Murphy Operator v Gladstone Ports Corporation (No 4)

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SUPREME COURT OF QUEENSLAND

CITATION:

Murphy Operator & Ors v Gladstone Ports Corporation & Anor (No 4) [2019] QSC 228

PARTIES:

MURPHY OPERATOR PTY LTD (ACN 088 269 596)

(first plaintiff/first applicant)

TOBARI PTY LTD (ACN 010 172 237)

(second plaintiff/second applicant)

SPW VENTURES PTY LTD (ACN 135 830 036)
(third plaintiff/third applicant)

v

GLADSTONE PORTS CORPORATION LIMITED
(ACN 131 965 896)
(defendant/first respondent)

LCM OPERATIONS PTY LTD
(second respondent)

FILE NO:

SC No 7495 of 2017

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Rockhampton

DELIVERED ON:

13 September 2019

DELIVERED AT:

Rockhampton

HEARING DATES:

18 and 19 July 2019

JUDGE:

Crow J

ORDER:

1. The agreement titled “Representative Proceeding Funding Agreement, Representative, The 2017 Gladstone Fisheries Scheme” between LCM Operations Pty Ltd, Murphy Operator Pty Ltd, Tobari Pty Ltd and SPW Ventures Pty Ltd is not, by reason of maintenance, champerty or public policy, unenforceable; and

2. The agreements titled “Representative Proceeding Funding Agreement, Member, The 2017 Gladstone Fisheries Scheme” between LCM Operations Pty Ltd and funded group members are not, by reason of maintenance, champerty or public policy, unenforceable.

CATCHWORDS:

TORTS – LAW OF MAINTENANCE AND CHAMPERTY – CHAMPERTY – where plaintiffs seek declarations that the litigation funding arrangements are not by reason of maintenance, champerty or public policy, unenforceable – where first respondent and plaintiffs argue that the torts of maintenance and champerty no longer exist as part of the common law of Australia – whether maintenance and champerty still exist as part of the common law of Australia

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – REPRESENTATIVE PARTY OR PROCEEDINGS – where plaintiffs seek declarations that the litigation funding agreements are not by reason of maintenance, champerty or public policy, unenforceable – where plaintiffs argue s 103K(2)(b) of the Civil Proceedings Act (Qld) 2011 authorise the litigation funding agreements – whether s 103K(2)(b) of the Civil Proceedings Act (Qld) 2011 authorise the litigation funding agreements

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – ILLEGAL AND VOID CONTRACTS – CONTRACTS CONTRARY TO PUBLIC POLICY – OTHER CONTRACTS – where plaintiffs seek declarations that the litigation funding agreements are not by reason of maintenance, champerty or public policy, unenforceable – where plaintiff argues that there is lawful justification for the litigation funding agreements and therefore are enforceable – where defendant argues that there is no lawful justification therefore the entry into the agreements is a civil wrong and the agreements are unenforceable as contrary to public policy - whether the agreements are lawfully justified and are therefore enforceable

EVIDENCE – ADMISSIBILITY - GENERAL PRINCIPLES – where plaintiffs seek declarations that the litigation funding agreements are not by reason of maintenance, champerty or public policy, unenforceable – where defendant argues that the first respondent exercises impermissible control of the proceedings – where defendant tendered invoices issued by the plaintiffs’ solicitors seeking to demonstrate impermissible control of the proceedings – where first respondent objects to the admissibility of the invoices on the basis…

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Details
Case
[2019] QSC 228
Decision Date

CaseChat Overview and Summary

The case of Murphy Operator v Gladstone Ports Corporation (No 4) involved a dispute regarding litigation funding agreements in the context of a proposed class action. The plaintiffs sought declarations that the funding agreements were not unenforceable by reason of maintenance, champerty, or public policy. The primary legal issues before the court were whether the torts of maintenance and champerty still exist as part of the common law of Australia, and whether section 103K(2)(b) of the Civil Proceedings Act 2011 (Qld) authorised the funding agreements. The court also needed to determine if the funding agreements were lawful and enforceable under general contractual principles, specifically if they were contrary to public policy.

