Walsh v WorleyParsons Limited (No. 4)

[2017] VSC 292

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE
COMMERCIAL COURT

S CI 2014 04712

JOANNE WALSH	Plaintiff
v
WORLEYPARSONS LIMITED (ACN 096 090 158)	Defendant

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JUDGE:	CAMERON J
WHERE HELD:	Melbourne
DATE OF HEARING:	25 May, 26 May, 23 August, 24 August and 21 October 2016
DATE OF JUDGMENT:	26 May 2017
CASE MAY BE CITED AS:	Walsh v WorleyParsons Limited (No. 4)
MEDIUM NEUTRAL CITATION:	[2017] VSC 292

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PRACTICE AND PROCEDURE – Application to stay a proceeding for an abuse of process – Who is the moving party – Can the litigation funder be the moving party – Improper purpose – Ulterior purpose for a purpose other than the vindication of rights – Permanently stayed.

PRACTICE AND PROCEDURE – Application to disallow this proceeding to continue as a group proceeding – Supreme Court Act 1986, s 33N.

PRACTICE AND PROCEDURE – Application to re-open the abuse application and the s 33N application – Plaintiff entered into a new funding agreement – Whether Plaintiff can rely on the new funding agreement – Interests of justice – Application refused.

EVIDENCE – Objection to evidence – Relevance – Opinion – Evidence Act 2008, ss 55, 56, 76 and 77 referred to.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr Norman O’Bryan SC Mr Michael Symons	Stewart Peters Lawyer
For the Defendant	Ms Wendy Harris QC Mr Robert Craig Ms Jennifer Finlay	Herbert Smith Freehills

HER HONOUR:

What is this case about?

1. This case is a shareholder class action.  It is alleged that WorleyParsons Limited (WorleyParsons) misled the market in 2013 by virtue of its statements to the market about projected earnings in 2014.  The background facts were outlined by Almond J in Walsh v WorleyParsons Limited.[1]

   [1]Walsh v WorleyParsons [2015] VSC 135.

1. Put simply, it is alleged that from 14 August 2013, WorleyParsons’ statements to the market gave rise to the implication that its 2014 earnings would be higher than the $322.1 million for the 2013 year.

1. As matters transpired, on 20 November 2013, WorleyParsons stated that earnings for the 2014 financial year would be in the range of $260 million to $300 million.

1. The closing price of WorleyParsons’ shares was $21.59 on 19 November 2013.  On 20 November 2013, the closing price was $16.00 — a 26% reduction in the share price and a reduction in market capitalisation in the order of $1.25 billion.

The abuse and s 33 N applications

1. This proceeding came before this court upon the return of the two summonses issued by the defendant, WorleyParsons.  The lead plaintiff in this proceeding is Ms Joanne Maree Walsh (Ms Walsh).

1. By its amended summons dated 18 February 2015, WorleyParsons seeks relief from the court that the proceeding be stayed permanently due to an abuse of process (abuse application).

1. Should the abuse application fail, WorleyParsons relies on a summons also dated 18 February 2015,[2] and seeks orders from this court that the proceeding not be continued as a group proceeding pursuant to s 33N of the Supreme Court Act 1986 (the Act) (s 33N application).

   [2]Transcript 2:26-29, 25 May 2016.

1. I will refer to the abuse application and s 33N application collectively as the applications.

1. WorleyParsons filed and relied on the following affidavits in support of the applications:

(a)        Affidavits of Mr Jason Lawrence Betts (Mr Betts) sworn 10 December 2014, 18 February 2015, 10 March 2015, 19 August 2015, 12 May 2016;

(b)        Affidavit of Ms Christine Yun Tran (Ms Tran) sworn 13 May 2015; and

(c)        Affidavit of Mr Murray John Edstein (Mr Edstein) sworn 3 September 2015.

1. Also, WorleyParsons also relied on a number of paragraphs in the evidence filed by Ms Walsh.

(a)        Affidavits of Ms Walsh sworn 17 March 2015 and 5 November 2015;

(b)        Affidavits of Mr Stewart Francis Sturrock Peters (Mr Peters) sworn 4 March 2015 and 1 September 2015.

1. In response, Ms Walsh filed and relied on the following affidavits:

(a)        Affidavits of Ms Walsh sworn 17 March 2015, 5 May 2015, 5 November 2015,  25 May 2016 and 25 July 2016.  The 25 July 2016 affidavit is a tentative tender, the reception of which will be subject to my ruling below; and

(b)        Affidavit of Mr Peters sworn 1 September 2015.

The application to re-open

1. Shortly after the abuse application and s 33N application were heard, and prior to the filing of written closing submissions, an application was brought by Ms Walsh by way of a summons filed 9 September 2016 seeking leave from the court to re-open her case in relation to the s 33N application. The summons was later amended on 26 October 2016 to further include the re-opening of the abuse application.

1. I will deal with this application as a preliminary matter.

1. In support of this application, Ms Walsh sought to rely upon an affidavit sworn by her solicitor, Mr Peters, dated 8 September 2016 (Mr Peters’ September Affidavit).  Critical to these applications, Mr Peters’ September affidavit exhibits a new litigation funding agreement entered into between Ms Walsh and BSL Litigation Partners Ltd (BSL) on 8 September 2016 (LFA).  Ms Walsh was already indemnified by Melbourne City Investments Pty Ltd (MCI) in relation to the proceeding.  The LFA effectively replaced the deed of indemnity dated 21 January 2015 (the second indemnity) given by MCI to Ms Walsh.[3]  I will refer to these later in this judgment.

   [3]Affidavit of Stewart Francis Sturrock Peters sworn 8 September 2016, SFSP-1, LFA, Recitals, [E].

1. The LFA is said to be of particular relevance to this case, being in response to criticisms made by senior counsel for WorleyParsons in the course of oral submissions during the hearing of the abuse application and section 33N application.

1. The principal criticisms of WorleyParsons in relation to the second indemnity included, firstly, that there was no express entitlement on the part of the funder to recoup its costs in the event of a successful outcome; and secondly, that instructions given by Ms Walsh could not override those given by the funder.

1. The LFA, it is said, addresses and overcomes these criticisms of the second indemnity primarily in the following ways; namely, the LFA provides that the litigation funder is entitled to ‘Case Costs’ and a ‘further amount’ based on a formula,[4] and, under the LFA, Ms Walsh is now only obliged to ‘follow all reasonable advice’ from lawyers.  In addition, Ms Walsh is also permitted under the LFA to ‘give instructions to the Lawyers concerning any Claim of the Plaintiff personally’.[5]  Further, the LFA provides that where a conflict arises between the interest of Ms Walsh and the interest of the funder, Ms Walsh’s instructions will override the funder’s instructions and that the lawyers may refrain from advising the funder and acting on the funder’s instructions.[6]

   [4]Ibid LFA, cl 12.

   [5]Ibid LFA, cl 6.1.

   [6]Ibid LFA, cl 13.

1. In response, WorleyParsons relied on two affidavits sworn by Ms Tran on 13 October 2016 and 4 November 2016 respectively.

Submissions

1. Ms Walsh submits that the application to re-open should be allowed.  This is a case of ‘fresh evidence’ and ‘new evidence’ as the LFA came into existence on 8 September 2016 shortly after which the court was notified and the application to re-open was brought.  It was submitted that it was only after WorleyParsons closed its case that Ms Walsh could be certain with what criticisms in relation to indemnification arrangements remained to be addressed in the LFA.[7]

   [7]Plaintiff’s Reply Submissions on Reopening, 24 November 2016 [8].

1. Ms Walsh referred to the statements of Barwick CJ in Ratten v The Queen in support of her submission that by definition, fresh evidence in a civil trial means that ‘evidence which was not actually available to the appellant at the time of the trial, or which could not then have been available to the appellant by the exercise on his part of reasonable diligence in the preparation of the case’.[8]  Ms Walsh submits that the LFA falls within that definition.

   [8](1974) 131 CLR 510, 516 (Barwick CJ); Transcript 4:6-10, 21 November 2016.

1. Ms Walsh submits that the principles in relation to fresh evidence are only relevant to an application to re-open made after the delivery of judgment but not before.[9]  This is a case, as Ms Walsh says, the application to re-open occurs whilst the hearing is continuing.[10]

   [9]Transcript 18:28-31, 21 November 2016.

   [10]Ibid 5:22-28.

1. Ms Walsh also says that WorleyParsons is not prejudiced or embarrassed if the LFA was admitted as evidence, given that WorleyParsons is in a position to respond to the LFA.[11]

   [11]Ibid 30:16-24.

1. Conversely, WorleyParsons submits that the LFA is not ‘fresh evidence’.  It submits that the creation of the LFA was a deliberate attempt by Ms Walsh, after hearing the applications, to address WorleyParsons’ criticisms made against Ms Walsh concerning funding arrangements.

1. The essence of WorleyParsons’ case is that exceptional circumstances, similar to other cases, ought be shown.  It was submitted that notwithstanding judgment has not been technically reserved, all parties had concluded their oral submissions and that the court indicated that a decision would be reserved pending written closing submissions from the parties.[12]

   [12]Defendant’s Submissions on the Plaintiff’s Application to Re-open Evidence, 14 October 2016 [12].

1. WorleyParsons submits that the rule is to uphold a party’s right to finality of litigation and to ensure the efficient administration of justice whereby the scope of the litigation is contained.

1. It was submitted by WorleyParsons that if the course of a re-opening is embarked upon, the potential scope of the re-opened proceeding is unknown.

1. WorleyParsons submits that the principles articulated by Kenny J in Inspector-General in Bankruptcy v Bradshaw have been applied equally in cases where judgment has not been reserved.[13]  WorleyParsons directed the court to a number of authorities – Hughes v Hill, the application was made by the plaintiff during reply after the defendant’s counsel closed its case;[14] Brown v Petranker, the application was also made by the defendant before closing its case;[15] Urban Transport Authority, the application was made during final address for the parties.[16]

   [13][2006] FCA 22, [24] (‘Bradshaw’).

   [14][1937] SASC 285, 287.

   [15](1991) 22 NSWLR 717, 727-728.

   [16]Urban Transport Authority of New South Wales v Nweiser (1992) 28 NSWLR 471, 474 (Clark JA) (‘Urban Transport Authority’).

1. WorleyParsons also submits that the same test applies to interlocutory applications.  In Samsung C&T Corporation v Duro Felbuera Australia Pty Ltd, Le Miere J applied the interests of justice test to determine if leave should be granted to re-open the defendant’s case after the application has been heard.[17]

   [17][2016] WASC 193 [14].

Legal principles

1. It is common ground that the test in relation to an application to re-open a case is summarised by Kenny J in Bradshaw.  The following passages are relied upon by the parties:

The authorities indicate that, broadly speaking, there are four recognised classes of case in which a court may grant leave to re-open, although these classes overlap and are not exhaustive.  These four classes are (1) fresh evidence (Hughes v Hill [1937] SASR 285 at 287; Smith v New South Wales Bar Association [No 2] (1992) 108 ALR 55 at 61–2); (2) inadvertent error (Brown v Petranker (1991) 22 NSWLR 717 at 728 (application to recall a witness); Murray v Figge (1974) 4 ALR 612 at 614 (application to tender answers to interrogatories); Henning v Lynch [1974] 2 NSWLR 254 at 259 (application to re-open); (3) mistaken apprehension of the facts (Urban Transport Authority of NSW v NWEISER (1992) 28 NSWLR 471 (“UTA”) at 478; and (4) mistaken apprehension of the law (UTA at 478). In every case the overriding principle to be applied is whether the interests of justice are better served by allowing or rejecting the application for leave to re-open: see UTA at 478; also The Silver Fox Co Pty Ltd as Trustee for the Baker Family Trust v Lenard’s Pty Ltd (No 2) [2004] FCA 1310 (“Silver Fox”) at [22] and [25].

