER CJ: The non‑registrants are the ones you do not know about. There is just no information. They have the information; they are not providing it.
MS MORGAN: It does not mean you cannot determine claims based on particular parameters. So, people who bought shares in 2012, people who bought shares before this announcement, people who bought shares after this announcement; there will be parameters even from the pleading that you could determine different subgroups of group members depending on how much information you get, how many registrants. That will give you a sense of what the spread is as a percentage, and there could be calculations done on the range of settlement opportunities or of the settlement potential in a mediation that does not require excluding for no reason other than a failure to register to access to the settlement, which is what this notice is purporting to do.
If I could then ask your Honours to look at paragraph 125 at page 281 of the book, which is Justice Nettle’s comments in relation to section 183, we say, apply equally to 175. The third sentence of that paragraph:
The limits of what may properly be described as the demands of justice –
That is picking up the language of 183:
in a particular case . . . must be determined by the text of the Act read as a whole, taking into account the relevant context and purpose.
Then dropping down a few lines, after footnote (176):
As the plurality observe, the provisions of –
Say, Part 10, in which 183:
sits, make specific provision for the entities in respect of whom, and the point in time at which, orders distributing cost burdens and judgment or settlement proceeds may be made.
Then he says that:
None of those provisions expressly or impliedly contemplates –
the CFO and:
The context of –
section 183:
strongly implies exclusion of a construction of that provision –
We say, as I have said, 175 – the same can apply. If you already have provision for a notice, settlement and judgment to opt in, why would you then say 175(5) can effect a different opt‑in moment. Then your Honour Justice Gordon at 137 – which my friend has already taken the Court to – when your Honour describes:
Opting out is important –
This is at 286 of the bundle:
Opting out is important: the hearing of a representative proceeding must not, except with the leave of the Court, commence earlier . . . The integrity of the scheme therefore depends upon group members having the right to opt out.
The flip side of that, your Honours, we say – which I have said – is opt‑in occurs at a particular moment in the legislative scheme, which this notice turns on its head.
GORDON J: If you took your complaints and one said, I agree that there is a registration process, I agree with the provision of information, but I do not like this form of order. So, the power question is in a sense answered in that sense. What is stopping a trial judge faced with this kind of notice saying, I am going to a point of contradictor to deal with the unregistered group members for the mediation, and in effect have their interests protected at that point? Does it not answer all of, in a sense, the very things you would adopt at settlement but have it for the purpose of the mediation, which would then overcome all of your concerns?
MS MORGAN: That is what was proposed by the President in the first instance decision of Haselhurst, and what we would say your Honour is that, one, how does the representative plaintiff find out from non‑registered group members that it is permitted to participate in this settlement but will have their interests represented by someone else?
GORDON J: Because you just told us, I think, that Mr Betts’ affidavit identifies at least a range and some parameters and that there was a method of identifying a possible sum to which we will deal with there, possible potential claims in case they were there, so that Lendlease had a realistic basis of assessing the tail. I am taking your ideas that you put to us for the settlement process and just saying why could they not be attached to the mediation process?
MS MORGAN: The registered plaintiff would be acting in the interest of all group members proactively in the versions that Mr Betts identifies in his affidavit, because there is not a dichotomy at that point in terms of the threat to unregistered group members. A contradictor or someone acting for the interest of unregistered group members, they only have one interest: that there either be no settlement, so they do not lose their claims, and Lendlease has made clear that the settlement is based on them losing their claims.
The second interest could be convincing Lendlease of one of the ideas that we have referred to in Mr Betts’ affidavit. That is also inconsistent because that is why we are here. We are here because those formulations of settlement are not effective because there is still a lack of certainty for the appellant, for example, in a settlement. I am not sure, as well, how a contradictor gets any instructions from whoever the unregistered group members are in the circumstances where we do not know. The whole problem is we do not know who they are, and that would be imposing again, we say, a positive act on them that the scheme does not permit.
Your Honours, if I could then ask your Honours to look, very briefly, at the provisions of the scheme. I understand your Honours have the separate copies of the legislation. Ms Collins already has gone through the commencement, and we say that section 157 is important, and the reason that it is important is that it is the representative plaintiff who determines this scope of the claim, and it is the representative plaintiff who elects to define the open class.