The court found that the funding agreements did not involve unlawful conduct or purpose and were not prejudicial to the administration of justice. The agreements were consistent with the public policy outlined in Part 13A of the Civil Proceedings Act 2011 (Qld). The court held that the agreements were not unenforceable by reason of maintenance, champerty, or public policy. Additionally, the court ruled that the invoices tendered by the defendant were inadmissible as evidence of post-contractual conduct. The court concluded that the funding agreements were lawful and enforceable, making the necessary declarations that they were not unenforceable.

Orders

Orders of the court

1. The agreement titled “Representative Proceeding Funding Agreement, Representative, The 2017 Gladstone Fisheries Scheme” between LCM Operations Pty Ltd, Murphy Operator Pty Ltd, Tobari Pty Ltd and SPW Ventures Pty Ltd is not, by reason of maintenance, champerty or public policy, unenforceable; and

2. The agreements titled “Representative Proceeding Funding Agreement, Member, The 2017 Gladstone Fisheries Scheme” between LCM Operations Pty Ltd and funded group members are not, by reason of maintenance, champerty or public policy, unenforceable.

Background

Background to the litigation

At the return date of the Funding Application on 18 July 2019 no group member provided a notice of intention to appear at the hearing. In response to the advertisement one further claimant has joined the group members, taking the total number of group members to 168 group members who join the three named plaintiffs seeking to bring a class action against the first respondent (‘GPC’).2. Background GPC, who is responsible for the management of the Port of Gladstone, undertook dredging in Gladstone Harbour to improve the shipping lanes during 2011 and 2012. The spoil created by the dredging was deposited behind a bund wall. The plaintiffs contend that the dredge spoil was known to be acidic after being exposed to air, and that GPC was on notice that the bund wall was unlikely to be effective to contain the spoil. The plaintiffs allege large volumes of spoil escaped the defective bund spread across a wide geographic area and from early September 2011 seriously depleted the quantity and quality of commercial seafood species in waters affected by the spoil. The plaintiffs and group members wish to bring a claim in negligence and public nuisance against GPC, alleging that the plaintiffs and the group members suffered economic loss and damage from the reduction of the catch of seafood products from the affected waters. Mr Barry Murphy is a director of the first plaintiff. From 1985 the first plaintiff has operated a fleet of trawlers in Queensland waters typically from Fraser Island to north of Yeppoon. During 2011 and 2012 the first plaintiff operated ten vessels focusing on trawling for scallops and prawns. Mr Murphy deposes that one of the most important scallop replenishment zones utilised by his fleet of trawlers was at Bustard Head, commencing approximately 25 kilometres from the entrance to Gladstone Harbour. Mr Murphy deposes from in and about late 2011 skippers of the vessels being operated by the first plaintiff reported catching diseased fish in waters off Gladstone, then from early 2012 the catch from the Bustard Head scallop replenishment area decreased considerably. Mr Christopher Thompson is a solicitor and director of the law firm Law Essentials of 65 Torquay Road, Pialba, Hervey Bay. Mr Christopher Thompson and his partner at the firm, Mr Michael Garrahy have, for more than 15 years, acted in a range of matters for fishers, fishing businesses, fish wholesalers and fish processors in and around the Gladstone and Hervey Bay area. In 2008 and 2009, Law Essentials acted for the majority of the Gladstone Fishing Industry. Mr Christopher Thompson deposes, and it is not disputed, that from in and around 2010 many of Law Essentials’ fishing clients, including the plaintiffs in the current proceedings, approached Law Essentials raising concerns about the proposed significant dredging and port reclamation project proposed to be undertaken in Gladstone Harbour by GPC. Mr Christopher Thompson deposes that:[1]“From or about 2010 Law Essentials was retained by a number of commercial fishing operators based in Gladstone in relation to the compensation scheme established as a part of the Western Basin and Dredging and Disposal Project in Gladstone harbour. At the same time we began to investigate the impacts of that project on our client base, and sought to widen the then proposed compensation scheme as more of our clients were saying that they would be impacted.”[1] Affidavit of Christopher John Thompson filed 11 June 2019.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Had I concluded that the agreements were unenforceable then I would have adopted the approach of the Full Court of the Federal Court in Westpac Banking Corporation v Lenthall[139] and the New South Wales Court of Appeal in BMW Australia Ltd v Brewster[140]. I would have considered it appropriate to make a common fund order in terms of the order sought.[139] (2019) 366 ALR 136.[140] (2019) 366 ALR 171.9. Conclusion The funding agreements which are the subject of the application do not involve unlawful conduct or purpose and are not prejudicial to the administration of justice. To the contrary the funding agreements accord with the public policy of Part 13A of the Civil Proceedings Act 2011 (Qld). In those circumstances I make the following declarations:1.The agreement titled “Representative Proceeding Funding Agreement, Representative, The 2017 Gladstone Fisheries Scheme” between LCM Operations Pty Ltd, Murphy Operator Pty Ltd, Tobari Pty Ltd and SPW Ventures Pty Ltd is not, by reason of maintenance, champerty or public policy, unenforceable; and2.The agreements titled “Representative Proceeding Funding Agreement, Member, The 2017 Gladstone Fisheries Scheme” between LCM Operations Pty Ltd and funded group members are not, by reason of maintenance, champerty or public policy, unenforceable.

