Webb v GetSwift Limited (No 2)
[2018] FCA 994
•25 June 2018
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 out in this proceeding.
2.For the avoidance of doubt, Order 1 does not prevent Squire Patton Boggs from responding to any unsolicited enquiry concerning opt out made to them by a group member in this proceeding:
(a)prior to the service of the opt out notice – by communicating to that group member that matters relevant to the issue of opt out are currently before the Court and the Court will, in due course, set a date for opt out and will approve an opt out notice which will be sent to the group members in this proceeding; or
(b)after the service of the opt out notice – by communicating to that group member that they should refer to the opt out notice and take such advice as they think appropriate relating to their right to opt out in such manner as they think fit by taking independent legal advice or contacting the independent barrister referred to in the opt out notice.
3.Squire Patton Boggs pay Mr Webb’s costs of the Interlocutory Application on an indemnity basis, with such costs to be paid on a lump sum basis in an amount to be fixed.
4.Order 3 made on 20 June 2018 be vacated and in lieu thereof orders that the issue of costs in relation to the interlocutory application filed on 25 May 2018 and the amended interlocutory application dated 28 May 2018 and their quantification be reserved, save that any costs will be awarded on a lump sum basis.
5.By 2 July 2018, Mr Webb file and serve a draft order indicating the costs orders sought, together with any evidence relating to the quantification of costs and any written submissions.
6.By 9 July 2018, any party against whom a costs order is sought file and serve any evidence and submissions in reply.
7.Unless any party against whom a costs order is sought indicates in writing to the Associate to Justice Lee by 12 pm on 10 July 2018 that they wish to be heard further orally, the costs orders be determined in Chambers on the papers.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
ORDERS
NSD 1112 of 2018 BETWEEN: RAFFAELE WEBB
Applicant
AND: SQUIRE PATTON BOGGS
Respondent
JUDGE:
LEE J
DATE OF ORDER:
25 JUNE 2018
THE COURT ORDERS THAT:
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.
REASONS FOR JUDGMENT
Revised from the transcriptLEE J:
A INTRODUCTION
This application came before the Court in highly unusual circumstances. To explain why, it is necessary to go into a good deal of detail concerning the procedural background. But before doing so, I wish to make a few observations about the centrality and importance of opt out to the regime provided for in Part IVA of the Federal Court of Australia Act 1976 (Cth) (FCAA).
B OPT OUT GENERALLY
In its grouped proceedings report (Grouped Proceedings in the Federal Court, Report No 46 (Australian Government Publishing Service, Canberra, 1988)), the Australian Law Reform Commission (ALRC) considered, in detail, the issue as to whether the consent of proposed represented persons ought to be required as a pre-condition to commencing a representative proceeding on their behalf. The ALRC concluded (at [126]-[127]) that a fair balance would be struck between the interests of group members and respondents if proceedings could be commenced without consent, so long as a date was fixed for opt out, notice was given to group members and the group members had an opportunity to withdraw from the proceeding. Accordingly, the ALRC recommended that provision should be made to ensure that all group members are notified of the existence of a proceeding, and their rights to opt out, by a Court approved notice. This eventually found reflection in Division 3 of Part IVA of the FCAA which provides that group members are required to be given notice of certain matters, including the right of group members to opt out before a specified date (s 33X). Division 3 further provides that the form and content of a notice must be as approved by the Court and requires the Court to specify, by order, who is to give the notice and “the way in which the notice is to be given” (s 33Y).
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).
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)
Importantly, as recorded in the emphasised part of the judgment above, at the time an interim restraint order was made, it was an order “pursuant to s 33ZF of the [Act that], until 4.15 pm on 8 June 2018, a group member in this proceeding, Mr Perera (and his servants and agents) be restrained from communicating with group members in this proceeding 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” (see Webb (No 1)). Counsel for Mr Webb made clear that Mr Webb considered that a form of restraint which restrained Mr Perera and “his servants and agents” would restrain SPB. Moreover, I sought specific confirmation to that effect from Mr Edwards, counsel for Mr Perera, who provided it (T12, 28 May 2018; see also Webb (No 1) at [18]). Also at that hearing, counsel for Mr Perera confirmed that if an undertaking had been sought consistent with the order made, it “would have been given”. Mr Edwards was instructed in Court by SPB.
It was on this basis that the order was made in the form it was made. A different approach was taken in relation to ILP18 because, in contradistinction to SPB, I thought there may be ambiguity. This notion that a restraint expressed in terms of “Mr Perera and his servants and agents” would operate so as to restrain SPB is of central importance to what later occurs.
When the matter then came before the Court on 8 June 2018, an issues document was distributed to the parties which included reference to the fact that full argument would take place in relation to whether the relief granted on a temporary basis should be extended until the completion of the opt out process in the Webb Proceeding. Despite the comments made in the principal judgment and the subsequent hearing when interim relief was granted, neither ILP18 nor SPB, who had been given leave to intervene at that case management hearing, exercised the right to intervene which had been granted to them. Counsel for Mr Perera, Mr Edwards, indicated that he was not in a position to provide arguments in relation to the question of restraint on that day.
As a consequence, I indicated that I proposed to adjourn the matter for a further case management hearing at 10.15 am the following Friday, 15 June 2018. I was requested to push back the time of that case management hearing to 2.15 pm on that day so that counsel for Mr Perera could attend and I was prepared to accede to that request to suit the convenience of those acting on behalf of Mr Perera.
To ensure no further misunderstanding and to confirm that I required detailed submissions on 15 June 2018 (as to whether the then interim restraint should be extended so as to be in place until the conclusion of opt out), on Tuesday, 12 June 2018 at 12.43 pm, my Associate communicated to the parties in the following terms:
As you know this matter has been adjourned to a further case management hearing at 2.15 pm this Friday.
His Honour has asked me to communicate and confirm to the parties an indication as to what is proposed to be dealt with on that occasion so that evidence and any submissions can be appropriately directed.
His Honour proposes to make orders on Friday dealing with the approval of the opt out notice but, as previously indicated, will make no order relating to service of that notice until determination of the current applications for leave to appeal. Additionally, his Honour has determined that he should not presently make any orders as to the construction or enforceability of the funding agreements affecting the Perera Funded GMs or the McTaggart Funded GMs during the process of opt out, for reasons that will be explained. Accordingly, it is unnecessary for submissions to be directed to this issue for the purpose of Friday.
