FEDERAL COURT OF AUSTRALIA
Webb v GetSwift Limited (No 2) [2018] FCA 994
File number: NSD 580 of 2018
NSD 1112 of 2018Judge: LEE J Date of judgment: 25 June 2018 Catchwords: REPRESENTATIVE PROCEEDINGS – Importance of opt out process and need for complete, disinterested advice to group members to allow informed decision as to opt out free from the appearance of conflict – restraint on contact by solicitors who acted in promoting a stayed proceeding with group members to preserve the integrity of the opt out process in non-stayed proceeding Legislation: Federal Court of Australia Act 1976 (Cth), Pt IVA, ss 4, 33ZF, 33J, 33X, 33Y Cases cited: Australian Solar Mesh Sales Pty Ltd v Anderson (2000) 101 FCR 1
Fejo v Northern Territory (1998) 195 CLR 96
Felton v Mulligan (1971) 124 CLR 367
John Alexander’s Clubs Pty Limited v White City Tennis Club Limited [2010] HCA 19; (2010) 241 CLR 1
Perera v GetSwift Limited [2018] FCA 732
Perera v GetSwift Limited (No 2) [2018] FCA 909
Re McJannet; ex parte Australian Workers' Union of Employees, Queensland (1997) 189 CLR 654
Webb v GetSwift Limited [2018] FCA 783
Allsop, J “Federal Jurisdiction and the Jurisdiction of the Federal Court of Australia in 2002” (2002) 23 Australian Bar Review 29
Date of hearing: 25 June 2018 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 73 Counsel for the Applicant: Dr O Bigos Solicitor for the Applicant: Phi Finney McDonald Counsel for the Respondents in NSD580/2018: Mr A Shearer Solicitor for the Respondents in NSD580/2018: Quinn Emanuel Urquhart & Sullivan Counsel for the Respondent in NSD1112/2018: Mr CM Tam Solicitor for the Respondent in NSD1112/2018: Squire Patton Boggs ORDERS
NSD 580 of 2018 BETWEEN: RAFFAELE WEBB
Applicant
AND: GETSWIFT LIMITED (ACN 604 611 556)
First Respondent
JOEL MACDONALD
Second Respondent
SQUIRE PATTON BOGGS (AU)
Respondent to the Interlocutory Application
JUDGE:
LEE J
DATE OF ORDER:
25 JUNE 2018
UPON MR WEBB, THROUGH HIS COUNSEL, GIVING THE USUAL UNDERTAKING AS TO DAMAGES, THE COURT ORDERS THAT:
1.Pursuant to s 33ZF of the Federal Court of Australia Act 1976 (Cth) (Act), the respondent to the interlocutory application dated 23 June 2018 (Interlocutory Application), Squire Patton Boggs, and its officers, servants and agents be restrained from communicating with group members in this proceeding, other than Mr Dwayne Cavan Shanahan Perera, solely in relation to the issue of whether group members should exercise their right to opt out of this proceeding pursuant to s 33J of the Act, with such restraint to continue until either:
(a)the final determination of the applications for leave to appeal and the appeals in proceedings NSD950/2018, NSD951/2018 and NSD964/2018, which determinations have the effect that one or both of NSD226/2018 and/or NSD440/2018 no longer be subject to a stay of proceedings; or
(b)the conclusion of the opt out process following the expiry of the date for opt…
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- AGLC
- Webb v GetSwift Limited (No 2) [2018] FCA 994
- Case
- [2018] FCA 994
- Decision Date
CaseChat Overview and Summary
The case of Webb v GetSwift Limited (No 2) involved a dispute between the plaintiff, Mr Webb, and the defendant, GetSwift Limited, in the Federal Court of Australia. The primary issue was the importance of the opt-out process in class action proceedings, focusing on the need for complete and disinterested advice to group members to allow them to make an informed decision regarding their opt-out rights. Additionally, the court addressed the restraint on contact by solicitors who had acted in promoting a stayed proceeding with group members to preserve the integrity of the opt-out process in the non-stayed proceeding.
The legal issues before the court included whether the court should restrain Mr Perera, his solicitors Squire Patton Boggs (SPB), and International Litigation Partners No 18 Pte Ltd (ILP18) from communicating with group members in the Webb proceeding regarding their right to opt out. The court had to determine if such communication should be allowed and under what conditions to ensure the integrity of the opt-out process and prevent any potential conflicts of interest.