Ratio Decidendi

Legal Principle Established

In my view, it is correct to determine whether the contract is legal by having reference to the terms of the contract and in cases of ambiguity, the nature and surrounding circumstances of the contract at the time of formation, and not by reference to subsequent acts of the parties. I conclude that the invoices are inadmissible. In case I have erred in this conclusion, I have considered the invoices.4.2 Consideration of Invoice Bundle The Invoice Bundle Summary shows that Mr Chris Thompson or Mr Michael Garrahy of Law Essentials had communications with the representative plaintiffs on 7, 9 and 27 February 2018, on 16, 17, 23 May 2018, on 4 June 2018, on 25 July 2018, on 6, 13 and 28 September 2018, on 2, 8, 15, 16 and 17 October 2018, on 30 January 2019, on 8, 11, 13, 14, 26 February 2019, 6 and on 26 March 2019. Mr Chris Thompson and Mr Michael Garrahy have had numerous other communications with group members. Mr Maurice Thompson and other personnel from Clyde & Co have had numerous communications with LCM. In addition Clyde & Co has had communications with the representative plaintiffs on 7 February 2018, on 10, 11, 14 May 2018, on 25 and 26 June 2018, on 23 July 2018, on 12, 15 October 2018, on 7, 8, 11, 12, 13, 14, 19, 26, 27 and 28 February 2019, on 1, 5, 6, 7, 8, 15 and 18 March 2019, on 2 April 2019, and on 8, 14, 15, 28, 29 May 2019. The Invoice Bundle Summary shows that in the period between 1 February 2018 and 31 May 2019, Law Essentials had 37 communications with the representative plaintiffs and no communication with LCM. The Invoice Bundle Summary shows that Clyde & Co had approximately 93 communications with the plaintiffs but over 200 communications with LCM. The Invoice Bundle shows that there has been considerable contact between Clyde & Co, Law Essentials and the plaintiffs but more communication or contact between Clyde & Co and LCM. It is submitted on behalf of GPC that the communication in the Invoice Bundle leads to an inferential finding that LCM has practical control over the litigation as there is far more communication between Clyde & Co and LCM than the communication between the plaintiffs and Clyde & Co and Law Essentials. GPC submit that if the litigation funder has no practical control over the conduct of the plaintiffs’ proceedings, and its role is confined to consultation, then it is likely that the Funding Agreements will be valid and enforceable.[33] Whether control is relevant at all, and if it is relevant, whether LCM possess the requisite control over the proceeding will be discussed later in these reasons.[33] Paragraph 6 of GPC’s Written Submissions. The Invoice Bundle does show that there is more contact or communication between Clyde & Co and LCM than there is contact or communication between Clyde & Co and Law Essentials and the plaintiffs. However, I do not conclude that this in itself leads to a conclusion that LCM has control over the proceeding. I consider that the content of the invoices do nothing more than evidence the contractual obligation of Clyde & Co to keep the funder fully informed of the action, and to seek and receive instructions from the funder on minor day to day matters as required in clause 6 and 11 of Retainer Agreements. In my view there is nothing inconsistent in the invoices to suggest that the Funding Agreements referred to above are being conducted other than ordinarily, in accordance with the terms of those agreements.