Webb v GetSwift Limited (No 4)
[2019] FCA 233
•7 February 2019
FEDERAL COURT OF AUSTRALIA
Webb v GetSwift Limited (No 4) [2019] FCA 233
File number: NSD 580 of 2018 Judge: LEE J Date of judgment: 7 February 2019 Catchwords: REPRESENTATIVE PROCEEDINGS – timing of opt-out notices – form of opt-out notices – relevant considerations – possibility of settlement – certainty as to group membership – exhaustion of appeal rights – clarity of opt-out notice Legislation: Federal Court of Australia Act 1976 (Cth) ss 37M, 54A Cases cited: Perera v GetSwift Limited [2018] FCA 732; (2018) 357 ALR 586 Date of hearing: 7 February 2019 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 25 Counsel for the Applicant: Mr D Collins QC Solicitor for the Applicant: Phi Finney McDonald Counsel for the Respondents: Mr M J Darke SC with Mr A Shearer Solicitor for the Respondents: Quinn Emanuel Urquhart & Sullivan Counsel for the Intervener: Mr W A D Edwards Solicitor for the Intervener: 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
DWAYNE CAVAN SHANAHAN PERERA
Intervener
JUDGE:
LEE J
DATE OF ORDER:
7 FEBRUARY 2019
THE COURT ORDERS THAT:
Initial Hearing
1.1. Pursuant to ss 33ZF and 37P(2) of the Federal Court of Australia Act 1976 (Cth) (Act) there be an initial hearing of the whole of the applicant’s claim for relief and such further common issues or issues of commonality that are to be ordered pursuant to Order 14 below with the initial hearing to commence at 10.15am on 1 October 2019 and to continue until completion of submissions.
Interlocutory Application
2.Orders 1 to 4 of the Interlocutory Application of Dwayne Cavan Shanahan Perera dated 19 December 2018 and filed in the Proceeding be dismissed with no order as to costs.
Costs Referee
3.Order 8(a) of the orders made on 20 June 2018 be varied so as to provide:
“the first Report, being a report of the applicant’s solicitors’ costs up to and including 31 December 2018, including costs:
(i)incurred in the course of preparing for the commencement of proceedings;
(ii)incurred in connexion with the applicant’s applications for leave to intervene in proceedings NSD226/2018 and NSD440/2018 filed 9 April 2018; and
(iii)incurred in this proceeding, such Report being required to be filed by 29 March 2019”.
Discovery
4.By 24 April 2019:
(a)the first respondent (GetSwift) provide discovery of the following categories of documents:
(i)documents directly relevant to the issues raised by the pleadings and responsive to the categories set out in Annexure 1 of these orders; and
(ii)any document currently known to GetSwift by its officers or agents which adversely affects its case;
Opt Out Notice to Group Members
5.Pursuant to ss 33J and 33ZF of the Act, 28 March 2019 be fixed as the date before which a group member may opt out of the proceeding (Opt Out Deadline).
6.The Notices referred to in Order 20 of the orders made on 20 June 2018, are to be given to group members according to the following procedure:
(a)GetSwift will provide to a mail house distribution service nominated by it details of all shareholders recorded on the GetSwift’s share register (Share Register) who or which acquired a legal interest in shares of GetSwift between 24 January 2017 and 19 January 2018 (inclusive);
(b)on or before 21 February 2019, GetSwift cause the mail house to send the Notice in the form attached at Annexure 2 to these orders by email to group members who had not entered into a litigation funding agreement with International Litigation Partners No 18 Pte Ltd (ILP) or Vannin Capital Ltd (Vannin), that have an email address recorded on the Share Register;
(c)to the extent that a group member referred to in Order 5(b) does not have an email address recorded on the Share Register, GetSwift will cause the mail house to send the Notice by prepaid ordinary post to that group member at the address recorded for that person on the Share Register;
(d)to the extent that the mail house receives notice of a delivery failure in relation to any email sent to a group member referred to in Order 5(b), GetSwift will cause the mail house to send the Notice by prepaid ordinary post to that group member at the address recorded for that person on the Share Register, within two business days of receiving that delivery failure notice;
(e)on or before 21 February 2019, GetSwift will cause the Notice attached at Annexure 3 of these orders to be sent, by email or prepaid ordinary post, to group members who had entered into litigation funding agreements with ILP in proceeding number NSD226 of 2018;
(f)on or before 21 February 2019, GetSwift will cause the Notice attached at Annexure 4 of these orders to be sent, by email or prepaid ordinary post, to group members who had entered into a litigation funding agreement with Vannin in proceeding number NSD440 of 2018;
(g)on or before 21 February 2019, the District Registrar of the New South Wales District Registry of the Federal Court of Australia shall cause of copy of the Notices, together with copies of the current Originating Application, Amended Statement of Claim and Defence to be:
(i)displayed on the Federal Court website ( and
(ii)available for inspection at the District Registry of the Federal Court in Melbourne, Sydney, Canberra, Brisbane, Adelaide, Perth, Hobart and Darwin, and to remain continuously so displayed up to and including the Opt Out Deadline.