…

As already noted, however, the overriding principle requires that the Court consider whether, taken as a whole, the justice of the case favours the grant of leave to re-open. In this case, the applicants’ decision not to present evidence on quantification was deliberate, but, as Clarke JA, with whom Mahoney and Meagher JJA agreed, said in UTA at 478:

No doubt it is relevant to take account of a number of matters such as likely prejudice to the party resisting the application and the reasons why the evidence was not led in the first place, but there is not, in my opinion, any hard and fast rule which requires the court to reject an application where the decision not to call a witness in the party’s case was a deliberate one. Of course that does not mean that that is not a very relevant consideration. It is. Where, for instance, a decision was based on tactical grounds it may be difficult to resist the conclusion that the interests of justice were better served by the rejection of the application. But even in that circumstance there may be cases in which it is felt that the client whose application it is should not have to suffer for his or her counsel’s deliberate decision. Where the decision is not made for tactical reasons and is based on a mistaken apprehension of the law or the facts the case is more appropriately to be considered as one in which the application has resulted from an error by counsel. [18]

[18]Bradshaw [2006] FCA 22, [24], [26].

1. The above passages are frequently quoted and were adopted in a number of decisions in higher courts.[19]

   [19]See, Marrier v Australian Super Developments Ltd [2016] VSCA 141 (‘Marrier’); Spotlight Pty Ltd v NCON Australia Ltd (2012) 46 VR 1 (‘Spotlight’).

1. In Spotlight, the Court of Appeal made reference to Kenny J’s analysis in Bradshaw.[20] Their Honours reiterated that the four classes are not closed and ‘[t]he overriding principle is that the court consider whether, taken as a whole, the justice of the case favours the grant of leave to re-open’.[21]

   [20]Spotlight (2012) 46 VR 1,7 [24]-[26] quoting Bradshaw [2006] FCA 22, [24], [26].

   [21]Spotlight (2012) 46 VR 1,7 [26] quoting Bradshaw [2006] FCA 22, [24], [26].

1. In Marrier, the Court of Appeal, adopted the analysis in Spotlight, observed that:

Where a case has been closed and judgment reserved, exceptional circumstances will be required for a court to allow the case to be reopened…The rule is necessary to ensure finality in litigation and the efficient administration of justice, and to avoid a reopened hearing being ‘bedevilled by arguments about…the scope of the re-opened proceeding’.[22]

[22]Spotlight (2012) 46 VR 1, 5-6 [17]-[18] cited in and quoted in Marrier [2016] VSCA 141.

1. Regard ought be had to the observations of the High Court in Aon Risk Services Australia v Australian National University.[23]  Notwithstanding that this application is of an interlocutory nature and does not involve the amendment of pleadings, but rather the admission of new evidence, the statement of principle from the majority of High Court is instructive.  The majority of the High Court observed:

A party has the right to bring proceedings.  Parties have choices as to what claims are to be made and how they are to be framed.  But limits will be placed upon their ability to effect changes to their pleadings, particularly if litigation is advanced.  That is why, in seeking the just resolution of the dispute, reference is made to parties having a sufficient opportunity to identify the issues they seek to agitate.

In the past it has been left largely to the parties to prepare for trial and to seek the court’s assistance as required.  Those times are long gone.  The allocation of power, between litigants and the courts arises from tradition and from principle and policy.  It is recognised by the courts that the resolution of disputes serves the public as a whole, not merely the parties to the proceedings.[24].

[23](2009) 239 CLR 175 (‘Aon’).

[24]Ibid 217 [111]-[113] (Gummow, Hayne, Crennan, Kiefel and Bell JJ).

Decision and observations

1. In an application such as this, there are compelling arguments and serious competing considerations.  It is incumbent upon the court to determine what the interests of justice in the circumstances of this case, as a whole, dictate,[25] even in situations where the application to re-open is related to interlocutory applications.[26]

   [25]See, Urban Transport Authority 28 NSWLR 471, 478 (Clarke JA).

   [26]Samsung C&T Corporation v Duro Felguera Australia Pty Ltd [2016] WASC 193, [14].

1. Ms Walsh referred the court to the decision of the Court of Appeal in Marrier.

1. However, the Court of Appeal in Marrier was not dealing with a re-opening application in its general sense.  In that case, an email containing terms of settlement was sent to the original trial judge but on remittance from an appeal to another judge, that email was not passed on to the second judge.[27]  On one view, this evidence was in the court file and did not require an application for it to be considered as evidence.  On another view, this falls squarely within the category of ‘mistake’.  On either of these views, Marrier should be distinguished from the case before this Court.

   [27]Marrier [2016] VSCA 141, [197] – [203].

1. It is beyond doubt that the role of courts in facilitating the administration of justice in an effective, efficient and, in this jurisdiction, a commercial way, is pivotal.

1. However, case management principles, questions of costs and inconvenience to the litigants do need to be balanced with the most fundamental of considerations — namely, the integrity of this State’s system of justice.  As the High Court has observed, in our system of justice, the considerations that weigh upon the court travel beyond the parties; account needs to be taken of the community as a whole and how the court’s management and resolution of disputes impacts on public confidence in our judicial system.[28]

   [28]Aon (2009) 239 CLR 175, 189 [23]-[30] (French CJ), 217 [112]-[113] (Gummow, Hayne, Crennan, Kiefel and Bell JJ).

1. This case has been advanced on the basis of particular arrangements between Ms Walsh, her indemnifiers and her legal team for several years, including, most importantly, the terms of the second indemnity.  The basis of these arrangements were central to WorleyParsons’ arguments that MCI was the moving party behind the litigation (I will expand on these arguments later in this judgment).

1. Ms Walsh’s legal team is very experienced in actions of the nature of Ms Walsh’s proceeding.  This is not a case where the court is troubled by a party with no, or limited, access to any legal advice or guidance.

1. There is little doubt that Ms Walsh’s legal team and indemnifiers have responded to and evolved their arrangements (and, indeed, such is admitted) in response to WorleyParsons’ submissions; as they are entitled to do in an appropriate way.

1. The critical question for the court to determine in this instance is whether the evolution of Ms Walsh’s case — the entry into the LFA — constitutes new or fresh evidence which ought, in the interests of justice, preserving the integrity of the judicial process, be admitted.

1. In my opinion, it should not for the reasons that follow.

1. I have formed this view in full knowledge that some measure of costs and expenses, delay and inconvenience may occur.  This is to be regretted.

1. However, in my opinion, certain principles prevail over practical concerns in particular circumstances.  I regard the present case as an example of such circumstances.

1. WorleyParsons is entitled to meet the case put before it on the basis upon which it has been conducted for a considerable period of time.  The court should not, in my opinion, facilitate a situation where the shifting sands of the very essence of a case ought be sanctioned, outside the established principles.

1. On three separate occasions, outlines of written submissions were filed by WorleyParsons with the court and served on Ms Walsh in this proceeding.[29] The earliest one dated back to 2014 in relation to a s 33N application brought by WorleyParsons on summons dated 10 December 2014. Each and every outline of submissions contained arguments of the WorleyParsons’ case, in which Ms Walsh’s arrangements with her indemnifier were criticised – the attack that Ms Walsh now says the need to respond arises.

   [29]Defendant’s Outline of Submissions, 10 December 2014 [61]-[73]; Defendant’s Supplementary Outline of Submissions, 10 March 2015, [64]-[74]; Defendant’s Consolidated Outline of Submission, 13 May 2016 [116]-[135].

1. Ms Walsh is no stranger to this argument.

1. As I have observed, the LFA fundamentally and radically changes the basis upon which Ms Walsh’s action is brought and goes to the very heart of the issues in these applications — that is, who is the operative or moving party in this litigation and whether the proceeding ought properly proceed as a group proceeding.

1. Ms Walsh, advised and represented by an experienced legal team, chose to agitate her claims, as a representative plaintiff, on the basis of arrangements in place at the time proceedings were instituted.

1. In the recital of the LFA, it stated:

Joanne Walsh has attended the Court and has read the submissions and the transcript of WorleyParsons Ltd’s application, she wishes to replace the Indemnity with a litigation funding agreement which addresses all the criticisms which were made by WorleyParsons Ltd of her existing arrangements with the Indemnifier. The Indemnifier has declined to enter into a litigation funding agreement.  Accordingly the Plaintiff has now requested the Funder to enter into a litigation funding agreement whereby the Funder will manage the Case, pay the Case Costs and provide all necessary funding and support for the Case from time to time on the terms of this Funding Agreement in place of the Indemnity.[30]

[30]Affidavit of Stewart Francis Sturrock Peters sworn 8 September 2016, SFSP-1, Recitals, [C].

1. As was stipulated in recital above, the LFA was entered into by Ms Walsh for the purpose of addressing criticisms made by WorleyParsons and for her own interests.

1. This is not a case in the sense that fresh evidence was discovered in the course of or after the hearing, the existence of which was not known to a party, possibly affecting the outcome of the applications and, ultimately the case.  Ms Walsh has chosen to enter into the LFA after oral submissions from both parties in an attempt to re-agitate matters that have been fully argued.  Ms Walsh’s actions are clearly undertaken in an attempt to reconfigure arrangements which may suggest that she is not in control of the litigation.

1. I agree with WorleyParsons that ‘[Ms Walsh] is the author of her own misfortune’.[31]  Ms Walsh had, in fact, full knowledge of how WorleyParsons’ case was put against her — where multiple versions of written submissions were filed in advance by WorleyParsons prior to the hearing.

   [31]Transcript 48, 21 November 2016.

1. It could be said that costs cure all and that, to the extent that amendments to pleadings, additional discovery and subpoenas are required, and indeed the admission of fresh evidence, these imposts can and should be accommodated by appropriate orders as to costs.

1. I disagree.

1. To fundamentally change the nature of arrangements between a party and their funder and/or indemnifier years into litigation is not in the interests of justice and would certainly not engender faith in the judicial system.

1. Ms Walsh has, as unpalatable as it may seem, other options to pursue her claim.

1. WorleyParsons should have the protection of the legal system to meet and defend a case put against it, within the reasonable boundaries of amendments, developments and refinements that frequently occur.

1. In my opinion, the only relevant question in the abuse application is whether the proceeding, at the time it was commenced, was an abuse of process.  The fact that the LFA was created after counsel had made their oral submissions would not and could not impact on the questions that the court endeavours to answer in relation to the abuse application and is incapable of disturbing any findings in relation to the abuse application.

1. It is on that basis that the adjudication of the applications before the court ought proceed.

1. It is also important to note that the parties have spent more than five days in court for oral submissions in relation to the applications.  The matter has been running for more than two years with multiple judgments being handed down for various interlocutory applications.  It was only some time after the conclusion of the five day hearing, subsequent to the parties’ closing of their case orally, that Ms Walsh entered into the LFA with BSL.

1. Should this application be allowed, further court time would have to be set aside for oral submissions from the parties, and possibly, cross-examination of Mr Peters (and perhaps others) as has been foreshadowed by WorleyParsons.  Additional resources would have to be committed by the parties to address new submissions based on the LFA.

1. Accordingly, the application to re-open the hearing of the abuse application and s 33N application is refused.

Objections to evidence

1. Before turning to the substance of the abuse application and the s 33N application, it is perhaps convenient for me to dispose a number of objections raised at the hearing as well as written objections filed by the parties in relation to evidence. In particular, I will consider whether Ms Walsh’s affidavit sworn 25 July 2016 ought be received into evidence.

Ms Walsh’s objections

1. Ms Walsh objected to a substantial number of paragraphs in the affidavits filed by WorleyParsons.

1. Ms Walsh’s objections to the evidence in these applications are numerous.  By her counsel, she indicated that she would be content to deal with such objections in this judgment.

1. Ms Walsh objects to certain paragraphs of affidavits of Mr Betts sworn:

(i)10 December 2014 (paragraphs 4-6, 7-10, 11-18, 19-39);

(ii)18 February 2015 (paragraphs 7, 9-14, 15-22, 23-24, 25-40, 41-49, 50-55);

(iii)10 March 2015 (paragraphs 4-30);

(iv)12 August 2015 (paragraphs 3-38);

(v)19 August 2015 (paragraphs 5-17, 18-20, 21-78, 79-80); and

(vi)12 May 2016 (paragraphs 5-6, 7-25, 26-30, 31-56).

1. In addition, Ms Walsh objects to certain paragraphs of the affidavit of Ms Tran affirmed 13 May 2015, being:

(i)paragraphs 3-34; and

(ii)paragraphs 35-41.

1. Finally, Ms Walsh objects to certain paragraphs of the affidavit of Mr Edstein sworn 3 September 2015 as follows:

(i)paragraphs 4-6; and

(ii)paragraphs 7-11.

1. In broad terms, the objections of Ms Walsh were that the paragraphs in these affidavits are either irrelevant, thereby inadmissible, pursuant to ss 55 and 56 of the Evidence Act 2008 (the Evidence Act), or opinions of the deponents that are not admissible under s 77 of the Evidence Act.