In the event that there is no agreement, as foreshadowed, his Honour does propose to deal with questions of relief relating to communication with group members in the Webb Proceeding during the course of the opt out process. Accordingly, in circumstances where the current temporary undertakings are not continued until the completion of opt out, his Honour will hear on Friday any application for relief under s 33ZF to prevent communication with group members during opt out as to the exercise of their s 33J rights which has not been approved by the Court.
As his Honour has previously indicated, the question of whether or not orders should be made protecting the opt out process until its conclusion should be dealt with now rather than later so that if any person affected was to challenge such an order, they could do so in such a way that will not cause further delay or deferral of the service of any opt out notices.
If relief is sought on a final basis consistently with the relief that has previously been sought on an interim basis, the issue then arises as to whether any point is to be taken as to how this should occur procedurally.
In relation to the solicitors, at least in so far as SPB was concerned, there was an understanding communicated by counsel for Mr Perera that any restraint on Mr Perera and his servants and agents would extend to SPB. This matter did not arise in relation to Corrs, because an inter partes agreement was reached. If an order was sought which would affect the respective solicitors, and there is no express agreement that an order (such as the one currently formulated in the Webb Proceeding) would bind the solicitors, then his Honour considers it appropriate for the matter to be formalised. Similarly, if there is no agreement as to the extension of undertakings, or as to the fact that the funders would agree to be bound by orders made in the Webb Proceeding, then the process should be formalised.
His Honour will extend the right of the solicitors and the funders to intervene in the Webb Proceeding to next Friday’s appearance, but in absence of express agreement that (if otherwise justified) orders could be made in the Webb Proceeding which will serve to bind the interveners, to prevent arid procedural disputation, any relief sought by Mr Webb should be sought by the filing of an originating application seeking relief against any entity proposed to be restrained which will be returnable at 2.15 pm next Friday. Again, if there can be no agreement relating to issues concerning service, if necessary, his Honour would be disposed to grant leave to Mr Webb to approach the Court to seek appropriate orders relating to service of any such originating application. In this eventuality, evidence filed to date in the Webb Proceeding would be evidence in the additional proceeding.
Accordingly, as part of the orders made following the case management hearing on Friday, it is proposed that the following additional orders will be made:
1.That the legal representatives of Mr Webb, Mr Perera and the McTaggart applicants confer as to the issue of communications with group members pending the finalisation of the opt out process on Tuesday, 12 June 2018.
2.If, following conferral, there is no agreement as to matters relating to communications with group members during the opt out process or the basis upon which any application should be made concerning this issue in the Webb Proceeding, if Mr Webb seeks relief he should do so by filing and serving an originating application seeking relief against all or either of Vannin, ILP18, Corrs Chambers Westgarth or Squire Patton Boggs which his Honour will grant leave to have returnable before the Court at 2.15 pm on Friday, 15 June 2018 and, failing any agreement concerning service of such an originating application, Mr Webb has leave to approach the Associate to Justice Lee in chambers for orders relating to substituted service.
3.Mr Webb is to file and serve any affidavit material in support of any application for restraint against Vannin, ILP18, Corrs Chambers Westgarth or Squire Patton Boggs by 10.00 am on Thursday, 14 June 2018.
4.Any evidence to be relied upon by any intervener or party (other than Mr Webb) be filed by 5 pm on 14 June 2018.
His Honour asks that these orders in this or similar form be included in the minute of orders being prepared by the parties. If any party wishes to be heard further in relation to these orders, his Honour is prepared to list the matter for a short directions hearing early tomorrow morning. (Emphasis added)
Before moving on, it is again important to note that it was clear from the emphasised parts of this email that the primary question for consideration on 15 June 2018 was whether the interim relief (thought by all to be then restraining SBP) should be continued.
In any event, orders were subsequently made reflecting what had occurred on 8 June 2018. The next unanticipated step was that on Thursday, 14 June 2018 at 4.54 pm a communication was received by my Associate from a solicitor at SPB, Ms Lisa Gallate, in the following terms:
Dear Associate
Please find attached the Perera Applicant’s submissions in the Webb Proceedings.
The other parties to the McTaggart and Webb Proceedings are copied into this email by way of service.
As noted and for the reasons set out in the Perera Applicant’s submissions, the Perera Applicant does not intend appearing at the case management conference tomorrow.
When this communication was brought to my attention after hours on the day before the case management hearing, I considered that there was some ambiguity. Accordingly, at 5.58 pm, my Associate sent a communication to Ms Gallate copied to the other parties in the following terms:
Dear Ms Gallate,
I refer to the listing tomorrow at 2:15pm and your email advising that Mr Perera will not be appearing tomorrow. I have been asked to request that you confirm that this means that neither SPB nor ILP18 will be exercising their right to appear as interveners tomorrow and further that they do not wish to make any submissions as to the content of the opt out notices nor as to the questions of power regarding restraint addressed by Mr Perera.
Given that there will be no appearance tomorrow by Mr Perera (and, I assume, subject to your confirmation, by SPB or ILP18) I inform you that judgment will be delivered at 2:15pm on the issues of costs argued last Friday, including the determination of the interlocutory application filed by Mr Perera on 30 May 2018. I have been requested by his Honour to inform you that in the absence of any appearance, the Court will proceed on the basis that neither Mr Perera, SPB nor ILP18 wish to make any further submissions in relation to the matters the subject of that judgment.
(Emphasis added)
The communication then went on to deal with issues relating to costs which are not presently material. At 6.47 pm the same evening – 14 June 2018 – Ms Gallate responded relevantly as follows:
Dear Associate
Thank you for your below email.
We confirm that neither SPB nor ILP18 will be exercising their right to appear as interveners tomorrow and further that they are not making any submissions as to the content of the opt out notices nor as to the questions of power regarding restraint addressed by Mr Perera.
In respect of the issue of costs argued last Friday, and the interlocutory application filed by Mr Perera filed on 30 May 2018, the Perera Applicant respectfully understood that the question of costs were reserved. In that regard, we note order 15 of the Court’s orders of 12 June 2018 that:
“Costs of and incidental to the issues the subject of the judgment in Perera v Getswift Limited [2018] FCA 732, including costs of Mr Webb’s application to intervene in the Perera Proceedings, costs of Mr Webb’s amended Interlocutory Application filed 31 May 2018, and all associated hearings, be reserved”.