So, they have undertaken, at the commencement of the proceedings, to bring a particular claim defining a particular scope of the class. I think it is agreed at the Bar table, and the authorities establish, that the representative plaintiff has taken on a limited form of statutory agency to act in the best interest of group members in relation to their common claims.
Section 159 provides that there is no need for consent. Section 162, the opt‑out, is the only mandatory step imposed on the group member, which is to positively opt out to preserve their claims. As we have already gone through, there are ways to alter the description of the group. We can de‑class the representative proceedings pursuant to section 166; a group member can apply to have a different representative party replaced. Then, the settlement power – the approval power – at section 173.
Your Honour the Chief Justice asked Ms Collins about the interaction between 173 and 177. It is true that courts have approached the question of binding all group members through the prism of 179. So, you get the approval under 173 and then after the settlement is approved, distribution is approved – distribution is effected – you then get final orders, and those final orders might be in the nature of dismissing the application.
And if your Honour looks at section 177, there is no power under 177(1) to dismiss the originating process, so I suspect the reason why we have stuck to 173 and 179 is because 177, in its nature of the relief that is being provided for at 177(1), does not include one of the orders that more – that is not unusual, is that the proceedings are ultimately dismissed, and it has the effect of then – that then captures the effect of that under 179.
GAGELER CJ: Leaving that aside, though, there is no reason why section 173 cannot operate with 177, is there?
MS MORGAN: I completely agree, your Honour. I was just trying to think of a reason why we had always approached it in this different way, and I think one of the issues is that there is no power to dismiss proceedings.
GAGELER CJ: Yes. Thank you.
MS MORGAN: And that is one of the ways that courts deal with this when a matter is finally resolved. Turning then to 175 very briefly, I just wanted to draw your attention, your Honours, to (3) and (4), which I have already mentioned more times than necessary. Each of (3) and (4), we say, are the notice asking a group member to opt in. So, a notice is to be:
given to group members of the bringing into Court of money in answer to a cause of action –
So, that picks up section 178(3). At subsection (4), this is a settlement, so you tell a group member there is a settlement, if you want a share in the settlement you need to register – you need to opt in. That is where, we say – and once you look at 173 and 174 in that way, 175, we say that an interpretation both of the text and purpose generally of Part 10 has a lot of work to do, in the appellants’ submission, and we would say it would be beyond the power of subsection (5) in that context for a notice to be issued of this kind.
Just touching on 176 for a moment to address the issue of whether 176(6) and 176(7) can be used to give more scope to 175(5), we have dealt with this in writing in a bit more detail, but we say that 176 is in fact a mechanical provision. It provides the machinery to effect a notice. It cannot give 175(5) more work to do by using 176. Your Honour Justice Gleeson referred specifically to subsection (6) and (7). We say these are picking up subsection 175(3) and (4) because you are asking a group member to opt in. You are asking a group member to do something, so you need to tell them when they have to do it and what steps they have to take. Then, similarly, subsection (7) is another provision providing the machinery which a court will require in a notice that would otherwise be issued pursuant to 175.
BEECH-JONES J: Ms Morgan, you would agree that for 175(6), an event is the commencement of the proceedings and affixing of a date to opt out?
MS MORGAN: Yes, your Honour.
BEECH-JONES J: And that is what his notice is?
MS MORGAN: Yes, your Honour.
BEECH-JONES J: And if all this notice did was have nothing about registration, but simply said Lendlease will, if the matter settles, apply for this order, is there anything in 175 that would preclude that being put in the notice?
MS MORGAN: Sorry, so you would not have these three options expressed as they are?
BEECH-JONES J: No, just telling you, by the way.
MS MORGAN: So, by the way ‑ ‑ ‑
BEECH-JONES J: If the proceeding settles ‑ ‑ ‑
MS MORGAN: So, there would have to be registration.
BEECH-JONES J: There would have to be some form of registration. I will go back. Once you have an event that triggers a notice, is there anything in 175 that says you cannot include other matter about the case?
MS MORGAN: Your Honour, I would say it does because it says there the “notice of any matter”, that has to be a matter not otherwise dealt with in 175. I would not complain if there were multiple matters in one notice. Is your Honour asking me ‑ ‑ ‑
BEECH-JONES J: So, the only thing you can include in the notice is the notification of the event itself?
MS MORGAN: No, I am not suggesting that, your Honour. What I am suggesting here is that the important issue that notification is sought of is a mandatory process of opting in, and that is not a matter, we say.