1. In each of the objections raised on the ground of relevance, Ms Walsh argues that:

No matter referred to in this paragraph or the exhibits thereto could rationally affect (directly or indirectly) the assessment of:

i.the plaintiff’s purpose in commencing and maintaining this proceeding; or

ii.the assessment of whether it is otherwise inappropriate that the claims made by the plaintiff in this proceeding be pursued by means of a group proceeding within the meaning of s 33N of the Supreme Court Act 1986 (Vic).

1. In relation to objections based on opinion, Ms Walsh argues that the paragraphs are ‘not admissible to prove a fact about the existence of which the opinion was expressed pursuant to s 77 of the Evidence Act… [the deponent] is not aided by any exception to this rule’.[32] I note that s 77 of the Evidence Act is an exception to the opinion rule under s 76.

   [32]Plaintiff’s Objections to Defendant’s Evidence, 25 May 2016.

1. The relevant sections of the Evidence Act are:

55       Relevant evidence

(1)The evidence that is relevant in a proceeding is evidence that, if it were accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding.

(2)In particular, evidence is not taken to be irrelevant only because it relates only to—

(a)      the credibility of a witness; or

(b)      the admissibility of other evidence; or

(c)      a failure to adduce evidence.

56       Relevant evidence to be admissible

(1)Except as otherwise provided by this Act, evidence that is relevant in a proceeding is admissible in the proceeding.

(2)       Evidence that is not relevant in the proceeding is not admissible.

…

76       The opinion rule

Evidence of an opinion is not admissible to prove the existence of a fact about the existence of which the opinion was expressed.

…

77Exception—evidence relevant otherwise than as opinion evidence

The opinion rule does not apply to evidence of an opinion that is admitted because it is relevant for a purpose other than proof of the existence of a fact about the existence of which the opinion was expressed.

1. The test for relevance under s 55 is whether the evidence could ‘rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding’.[33]  Gleeson CJ, Heydon and Crennan JJ of the High Court in Washier v Western Australia explained that:

[Relevance] can be determined only by an analysis of the facts in issue in the proceedings, and the circumstances which bear upon the question of probability.  It also requires consideration of the process of reasoning by which information as to the fact of the acquittal could rationally affect the assessment of the probabilities.  The word “rationally” is significant in this context.  In order to establish relevance, it is necessary to point to a process of reasoning by which the information in question could affect the jury’s assessment of the probability of the existence of a fact in issue at the trial.[34]

[33]Evidence Act 2008 s 55.

[34](2007) 234 CLR 492, 498 [5].

1. In Dasreef Pty Limited v Hawchar,[35] the High Court examined the operation of the opinion rule under the Evidence Act 1995 (NSW), which is essentially the same as the rule under the Evidence Act in Victoria.  The majority of the High Court explained the operation of the opinion rule in the following terms:

Section 76(1) expresses the opinion rule in a way which assumes that evidence of an opinion is tendered “to prove the existence of a fact”. That manner of casting the rule does not, as might be supposed, elide whatever distinction can be drawn between “opinion” and “fact” or invoke the very difficult distinction which sometimes is drawn between questions of law and questions of fact. It does not confine an expert witness to expressing opinions about matters of “fact”. Rather, the opinion rule is expressed as it is in order to direct attention to why the party tendering the evidence says it is relevant. More particularly, it directs attention to the finding which the tendering party will ask the tribunal of fact to make.[36]

[35](2011) 243 CLR 588.

[36]Ibid 602 [31].

1. As Finkelstein J observed in La Trobe Capital & Mortgage Corporation Ltd v Hay Property Consultants Pty Ltd:

It might be said that the more concrete the evidence in the sense that the more grounded the evidence is in a witness’s direct observation or perception of an event, the more likely it is to be factual in nature. It is, however, always a question of degree.[37]

[37](2011) 190 FCR 299, 309 [44].

1. With those key principles in mind, careful consideration needs to be given to the paragraphs in the affidavits which are subject to Ms Walsh’s objections, the reasons underpinning those objections.

1. To each of the objections made by Ms Walsh, WorleyParsons has given a detailed response.

1. My rulings in relation to these objections are attached to these reasons as Attachment A.

WorleyParsons’ objections

1. WorleyParsons objected to the late filing of Ms Walsh’s affidavits of 26 May 2016 and 25 July 2016, which were filed respectively one day and two days into the hearing.  As was submitted by WorleyParsons, the period for which filing of evidence was permissible, was long overdue.  Pursuant to the consent orders made 10 May 2016,[38] Ms Walsh was required to file any further supporting evidence on or before 20 May 2016, prior to the hearing of the abuse application and the s 33N application.

   [38]Ibid.

1. Worley Parsons did not press further objection in relation to the content of 26 May 2016 affidavit as it says it does not assist Ms Walsh’s case.

1. However, in relation to the 25 July 2016 affidavit, it was argued that the affidavit should not be received by the court given the deadline consented to by the parties.  WorleyParsons, therefore, submits that it was inappropriate for Ms Walsh, without the consent of WorleyParsons, to file further evidentiary material two days into the hearing of the applications.  However, if the court held that the affidavit be received, in the alternative, WorleyParsons would press its objections on specific paragraphs of the 25 July 2016 affidavit.

1. Despite the late filing of the affidavits, in respect of which I must criticise the conduct of Ms Walsh, I believe that it is in the interests of justice, under the CPA, to receive Ms Walsh’s affidavits sworn 26 May 2016 and 25 July 2016.

1. I base my decision to allow the reception of Ms Walsh affidavit of 25 July 2016 on a number of authorities.  In particular, I have considered the factors enunciated by the High Court in Aon (as extrapolated in [33]) which is relevant to the application of the overarching principles in relation to modern case management as prescribed under the CPA.

1. I have had regard to the joint decision of Kyrou and McLeish JJA in Northern Health v Robert Kuipers in which their Honours agreed with J Forrest J’s observation in Ultra that in determining the late reception of report or the like, ‘the primary question still remains: what do the interests of justice dictate?’[39]

   [39]Northern Health v Robert Kuipers [2015] VSCA 172 [33] quoting Ultra Thoroughbred Racing Pty Ltd v Those Certain Underwriters at Lloyd’s London [2011] VSC 370 [9] (‘Ultra’).

1. I perceive that there is no substantial injustice to WorleyParsons in allowing the reception of the affidavit. Even at this late stage of the hearing of the abuse application and s 33N application, given the gravity of the potential impact on Ms Walsh, every reasonable opportunity should be afforded to Ms Walsh to provide any further relevant explanation to the court to refute WorleyParsons’ submissions made during the course of the hearing.

1. In her affidavit sworn 25 July 2016, Ms Walsh deposed to her intention and understanding of being the lead plaintiff and of this proceeding, which in a case of this nature, allows the court to have a clearer understanding of the arguments put forward by her when considering her arrangements with MCI.

1. I am fully cognisant of the objections pressed by WorleyParsons.  However, I am of the opinion that the 25 July 2016 affidavit should be admitted in full and appropriate weight will be given to the evidence.

Background – MCI proceeding and this proceeding

MCI proceeding

1. I now turn to a number of facts in relation to the MCI proceeding and this proceeding.

1. In 2013, MCI commenced its own proceeding against WorleyParsons.  MCI alleged that WorleyParsons contravened certain disclosure provisions that led to a profit downgrade of the company affecting negatively on its share price.

1. It was alleged by WorleyParsons that the statement of claim filed by MCI was defective.

1. On 12 March 2014, WorleyParsons’ application to the court to strike out MCI’s amended statement of claim was heard by Ferguson J.[40]  MCI then sought leave to file a further amended statement of claim.  The application was opposed by WorleyParsons.

   [40]Affidavit of Jason Lawrence Betts sworn 10 December 2014 [23], JLB-13.

1. On 27 June 2014, Ferguson J handed down judgment refusing MCI leave to file the proposed further amended statement of claim, in which her Honour held that MCI, as a lead plaintiff, lacked standing and had no real interest in bringing its claim.[41]

   [41]Melbourne City Investment Pty Ltd v WorleyParsons Ltd [2014] VSC 303.

1. Around the same time the judgment was handed down, (around 20 minutes subsequent to delivery of judgment), Mr Elliott engaged a number of potential participants by email,[42] including Ms Walsh, and asked ‘Do you have any interest in being the co-plaintiff in this case?’.  Ms Walsh then replied ‘Really not sure what is involved Could be but unsure [sic]’.[43]

   [42]Ibid; Affidavit of Jason Lawrence Betts sworn 10 December 2014 [29]; Affidavit of Christine Tran affirmed 13 May 2015 [30], CYT-15.

   [43]Affidavit of Christine Yun Tran affirmed 13 May 2015 [30], CYT-15 (emphasis original).

1. At an early stage (on 2 July 2014), Ms Walsh entered into the first indemnity with MCI (the first indemnity).  However, it was apparent that there was some ambiguity around the terms of the indemnity and the details to which the parties agreed through subsequent communication between the parties.  The communication was in the following terms:

Hi Mark

Great to have a chat. Mick and I have discussed the concept and we would like further clarification on a couple of things. Can you please call me on [redacted] to discuss.

Am I the co plaintiff or plaintiff?
Any Legal ramification on me personally if it goes to judgement and appeal fails?
Not sure on hourly rate to be agreed?

At some stage we need meet at your office.

Looking forward to hearing from you soon. Can call tonight on the land line if you wish.

Joanne [sic][44]

[44]Ibid.

1. Ms Walsh agreed to be joined as a plaintiff to the MCI proceeding on 15 July 2014.  The summons dated 21 July 2014 was filed by MCI to join Ms Walsh as co-plaintiff and seek leave to file a second further amended statement of claim.[45]

   [45]Ibid CYT-1 and CYT-2.

1. Subsequent to the filing of the summons dated 21 July 2014, Ferguson J handed down her decision in two proceedings — Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd and Melbourne City Investments Pty Ltd v Leighton Holdings Limited[46] — in which MCI was also the lead plaintiff.  Her Honour restrained Mr Elliott, the sole director of MCI, from acting as the solicitor whilst MCI was the lead plaintiff.

   [46]Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd (No 3) [2014] VSC 340.

1. Mr Elliott then withdrew as the solicitor for MCI.  Tan Partners later acted for both MCI and Ms Walsh in the MCI Proceeding.

1. After Ferguson J’s decision on 27 June 2014, WorleyParsons brought an application before her Honour to dismiss the MCI proceeding, which was heard on 8 September 2014.[47]

   [47]Affidavit of Jason Lawrence Betts sworn 10 December 2014 [35]-[37].

1. On 25 September 2014, MCI’s then lawyers, Tan Partners, wrote to the court and advised that MCI no longer wished to join Ms Walsh to the MCI proceeding and that Ms Walsh had initiated her own action against WorleyParsons.[48]

   [48]Ibid [38], JLB-21.

1. On 17 October 2014, Ferguson J delivered judgment refusing MCI leave to file the proposed second further amended statement of claim and dismissed the MCI proceeding.[49]  MCI was ordered to pay WorleyParsons’ costs of the proceeding.  The settlement sum of the proceeding was said to be $265,000, which was borne out by BSL.[50]

   [49]Melbourne City Investment Pty Ltd v WorleyParsons Limited [2014] VSC 523; Affidavit of Jason Lawrence Betts sworn 10 December 2014 [39].

   [50]Affidavit of Jason Lawrence Betts sworn 12 May 2016 [52], JLB-120.

This proceeding

1. This proceeding was commenced by Ms Walsh on the same day that Ferguson J heard WorleyParsons’ application to dismiss the MCI proceeding on 8 September 2014, but the writ and statement of claim was not served until 29 September 2014.

1. At the commencement of this proceeding, Ms Walsh was represented by Mr Elliott.[51]

   [51]Affidavit of Jason Lawrence Betts sworn 10 December 2014, [5(f)],[7], JLB-1.

1. On 26 November 2014, WorleyParsons filed a summons applying to the court to strike out Ms Walsh’s amended statement of claim and seeking orders restraining Mr Elliott from acting for Ms Walsh. [52]  Mr Elliott withdrew as the solicitor on the record on the same day.[53]

   [52]Affidavit of Jason Lawrence Betts sworn 18 February 2015, [3].