7.The costs charged by the mail house distribution service referred to in Order 5 are to be paid in the first instance by the applicant, but otherwise the costs of and incidental to the procedure set out in Order 6 are to be costs in the proceeding.
Opt Out
8.The solicitors for the parties have leave to inspect the Court file and to copy any opt out forms filed.
9.If, on or before the Opt Out Deadline, the solicitors for any party receive a notice purporting to be an opt out form referable to this proceeding, the solicitors must file the notice in the New South Wales District Registry within seven days of receipt, and the notice is to be treated as an opt out notice received by the Court at the time it was received by the solicitors.
Questions for Initial Hearing
10.Pursuant to s 37P(2) of the Act, by 18 February 2019, the applicant is to provide to the respondents a draft of a document entitled “Factual and Legal Issues for Determination” (Issues Document) which document:
(a)identifies each substantive contested factual issue which the parties consider it is necessary for the Court to make findings (Principal Contested Facts in Issue);
(b)identifies each contested legal issue which the parties consider it is necessary for the Court to determine at the hearing, cross referenced to the pleadings (Contested Legal Issues);
(c)identifies what issues in the proceeding are, as presently advised, to be the subject of opinion evidence (Expert Issues).
11.Pursuant to s 37P(2) of the Act, by 25 February 2019, the respondents are to provide to the applicant a marked up version of the Issues Document reflecting any changes that the respondents consider necessary to be made to the document to record accurately the Principal Contested Facts in Issue, the Contested Legal Issues and to populate the Expert Issues part of the document.
12.Pursuant to s 37P(2) of the Act, by 4 March 2019, junior counsel presently briefed by the solicitors for the applicant and the respondents to appear at the initial hearing, confer and attempt in good faith to settle an agreed version of the Issues Document.
13.Pursuant to s 37P(2) of the Act, by 12 noon on 11 March 2019, the solicitors for the applicant and the respondents provide to the Associate to Justice Lee an agreed version of the Issues Document or, failing agreement, the competing versions of the Issues Document.
Case Management Hearing
14.At 10.15 am on 19 March 2019, there be a Case Management Hearing at which orders will be made:
(a)to determine, subject to further order, the Issues Document and the common issues or issues of commonality to be determined at the initial hearing;
(b)to determine whether any orders for reference should be made pursuant to s 54A(1) of the Act in relation to any of the Expert Issues for inquiry and report by a referee;
(c)to determine any orders consequent on the making of any reference including fixing a date for any adoption hearing;
(d)as to the filing of any expert evidence in the proceeding.
15.The applicant serve on the respondents by 20 May 2019, an index to a proposed joint tender bundle of all documents which the applicant intends to tender at the initial hearing, with such documents to be limited to those documents or parts of documents the applicant presently proposes to refer to in submissions.
16.The respondents:
(a)file and serve the lay evidence upon which they intend to rely by 6 June 2019;
(b)a marked-up index to the proposed joint tender bundle of all documents which the respondents intend to tender at the initial hearing, with such documents to be limited to those documents or parts of documents the respondents presently propose to refer to in submissions by 20 June 2019.
Mediation
17.The proceeding be referred to mediation pursuant to s 53A of the Act with such mediation to commence no later than 18 April 2019 and to be held within 14 days of that date. The parties appoint the Hon Ray Finkelstein QC as mediator.
Submissions
18.Pursuant to s 37P(2) of the Act, by 9 August 2019, junior counsel confer and attempt in good faith to settle:
(a)an agreed version of a template for opening submissions (Submission Template), which document, when completed, will:
(i)provide an overview of each party’s case in summary form (Part A);
(ii)identify that party’s summary contentions in relation to each of the Principal Contested Facts in Issue to the extent they relate to that party (Part B);
(iii)identify that party’s summary contentions in relation to each of the Contested Legal Issues to the extent they relate to that party (Part C);
(b)a document entitled “Agreed Background Facts” which, in narrative form, identifies relevant facts in respect of which there is agreement or no contest between the parties.