BEECH-JONES J: That is because it is excluded by other parts of the Acts, not because of some connection to the word “event” – because we have an event.
MS MORGAN: Being the commencement of the proceedings?
BEECH-JONES J: Yes.
MS MORGAN: I would accept that, your Honour.
GORDON J: Your short point is that, yes, you can have a notice; yes, you can have an event; a notice can tell you the proceedings of events; it can tell you that there is an opt‑out date. Your point is that the notice cannot contain a registration process of this kind because it is inconsistent with the statutory scheme. That is your short point.
MS MORGAN: We say that is not a matter. So yes, we say, one, it is inconsistent with the statutory scheme, and second, conceptually that is not a matter that would fall within 175(5).
GORDON J: But you accept that the registration process can occur at settlement or after judgment for distribution of funds?
MS MORGAN: A mandatory registration process, yes ‑ ‑ ‑
GORDON J: Thank you.
MS MORGAN: ‑ ‑ ‑ because we have said a registration process before. Meditation under section 183 is not an issue.
GORDON J: So, the issue then becomes that, consistent with the scheme, your short point is that I cannot have a mandatory registration process of this kind before settlement having already occurred or after judgment for distribution of funds.
MS MORGAN: I am sorry, your Honour, I think I misheard the negative at the beginning. Could you repeat that question?
GORDON J: You cannot have a positive registration scheme of this kind except in those two limited circumstances, being post‑settlement – i.e., I already have a sum of money – or post‑judgment – I have a sum of money I wish to distribute.
MS MORGAN: Yes. Thank you, your Honour.
STEWARD J: Can I ask you about that as well, and the concept of opting in and out. I take it that you accept that the court can make group members do things, positively, before settlement or judgment.
MS MORGAN: Under section 183, the courts have used section 183, before Brewster, to require steps – I think this is right – of group members.
STEWARD J: So, in Wetdal, Justice Beach listed the following instances: discovery, provision of particulars, provision of a contribution towards security for costs, and provision of particulars of group members’ identities.
MS MORGAN: Yes.
STEWARD J: Those are the four examples. So, you do not cavil with that?
MS MORGAN: I do, your Honour, in the sense of his Honour the Chief Justice in the reasons below actually went through all of those examples, and one of the issues was, were they orders by consent? Did they predate Brewster? So, one of the issues is the use of section 183 to require group members to do something. It has now been – everybody has taken a step back since Brewster, and so ‑ ‑ ‑
STEWARD J: So, what is the dividing line between when you can and cannot use 183 to require a group member to do something before settlement or judgment?
MS MORGAN: Well, your Honour, what are they being asked to do? In this case, they are being asked to take a step to avoid having their claims extinguished, and we say that is opting in. So, it is forcing a group member to opt in at a moment ‑ ‑ ‑
STEWARD J: What is the downside for them to register?
MS MORGAN: Your Honour, I am not suggesting there is a downside. All I am saying is the statutory text – it may be that what the Full Court has identified is an issue that should be fixed. The place for that to be fixed is the Parliament.
STEWARD J: So, Ms Morgan, the real killing field for your argument is this idea that post‑Brewster the only way you opt in is post‑settlement or judgment and that if you accept that – there may be some exceptions at the margins, but if you accept that in the main, then that drives your interpretation of how far you go with 175(5).
MS MORGAN: No, your Honour, that is not my position, because Ms Collins has accepted that 183 does not give as court power. That is not the source of power for this notice.
STEWARD J: I know that, yes.
MS MORGAN: The source of power is 175(5), and I say – that is argument I am here to meet, and that argument is ‑ ‑ ‑
STEWARD J: But you need us to read down the very general language of 175(5), and I thought the way you were doing that is by saying you cannot require the pre‑option in step that the notice contemplates here because post‑Brewster we have all taken a step back and we realise that, generally speaking, you cannot force group members to do anything until after settlement judgment.
MS MORGAN: No, I am so sorry, your Honour, that is not my argument. My argument is when one looks at the text and the purpose of Part 10 ‑ ‑ ‑
STEWARD J: What is the language in (5) that would deny what Justice Beech‑Jones has suggested to you, namely, adding in some extra stuff?
MS MORGAN: Because of the requirement for a group member to opt in, and we say that the action of mandatory registration ‑ ‑ ‑
STEWARD J: That goes back to something I asked you earlier. Is your real complaint about “registration” as distinct from “warning”?