   [53]Affidavit of Christine Yun Tran affirmed 13 May 2015 [23], CYT-10; Walsh v WorleyParsons Ltd [2015] VSC 310 [49].

1. Mr Peters was later engaged by Mr Elliott to represent Ms Walsh.[54]  Notwithstanding the change of solicitors on the record, the first indemnity remained in force until it was replaced by the second indemnity.

   [54]Affidavit of Christine Yun Tran affirmed 13 May 2015, [24], CYT-11.

Abuse application

1. In this application, WorleyParsons applied to the court to have the current proceeding permanently stayed as an abuse of process.  This application is predicated on, as WorleyParsons conceded, the court finding that MCI is the moving party who instituted the current proceeding.

1. The key issue to be determined is therefore whether a third party, given MCI is neither a named party nor a group member to this proceeding, is the moving party of the current proceeding.

1. WorleyParsons conceded that if the court determines that MCI is not the moving party, this application would fail.

1. For the reasons that follow, I consider that MCI is the moving party of this proceeding and the proceeding was issued for an improper purpose.  Accordingly, I will order that this proceeding be stayed as an abuse of process.

Who is the moving party – MCI or Ms Walsh?

What did WorleyParsons say?

1. WorleyParsons, in relation to the question of moving party, first submits that a moving party of the proceeding is not limited to the named plaintiff, but the ‘real party’ that caused the institution of the suit.  It was further submitted that MCI is the moving party, as evident by the events leading up to, and subsequent to, the commencement of this proceeding, including relevant findings that were previously made by this court.

1. WorleyParsons says that the fact that MCI was not the named plaintiff or a member of the group, should not, as WorleyParsons says, prevent the court from looking beyond the named party and holding that MCI is indeed the moving party behind the proceeding.

1. Central to that argument, WorleyParsons relies upon the court’s inherent jurisdiction to stay proceedings as an abuse of process.

1. In order to ensure the court’s processes are not invoked for improper purposes or in a way that tends to bring the administration of justice into disrepute, the court has the power to prevent its processes from being misused.

1. The categories of abuse are not closed.  WorleyParsons relies on Knight v FP Special Assets.[55]  In that case, it was held that where necessary, courts may hold the ‘real party’, rather than the named plaintiff, accountable for an abuse of process.  Consistent with the decision in Knight, the High Court in Williams v Spautz (handed down a month after Knight) referred to the purpose of the ‘moving party’ rather than that of the named plaintiff.[56]

   [55](1992) 174 CLR 178 (‘Knight’).

   [56](1992) 174 CLR 509, 526 (‘Williams’).

1. WorleyParsons further submits that in Flower & Hart,[57] the Full Court of the Federal Court upheld the approach adopted by the trial judge in finding that the proceedings were instituted for an improper purpose.  The trial judge carefully distinguished the purpose of the solicitor and that of his clients.  As was held by the trial judge, with which the Full Court agreed, it was the solicitor who ‘procured’ the issue of the proceedings and his purpose that mattered.

   [57]Flower & Hart (a firm) v White Industries (Qld) Pty Ltd (1999) 83 FCR 134 (‘Flower & Hart’).

1. Similarly in this case, WorleyParsons argues that MCI and Mr Elliott originally instituted the proceeding for an improper purpose.

1. WorleyParsons submits that the following background facts are pertinent to the finding of MCI as the moving party behind this proceeding:

(a)        MCI was incorporated on 1 November 2012.  Mr Mark Elliott was its sole director and shareholder.  From that time onwards, MCI engaged in a trading pattern of acquiring small parcels of shares in the top ASX 200 companies;

(b)        Mr Elliott intended to use MCI as a vehicle for bringing representative proceedings against listed companies, with the intention that MCI would act as representative plaintiff.  MCI brought proceedings in its name as the lead plaintiff against WorleyParsons (the MCI proceeding) and other listed companies;

(c)        MCI intended Mr Elliott to be the solicitor for the lead plaintiff (either MCI or other persons) in class actions;

(d)       In order to maintain a proceeding against WorleyParsons, MCI actively sought a person or entity who could act as a plaintiff in the MCI proceeding through public advertisement.  In MCI’s advertisement, MCI also called for prospective group members to ‘participate in the class action and receive compensation’.  However, WorleyParsons submits that the MCI proceeding was brought on behalf of an open class and did not seek compensation on behalf of group members;

(e)        MCI, as WorleyParsons says, actively recruited and procured Ms Walsh, who is said to have an arguable claim against WorleyParsons (as compared to MCI) to act as a co-plaintiff in the MCI proceeding;

(f)         When the MCI proceeding was dismissed because the court ruled that MCI lacked standing to bring the proceeding, it procured Ms Walsh to initiate the present proceeding.  Ms Walsh subsequently agreed to be a plaintiff ‘on condition that [she] was indemnified in respect of legal fees and adverse costs orders and would receive modest remuneration for all work [she] did on the case’;

(g)        WorleyParsons argues that despite MCI not being a group member in the current proceeding, it went to considerable (and expensive) lengths to ensure proceedings remained on foot against WorleyParsons.  It is significant that this proceeding was issued (but not served) on 8 September 2014, the day Ferguson J (as she then was)[58] heard argument on WorleyParsons’ application to have the MCI Proceeding dismissed.  As said by WorleyParsons, it was apparent that at the conclusion of the MCI proceeding, it was unlikely that MCI could remain as the plaintiff in the MCI proceeding.  That explains why this proceeding was issued, it is contended.  This proceeding is issued in the name of Ms Walsh whose standing could not readily be challenged, as WorleyParsons says, since Ms Walsh acquired her shares substantially closer in time to the corrective disclosure.  This proceeding was issued with a statement of claim in a form materially identical to the proposed second further amended statement of claim which MCI had tried unsuccessfully to file in the MCI Proceeding;

(h)        WorleyParsons submits that MCI sought to exert control over this proceeding through its principal Mr Elliott as evident by the fact that this proceeding was commenced with Mr Elliott as solicitor on the record.  WorleyParsons submits that control can be exerted by MCI, through Mr Elliott, by reference to Ms Walsh’s obligation under clause 2 of the first indemnity ‘to accept and act promptly on all advice which she is given by the solicitor and counsel for the Group’ and ‘not [to] consult with or engage any other solicitors or counsel in connection with the Proceedings while she remains the Plaintiff’.  Mr Elliott later withdrew, however, it was submitted by WorleyParsons that Mr Elliott did so in the expectation that he would continue to control the conduct of this proceeding.

[58]For convenience in this judgment, and to avoid repetition, I will refer to her Honour as Ferguson J where her Honour handed down judgments in that capacity.

What did Ms Walsh say?

1. In response to WorleyParsons’ submissions, Ms Walsh contends that only the litigant to the proceeding can be held to be a moving party behind a suit for the purpose of an application for an abuse of process.

1. In particular, Ms Walsh refers to a passage in Williams:

The observations of the Privy Council in King v Henderson and those of Isaacs J in Dowling, to which we referred earlier, represent an attempt to achieve a formulation which keeps the concept of abuse of process within reasonable bounds.  To say that a purpose of a litigant in bringing proceedings which is not within the scope of the proceedings constitutes, without more, an abuse of process might unduly expand the concept. The purpose of a litigant may be to bring the proceedings to a successful conclusion so as to take advantage of an entitlement or benefit which the law gives the litigant in that event.[59]

[59](1992) 174 CLR 509, 526 (emphasis added by the plaintiff) (citations omitted); see also, Plaintiff’s Closing Submissions, 16 September 2016 [6].

1. It was submitted that the correct principle for abuse of process is that, upon which the above passage was based, there can be no abuse of process unless Ms Walsh has no intention of ‘bring[ing] the proceedings to a successful conclusion so as to take advantage of an entitlement or benefit which the law gives the litigant in that event’.[60]

   [60](1992) 174 CLR 509, 526.

1. Ms Walsh argues that no relevant authority was produced by WorleyParsons to show that a litigation funder or indemnifier was found to be the moving party for the purposes of the law of abuse of process;[61] or the purpose of a third party litigation funder or indemnifier was found to give rise to an allegation of abuse of process.[62]

   [61]Transcript 330:27-30, 23 August 2016.

   [62]Ibid 331.17-21.

1. In particular, Ms Walsh relies on the conclusion drawn by Mason P of the New South Wales Court of Appeal’s decision in Fostif.  His Honour stated that:

In my opinion, a conclusion about abuse of process must stem from a finding directed at the actual or likely conduct of the party in whose name the litigation is brought (or its agents).  The court is not concerned with balancing the interests of the funder and its clients. Indeed, it is not concerned with the arrangements, fiduciary or otherwise, between the plaintiff and the funder except so far as they have corrupted or have a tendency to corrupt the processes of the court in the particular litigation. ^[63]

[63]Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd (2005) 63 NSWLR 203, 229 [114] (Mason P) (‘Fostif’).

1. Ms Walsh argues that the subsequent approval of the decision of the Court of Appeal on abuse of process by the High Court in Campbells Cash & Carry means that it is neither necessary nor appropriate to consider the purpose of a party’s litigation funder or indemnifier in making a decision as to abuse of process alleged against that party.[64]  The High Court said:

As Mason P rightly pointed out in the Court of Appeal, many people seek profit from assisting the processes of litigation. That a person who hazards funds in litigation wishes to control the litigation is hardly surprising.  That someone seeks out those who may have a claim and excites litigation where otherwise there would be none could be condemned as contrary to public policy only if a general rule against the maintenance of actions were to be adopted. But that approach has long since been abandoned and the qualification of that rule (by reference to criteria of common interest proved unsuccessful.[65]

[64]Campbells Cash & Carry PtyLtd v Fostif Pty Ltd (2006) 229 CLR 386 (‘Campbells Cash & Carry’).

[65]Campbells Cash & Carry (2006) 229 CLR 386 [89] (emphasis added by the Plaintiff).

1. Ms Walsh further argues that, as WorleyParsons has expressly conceded,[66] there is nothing improper about litigation indemnities and funding agreements under Australian law; WorleyParsons is therefore not entitled to any relief by reason of Ms Walsh being the beneficiary of an indemnity.  WorleyParsons, so it is said, is not permitted to attack the litigation funder’s purpose.  Ms Walsh argues that the relevance of such an enquiry disappeared with the abolition of the offences and torts of maintenance and champerty in Victoria nearly 50 years ago.

   [66]Transcript 78, 144-145, 195, 599, quoted in Plaintiff’s Closing Submissions, 16 September 2016 [13].

1. It was submitted that the High Court in Campbells Cash & Carry was not concerned with the adverse effects on litigation of the provision of maintenance and any possible unfairness in the bargain struck between a party and a maintainer.  No overarching rule of public policy was enunciated by the High Court in that case to bar the prosecution of a maintained action as an abuse of process.[67]  None of the elements upon which WorleyParsons relies in this application can, as Ms Walsh said, on the authority of Campbells Cash & Carry, be regarded as giving rise to an abuse of process.[68]

   [67]Campbells Cash & Carry (2006) 229 CLR 386 [88], [90]-[91].

   [68]Plaintiff’s Closing Submissions, 16 September 2016, [20].

1. Ms Walsh submits that WorleyParsons’ reliance upon Knight is irrelevant to the application of abuse of process as the case concerned the awarding of costs against a non-party which the High Court concluded was the ‘real party’ standing behind a named plaintiff.[69]  That proposition is not controversial.

   [69](1992) 174 CLR 178, 192 (Mason CJ and Deane J), 202 (Dawson J).

1. Ms Walsh also contends that courts might identify and make an award of costs against the ‘real party’, even if he or she is a non-party to the litigation.  In awarding costs against the real party, the court does not concern itself with the person’s purpose or motive in relation to a proceeding.  It is merely the case that such a person might be obliged to bear the burden of costs of the proceeding because of her or his role as the ‘real party’.[70]

   [70]Plaintiff’s Closing Submissions, 16 September 2016 [21].

Decision and observations on the moving party

1. The High Court in Campbells Cash & Carry specifically permits a funder in a group proceeding to actively recruit a potential plaintiff and to be in charge of the proceeding on behalf of all litigants.  This is uncontroversial.

1. However, I am not persuaded by Ms Walsh (nor do the authorities support Ms Walsh’s contention) that the court, in an abuse of process application, ought not look beyond the named plaintiff and assess the purpose of the ‘real party’ or ‘moving party’ for the purpose of deciding whether there should be a stay for an abuse.