The above order is also entirely consistent with his Honour’s observations during the hearing in relation to the reservation of costs – see T22, line 34 to T23, line 42, and T26 line 30 to T30 line 10.
Accordingly, the Perera Applicant respectfully does not understand the enquiry about Mr Perera, SPB or ILP18 making any further submissions in relation to the matters the subject of that judgment, given that we understood that His Honour has already made the above order.
(Emphasis added)
A further email was sent by Masi Zaki, at 2.16 pm on 15 June 2018 (that is a minute or so after the case management hearing on 15 June 2018 had been scheduled to commence). This email said as follows:
Dear Associate
We refer to the above proceedings, the correspondence below and this afternoon’s listing for judgment.
As set out in our earlier correspondence, we do not intend to appear this afternoon for the purposes of obtaining judgment. As such, we would be grateful if you could please provide a copy of the judgment at your convenience. Our client will submit orders reflecting the judgment to his Honour chambers, in due course.
Further, we confirm that our firm, Squire Patton Boggs, is not a party to a Tri-parties agreement with the funder. We would be grateful if you could bring this to his Honour attention.
D THE CASE MANAGEMENT HEARING ON 15 JUNE 2018
The matter was then called on, and as foreshadowed there was no appearance for Mr Perera, ILP18 or SPB. Mr Collins QC appeared on behalf of Mr Webb, Mr Shearer appeared on behalf of the respondents, Mr Shariff appeared on behalf of Vannin and Mr Rich SC appeared on behalf of the McTaggart applicants. At the commencement of that hearing I delivered a judgment relating to costs: Perera v GetSwift Limited (No 2).
Part of the costs application that I dealt with at that time were the costs of the interim restraint application to which I have already made reference above. At [40]-[46] I said:
The circumstances surrounding the injunction have been explained in my earlier judgment in the Webb Proceeding: Webb v GetSwift Limited [2018] FCA 783. The order that Mr Webb pressed by interlocutory application filed in Court on 25 May 2018 was as follows:
Pursuant to s 33ZF of the [Act], the legal representatives and the litigation funder (and related entities of the applicant in [the Perera Proceeding]) be restrained from communicating with group members in [the Webb Proceeding] concerning any opt-out of that proceeding until such further order of the Court.
The complaint of Mr Perera is that this form of order “purported to prevent Mr Perera from communicating with his solicitors Squire Patton Boggs about opt out”. It was said that this would “stymie” Mr Perera’s ability to give instructions as to whether to seek leave to appeal from the principal judgment. This was apparently because opt out was mentioned in numerous places in the principal judgment and the proposed restraint contained no limitation to communications which were only in relation to the question of whether a group member should opt out of the Webb Proceeding.
Although there was some substance in the complaint as to the generality and form of the order sought (which was rectified in the form of order actually made), the core contention is that if Mr Webb put forward an appropriately framed request, rather than persisting in a broad restraint which had already been the subject of criticism from the Court, there would have been no need for an interlocutory hearing on 28 May 2018.
Although I unqualifiedly accept the implicit submission of Mr Edwards, as highly experienced and competent counsel, that in such a counterfactual his advice to Mr Perera would have been to consent to such an order, it is a little difficult to reconcile the notion that consent would have been readily forthcoming, given the actions that were taken after the principal judgment was delivered. Notwithstanding that I declined to deal with the first application for restraint in order to allow for instructions to be obtained from both sets of solicitors and funders, no sensible temporary arrangement was put in place by [SPB] and ILP18 (such as the arrangement that was agreed in a timely and cooperative way between Mr Webb, the McTaggart applicants, Corrs Chambers Westgarth and Vannin). Indeed, assuming that Mr Perera, SPB and ILP18 would have consented to a more narrowly framed temporary restraint (as they now have done), then it seems to me that this should have been communicated to the solicitors for Mr Webb.
What is evident, is that notwithstanding I indicated that a restraint order was very much a last resort, the position taken by at least Mr Perera and SPB was apparently inconsistent with agreeing to an immediate interim regime being put in place for a very short period so as to allow the argument concerning restraint to be argued fully (and hence avoiding the risk that the proposed restraint on non-Court approved communications would be rendered nugatory). As communicated by Mr Fraser of SPB on 25 and 28 May 2018, the procedural point was taken that neither SPB nor ILP18 were represented at the hearing on 23 May 2018, and that SPB considered that Mr Webb “should be required to file an application in relation to the proposed order so that both [SPB] and the litigation funder can be represented and be heard on the application before the order is made by the Court”. After my Associate communicated an urgent listing, the further point was taken by Mr Fraser that “[SPB] do not understand that any application can proceed…in the absence of those documents being served on those entities”, that is, SPB and ILP18: see Webb at [12]-[14]. This was consistent with Ms Banton of SPB noting at 10:18 am on 28 May 2018 to PFM, that if Mr Webb “wishes to restrain our firm and our client’s (sic) funder the application would need to be properly constituted and served on the parties you are seeking injunctive relief against”. To any recipient of this email, it would have been clear that no compromise would be proposed until at least SPB had been served and the funder had been served and apparently obtained independent legal advice.
In any event, in these circumstances, the re-listing of the matter to deal with the issue of restraint in open court was caused by the necessity to preserve the status quo and to allow for an application to be made on an ex parte basis against ILP18 and on an inter partes basis against Mr Perera and his servants and agents. Although there might be good reasons as to why SPB could not have appeared, or why instructions could not have been obtained from ILP18 earlier, or for SPB’s and ILP18’s inability to instruct a representative to appear on their respective behalves at the interlocutory hearing, they are not self-evident and no material has been put before the Court to this effect.
One would have thought that, consistently with the overarching purpose, it should have been possible for all these matters to have been sorted out (as was done speedily and with minimal fuss in relation to the McTaggart applicants and their funder and solicitors). Prima facie, it is difficult to understand why a sensible regime could not have been put in place until full argument could occur in relation to whether or not the restraint should continue during the entirety of the opt out process. In all the circumstances, it seems to me to be an appropriate exercise of discretion to reserve the costs of the interlocutory application for temporary restraint until the conclusion of full argument. At that time, I will make a determination as to who should pay the costs of the application for restraint on both an interim and final basis. I should note, subject to hearing any submissions, my preliminary view is that if argument is unnecessary and acceptable undertakings are eventually provided lasting until the end of the opt out process, then any relevant costs should be the costs of Mr Webb in the Webb Proceeding. (Emphasis added)
This judgment reflected the fact that when this judgment was prepared, I still regarded it as likely that there would be substantive argument on 15 June 2018 as to whether or not a restraint should be continued in relation to ILP18 and SPB.