MS MORGAN: Yes, your Honour, because that is the step. The step is ‑ ‑ ‑
STEWARD J: They are kind of related, on your view.
MS MORGAN: I agree, and that is how it is given to us in this notice. I say Brewster confirms what I am saying, but my argument rests on the legislation, and section 175(5) just cannot be the source of that power. Your Honours, I can bring issue 1 altogether. We say that the purpose and effect of the proposed notice is inconsistent with the statutory scheme. It requires group members to register in order to participate in any settlement that emerges from an expected mediation, and it does that by threatening the sanction of losing their claim.
The effect of the proposed notice is to place Lendlease and the representative parties in a position to obtain the court’s approval, pursuant to section 173 to a settlement that will permit recovery only for those group members that have registered and also to obtain the binding effect of section 179 on all group members who have not opted out, including those who have not registered. The proposed notice gives the parties the forensic advantage of having forewarned group members of their application. The result is that a group member is placed in a position – assuming they receive or otherwise see the proposed notice of having to make a decision to preserve the claim – either by opting out, as envisioned by the statutory scheme, or opting in, which is not envisioned – as I have said – unless or until there is a settlement or judgment. The proposed notice wants the moment that group members have to act so that they do not lose their rights to be brought forward before the notice of settlement.
As we have said at our written submissions at 53, this is anathema to the purpose of Part 10, to facilitate a representative plaintiff, who has drawn a class so broadly that its members cannot be readily identified, to bargain away the claims of unregistered group members for no reward in order to settle a proceeding for the benefit of registered group members. To do so, we say, would be to impede rather than enhance access to justice for unregistered group members. Issuing the proposed notice would serve only to facilitate an exclusionary outcome. It would encourage the manipulation of a class definition to maximise the number of claims that may be extinguished for no value.
The solution is not to look at the settlement hearing – and I have already addressed that particular point. We say the text of 175 does not empower the court to issue the notice. As I have already stepped out, there are particular provisions in 175 that deal with settlement and judgment, and we say the general provision is to give a notice of any matter. The future intention of Lendlease and the representative parties to apply for a settlement approval based on who was registered for a mediation is not, itself, a “matter”, so it is not within 175(5), nor is that an “event” that has occurred pursuant to 175(6).
I have already dealt with 176, we say it does not expand the scope of section 175(5), even if 175(5) was given a broad interpretation – so, it can be used to give group members information of future matters as well as past matters – we say that a notice of intention to seek a settlement approval based on a notice which effects an opt‑in system is contrary to the very structure of the legislation and is not a matter properly within 175(5).
Then finally, your Honours, we deal in detail in our written submissions about the conflict that we say is faced by the representative plaintiff. The scheme of the statute permits the representative plaintiff to choose the scope of the claim to define the scope of the class, and then they are all acting for group members who do not opt out until the matter is resolved.
We say that, having taken on the risk, the representative plaintiff cannot then decide that it is in the interests of all the group to effect a settlement by having a notice issued requiring registration on the threat of sanction of having one’s claim extinguished, and then participating in a mediation which will have as its premise that it is likely that unregistered group members will not participate in the settlement but will be bound. We say the real immediate and direct conflict is created by the commercial interests of Lendlease to settle on such terms. It gives Lendlease certainty with the open class but has the advantage of potentially a smaller class of actual participants.
Then the representative plaintiffs are placed in those circumstances with – the interests of registered group members to achieve a favourable settlement and achieve a settlement with the fewest participants and to encourage Lendlease to settle on the most favourable terms by bargaining those rights of the unregistered group members for finality for Lendlease of the whole class being bound. I have already dealt, your Honours, with why there is no solution to this conflict by giving someone – by having a contradictor in a mediation because, whether they can get instructions or consent, their only outcome is no settlement or money for the unregistered group members, which is inconsistent with Lendlease’s intent.
Before I move very quickly to the second issue, if I could just address a few of the questions that were asked of Ms Collins. Your Honour Justice Beech‑Jones asked whether Lendlease could just advertise, and for failure, warning group members for a failure to register, and Ms Collins touched on the complexity of communication that is not authorised or approved by the court. There are various authorities dealing with the importance of avoiding improper group member pressure. One of those decisions is a decision of Justice Perram in the Capic v Ford class action, your Honours will find that at [2016] FCA 1020.