1. Notwithstanding the abolition of the doctrine of maintenance and champerty, the court, as WorleyParsons rightly argued, retains control over of its processes and it is part of the inherent jurisdiction of this court to stay proceedings in the case of an abuse to maintain public confidence in the court system.

1. The majority in Campbells Cash & Carry held that no general rule should be identified to prevent a representative action from being instituted and supported by a third party litigation funder, who will be entitled to a large sum of awards should the proceeding be successful.  Such representative actions with funding arrangements are allowed.  That being said, the High Court in that case did not preclude any possibility that representative proceedings could be held to be an abuse of process in other circumstances.

1. As I have said, in my opinion, MCI is the moving party in this proceeding.  My conclusion is not based solely upon the unusual nature of the agreement struck between Ms Walsh and MCI.

1. I came to this conclusion after considering in part the procedural history of this case which is informative, but not ultimately determinative.  The totality of factors (in summary) referred to below need to be considered in aggregate and this leads to the court to its conclusion.

1. Firstly, the statement of claim of the present case was filed by Mr Elliott on behalf of Ms Walsh on the same day on which Ferguson J heard the argument of WorleyParsons’ application to dismiss the MCI proceeding.[71]  This is of significance because it gives rise to an inference that this proceeding would not have existed but for the dismissal application in the MCI proceeding of which MCI was the named plaintiff.

   [71]Affidavit of Jason Lawrence Betts sworn 10 December 2014 [5(b)], [35].

1. Secondly, the substance of the statement of claim of the present case is substantially the same as the MCI proceeding.

1. Thirdly, Mr Elliott, the sole director of MCI, was retained as the solicitor on the record at the commencement of the current proceeding.

1. Fourthly, the financial incentives given to Ms Walsh to assist in the litigation were manifestly disproportionate to her claim.

1. Fifthly, MCI has no interest in the outcome of this proceeding and is not a group member.  Notwithstanding this MCI has incurred substantial costs to date (including the payments to Ms Walsh, monies held on trust in relation to costs orders, fees paid to Mr Stewart Peters, the solicitor on the record) and it is to be expected that substantial costs will continue to be incurred in the prosecution of Ms Walsh’s claim with no prospect of recoupment by MCI.

1. Finally, the indemnification arrangements between MCI and Ms Walsh cannot be construed otherwise than an indication of MCI’s control over the litigation.

1. Ms Walsh deposed in her March 2015 affidavit that she contacted Mr Elliott after reading an advertisement in the Australian Financial Review concerning the MCI proceeding.[72]  She became a co-plaintiff in the MCI proceeding.[73]

   [72]Affidavit of Joanne Maree Walsh sworn 17 March 2015, [2].

   [73]Ibid.

1. Subsequently, Ms Walsh said, she agreed to become the representative plaintiff in the current proceeding ‘on condition that [she] was indemnified in respect of legal fees and adverse costs orders and would receive modest remuneration for all work [she] did on the case’.[74]  To that effect, she entered into the first indemnity with MCI.

   [74]Ibid.

1. Again, to that effect, in Ms Walsh’s July 2016 affidavit, she said:

When I first contacted Mr Elliott and spoke to him about whether I would be willing to act as representative plaintiff on behalf of Worley Parsons shareholders in the class affected by the alleged non-disclosure of price-sensitive information, I told Mr Elliott that I expected and intended to be actively involved in the case and I wanted to be reasonably remunerated for my time and trouble spent on the case’.[75]

[75]Affidavit of Joanne Maree Walsh sworn 25 July 2016 [15].

1. It is not contested by the parties that Ms Walsh has received around $30,000 in relation to this proceeding.

1. Ms Walsh received an upfront payment of $9000 on 7 July 2014 and a further $1000 on 1 September 2014 in relation to the matter.[76]  Ms Walsh deposed in her May 2016 affidavit that:

The money paid to me on 7 July 2014 in respect of the significant amount of work that I had done over the preceding weeks and by way of a prepayment for work I expected to do over the next few months.  It was important to me that I received a prepayment to show that Mr Elliott was serious about our arrangement.[77]

[76]Affidavit of Jason Lawrence Betts sworn 12 May 2016, [23(b)], JBL 92; Transcript, 26 May 2016, 180:6-14.

[77]Affidavit of Joanne Maree Walsh sworn 25 May 2016 [7(e)].

1. Ms Walsh reiterated the importance of receiving an upfront payment in her July 2016 affidavit.  She said she expected Melbourne City Investments Pty Ltd ‘to pay a reasonable amount to [her] “up front” to demonstrate that it had sufficient means and to show its bona fides’.[78]

   [78]Affidavit of Joanne Maree Walsh sworn 25 July 2016 [16].

1. However, Ms Walsh deposed that there has not been an agreed methodology to calculate her entitlement as in remuneration.  She said:

When I spoke to Mr Elliott we worked through some of my remaining issues.  We agreed that I would not be paid an hourly rate but that I would be reimbursed for my time on a basis of what I considered to be fair and reasonable.[79]

[79]Affidavit of Joanne Maree Walsh sworn 25 May 2016 [7(d)].

1. Ms Walsh explained in her 25 July 2016 affidavit what she has undertaken a number of tasks for the proceeding in exchange for the $30,000 that she received since the commencement of the case:

Since my case commenced in 2014, I have been paid a total of around $30,000.  I have spent hundreds of hours working on my case in total, including travelling to Melbourne on several occasions to attend court, conferring with my barristers and solicitor, giving instructions, receiving advice, searching through numerous documents in order to answer the subpoenas and notices to produce which have been issued by Worley Parsons, discussing the progress of the case, reviewing documents, preparing and swearing affidavits and so forth.  I consider the remuneration that I have received to be quite modest, having regard to the time and effort that I have been required to put into the case on behalf of all class members.[80]

[80]Affidavit of Joanne Maree Walsh sworn 25 July 2016 [17].

1. In Farey v National Australia Bank Ltd, Beach J made some observations in relation to reimbursement payments for the reasonable time spent by the applicants, in the context of settlement approval in that proceeding.[81]  Whilst His Honour did not rule out the possibility of incentivisation payments, he did observe that:

… where there is an external litigation funder who has taken on the costs risk, including any exposure to an adverse costs order, it may be difficult to see how any such incentivisation award could ever be justified in addition to reasonably remunerating the applicant for the time spent in pursuing the proceeding for the benefit of the group members and any out of pocket expenses.[82]

[81][2016] FCA 340 [43].

[82]Ibid (emphasis original).

1. Ms Walsh may or may not have a legitimate (albeit modest) claim to make.

1. Although unpalatable, there are other avenues for her to pursue to agitate those claims.

1. The decision that is to be made by the court is whether the agitation of Ms Walsh’s claim was the predominant purpose of the institution of the proceeding.

1. Ms Walsh says it was and she wants to maintain her claim to vindicate her rights and that she is instructing and working with her legal team to that end.  Mr Peters also deposes to the fact that he has a normal solicitor client relationship with Ms Walsh, takes instructions from her and keeps her informed of the progress of the case.

1. This evidence needs to be balanced against the facts and circumstances leading up to the institution of the proceeding and the modus operandi of Mr Elliott and MCI.

1. It is clear from my observations that I do not regard this evidence as affecting my conclusion that the predominant purpose for instituting the proceeding was to enrich MCI or Mr Elliott.

1. The only sensible conclusion from the entirety of the facts is that Ms Walsh was the ‘front man’ for litigation that Mr Elliott could not pursue in the manner in which he first intended.

1. In addition, Ms Walsh’s control of this proceeding is severely hampered if not rendered non-existent by the second indemnity.

1. In this regard, clauses 2, 3 and 4 of the second indemnity are of particular concern.  These provisions provide:

2.The Plaintiff will accept and act promptly upon all advice which she is given by the solicitors and counsel for her and for the Group in connection with the conduct of the Proceedings and will not engage any other solicitors or counsel in connection with the conduct of the Proceedings whilst she remains the Plaintiff.

3.The Plaintiff remains free to engage any other solicitors and/or counsel in respect of any matter other than the Proceedings, including but not limited to consulting with a solicitor to obtain independent advice in relation to any matter which is the subject of the Proceedings, in her personal capacity.

4.The Plaintiff will not discuss the Proceedings or anything connected therewith with any other person, including any representative of WorleyParsons or the media, without the prior knowledge and express consent of the Indemnifier, that consent not to be unreasonably withheld by the Indemnifier. (emphasis added)[83]

[83]Affidavit of Christine Yun Tran affirmed 13 May 2015, [31(c)], CYT-16.

1. Clauses 2 and 3 restrict Ms Walsh’s ability, firstly, to act in anyway inconsistently with the advice given by her legal team; secondly, to consult with other solicitors in relation to any matter which is the subject of this proceeding; thirdly, and most importantly, Ms Walsh could only consult other legal practitioners in her personal capacity.  Under clause 4, Ms Walsh is further bound not to discuss the proceedings with third parties.

1. As such, Ms Walsh is effectively only able to follow the instructions of her lawyers and cannot, as a representative litigant, assess the interests of the group and make decisions whether to follow advice from her legal representatives.  Ms Walsh would not be able to engage in negotiation with WorleyParsons, or make publication in the media to further the group’s interest in this matter.  Any attempt to do so can easily be overridden by her legal representatives at will.

1. The second indemnity grants total control of the proceedings to Ms Walsh’s legal representatives, bypassing Ms Walsh as the ‘lead plaintiff’.  To my mind, this arrangement makes Ms Walsh’s legal representatives appear more like the lead plaintiff than it does Ms Walsh herself.  This is contrary to Ms Walsh’s evidence.[84]  However, I do not accept Ms Walsh’s evidence.

   [84]Affidavit of Joanne Maree Walsh sworn 25 July 2016.

1. It is also curious that the second indemnity and the superseded first indemnity do not contain any provisions for MCI to recoup its legal costs and expenses incurred in this proceeding.

1. In the event that Ms Walsh is ultimately successful in the proceeding or the proceeding settles, the court has power under the Act, such as s 33V to make orders for costs and expenses of the like against WorleyParsons.

1. However, absent any contractual rights between the parties, Ms Walsh, as a lead plaintiff, has no obligation to remit the legal costs and expenses spent to MCI.

1. Ms Walsh deposed in her 27 July 2016 affidavit that:

While it is not the subject of either deeds of indemnity, I have always assumed that Melbourne City Investments Pty Ltd and I would work together cooperatively and in good faith in relation to any matter which we had not expressly agreed at the time of executing the deeds of indemnity. I see no reason why the absence of any specific reference to Melbourne City Investments Pty Ltd having a right to recover any of its expenditure on legal costs in the event of my success in this proceeding should be regarded as meaning that I would not support Melbourne City Investments Pty Ltd to recover its expenditure on my legal costs to the extent permitted by law. I understand that, if this proceeding concludes successfully, Part 4A of the Supreme Court Act enables me to apply to the Court to be fully reimbursed for all of the legal costs and disbursements that I have incurred in the conduct of this proceeding and for which I have been reimbursed by MCI. I will do whatever is necessary to ensure that any amount that has been paid by Melbourne City Investments Pty Ltd in respect of any of my legal costs is recovered by it in the event that my case is successful.[85]

[85]Ibid [9].

1. Notwithstanding that, it is unusual and manifestly uncommercial that an indemnifier to a group proceeding does not have contractual arrangements in place to ensure that it is remunerated appropriately.

1. Given the history of this matter, the nature of the proceedings, MCI’s practice of share acquisition, disposal and re-acquisition of small parcels of shares in top publicly listed companies and the evolution of MCI’s business model, in the interests of justice, more needs to be said about my reasons for concluding that MCI is the moving party or, in less opaque terms, the effective or controlling plaintiff in this proceeding.