After dealing with other matters, at T15, Mr Collins, who, as noted above, appeared on behalf of Mr Webb, said as follows:
MR COLLINS: … Forms of undertaking have been agreed and are set out in correspondence. Mr O’Connor, I believe, is in court and can provide the correspondence which has the form of the undertaking stated in it.
HIS HONOUR: All right. Well, that’s the undertaking from both funders.
MR COLLINS: There are to be undertakings given by me on behalf of Phi Finney McDonald and Therium Litigation Finance (Australia) Proprietary Limited – Limited, and Mr Webb.
These undertakings were then tendered. Exhibit VCO1 was a document from Vannin to Mr Finney dated 14 June 2018 and a letter from SPB to Mr Finney dated 13 June 2018 became Exhibit SPB1. Exhibit SPB1 is important. It provided for the continuation, by way of undertaking, of the form of order that had put in place the interim restraint (that had been agreed by Mr Perera’s counsel and understood by the Court as being binding on SPB).
I then proceeded to deal with and accept the undertakings given on behalf of Vannin and the McTaggart applicants, and then the following exchange occurred:
…
HIS HONOUR: … well, there’s no one here to give the undertaking on behalf of Squire Patton Boggs.
MR COLLINS: That’s so, your Honour.
HIS HONOUR: So what do you want to do?
MR COLLINS: So we rely upon the undertaking that has been given to us in the letter, and we will write to Squire Patton Boggs requesting them to give the undertaking to the court by making appropriate arrangements in accordance with the agreement constituted by the letter.
HIS HONOUR: Yes. Yes. Yes. So if you could just strip out from that – in the absence of a party being in court to give it in open court, then it should be done by a written document that can be filed electronically. But I will work on the basis that that’s going to happen. All right.
MR COLLINS: Yes, your Honour.
HIS HONOUR: But I will note for present purposes that exhibit SPB1 indicates an intention on behalf of Squire Patton Boggs and ILP18, its servants and agent, to give undertakings both inter partes and also to the court in terms of exhibit SPB1, with such undertaking to be formalised by the provision of a written document to be filed with the court, given the fact that there’s no appearance on behalf of Mr Perera, ILP18 or SPB. All right. Well, that means that I don’t need to deal with that question.
You will see in the judgment I delivered today, which was prepared prior to me being informed of the fact that that issue had been resolved, I did foreshadow that – I had originally determined that the costs of your interlocutory application for restraint on a temporary basis would be reserved, until I determined whether or not you were entitled to that relief on a final basis. And I indicated the provisional view, subject to hearing from the parties, that in the event that the matter resolved consensually, then the appropriate order would be that the costs of the interlocutory application for temporary restraint be Mr Webb’s costs in the Webb proceedings. So unless you want to address in relation to that, then that will follow.
MR COLLINS: No, we don’t wish to - - -
HIS HONOUR: So unless the Perera applicants wish to be heard in relation to that, given that the issue is now resolved, then that can be included in the orders that come through, Mr Collins.
MR COLLINS: Yes, your Honour.
It was plain as a pikestaff from these exchanges that everyone in the courtroom believed that the issue relating to a restraint on ILP18 and SPB had been resolved in the same pragmatic and sensible way as with Vannin and Corrs Chambers Westgarth (in the McTaggart Proceeding). SPB were well aware that the solicitors for Mr Webb had sought (and were now seeking) an express undertaking in terms of the interim restraint. In response to the request from the solicitors for Mr Webb, the relevant undertaking was given.
As noted above, notwithstanding that the matter was listed to suit the convenience of Counsel for Mr Perera; neither Mr Perera nor SPB showed up. It is important to emphasise that this non-appearance was against the background of the existing interim restraint and that:
(a)the solicitors had being given leave to intervene to make submissions as to why a continuation of the earlier interim restraint order should not be made;
(b)the Court had sought clarification that the foreshadowed non-appearance meant no submissions as to power to order a restraint would be made by SPB (see [17] above); and
(c)the Court received a response from SBP that SPB were “not making any submissions… as to the questions of power regarding restraint addressed by Mr Perera” (see [18] above).
Unsurprisingly, everyone proceeded on the basis that all issues relating to restraints on communication by solicitors and funders, with group members as to the right to opt out had been resolved consensually, and all parties and the Court acted accordingly.
We were all wrong.
E POST CASE MANAGEMENT DEVELOPMENTS
The next development was Ms Lisa Gallate, on behalf of Amanda Banton, of SPB, sending a further unsolicited email to my chambers on 21 June 2018 at 4.03 pm. It was in the following terms:
Dear Associate,
We refer to the case management hearing of 15 June 2018 in which Mr Perera and SPB (in its own right and as Mr Perera’s servant and agent) did not appear. We have reviewed the transcript from that hearing.
We note his Honour’s observations at T17, L39-41 concerning the undertakings addressed in SPB’s letter of 13 June 2018 to PFM that was marked as Exhibit SPB1 at the case management hearing.
For the avoidance of doubt, we confirm that the undertakings described in Exhibit SPB1 will be given to the other parties and to the Court by:
1) Mr Perera, as Applicant in NSD226/2018; and
2)Mr Perera’s servants and agents, including SPB, in its capacity as Mr Perera’s servant and agent.
Steps to file the appropriate document containing the undertakings, on Mr Perera’s behalf, will occur. As we apprehend, the Court does not intend that SPB, in its own right, will be restrained by the undertakings. In this regard, his Honour said to Mr Edwards on 8 June 2018 (T83, L9-14), with emphasis added:
“… the restraint that I was proposing was restraint, just to make it perfectly clear, on your client, its service [sic] and agents, which, as I understood from what had said before [sic], included Squire Patton Boggs. So Squire Patton Boggs, as a servant and agent of Mr Perera, be caught by a restraint on Mr Perera …”
His Honour then said (at L 30) in response to Mr Edwards observation that he did not act for SPB, with emphasis added:
“… but you act for Mr Perera, and I don’t propose to make a separate restraint on Squire Patton Boggs, except as they are servants and agents of Mr Perera, which, as I understand, is accepted.”