What his Honour was there considering is whether an injunction should issue on the basis that the respondent had communicated with group members directly, and whether that communication would generate unfairness or injustice in the proceedings. He did not issue that injunction, but it is an example of why all communications with group members are very closely supervised with the court, and if this Court decides there is no power for the court to approve a notice of this kind, a newspaper advertisement would risk a court deciding that it generates unfairness or injustice.
Your Honour the Chief Justice asked what the difference was between a soft closure and a hard closure. “Hard closure” is the old orders, under section 183, which effected finality and extinguishment of claims of group members at that point, so they would be bound by the result, would not share in the settlement. “Soft closure” is the description where the order is only for mediation, so the class is closed in some way for mediation, and if the settlement does not occur, it magically springs back open and everyone is back, and their claims are not extinguished. It is not really language that is used as much anymore, given the problems with section 183 and how that is not seen as a source of power for a class closure.
Your Honour the Chief Justice also asked about section 33ZG of the Victorian legislation. We found two first instance decisions where the power was used to effect class closure prior to mediation. One of those decisions is Matthews v SPI [2013] VSC 17, and the other one is in the recent Uber class action, and the name of that Andrianakis v Uber [2024] VSC 436. So, the Supreme Court of Victoria said that that did give it power, but there was no consideration in those cases, as I understand it, of whether that provision would give power. If one looks at the scope of the provision, it looks like it is trying to replicate what happens after judgment but do it at the settlement stage.
What is clear in Part 10 and Part IVA is that was drafted before – we have had decades of where the real action is, which is settlements. So, Victoria has brought into its scheme some kind of registration process. Nobody has ever argued that it therefore happens before – whether or not it should happen before mediation, that has not been determined. But obviously and most importantly there is no version of that in Part 10 of the CPA.
Your Honour Justice Edelman asked Ms Collins if the Court of Appeal was considering the equity of the statute. We would say that the Court of Appeal was properly considering the text, context and purpose of the legislation when it was interpreting section 175(5). Unless there are any questions on issue 1, I was going to touch very briefly on issue 2.
Your Honours will have seen from our written outline of oral argument that your Honour Justice Edelman’s comment about intermediate courts deciding their own practice when it comes to reconsidering its own decision, we say, could be applicable here because Part 10 is clearly a statute of the New South Wales Parliament. Both the Full Court of the Federal Court and the Court of Appeal have interpreted the class action regime as if it was a form of uniform national legislation, even though strictly it is not, like the corporations law of the 1990s.
We have suggested in our written outline that the appropriate test should be the same, that the intermediate appellate court consider its own decision and if it is not plainly wrong, or there are no compelling reasons, then it should follow it. A compelling reason might be that a coordinate appellate court has considered the issue, had much more extensive arguments, had identified to it much more thorough range of considerations, and so, a compelling reason would be to follow that intermediate court’s decision. The primary position is an intermediate appellate court looks to its own decisions and determines if that is plainly wrong or whether there are compelling reasons not to follow it.
They are the submissions of the contradictor, your Honours.
GAGELER CJ: Thank you, Ms Morgan. Ms Collins, do you have a reply?
MS COLLINS: Very briefly, your Honour. One of the submissions my learned friend the contradictor said at the start of her submissions was that it was my clients’ position that there would be no settlement, or the settlement would be off if the order that is foreshadowed in the notification was not made. We say, with respect, that somewhat overstates the position. While true it is we will be asking for an order, like any litigant in any court, we may not be successful in asking for that order and the court may say, we are not going to make that order, at which point there is obviously a decision to be made by my client and, indeed, by the plaintiff as to what the consequences of that might be.
A number of these decisions below – and I think Wetdal is a good example. His Honour Justice Beach was inclined to let people in, even though there was a complaint by the respondent in my position that they ought not be allowed to be let in and participate in the settlement, but he said, well, I am going to let them in anyway. I think there are words to the effect of, they should have responded earlier, but they did not, but I am going to let them in.
Now, as to what my client would do in the event that it were unsuccessful in asking for such an order, again, the settlement may fall over, there may be a renegotiation, there may be late registrants. It is impossible, really, to say. But the certainty that my client comes to this court with is that it will ask for the order, for the reasons that I have articulated in‑chief.