In delivering the judgment, the court considered the importance of ensuring that group members receive complete, accurate, and non-conflicted information before making an opt-out decision. The court noted that the proposed notices and communication methods should be court-approved to maintain the integrity of the opt-out process. The court further highlighted the necessity of the court's supervisory role to protect group members and ensure they are fully informed. The court ultimately decided to restrain Mr Perera, his solicitors SPB, and ILP18 from communicating with group members about the opt-out issue until the hearing on 8 June 2018. The court made a specific order to avoid ambiguity and ensure clarity regarding the restraint on ILP18.
The final orders of the court included reserving the issue of costs and their quantification, with any costs awarded to be assessed on a lump sum basis, and dismissing the proceeding otherwise.
The legal issues before the court included whether the court should restrain Mr Perera, his solicitors Squire Patton Boggs (SPB), and International Litigation Partners No 18 Pte Ltd (ILP18) from communicating with group members in the Webb proceeding regarding their right to opt out. The court had to determine if such communication should be allowed and under what conditions to ensure the integrity of the opt-out process and prevent any potential conflicts of interest.
In delivering the judgment, the court considered the importance of ensuring that group members receive complete, accurate, and non-conflicted information before making an opt-out decision. The court noted that the proposed notices and communication methods should be court-approved to maintain the integrity of the opt-out process. The court further highlighted the necessity of the court's supervisory role to protect group members and ensure they are fully informed. The court ultimately decided to restrain Mr Perera, his solicitors SPB, and ILP18 from communicating with group members about the opt-out issue until the hearing on 8 June 2018. The court made a specific order to avoid ambiguity and ensure clarity regarding the restraint on ILP18.
The final orders of the court included reserving the issue of costs and their quantification, with any costs awarded to be assessed on a lump sum basis, and dismissing the proceeding otherwise.
Orders
Orders of the court
1. The issue of costs and their quantification be reserved, save that any costs awarded will be awarded on a lump sum basis.
2. The proceeding be otherwise dismissed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Basal to the statutory regime is ensuring that the necessary information is provided to group members to allow them to consider whether they should exercise the statutorily protected right of opt out. It is also foundational that such information is to be included in a Court approved form and is conveyed in a Court approved manner. It necessarily follows that approval will only be given when the Court is satisfied that the proposed notice provides all information necessary to the making of a fully informed decision, and that the proposed mode of delivery ensures that the information material to the decision is conveyed in a way which allows it to be received in an effective manner. It is against the background of the importance of Court supervision of the opt out process, that I come to the present issue.C RELEVANT PROCEDURAL BACKGROUND In Webb v GetSwift Limited [2018] FCA 783 (Webb (No 1)), I dealt, in ex tempore reasons, with an interlocutory application filed by Mr Webb which sought to preserve the status quo pending the later hearing of an application to put in place a regime for opt out. As I indicated at [2] in those reasons, subject to hearing further argument, I foreshadowed that this regime would have, as a component part, the notion that all communication with group members in this proceeding, for the purposes of opt out, should be communications that are sanctioned by the Court. This was because in the unusual circumstances of this case, given my supervisory and protective role in relation to group members, I was anxious to ensure that only complete, accurate and non-conflicted information was conveyed prior to the date for opt out (so as to maximise the prospect of a fully informed decision being made by group members as to opt out). In Webb (No 1), I set out the background to the bringing of that earlier interlocutory application at [3]-[16]. These reasons assume a familiarity with that judgment and the related judgments that had preceded it, being Perera v GetSwift Limited [2018] FCA 732 (principal judgment) and a subsequent judgment, being Perera v GetSwift Limited (No 2) [2018] FCA 909. All the judgments are connected, in a sense, as the evidence in the related applications dealt with in those reasons, was also evidence in this application. In any event, at the risk of burdening the reader with a further detailed chronology of the circumstances that have rendered it necessary for me to deliver this judgment, it is convenient to set out (and to some extent repeat) some matters of present relevance. On 23 May 2018, I delivered the principal judgment which had the result of staying proceeding NSD 226 of 2018 Perera v GetSwift Limited (Perera Proceeding) and proceeding NSD 440 of 2018 McTaggart v GetSwift Limited (McTaggart Proceeding). In section K.4 of that judgment, at [362]-[370], I pointed to the fact that in both the Perera Proceeding and the McTaggart Proceeding, there were a number of group members who had signed funding agreements with litigation funders. These group members were described in the principal judgment as the Perera Funded GMs and the McTaggart Funded GMs. Given that there were funding agreements with both the Perera Funded GMs and the McTaggart Funded GMs, I was conscious of the possibility that if this proceeding (Webb Proceeding) was successful, those group members might, pursuant to the terms of the funding agreements, be required to pay an amount to litigation funders for the stayed proceedings (that is, to International Litigation Partners No 18 Pte Ltd (ILP18) in the Perera Proceeding and Vannin Capital Operations Limited (Vannin) in the McTaggart Proceeding). This may be in addition to an amount required to be paid pursuant to the terms of a common fund order that I had then proposed, and have now made in the Webb Proceeding (I will deal separately with the common fund order in a subsequent judgment in which I propose to deal briefly with my reasons for making those orders and disposing of certain costs issues).