We raise these matters save that there be potential for confusion, particularly arising from the Court’s observations at T17, L46 to T18, L1 on 15 June 2018 in which His Honour observed:
“HIS HONOUR: But I will note for present purposes that exhibit SPB1 indicates an intention on behalf of Squire Patton Boggs and ILP18, its servants and agent, to give undertakings both inter partes and also to the court in terms of exhibit SPB1, with such undertaking to be formalised by the provision of a written document to be filed with the court, given the fact that there’s no appearance on behalf of Mr Perera, ILP18 or SPB. All right. Well, that means that I don’t need to deal with that question.” [T17.47-T18.5 – 15 June 2018].
The legal representatives for the other parties in these and the McTaggart Proceedings are copied into this email.
(Emphasis added)
Although it was not said so in terms, it later became clear that this communication reflected a view now taken by SPB that they did not consider themselves restrained. This was apparently because the view apparently taken by SPB was that the attempt to procure an effective undertaking by Mr Webb had miscarried. This was because SPB now regarded itself as being entirely free to communicate with group members as to opt out of the Webb Proceeding.
SPB now took the position that they were free to communicate with group members as any such communication would not be pursuant to an agency or contractual arrangement with Mr Perera, but rather as solicitor for the group member. It is hardly necessary to remark that this defeated the whole purpose of what was being sought to be achieved by Mr Webb (and what had been thought by Mr Webb to have been achieved consistently with what had been said by Counsel for Mr Perera instructed by SPB). I will come back to this disconformity between the view taken by SPB and the understanding of Mr Webb and the Court below.
In any event, following this communication, on Sunday, 24 June 2018 a communication was received by my Associate from the solicitors for Mr Webb. That email (unsurprisingly in the circumstances) enclosed unsealed copies of an interlocutory application, together with an affidavit of Mr Finney. Mr Webb’s solicitors indicated an intention to ask that the application be returnable at 9 am today (I pause to note the matter had already been listed for the purposes of a case management conference to deal with other matters).
F THE WEBB APPLICATIONS FOR RELIEF
Today, Dr Bigos appeared on behalf of the applicant, Mr Shearer appeared on behalf of the respondents and Mr Tam appeared on behalf of SPB. The interlocutory application of Mr Webb named SPB as a respondent to the interlocutory application and sought orders that SPB be restrained from communicating with group members other than Mr Perera, solely in relation to the issue of whether group members should exercise their right to opt out of this proceeding under s 33J of the FCAA.
It will be recalled (see [14] above) that the legal representatives were to confer as to the issue of communications with group members, pending finalisation of the opt out process which was to be argued on Friday, 15 June 2018. I am told that this conferral took place. My directions also provided that if no agreement was reached following such conferral, then Mr Webb had leave to file an originating application seeking relief against, among others, SPB which could be made returnable before the Court on 15 June. This leave was granted because I wished to “prevent arid procedural disputation” as to an order being made in the Webb Proceeding, which would bind a third party. Of course, as would now be clear, this course of commencing another proceeding was not taken, for the obvious reason that those advising Mr Webb thought that the issue concerning the restraint on SPB had been resolved consensually.
In any event, when the matter was called on at 9 am, Mr Tam appeared for SPB. After dealing with case management issues, the interlocutory application naming SPB as a respondent to the interlocutory application was, without objection from SPB, filed in Court by Dr Bigos and made returnable instanter. Dr Bigos opened and, in the light of what had occurred, I noted my preliminary view that I thought there must be some misunderstanding. I was subsequently disabused of this misapprehension as in response to what I described as a “direct question”, Mr Tam confirmed that his instructions were that SPB wished to reserve its rights to contact group members concerning the issue of the group members’ right to opt out from the Webb proceeding.
This position has been persisted in during the course of today. I initially heard argument at the case management hearing until approximately 9.50 am when it was necessary that I adjourned to resume a part-heard hearing. That matter concluded somewhat earlier than anticipated, which allowed me to recommence the hearing of this interlocutory application at 3.45 pm. In the intervening period, pursuant to leave that I granted, the second proceeding was commenced by way of originating application. When the matter was called upon again this afternoon, there was again no objection to the originating application commencing the second proceeding being heard instanter.
In this new proceeding, with SPB being named as the respondent, relief was sought in relevantly identical terms to the relief originally sought in the interlocutory application in the Webb Proceeding. It suffices to note that it was the attitude of SPB that required Mr Webb to commence the new proceeding, since a point was taken that it was beyond power for the Court to make an order restraining SPB in the Webb Proceeding.
At the hearing, orders were made, without objection, that evidence previously read in relation to the substantive application (that is, the multiplicity applications in the competing class actions) be regarded as evidence on this application and also that evidence on the earlier interlocutory application in the Webb Proceeding, be evidence in both the applications. Further, there was no objection raised to the communications with my Associate being regarded as part of the record to which the Court could make reference. Affidavit evidence was read by Dr Bigos which put into evidence the details of the communications which had taken place supplemented by the tender of a document by Mr Tam (who also provided an outline of submissions).
G THE APPLICATIONS FOR RESTRAINT
As noted above, the position now taken by SPB is that it is entitled to have unrestricted communications with group members – including in relation to the steps that those group members might take to opt out of the Webb Proceeding – on the basis that those communications would be taking place in circumstances where SPB was acting as the solicitor for the group members (and would not, in the course of those communications, be acting as the agent for Mr Perera).
In context, the letter of 13 June 2018 sent by SPB agreeing to the undertakings proposed by the solicitors for Mr Webb, was apt to mislead. This is particularly so when one has regard to the fact that in light of what occurred when interim restraint was put in place, there could be no doubt that both Mr Webb and the Court were operating on the basis that the interim restraint binding the servants and agents of Mr Perera was effective to prevent communication by SPB with group members as to opt out. I do not suggest that this was done intentionally, but the confusion of thought and apparent change of position is difficult to understand. There is no direct evidence as to when SPB, despite the terms of the interim restraint, regarded itself as not being bound. Mr Webb does not press for a finding (and I do not make any finding) that SPB never regarded itself as bound and was deliberately keeping this information to itself.