1. It is clear that this case presents facts and circumstances which are an evolutionary step from the previous litigation instituted by MCI.  At the risk of some repetition, in particular, in this case as it now stands sees, by way of example:

(a)Ms Walsh as sole representative plaintiff, without MCI;

(b)Ms Walsh being encouraged to participate in the litigation by responding to an advertisement.  No criticism whatsoever can be made of this practice;

(c)Ms Walsh being remunerated for her time spent in assisting her legal team in formulating, developing and agitating her claims.  Again no criticism can be made of this, so long as there is no suggestion that this compensation in itself was in fact an incentive to agree to act as representative plaintiff;

(d)Mr Elliott maintaining effective control over the course of the litigation.  It should be said at this point that whilst a firm strategic hand is not unexpected from a litigation funder or an indemnity provider, it is a question of degree which, in this case, is informed by the evolution of this proceeding;

(e)Ms Walsh being only a party to 43 items of correspondence out of the 1042 that were set out in the Plaintiff’s enumerated List of Documents,[86] pursuant to Almond J’s decision in Walsh v WorleyParsons (No 3).[87]  It seems highly unusual that the lead plaintiff was being kept out of the correspondence over which Ms Walsh claimed privilege in relation to the proceeding;

(f)On the evidence, there being no discernible benefit for MCI indemnifying Ms Walsh, prior to the latest iteration of the funding agreement which, as was admitted, was crafted to address concerns and issues raised by WorleyParsons.  There was no evidence that MCI had philanthropic objectives in pursuing this litigation.  The evidence was that Mr Peters was being appropriately remunerated for his work.  It is unclear what arrangements were in place with counsel, Messrs Norman O’Bryan SC and Michael Symons, appearing on behalf of Ms Walsh, suffice to say that there was no evidence that counsel were providing their services on a pro bono basis.

[86]Plaintiff’s Enumerated List of Documents, 5 November 2015; Transcript, 23 August 2016, 229:8-21.

[87]Walsh v WorleyParsons Ltd (No 3) [2015] VSC 551.

1. It may be said by Ms Walsh that there is nothing in the non-exclusive facts and circumstances to which I have referred above and elsewhere in this judgment that would lead the court to the conclusion that MCI is the moving party in this litigation.

1. I disagree.

1. In considering cases such as this, it falls upon the court to consider the entire matrix of facts and circumstances or, as was referred to, the ‘jigsaw’.

1. In my opinion, the community expects that courts will act, and deliberate, commercially, leading to just decisions based on the application of law in a commercial environment.

1. I consider that, notwithstanding elements of Ms Walsh’s case which may perhaps be in her favour, Ms Walsh is not the real moving party or active plaintiff in this proceeding.  I also do not consider that community standards would expect the court to adopt a ‘tick box’ approach to deciding cases of this nature.

1. The court, in my opinion, should not permit a form of litigation bracket creep where it is clear, from the facts, matters, circumstances, evidence and conduct of the matter, that the litigation is being pursued for the predominant purpose of enriching the plaintiff’s legal team and the moving party of the litigation, in this case MCI.

1. Having said this, it may be that MCI has now, as a result of this decision and other decisions of this court in other matters, learned from its ‘mistakes’.  It may be that future matters (if there be any) are launched and pursued on a different basis which overcomes the problems it and its legal team have encountered in this matter and its various other proceedings before this court.

1. Despite that perhaps being so, it does not alter the fact that, as I have said, in my opinion, the inference can be drawn that MCI, and not Ms Walsh, is, in this case, the moving party, in plain language, the initiator, orchestrator and controller of this litigation.

Is this proceeding an abuse of process?

1. It is trite law that the court has inherent jurisdiction to stay proceedings that give rise to an abuse of process and that the categories that amount to an abuse are not closed.

1. In PNJ v Queen,[88] the High Court, in refusing to grant special leave, held that:

[3] It is not possible to describe exhaustively what will constitute an abuse of process.  It may be accepted, however, that many cases of abuse of process will exhibit at least one of three characteristics:

(a) the invoking of a court’s processes for an illegitimate or collateral purpose;

(b) the use of the court’s procedures would be unjustifiably oppressive to a party; or

(c) the use of the court’s procedures would bring the administration of justice into disrepute.[89]

[88](2009) 252 ALR 612, 613 [3] (French CJ, Gummow, Hayne, Crennan and Kiefel JJ).

[89]Ibid (citations omitted).

1. In Williams, the majority said:

In our view, the power must extend to the prevention of an abuse of process resulting in oppression, even if the moving party has a prima facie case or must be assumed to have a prima facie case.  Take, for example, a situation in which the moving party commences criminal proceedings.  He or she can establish a prima facie case against the defendant but has no intention of prosecuting the proceedings to a conclusion because he or she wishes to use them only as a means of extorting a pecuniary benefit from the defendant.  It would be extraordinary if the court lacked power to prevent the abuse of process in these circumstances.[90] 

[90]Williams (1992) 174 CLR 509, 522 (Mason CJ, Dawson, Toohey and McHugh JJ) (Emphasis added).

1. The majority stated that the criterion for an abuse of process is an enquiry to the predominant, not sole, purpose for which the proceeding was issued.[91]  Their Honours had regard to the observation of Slade LJ of the English Court of Appeal in Metall &Rohstoff v Donaldson Inc who stated:

[A] person alleging such an abuse must show that the predominant purpose of the other party in using the legal process has been one other than that for which it was designed.[92] …

[91]Ibid 529 (Mason CJ, Dawson, Toohey and McHugh JJ).

[92]Ibid 529 quoting Metall &Rohstoff v Donaldson Inc [1990] 1 QB 391, 469.

1. Their Honours in Williams described the importance of examining the use of the proceedings in an abuse of process application:

Neither the authorities in Australia nor those in England insist on the need for an improper act as an essential ingredient in the concept of abuse of process.  However, the authorities do speak of the “use” of process for a purpose which stamps it as an abuse.

…

The statements that there must be a use of the proceedings are equivocal because the commencement of the proceedings may be described as a “use” of them, even if no attempt be made thereafter to take advantage of them for such a purpose as would constitute an abuse of process.  Especially is this so when the party commencing the proceedings has previously threatened that, unless the other party complies with some improper demand the first party has made, such as payment of an alleged debt, criminal proceedings will be commenced and prosecuted to a conviction.  In such a case, the very commencement of the proceedings amount to use of them for an improper purpose.[93]

[93]Ibid 527-528.

Purpose not motive

1. WorleyParsons submits that it is purpose not motive which ought be the focus of the enquiry as to whether the alleged abuse has occurred.  The concepts of purpose and motive are distinct.  As WorleyParsons submits, purpose is the object sought to be achieved and motive is the subjective reasons for seeking to achieve it.  It was submitted that an unworthy motive is not enough to taint proceedings as an abuse, but a predominant purpose will do so.

1. However, WorleyParsons submits that the distinction is unlikely to assume any importance here because its claim for a stay is founded on the purpose of the moving party, MCI.  The court is concerned with MCI’s object of securing a benefit unrelated to the vindication of rights or immunities by judgment or settlement but not its subjective motivations for doing so.[94]

   [94]Defendant’s Closing Submissions, 16 September 2016 [17].

1. As Brennan J said in Williams:

To amount to an abuse of process, the commencement or maintenance of the proceeding must be for a purpose which does not include — at least to any substantial extent — the obtaining of relief within the scope of the remedy.

…

At the end of the day, the court must determine, by reference to the intention attributed to the plaintiff, not merely whether the collateral purpose of the proceeding outweighs any legitimate purpose but whether the plaintiff entertained any substantial intention that the proceeding should achieve a legitimate purpose.

For these reasons, I would hold that an abuse of process occurs when the only substantial intention of a plaintiff is to obtain an advantage or other benefit, to impose a burden or to create a situation that is not reasonably related to a verdict that might be returned or an order that might be made in the proceeding.[95]

[95]Williams (1992) 174 CLR 509, 535, 537 (Brennan J) (emphasis added) (citations omitted).

1. Two things should be noted from the observations of Brennan J.  Firstly, the intention of the party is not assessed subjectively, but objectively.  Secondly, the mere fact that the party may have a legitimate claim does not mean that a proceeding arising from that claim cannot be declared an abuse of process.  In assessing whether a proceeding is an abuse of process, the assessment is whether the ‘only substantial intention of a plaintiff’ is illegitimate.

The parties’ submissions

1. WorleyParsons submits that it is irrelevant to consider the precise and exact benefits MCI would receive as a result of the prosecution of this proceeding as only the identification of the purpose, not benefit, is relevant.

1. The court can infer, or should infer, it was submitted, that there must exist some kind of benefit, unbeknown to WorleyParsons, and that it was in MCI’s interests to continue and maintain this group proceeding at all costs.

1. In any event, WorleyParsons submits that the potential benefits to MCI from this proceeding are not related to the vindication of the legal rights of Ms Walsh and group members.

1. To assist the court in drawing the inference argued by WorleyParsons, a document annexed to WorleyParsons’ consolidated outline of submissions set out 32 facts that ought be found by the court.

1. By reference to these facts, which were pressed upon the court to be found, it was submitted by WorleyParsons that the court should come to the same conclusion as Foster J in Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd.[96]

   [96](2016) 243 FCR 474.

1. WorleyParsons relies on his Honour’s decision in that case and submits that the evidence here establishes that MCI’s purpose in bringing this proceeding is ‘to gain a financial benefit’.[97]  The extent of financial benefit received by MCI was not established in that case, nor was it required.  WorleyParsons argues that such a benefit had to exist because ‘[t]he insignificant amount sought to be recovered for itself by MCI’ did not, ‘on any rational basis, justify the commencement and maintenance of [the] proceeding’ at substantial cost and considerable risk of an adverse costs order.[98]

   [97]MCI’s purpose being accepted by as Foster J in Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd (2016) 243 FCR 474, 512-513 [156(f)].

   [98]Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd (2016) 243 FCR 474, 513-514 [156(k)].

1. WorleyParsons argues that the same conclusion may be drawn with even greater confidence in the present case since MCI is not a group member and has no claim for damages in this proceeding, yet procured Ms Walsh’s involvement to maintain the proceeding against WorleyParsons.[99]  Further, it is not entitled to any benefit or reimbursement of any kind under the funding arrangements with Ms Walsh.[100]  Despite the funding arrangements, MCI already spent hundreds of thousands of dollars, allegedly irrecoverable, in prosecuting the MCI proceeding[101] and this proceeding,[102] as well as exposing itself to enormous potential future liabilities including by way of adverse costs orders.[103]

   [99]Transcript, 26 May 2016, 174:12-25, 181:5-182:1.

   [100]Ibid 193:4-204:24, 205:21-207:2.

   [101]Ibid 179:2-181:4.

   [102]Ibid 186:6-190:18, 207:4-208:1.

   [103]Ibid 208:2-210:12.

1. WorleyParsons says that Ms Walsh has failed to establish her claim and has not led evidence to refute the existence of the alleged predominant purpose of MCI.  Neither Mr Elliott nor MCI has proffered evidence in this proceeding.  WorleyParsons says that the absence of evidence is particularly telling given Mr Elliott’s involvement in this proceeding.

1. Ms Walsh submits that there is no abuse of process even if a litigation funder’s purpose is relevant for the determination of an abuse application. It was submitted that the purpose of MCI is not to obtain some benefit beyond what Part 4A of the Act provides and therefore MCI has not abused the court processes in this case.

1. Ms Walsh submits further that the purpose of MCI can be inferred from the evidence available to date in this proceeding.  It was submitted that no other purpose can be inferred other than that ‘the litigation funder’s purpose is to recover the legal costs and disbursements it has outlaid’.[104] Such recovery is, as says Ms Walsh, only possible through the orders of the court made under ss 33V, 33ZF and 33ZJ noting that this proceeding was brought under Part 4A of the Act. Under those provisions, it was also submitted that the court has ‘a great deal of control to ensure that its processes are properly used’.[105]  The litigation funder’s purpose can only be achieved by the litigation funder if Ms Walsh vindicates her rights and those of the class that she represents.

   [104]Plaintiff’s Closing Submissions, 16 September 2016, 9 [22].

   [105]Ibid 7 [15].

1. Ms Walsh argues that she should not be shut out from her claim and that of the group members.  Ms Walsh submitted that she comes to the court with a right to have her case decided according to the ordinary rules of procedure, which should afford her full time and opportunity for the presentation of her case.  For the court to deprive her of those rights and summarily dispose of her action, based only upon bare and unparticularised allegations of improper purpose by her litigation funder arising out of a supposed “jigsaw” (most of the pieces of which derive from other cases having nothing to do with her) and without a proper trial, it was said, would require proof of far more compelling facts and circumstances than WorleyParsons has established.

1. Ms Walsh submits that WorleyParsons bears the onus of proof under s 140(2) of the Evidence Act to convince the court that this proceeding should be stayed.  In doing so, the court must be satisfied that the whole of the evidence is to its ‘reasonable satisfaction’.[106]

   [106]Ibid 10 [25].