Evidence
Evidence Before The Court
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Decision
Reasons for decision
In Webb (No 1), I set out the background to the bringing of that earlier interlocutory application at [3]-[16]. These reasons assume a familiarity with that judgment and the related judgments that had preceded it, being Perera v GetSwift Limited [2018] FCA 732 (principal judgment) and a subsequent judgment, being Perera v GetSwift Limited (No 2) [2018] FCA 909. All the judgments are connected, in a sense, as the evidence in the related applications dealt with in those reasons, was also evidence in this application. In any event, at the risk of burdening the reader with a further detailed chronology of the circumstances that have rendered it necessary for me to deliver this judgment, it is convenient to set out (and to some extent repeat) some matters of present relevance. On 23 May 2018, I delivered the principal judgment which had the result of staying proceeding NSD 226 of 2018 Perera v GetSwift Limited (Perera Proceeding) and proceeding NSD 440 of 2018 McTaggart v GetSwift Limited (McTaggart Proceeding). In section K.4 of that judgment, at [362]-[370], I pointed to the fact that in both the Perera Proceeding and the McTaggart Proceeding, there were a number of group members who had signed funding agreements with litigation funders. These group members were described in the principal judgment as the Perera Funded GMs and the McTaggart Funded GMs. Given that there were funding agreements with both the Perera Funded GMs and the McTaggart Funded GMs, I was conscious of the possibility that if this proceeding (Webb Proceeding) was successful, those group members might, pursuant to the terms of the funding agreements, be required to pay an amount to litigation funders for the stayed proceedings (that is, to International Litigation Partners No 18 Pte Ltd (ILP18) in the Perera Proceeding and Vannin Capital Operations Limited (Vannin) in the McTaggart Proceeding). This may be in addition to an amount required to be paid pursuant to the terms of a common fund order that I had then proposed, and have now made in the Webb Proceeding (I will deal separately with the common fund order in a subsequent judgment in which I propose to deal briefly with my reasons for making those orders and disposing of certain costs issues). Having anticipated this issue as to funding agreements, one of the orders I made when delivering the principal judgment, was for there to be a case management hearing on 8 June 2018 as to the form of the opt out notices. This order granted leave to Mr Perera, the McTaggart applicants, ILP18 and Vannin to intervene to advance any interest they had in relation to the terms, that is, the content of the proposed notice. As I indicated in Webb (No 1) at [5]-[16], there were a number of communications seeking to preserve the status quo until the hearing on 8 June 2018. Despite there only being a period of a little over a week between this issue being debated and the hearing on 8 June 2018, a sensible interim agreement on a non-admissions basis could not be reached. Accordingly, it was necessary for the inter partes relief against Mr Perera and ex parte relief against ILP18 to be dealt with in Court. At [18]-[19], I noted: During the course of argument, I indicated that, notwithstanding I would not be disposed to make an order restraining [Squire Patton Boggs (SPB)] and/or ILP18 in the terms proposed, I would be disposed, in order to protect the processes of the Court, to make an order that Mr Perera, his servants and agents be restrained until 4.15 pm on 8 June 2018 from communicating with any group member in this proceeding solely in relation to the issue of whether that group member should exercise its right to opt out of this proceeding pursuant to s 33J of the Act. As I understood it, after the relief had been articulated in this more confined way, Mr Perera did not object, and indicated that if the restraint in the terms proposed by the Court had been put at the start by Mr Webb, then the current difficulty may not have arisen. When I enquired of Mr Edwards whether the position would be that SPB and ILP18 fell within the description of servants and agents of Mr Perera, he made the point, quite correctly, that he could not speak on behalf of ILP18, but that the position of Mr Perera was that SPB fell within that category.Given there seems to be some issue about whether ILP18 falls into the category of servants and agents of Mr Perera for present purposes, I should avoid any ambiguity and make a specific order in relation to ILP18 (without expressing a final view as to whether or not it would have fallen within the category of servants and agents, given the tripartite relationship between it, Mr Perera and SPB for the conduct of the advancement of Mr Perera’s claim against GetSwift).(Emphasis added)
Ratio Decidendi
Legal Principle Established
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