Rather, as Mr Tam indicated (at T76), it appears that when the undertaking was provided by SPB to Mr Webb, the “most accurate description of [SPB’s] state of mind was that they simply didn’t know” whether they were restrained from dealing with group members during the opt out, and the relevant persons within SPB did not turn their mind one way or the other as to whether or not the undertaking prevented them from having the right to communicate with group members. Mr Tam further indicated that what appears to have happened is that subsequent to the giving of the undertaking, SPB gave thought to the matter and considered that they were not restrained by the terms of the undertaking. The giving of the undertaking, when it must have been known that what Mr Webb was seeking to put in place was a continuation of an interim restraint, without a firm understanding of what was actually meant by the undertaking is, to use a neutral term, singular, and has caused very significant cost and unnecessary disputation involving the Court having to convene an urgent hearing and being required to sit until almost 8 pm to hear full argument. This should simply not have occurred.
In any event, the asymmetry of understanding between what SPB now thought and what Mr Webb understood was clarified by Ms Gallate’s 21 June 2018 email. Hence, the bringing of the present applications.
I regret the necessity for having to set out the background to this rather extraordinary state of affairs in some detail, but it is necessary to do so in order to understand the issues that now fall to be determined. The arguments of Mr Tam as to why a restraint should not be granted, in either proceeding, fall into the following categories:
(1) that because the application is sought in the Webb Proceeding, SPB is not a party and there is no principled basis to join SPB to the Webb Proceeding (Third Party Contention);
(2)that any relief sought in the new proceeding seeking to restrain SPB pursuant to s 33ZF of the FCAA must fail, as any relief given under s 33ZF could only be made in the Webb Proceeding (s 33ZF Contention);
(3)to the extent that relief is sought in the new proceeding pursuant to the implied power of the Court to control its processes, no relief could be granted because such relief is not in aid of final relief in the new proceeding (Lack of Final Relief Contention);
(4)the Court does not have jurisdiction to deal with the relief sought in the new proceeding (Want of Jurisdiction Contention);
(5) if SPB was enjoined from advising Perera funded GMs that they may be liable to bear the burden of two funding fees (that is, pursuant to the common fund order and by virtue of their contractual obligations to ILP18), SPB could be subject to a “suit” for negligence brought by the Perera funded GMs (Inappropriateness of Restraint Contention);
(6)the balance of convenience does not grant the favour of relief in either proceeding, including because of a want of evidence supporting an undertaking as to damages (Balance of Convenience Contention).
I will deal with each of these in turn.
Third Party Contention
SPB submit that there is no principled basis to join SPB to the Webb Proceedings. In doing so, reliance was placed on the decision of the High Court in John Alexander’s Clubs Pty Limited v White City Tennis Club Limited [2010] HCA 19; (2010) 241 CLR 1 at 46 [131]. This was a case about a registered proprietor of land on which an incorporated tennis club conducted activities under a lease and licence. The proprietor wished to sell the land. The respondent and John Alexander’s Clubs (JACS) proposed to purchase and develop the land. A nominee of JACS bought the land after obtaining a loan secured by an unregistered mortgage. A dispute arose and the respondent claimed JACS had, inter alia, breached the fiduciary duty owed to it to hold the land for the two parties and this resulted in a lost opportunity to acquire the land for itself. Importantly, the respondent also claimed a constructive trust over the land. In this complex commercial dispute, the comments upon which SPB relies are no more than a reflection of the basal principle that when orders are sought by a party to establish or recognise a proprietary or security interest in land or other property, all persons who have a claim or interest in the subject matter are necessary parties. That is because an order in favour of a claimant will be detrimental to all others who have a claim or interest in the property.
I will come to the answer to this contention shortly, but it is first worth emphasising how we are involved here in an entirely different form of legal discourse and why I was and am persuaded to restrain SPB. Since the delivery of the principal judgment, the focus of the Court has been on receiving submissions on an important topic which, in the present context, was anticipated to raise novel issues: that is, the terms of the information that should be given to group members and how this information should be best conveyed given two proceedings, promoted by participants in a common enterprise, have been stayed. In this context, following delivery of the principal judgment, the non-trivial possibility arose that those funders and solicitors who had promoted (and had a commercial interest in deriving a profit) from the proceedings which were stayed, may, as a consequence of the forestalled commercial enterprise, have an interest in seeking to convey information to group members about their right to opt out of the Webb Proceeding to allow a revised form of the commercial enterprise to be, in effect, resurrected in a different form. This might have the effect of recreating a competition about multiplicity.
There is, of course, nothing about this which means information relevant to alternatives to the Webb Proceeding should not be conveyed to group members. My preliminary view, now fortified by argument, was that this be done in a way which involves the Court, consistent with the statutory scheme to which I have already made reference, understanding and approving what is conveyed to group members as to the exercise of their statutory rights. To the extent communications are not made in writing, the Court’s desire, as part of its supervisory and protective role, was (at least in the first instance) to seek to put in place a regime which best facilitated the group members receiving, if they wished, legal advice which the Court could be satisfied was non-conflicted and wholly independent.
Given that this was an issue that may affect the interests of those whom had sought to advance the stayed proceedings, I granted leave to both funders and both sets of solicitors to give such assistance to the Court as they wished, as the proposed regime contemplated, as to any matters that the funders or the solicitors wished to convey to group members about the exercise of their right to opt out of the Webb Proceeding. This was done to ensure that any notification was accurate and, at least in the first instance, that there would be complete transparency in relation to any matters communicated to group members. Needless to say these were interlocutory orders directed to a particular class of persons to protect the integrity of the opt out process generally. Put bluntly, what is sought to be put in place is to ensure that there is no “lobbying” of group members for opt out, but that choices are made by group members on the basis of all material information or other information that the group member makes an informed choice to receive.
This opportunity was not taken up, with the exception of Vannin at a later case management hearing, by putting submissions in relation to a proposed opt out notice. I have already made remarks about the centrality of the opt out procedure to the efficient operation of Part IVA. As I remarked during the course of argument, if anyone is to opt out, they should do so on the basis of information that the Court has approved as to both form and content and that if they are to obtain advice concerning those matters, at least in the first instance, it should be from someone who does not, in a colloquial sense, have a “dog in the fight”.