The second point, perhaps, I should address, is I understood my learned friend to be putting the submission that there was no power to require what she called a “mandatory registration process” prior to there being any settlement or judgment. Two things arise from that. Firstly, I am not entirely sure what is meant by “settlement”, when we are in a statutory scheme whereby a settlement is not efficacious until it gets approval by the court. Whether that is intended to mean a settlement in principle between the parties and then the power is enlivened, or something short of that – heads of agreement – or whether what she means is until the court has actually granted approval of the settlement.
If it is the latter, then it rather underscores the circularity that I referred to in‑chief about the difficult position the judge will be in, in dealing with an application to approve a settlement, where the court really does not have any proper understanding as to the size of the scope, the amounts of the claim. That puts the court in a very difficult position to make an assessment as to fairness and reasonableness.
In relation to the mandatory registration, we do not accept the characterisation of the mandatory registration. There is not any attempt by us to ask for mandatory registration, but we have asked for the notification because, while we say it does not turn a registration process into a mandatory registration, the evidence is it will make people think seriously about just putting it in the bin. If they actually are interesting to participate, they will do so sooner rather than later.
STEWARD J: It is hard to see it is mandatory when there is an option to do nothing.
MS COLLINS: Yes, quite. I completely agree. A further point Ms Morgan put was that in the event that my client wishes to eliminate its tail risk, it should pay for it, and that was a matter that was raised, I think, in a decision of the Chief Justice and also Justice Leeming in the court below. The immediate difficulty in relation to that suggestion is how would that money ever be determined in circumstances where there was not a registration process and some confidence by the legal practitioners that the registration process was at least reasonably indicative of registrants and claims that were likely to come forward. It would be impossible to determine what the right price for tail risk would be.
The only other point I wish to make was your Honour Justice Beech‑Jones did ask about – which my learned friend has just addressed – the concept of putting it in the paper. I accept what she says; there are delicacies around respondents doing something like that, but it does not always have to be something that is combative or cross the line, if I can use that expression.
One of the difficulties of doing that in lieu of using the notice process is the well‑recognised difficulty that not everyone reads newspapers who will see a notice, whereas, at least if people who are the legal owners of the shares are being sent a notice, one would think that – for instance, nominee companies would then distribute that to the beneficial owners of the shares because they are the ones with the real interest – there is more likelihood through the notice process of getting proper responses and, therefore, obtaining the information, we say, is necessary.
The second point is obviously something that my client were to put in the newspaper, even if it were not to fall foul of close scrutiny of the plaintiffs or of the court, it clearly would not have the gravitas of a court‑sanctioned notice – which is one of the purposes, we say, in the scheme: indicating to group members that when a notice comes out, it has been sanctioned by the courts, so they do not need to see it as a partisan kind of communication that they can ignore or otherwise, but rather the court has approved it – which is a significant matter, in my submission.
The final question your Honour Justice Edelman asked me in relation to whether or not the criticisms that we have made of the court below about applying a fundamental precept or a top‑down analysis could be applied to Brewster, we think with respect, not. The passage that we would turn to is a paragraph in the judgment my learned friend took your Honours to, but for a different reason, and only to the first sentence. That is paragraph 48, which is in the judgment of the Chief Justice, Justices Bell and Keane,
which says – it is 257 of the bundle, page 600 of the report, 269 CLR. I think my learned friend went to the sentence that said:
In the resolution of this issue, textual and contextual considerations must be addressed together with considerations of purpose.
I will not read all of it out, but the third sentence says:
That conclusion can be reached without reliance upon any implication to narrow the scope of their operation, whether by reference to the principle of legality or otherwise.
So, we think, with respect, that that is probably the answer to your Honour Justice Edelman’s question. Unless your Honours have any further questions, those are my submissions.
GAGELER CJ: Thank you, Ms Collins. Mr Edwards, you look as if you want to say something.
MR EDWARDS: With your Honour’s leave, just a reference to our written submissions at paragraph 14. Your Honours will see how it is possible, and regularly done, for persons in the representative plaintiff’s position to negotiate for open classes without sacrificing people’s interests, even when there are registration processes.
GAGELER CJ: Ms Morgan, does anything arise from Mr Edwards’ intervention?
MS MORGAN: No. Thank you, your Honour.
GAGELER CJ: Thank you. The Court will consider its decision in this matter and will adjourn until 10.00 am tomorrow.
AT 3.37 PM THE MATTER WAS CONCLUDED
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