1. It was argued that the WorleyParsons’ case is only inferential and circumstantial.  It was submitted that for inferences to be drawn from circumstantial evidence, ‘the circumstances must raise “a more probable inference in favour of what is alleged” and “where competing possibilities of equal likelihood, or the choice between them can only be resolved by conjecture, the allegation is not proved”’.[107]

   [107]Plaintiff’s Closing Submissions, 16 September 2016, [39] quoting Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1, 5 and Palmer v Dolman [2005] NSWCA 361 [41] (Ipp JA).

Evidentiary burden

1. The evidentiary burden rests on WorleyParsons on the balance of probabilities to prove that MCI the moving party initiated this proceeding for an ulterior purpose and that this proceeding is liable for a stay.

1. The majority of the High Court in Neat Holdings v Karajan Holdings stated the principle, which is uncontroversial, but worthy of consideration:

The ordinary standard of proof required of a party who bears the onus in civil litigation in this country is proof on the balance of probabilities. That remains so even where the matter to be proved involves criminal conduct or fraud.  On the other hand, the strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what it is sought to prove.  Thus, authoritative statements have often been made to the effect that clear or cogent or strict proof is necessary “where so serious matter as fraud is to be found.  Statements to that effect should not, however, be understood as directed to the standard of proof.  Rather they should be understood as merely reflecting a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach that a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct. As Dixon J commented in Briginshaw v Briginshaw.[108]

[108]Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449, 449-450 (Mason CJ, Brennan, Deane and Gaudron JJ) (citation omitted).

1. In Palmer v Dolman, Ipp JA with whom Tobias and Basten JJA agreed, stated that even in a case where fraud was alleged, there are no hard and fast rules with which the court can have regard to circumstantial evidence for it to be satisfied of the evidentiary requirement of the finding of facts under s 140 of the Evidence Act.[109]

   [109]Palmer v Dolman [2005] NSWCA 361 [46]-[47] (Ipp JA).

1. I am satisfied that WorleyParsons has sufficiently discharged its onus of proof on the balance of probabilities that MCI was the moving party to this proceeding and the circumstantial evidence adduced gave rise to an inference that this proceeding is tainted with an improper purpose.

1. Further, in my opinion, the court was not assisted by the lack of evidence of Mr Elliott, given his involvement throughout this proceeding, as evident by the communications between Ms Walsh and himself.  Mr Elliott did not give evidence as to the circumstances to which Ms Walsh was recruited, why he chose to be a solicitor on the record to act for Ms Walsh, why this proceeding was issued by him on behalf of Ms Walsh on the day that Ferguson J heard the application to dismiss the MCI proceeding.

Consideration – Is this proceeding an abuse of process?

1. In summary, I agree with WorleyParsons that, in this proceeding, the court is concerned with a matrix of facts that are of relevance to the conduct of the moving party, MCI.  Collectively, the facts presented to the court suggest that a conclusion must be drawn that this proceeding is tainted with a predominant purpose of some sort other than vindication of the legal rights of Ms Walsh and the group members and is therefore liable to be stayed for the reasons set out below.

1. The court does not arrive at this conclusion lightly.

1. It weighs heavily upon the court that Ms Walsh ought have the opportunity to fully agitate her claims against WorleyParsons.  She is entitled to access to justice, a fair hearing and a fair trial.

1. It also might be said that court supervision and the arrangements that are now in place adequately address the concerns that the court may have and therefore the proceeding, with these safeguards in place, ought proceed.

1. I disagree.

1. There are compelling reasons in this case, as I have said, why this proceeding ought be stayed.

1. It is incumbent upon the court to bring to bear broader facts, matters and circumstances when considering the question of the administration of justice and the regulation of its processes.

1. Having said that, it is a rare and specific case that such a drastic remedy ought be awarded by the court.

1. These observations are made in the knowledge that Ms Walsh repeatedly deposes to her belief that WorleyParsons was in the contravention of its continuous disclosure obligations under the Corporations Act 2001 (Cth); and the significance of her investment in WorleyParsons’ shares and the subsequent loss. Ms Walsh deposed in her affidavits as follows:

(a)        On 17 March 2015:

I firmly consider that the defendant has breached its continuous disclosure obligations under s. 674 Corporations Act in the ways alleged in this proceeding and I am committed to pursuing the proceeding in order to obtain compensation from the defendant on behalf of myself and the group members in the class.[110]

[110]Affidavit of Joanne Maree Walsh sworn 17 March 2015 [3].

(b)        On 25 May 2016:

The $10,000 investment was significant to me. I did not expect that my shares would decline in value because there was information about WorleyParsons Limited which should have been, but had not been, disclosed to the market at the time I bought my shares.[111]

(c)        On 27 May 2016:

I have personally lost approximately $6,500 of my investment in Worley due to what I consider to have been its clear breaches of Corporations Act and I intend to purse [sic] my claim for damages on my own behalf and on behalf of the class of shareholders in Worley whom I represent.[112]

[111]Affidavit of Joanne Maree Walsh sworn 25 May 2016 [5].

[112]Affidavit of Joanne Maree Walsh sworn 25 July 2016 [18].

1. The court is also cognisant of the fact, as I have observed, that any decision reached in cases such as this ought recognise the practical circumstances confronting litigants — the cost, time, delay and potential prejudice that may flow from proceedings being stayed.

Matters for consideration

1. The facts that I considered to be particularly of importance in arriving at my conclusion in relation to the abuse application are: firstly, the unique and unusual events leading up to this proceeding and, secondly,  the extent to which MCI and its then sole director, Mr Elliott, participated and are involved in this proceeding.

1. Mr Elliott’s effort to seek a co-plaintiff of the MCI proceeding, shortly after Ferguson J handed down her decision holding that MCI lacked standing to bring the group proceeding is revealing.[113]  An inference may be drawn that MCI was concerned that its proceeding would be dismissed by Ferguson J and therefore, had to actively try to maintain the MCI’s interest in maintaining an action against WorleyParsons by recruiting a co-plaintiff to the MCI proceeding who subsequently became the plaintiff to this proceeding.

   [113]Melbourne City Investments Pty Ltd v WorleyParsons Limited [2014] VSC 303.

1. It is equally telling that this proceeding was issued on the day Ferguson J heard WorleyParsons’ application to dismiss the MCI proceeding.  The only possible inference to be drawn is that MCI was alert to the possibility that the MCI proceeding would be dismissed.  A new proceeding in the name of Ms Walsh, therefore, may perhaps be a safer option for MCI to continue the spirit of the MCI proceeding, by bypassing the impediment of having to seek leave to file any further proposed amended statement of claim in the MCI proceeding and issuing any further application in relation to the joinder of Ms Walsh to the MCI proceeding.

1. MCI in procuring Ms Walsh’s involvement in the MCI proceeding, and later in this proceeding, demonstrated a determination to maintain a proceeding on foot against WorleyParsons.  This in itself alone, however, is not objectionable.

1. Ms Walsh argues that no inference should be drawn from the fact that Mr Elliott has acted as Ms Walsh’s solicitor for a short period of time when this proceeding commenced, given that Mr Elliott acted on a no win no fee basis and retired as solicitor for Ms Walsh immediately upon WorleyParsons’ request at an early stage of this case.  Ms Walsh submits that the reasonable inference that the court should draw is that retaining Mr Elliott was to minimise MCI’s outlay on legal costs payable to external counsel and not for the predominant purpose of earning legal fees for Mr Elliott.

1. I disagree with that submission.

1. Mr Elliott, in my opinion, given the fact that he had been restrained from acting a number of times by this court,[114] has taken every opportunity to represent the lead plaintiff or to, in effect, retain effective control of the proceeding.  I am of the opinion, after considering the evidence, that his purpose was to enrich MCI or himself; by whatever means possible.  The fact that Mr Elliott retired on the day that WorleyParsons issued a summons seeking orders to restrain him from acting for Ms Walsh is telling.  I do not accept that that is, as Ms Walsh said, out of precaution.

   [114]See, eg, Bolitho v Banksia Securities Limited (No 4) [2014] VSC 582.

1. Given the consideration above, I would respectfully adopt the approach and analysis of the Court of Appeal in Treasury Wine Estate v Melbourne City Investment.[115]

   [115](2014) 45 VR 585.

1. The majority of that Court, Maxwell P and Nettle JA (as he then was), held that MCI abused the process and that that proceeding should be permanently stayed.

1. In overturning the decision below, their Honours held that in contrast with the frequently quoted alderman example in Williams, MCI’s purpose was not allowed.  Their Honours said that it is of importance to distinguish ‘the use to which the relevant proceeding is put’ to determine if there is an abuse of process.[116]

   [116]Ibid 589 [17].

1. Their Honours explained that the key difference between the alderman example and MCI’s claim was that the ultimate goal of the alderman was dependent upon the cause of action to be prosecuted to a successful conclusion where this was not the case for MCI.  In Williams, the court held that there was no abuse of process of the alderman in bringing a criminal prosecution against his political opponent for his failure to disclose some pecuniary interest.  Despite the fact that the ultimate purpose for bringing that proceeding was to disqualify his political opponent, the alderman could only achieve his ultimate goal of disqualifying him from running for the office should the proceeding be successful.

1. In contrast, it was held that MCI had no interest in prosecuting the matter to an end and that each class action was expected to settle before judgement.  Maxwell P and Nettle JA concluded that the cause of action and the question of ultimate success were immaterial to MCI’s purpose.  The court should not be distracted by the fact, it was held, that a strong cause of action may have been found.  A strong cause of action would be a vehicle for MCI to encourage WorleyParsons to settle its claim, which would include MCI’s costs, and ultimately, to achieve the purpose of generating income for Mr Elliott.

1. It is clear to me that a number of facts in this case fall squarely within the majority’s decision of the Court of Appeal in Treasury Wine Estate v Melbourne City Investment, which would entail the same conclusion reached by the majority of that Court.  President Maxwell and Nettle JA held that:

As the law stands, the only legitimate purpose for bringing a proceeding is to vindicate legal rights or immunities by judgment or settlement.  Consequently, unless the predominant purpose of bringing a proceeding is a legitimate purpose, the proceeding is an abuse of process and is liable to be stayed.

The question for determination, therefore, is whether MCI’s purpose of “generating legal fees for Mr Elliott” is a legitimate purpose. Plainly enough, generating legal fees does not constitute a purpose of vindicating legal rights or immunities.  Obtaining payment of legal costs is but a corollary, or an incident, or a by-product, of the successful vindication of rights.

It is necessary, then, to examine the notion of “collateral advantage”. The authorities distinguish between two types of case.  On the one hand, a proceeding will not be regarded as an abuse of process by reason only that it is brought for the purpose of taking collateral advantage of any judgment or settlement in vindication of legal rights or immunities which might be obtained in the proceeding.  On the other hand, if a proceeding is brought for the predominant purpose of obtaining collateral advantage from the existence of the proceeding as such, as opposed to collateral advantage flowing from any judgment or settlement in vindication of legal rights or immunities which might be obtained in the proceeding, it will be an abuse of process and liable to be stayed.

In our view, the proceeding by MCI against Treasury falls into the second of these categories.  What distinguishes the two categories is the use to which the proceeding is put. In the present case, MCI is using the cause of action to create an income-generating vehicle for its solicitor. It has no interest in vindicating its rights, or obtaining a remedy, as such.

The nature of the cause of action — as a claim based on an alleged breach of disclosure requirements — is immaterial to MCI’s purpose.  Its sole purpose has only ever been to create for itself — in this case, by acquiring a small parcel of shares — a cause of action of sufficient merit to induce the defendant company to pay Mr Elliott’s fees.

It seems to us that this is a clear example of an abuse of process.  The processes of the court do not exist — and are not to be used — merely to enable income to be generated for solicitors.  On the contrary, they exist to enable legal rights and immunities to be asserted and defended.  In the common form of class action, that is the sole purpose of the proceedings.  The members of the class wish to vindicate their rights.  The fact that success will result in the solicitors’ fees being paid does not affect the propriety of the proceeding.

…

That conclusion is unaffected by the fact that, in order to generate maximum fee income for Mr Elliott, the cause of action had to be strong enough to create the risk for the defendant company that it might be liable to pay costs. All that was needed to make this “vehicle” suitable for the purpose of generating costs was that any claim issued on behalf of MCI be sufficiently arguable to encourage the defendant to negotiate a settlement and pay MCI’s costs.