This is not a criticism of the funders or solicitors. The Court has a protective role and a duty to protect the integrity of opt out. It does not in any way amount to a conclusion that the solicitors and funders would act inappropriately, but the stark reality is that they may (or there is a reasonable apprehension that they may) have a real commercial interest in maximising the number of persons opting out of the Webb Proceeding to present the possibility of a viable, alternative commercial vehicle. No evidence has been adduced to suggest that another representative proceeding would not be funded or promoted by ILP18 and conducted by SPB, following opt out, if enough group members did opt out. Moreover, no evidence was adduced to suggest that any actual retainer by the Perera Funded GMs of SPB was anything other than as part of becoming a participant in the commercial enterprise to promote and maintain a representative proceeding funded by ILP18 (such as the Perera Proceeding). Indeed, as I indicated in an earlier case management hearing to Mr Edwards who was then appearing on behalf of Mr Perera, I would infer that this was the case absent the tender of the retainers which suggested to the contrary (T-69; T-80, 8 June 2018). This is not a case where there is any evidence to find that SPB have been retained generally to advise the group members independently of the common enterprise.
In the principal judgment, I have already explained in detail the nature of the scheme by which the Court’s processes are being used to derive financial benefits for participants in the scheme. It is contrary to common sense not to recognise the possibility of conflict arising in a solicitor deriving commercial benefits from the scheme advising a participant in the scheme as to whether they should continue to be involved in another proceeding. The protective and supervisory role of the court to ensure opt out occurs on the basis of non-conflicted and accurate information as to the consequences is not mere rhetoric. Hence my desire to put in place a mechanism by which a group member is entreated to get objective, disinterested advice.
Enough has been said to explain that this has no relevant analogy, it seems to me, to a circumstance where I am dealing with the proprietary rights of a litigant and ensuring that all necessary parties are before the court who may have an interest in the relief sought being granted.
The relief that I have granted on an interim basis and propose to grant pending the completion of opt out, is under s 33ZF. I have already explained the width of this power in the principal judgment. It very regularly operates to oblige third parties to do (or refrain from doing things). Group members, commonly bound by s 33ZF orders, are, it will be recalled, themselves non-parties. Procedural fairness was amply provided to SPB by granting the right to intervene at all material stages (and indeed encouraging submissions). Also, the relief sought, which is interlocutory in nature in the Webb Proceeding (to protect the opt out process and is appropriate or necessary to ensure that justice is done in the Webb Proceeding), has been made pursuant to a prayer for relief sought in interlocutory process which has been served on the party against whom relief has been sought and that party has appeared and (belatedly) has made submissions as to why that relief ought not be granted. Although, as I have said, no submissions have been made by SPB or ILP18 as to what should be included in any notice, despite invitation.
There is no want of power to make an order under s 33ZF if I think it appropriate or necessary to ensure that justice is done in the Webb Proceeding. I do not believe there is any substance in what Mr Tam describes as the first hurdle.
Section 33ZF Contention
It follows from what I have already stated that I do not believe that the new proceeding is necessary in order for relief to be granted. For completeness, however, I will also proceed to deal with whether or not I could have granted relief in that further proceeding commenced because of the attitude taken by SPB.
I have already pointed out that s 33ZF gives power for the Court to make an order if it is “appropriate or necessary to ensure that justice is done in the proceeding”. This directs attention to the definition of “proceeding” in s 4 of the FCAA. Proceeding is there defined to mean:
a proceeding in a court, whether between parties or not, and includes an incidental proceeding in the course of, or in connexion with, a proceeding, and also includes an appeal.
(Emphasis added)
This means that, incorporating the definition, s 33ZF reads:
In any proceeding … conducted under [Part IVA], the Court may … make any order the Court thinks appropriate or necessary to ensure that justice is done in the [incidental proceeding in connexion with, a proceeding].
Despite this, the introductory words of s 33ZF seem to me to require that the order be made in the proceeding being conducted under Part IVA. It follows I do not believe that I have power under s 33ZF to make an order in the new proceeding using this statutory power.
Lack of Final Relief Contention
There is an implied power of the Court to protect its own processes. I dealt with the nature of that power at some length in the principal judgment. The Court is not left without remedy in the event that it considers it necessary to take a step to protect its processes. Although there is some force in Mr Tam’s submission that relief to protect the processes of the Court must be relief granted in aid of some final relief, I do not believe that the Court would be hamstrung in granting relief under its implied powers in the event that the only way of doing so procedurally was to commence a new proceeding. It is inconceivable to me (starting from the incorrect premise that I am unable to make a s 33ZF order in the Webb Proceeding to preserve the integrity of the opt out process), the Court would be prevented from taking any action to protect its process and exercise its supervisory and protective role. It is unnecessary for me to make a substantive order in the new proceeding, because of the view I have taken as to making a s 33ZF order in the Webb Proceeding.
Want of Jurisdiction Contention
The argument was advanced that the Court does not have jurisdiction in dealing with the new proceeding. This contention cannot be sustained. This is not the place to provide a further excursus on how federal jurisdiction operates. If one wishes to revisit the subject, reference should be made to cases such as Felton v Mulligan (1971) 124 CLR 367 at 374, 375, 388, 403 and 408; Fejo v Northern Territory (1998) 195 CLR 96 at 120; Re McJannet; ex parte Australian Workers' Union of Employees, Queensland (1997) 189 CLR 654 at 656-657; Australian Solar Mesh Sales Pty Ltd v Anderson (2000) 101 FCR 1 at 7-8; and the extra curial article by the present Chief Justice, “Federal Jurisdiction and the Jurisdiction of the Federal Court of Australia in 2002” (2002) 23 Australian Bar Review 29 at 36-38. Here indubitably, the claim for relief in the new proceeding arises out of the same “matter” being the same substratum of facts which give rise to a justiciable controversy between various actors. The mere fact that an interlocutory application has been made in the Webb Proceeding seeking identical relief is ample testimony to that. Indeed, the new proceeding seeks relief to protect the processes of the Court in the Webb Proceeding. The jurisdiction of the Court has been properly invoked.
Inappropriateness of Restraint Contention
The contention is advanced that it would be unfair and, indeed, would bring the administration of justice into disrepute if SPB was enjoined from, for example, advising Perera Funded GMs who may be liable to pay amounts to a funder pursuant to a common fund order in the Webb Proceeding, may also be required to pay amounts on any recovery (in the Webb Proceeding) to ILP18 by virtue of their contractual obligations. It is said that, in these circumstances, SPB could be liable to a suit (or, more accurately, an action) for negligence if they did not advise group members about this issue. There is again no substance in this contention.