…

Ultimately, the policy considerations which inform the law relating to abuse of process are twofold: to ensure that the processes of the court are used fairly, and to maintain public confidence in the ability of the court to function in that way.  In this case, there is a palpable unfairness in a defendant being brought to court for the predominant purpose of enriching the plaintiff’s solicitor, and the community’s confidence would undoubtedly be shaken if that were held to be a legitimate purpose for bringing proceedings.[117]

[117]Ibid 588 [9]-[14], [19], [22] (citations omitted).

1. Ample evidence from the evolution of this case shows that, in substance, this proceeding is not distinguishable from the one brought in the name of MCI against other defendants.

1. To my mind, at the commencement of this proceeding, the purpose of the moving party, MCI, was to initiate a proceeding that was designed to circumvent the problem encountered at the MCI proceeding that it lacked standing.  It recruited Ms Walsh to keep the proceeding on foot.  It was willing to indemnify Ms Walsh for all legal costs and adverse costs orders without any recourse to recouping its fees, based on the terms of the second indemnity.

1. Most significantly, when this proceeding was instituted, Mr Elliott, the sole director of MCI, was the solicitor on the record for Ms Walsh, which demonstrates that MCI has not departed from its modus operandi that Mr Elliott would be the legal representative for the lead plaintiff and obtain financial benefit should the proceeding be successful.  The fact that Ms Walsh was recruited to be the lead plaintiff does not mask the nature of the proceeding that its indemnifier, MCI, sought to maintain and continue the proceeding for an ulterior purpose.

Subsequent conduct

1. In light of my observation, a question in this case arises as to whether the court would allow the proceeding to continue, having regard to subsequent conduct by Ms Walsh, who changed her solicitor on the record and entered into the LFA, a new litigation funding agreement.

1. In Melbourne City Investment v Leighton Holdings Limited,[118] the Court of Appeal was concerned with the question of whether subsequent conduct of MCI, effecting a change in solicitor and giving undertaking to the Court that Mr Elliott would not be engaged as a solicitor, would lead to a different conclusion than that the proceeding was an abuse of process and should be permanently stayed.  The Court unanimously upheld the trial judge’s conclusion that ‘the commencement of the proceeding was an abuse of process was well-entitled to order a stay notwithstanding MCI’s attempts to “mend its hand”.’[119]

   [118][2015] VSCA 235.

   [119]Ibid [49].

1. Equally in this case, it was apparent that Ms Walsh was trying to ‘mend its [or her] hand’ in this proceeding by changing her solicitor on the record, entering into the second indemnity and finally, the LFA.  The subsequent conduct of Ms Walsh would not affect the character of this proceeding that, at the commencement of this proceeding, it was an abuse.

Conclusion

1. MCI, as a moving party to this proceeding, initiated and maintained this proceeding for the purpose of sustaining a proceeding that MCI had failed to maintain in its own name.  By doing so, MCI was able to continue its modus operandi in bringing proceedings against listed companies, as part of its business model, to obtain a financial gain for itself, its legal representative, when this proceeding was issued.  Therefore this proceeding is tainted by a predominant purpose that is irrelevant to the vindication of legal rights of Ms Walsh or the group members, notwithstanding that Ms Walsh may ultimately benefit from the litigation.

1. I order that this proceeding be stayed permanently.

Section 33N application

1. As I have concluded that this proceeding should be stayed permanently, I need not determine the s 33N application. However, I would make the following brief observations.

1. In my opinion, the s 33N application should succeed if it were to be determined on its merits.

1. I place particular emphasis on the terms of the second indemnity referred to above which effectively disabled Ms Walsh to fully participate the proceeding in her own capacity or on behalf of the group members.

1. It is beyond doubt, examining the terms of the second indemnity, that Ms Walsh lacked the capacity to represent the group members.  As I have observed, the second indemnity specifically restricts her ability to engage solicitors or counsel in relation to the conduct of the proceedings.  Ms Walsh was authorised to seek independent legal advice for herself, however she was not able to seek independent legal advice for the group members even if she believed such advice to be necessary and beneficial.

1. I will hear the parties on the final form of orders and the question of costs.

Attachment A

RULINGS ON EVIDENCE

Affidavit of Jason Lawrence Betts sworn 10 December 2014

Paragraphs [4]-[6]:

These paragraphs set out factual matters concerning litigation preceding this proceeding.

This proceeding will be determined independently of previous proceedings, on its own merits.

However, given the allegation that MCI is the moving party to this litigation, these paragraphs are relevant and could rationally affect the court’s consideration of the role, purpose and motive of MCI in relation to the initiation and maintenance of the proceeding.

The evidence is admitted.

Paragraphs [7]-[10]:

Again, these matters are of a purely factual matter and background in nature.

These paragraphs shed light on the genesis of this matter and its evolution.

Appropriate weight will be given to this evidence, but it is not irrelevant and is capable of rationally affecting (directly or indirectly) the determination of the purpose or motive of MCI and whether it is the moving party in this litigation.

In a matter such as this, the court needs to balance evidence that goes to the history of the matter with a determination of the facts of the particular case before it.

The evidence is admitted.

Paragraphs [11]-[18]:

I refer and repeat my observations in relation to paragraphs [7]-[10].

The evidence is admitted.

Paragraphs [19]-[39]:

These paragraphs go to the background of related proceedings and detail the progression of those proceedings before this court.

These applications are to be determined on their merits, in the context of the present case, notwithstanding that a certain level of factual background is, in my opinion, relevant and admissible for the purposes of determining the identity of the moving party in these proceedings.

However, I do consider that the matters referred to in these paragraphs could rationally affect the assessment of the bona fides of the present applications as possibly demonstrating the identity of the moving party.

General background I have determined, is relevant to the question of the identity of the moving party to these proceedings, however the court will determine the weight to be given to this evidence.

Affidavit of Jason Lawrence Betts sworn 18 February 2015

WorleyParsons has indicated that it will not rely on paragraphs 23-24, 36-40, 48-49 and 50-55.

Paragraph [7]:

This paragraph is admitted.

It reflects an aspect of the procedural history of an application brought in this proceeding and factual matters in relation to indemnification arrangements of Ms Walsh.

The procedural history of this matter is relevant to the determination of the question of the identity of the moving party to this litigation as pressed by the defendant.

Paragraphs [9]-[14]:

These paragraphs are factual in nature and outline aspects of the procedural history of this matter which are of relevance to the question of whether a party other than Ms Walsh is the ‘moving party’ to this proceeding as agitated by WorleyParsons.

The evidence is admitted.

Paragraphs [15]-[22]:

These paragraphs are admitted.

They go directly to the basis of the arrangements between Ms Walsh and MCI.

The evolution of the indemnification arrangements between Ms Walsh and MCI bears directly upon the question of whether Ms Walsh ceded control of the proceeding to MCI and, therefore, whether the institution of this proceeding constituted an abuse of process or that Ms Walsh could not properly be a representative plaintiff in these proceedings.

Paragraphs [25]-[35]:

Paragraphs 25-32 purport to outline the background to other proceedings in this Court involving MCI.

In particular, other securities class actions against Leighton Holdings Limited and Treasury Wines Limited, and the findings of this court in relation to those proceedings do not assist the court in its determination of the questions in this proceeding.

The parties to this proceeding ought not bear the burden of the outcome of other, unrelated matters.

To do justice is to consider this case on its own merits, not weighed down by past matters.

The evidence is not relevant and not admitted.

Paragraphs [41]-[47]:

The court refers and repeats the observations in relation to paragraph [25]-[35] above.

However, certain paragraphs are objectionable as being akin to an opinion, being paragraphs [41]-[44] and the objection to these paragraphs is upheld.

Paragraph [47] is not relevant to the issues before this court at this time and, accordingly, these paragraphs are also not admissible.

Affidavit of Jason Lawrence Betts sworn 10 March 2015

Paragraph [14]:

The evidence, in my opinion, could rationally affect the assessment of the bona fides of the present claim in that it goes to the history and evolution of the current proceeding.  But, having said that, appropriate weight will be given to the evidence.  This matter is to be determined on its own merits, not weighed down by past matters.

Affidavit of Christine Yun Tran affirmed 13 May 2015

Paragraphs [3]-[34]:

This evidence, at paragraphs [3]-[24], is admissible.

I refer and repeat my observations in relation to paragraphs [25]-[35] (except the first two paragraphs of those observations).

With the exception of paragraphs [30] and [31], paragraphs [25]-[34] are not relevant to the current applications as they are directed to (i) when Mr Elliott acted as Ms Walsh’s solicitor; (ii) what documents were produced by recipients to subpoenas in respect of which no objection was made by Ms Walsh to inspection on grounds of privilege; and (iii) correspondence with Ms Walsh’s solicitor, Mr Peters, in relation to various objections to inspection.

Paragraphs [30] and [31] refer to exhibits CYT-15 and CYT-16 which do have the prospect of rationally affecting the determination of issues in these applications.

Accordingly, they could not rationally affect the assessment of the present issues and accordingly are not admissible.

Paragraphs [35]-[41]:

The evidence is not relevant to this proceeding and could not rationally affect (directly or indirectly) the determination of issues in this proceeding.

The evidence concerns the alleged deficiency in production of documents.

The evidence is not admissible.

Affidavit of Jason Lawrence Betts sworn 19 August 2015

Paragraphs [5]-[17]:

I refer and repeat my observations in relation to paragraphs [35]-[41] of the Tran affidavit.

Paragraphs [5] to [12] concern the fact of documents being returned on subpoenas issued by WorleyParsons, objections to inspection by Ms Walsh, the court’s determination of those objections, and subsequent correspondence.  Paragraphs [13] to [17] further refer to documents prepared by WorleyParsons, and state what those documents prepared by WorleyParsons show.  No matter referred to in these paragraphs could rationally affect (directly or indirectly) the assessment of the issues in the present applications.

The evidence is not admissible.

Paragraphs [18]-[20]:

This evidence is admitted.

It is relevant to the determination of the identity of the alleged moving party, its determination to maintain proceedings, its modus operandi and its past conduct.  This evidence provides important contextual background but due weight will be given to it.

Paragraphs [21]-[78]:

These paragraphs are not admissible on the grounds of relevance.

They concern other proceedings in this court unrelated to the present proceeding and therefore could not rationally affect the assessment of issues on these applications.

Paragraphs [79]-[80]:

These paragraphs are admissible.

The evidence assists the court in determining the issue of the identity of the “moving party” in this litigation.

The character of the arrangements between the funder and the litigant inform the court as to the nature of the relationship and allows the court to draw inferences as to where the control of the litigation rests, which will shed light on the determination of the question as to the identity if the moving party behind this litigation.

Having said this, due weight will be given to this evidence.

Affidavit of Murray John Edstein sworn 3 September 2015

Paragraphs [4]-[6]:

These paragraphs concern correspondence between WorleyParsons’ solicitors and Mr Elliott in his personal capacity following Mr Elliott’s receipt of a letter dated 19 August 2015 from WorleyParsons’ solicitors and relate to the time by which Mr Elliott would respond.

Accordingly, they could not rationally affect the assessment or determination of issues raised by the present applications.

The evidence is not admissible.

Paragraphs [7]-[11]:

These paragraphs are admissible as providing general background as to the modus operandi of MCI.

This is relevant to the question of whether MCI is the moving party in this litigation.

Due weight will be given to this evidence.

Affidavit of Jason Lawrence Betts sworn 12 May 2016

Paragraphs [5]-[25]:

With the exception of paragraphs [9] and [23], these paragraphs concern corrections to a previous affidavit by Mr Betts and a notice to produce.

Paragraphs [9] and [23] refer to exhibits JLB-83 and JLB-92 which do have the prospect of rationally affecting the determination of issues in these applications.

The evidence is not relevant to the issues presently before the court and is not admissible.

Paragraphs [26]-[30]:

The evidence is not relevant to the issues presently before the court and is not admissible.

Paragraphs [31]-[56]:

With the exception of paragraph [52], these paragraphs, in large measure, concern matters relating to proceedings, not being this proceeding.

In relation to paragraph [52], exhibit JLB-119 relevantly contains evidence as to, according to WorleyParsons, payments made by MCI to WorleyParsons which is relevant to the overall assessment of the cost of the litigation to MCI.

Accordingly, the evidence is not admissible on the grounds of relevance.