The opt out notice that I approved in the Perera Proceeding on 20 June 2018 says in relation to this issue under the heading “What if I Have Signed a Litigation Funding Agreement with ILP18 in the Perera Class Action”:
You have signed a funding agreement by which the funder, ILP agreed to fund the Perera Class Action (which is now not proceeding). The Court has not yet determined whether any promises you made to pay ILP any money are or remain enforceable. Nor is it presently clear that any such promises will be sought to be enforced. For present purposes, in deciding whether you should remain a group member in the Webb Class Action, you can work on the assumption that if you do and recover an amount representing your claim in the Webb Class Action, that any total amount you pay for funding in relation to your claim will not exceed the quantum of any amount you already promised to pay to ILP and may, in fact, be a lesser figure.
(Emphasis added)
The whole point of the exercise I propose to put in place in relation to opt out is to provide accurate information, including as to this aspect of the decision, to all group members. The fact that this contention could even be made on behalf of SPB in the light of the prior approved notice (which seems to suggest that SPB apparently wants to advise Perera Funded GMs that they could conceivably be exposed to damages if they did not opt out of the Webb Proceeding) graphically illustrates the danger that funding agreements could possibly be used as a spectre to encourage opt out, and reinforces the need that the Court must do all it reasonably can to ensure accurate, complete and independent information be provided to group members. As was clear during argument on approval of the terms of opt out notice and by the notice itself, there is simply no prospect of any funded group member paying two funding fees if an amount was recovered for their claim in the Webb Proceeding (even if this required an order that the common fund order not apply in relation to the Perera Funded GMs and the McTaggart Funded GMs). Insofar as payment for funding is concerned, it will be necessary to leave to another day any issue as to whether the funding agreements in relation to the stayed proceedings can be enforced according to their terms, but one thing is clear: the power of the Court to ensure no funded group member will be worse off by the imposition of any additional funding impost pursuant to Court order.
Moreover, the restraint proposed does not prevent SPB from communicating with group members in relation to matters save for the minimum restraint necessary to preserve the Court’s approval of communications relating to the right to opt out. It is difficult to understand how it could sensibly be suggested that SPB could be exposed to an action for negligence if the firm was to refer a group member to what is said in the opt out notice (provided the opt out notice had been received) and indicated that advice could be sought from an independent barrister or, alternatively, if an opt out notice had not been received, by indicating that the matters relevant to opt out are currently before the court and the court will, in due course, provide for an opt out notice with relevant information to be sent to group members in the proceeding.
Balance of Convenience Contention
In relation to the balance of convenience, it seems that three matters are called in aid. The first is that there is no relevant risk sufficiently established on the evidence justifying restraint; secondly, there is no evidence as to the worth of an undertaking as to damages that has been proffered and, thirdly, Mr Webb has not articulated nor put on any evidence as to the loss he would suffer in his own right in relation to the proposed restraint.
As to the first of these matters, there is plainly a risk of a type justifying relief in circumstances where, as Mr Tam acknowledged frankly, SPB wish to reserve to itself the right to have untrammelled communication with group members concerning opt out notwithstanding the terms of the undertaking. The tension between the current position taken by SPB and terms of the interim restraint reinforces my concerns.
As to the second point, the undertaking as to damages has been proffered and accepted in exchange for the interim restraint and now continued (notwithstanding it is not apparent to me that having heard final argument such an undertaking is necessary and how it is any loss would be suffered by SPB in group members making a choice whether to opt out on the basis of a court approved notice and independent advice). In any event, to the extent relevant, I am satisfied the undertaking has some value. It is given on behalf of an individual by responsible counsel and it is not usual for evidence to be adduced, at least in chief, in relation to the worth of an undertaking as to damages unless there is some real reason for questioning whether or not a person has an ability to pay damages. No substantive reason has been advanced to suggest the undertaking has no worth. Finally, I note I would have made a s 33ZF order without an undertaking in any event (if it had not been proffered), to preserve the integrity of the opt out process.
The third point is that Mr Webb has not articulated any loss. This is beside the point. What the Court wishes to do is to preserve the integrity of a process. The ‘loss’ of Mr Webb (if it is that one can characterise the right he seeks to vindicate in that way) would be, in the absence of restraint on SPB, the risk to the integrity of the opt out process (being the process that Mr Webb, as the representative applicant, wishes to protect).
H THE NEW PROCEEDING
For reasons I have explained, it is unnecessary for me to deal further with the new proceeding because of the view that I formed in relation to granting relief pursuant to the interlocutory application. It suffices for present purposes to note that if granting relief in the new proceeding was the only basis upon which I thought it was possible to preserve the opt out process in the Webb Proceeding, then I would have proceeded to grant relief in those new proceedings.
I CONCLUSION & ORDERS
In those circumstances, I propose to make an order that, pursuant to s 33ZF, that SPB and its servants and agents be restrained from communicating with group members in the Webb Proceeding (other than Mr Dwayne Perera), solely in relation to the issue of whether group members should exercise their right to opt out of the Webb Proceeding pursuant to s 33J of the FCAA, with such restraint to continue until either:
(a)the final determination of the related applications for leave to appeal or any appeals, which determinations have the effect that one or both of the related proceedings no longer are the subject to a stay; or otherwise
(b)the conclusion of the opt out process following the expiry of the date for opt out in the Webb proceeding.
For the avoidance of doubt, the restraint will not prevent SPB from responding to any unsolicited enquiry concerning opt out made by a group member in the Webb Proceeding by:
(a)prior to the service of the opt out notice: communicating to that group member that matters relevant to the issue of opt out are currently before the Court and the Court will, in due course, set a date for opt out and will approve an opt out notice which will be sent to the group members in this proceeding; or
(b)after service of the opt out notices: by responding to an unsolicited inquiry concerning opt out made to them by a group member in the Webb Proceeding by communicating to a group member that they should refer to the opt out notice and take such advice as they think appropriate relating to their right to opt out in such a manner as they think fit by taking independent legal advice or in the manner indicated by the Court by contacting the independent barrister.
I propose to order costs on an indemnity basis and will provide my reasons when I deal with all issues as to costs and will also make orders facilitating submissions as to the terms of any costs orders.
POSTSCRIPT
Although not material to my decision and not part of my revised reasons, it is convenient to note for completeness, and to avoid any possible confusion, that these are interlocutory orders and they can be varied upon application by a group member if a particular fully informed group member wishes to have privileged communications with SPB or commercial negotiations with a funder.
I certify that the preceding seventy-three (73) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lee. Associate:
Dated: 30 July 2018
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