19.By 16 August 2019, the parties provide to the Associate to Justice Lee with the Agreed Background Facts document and the agreed Submission Template or, failing agreement as to the Submission Template, one version of the draft Submission Template with the extent of the disagreement identified in mark-up together with brief submissions explaining the reasons for the disagreement.
20.There be a Pre-Trial Case Management Hearing of the type referred to in Practice Note CPN-1 at 9:30am on 20 August 2019, which will deal with the matters referred to in paragraph 13.3 of the Practice Note and also resolve any disagreement notified in accordance with Order 18.
21.By 4.00pm on 9 September 2019, the applicant file and serve his opening submissions.
22.By 4.00pm on 16 September 2019, the respondents file and serve their opening submissions.
23.4.00pm on 23 September 2019, the applicant provide his reply to the opening submissions of the respondents by way of including, in a revised opening submission, any material in reply and serve their revised opening submissions.
23.The submissions filed by the parties in accordance with these orders are to follow the Submissions Template, are not to include any footnotes and, to the extent reference is made to an authority, be cited including reference to any authorised report or, in the absence of citation in an authorised report, any reported version of the case.
24.By 24 September 2019, the parties deliver to the Associate to Justice Lee a Court Book which:
(a)as Part A contains in a bound volume the final version only of the pleadings relied upon by the parties, the final versions of the Agreed Background Facts and the Issues Document;
(b)as Part B contains in a bound volume the final versions of the Opening Submissions of each party (updated to contain cross references to Part C of the Court Book to the extent a document is the subject of reference);
(c)as Part C contains, in chronological order, in a lever arch folder or folders without tabulation, one paginated copy only of the documents for tender notified by each party (being only documents to which a party proposes to refer to in submissions) and, in this regard, if only part of a document is to be relied upon, only part of the document should be reproduced;
(d)as Part D contains any of the lay affidavit material proposed to be relied upon by any party (without any annexures or exhibits) and, to the extent the affidavit refers to any document, a cross reference to Part C of the Court Book;
(e)as Part E contains any referee report adopted or expert affidavit and report material proposed to be relied upon by any party (without any annexures or exhibits) and, to the extent the referee report, affidavit or report material refers to any document which is to be referred to by a party in submissions, a cross reference to Part C of the Court Book.
25.By 18 September 2019, each party notify each other party of the objections which the notifying party has to material contained in Parts C, D and (other than in relation to any adopted referee report) Part E of the Court Book and, in respect of each objection, the grounds of the objection.
26.By 20 September 2019, junior counsel briefed by each party confer and endeavour to resolve all objections.
27.By 12 noon on 23 September 2019, the applicant file and serve a Consolidated List of Objections that contains a list of those objections that are pressed and, in respect of each such objection, the grounds of the objection and the response to those grounds provided by the counter-party.
Independent Barrister
28.The independent barrister to be appointed under Order 23 of the 20 June 2018 orders be Mr Caspar Conde of Counsel.
29.Pursuant to s 33ZF of the Act, the independent barrister is to have the same protection or indemnity from suit as the independent barrister would under s 53C of the Act as if that section applied. Subject to further order, the independent barrister’s costs are fixed in the sum of $10,000 plus GST.
30.Without affecting the powers of the Court as to costs, the solicitors for the applicant are to be liable for the costs of the Independent Barrister, referred to in Order 31, with such costs to become part of the applicant’s costs in the first instance.
Other
31.Orders requiring the second respondent to perform tasks or take steps are subject to any claim which he makes in reliance on the privileges against self-incrimination or self-exposure to a civil penalty.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
(Revised from the Transcript)LEE J:
These ex tempore reasons are provided during the course of a case management hearing. This is an unusual step to take, but I have been asked to deliver reasons by an intervener. At heart it involves an issue of practice and procedure and the exercise of case management powers to ensure the efficient interlocutory progress of this Part IVA proceeding.
On 23 May 2018, I made orders which had the effect of staying the Perera proceedings. In these reasons I will adopt the abbreviations I used in my earlier judgment (Perera v GetSwift Limited [2018] FCA 732; (2018) 357 ALR 586 (stay judgment)) which sets out some of the background.
At the time of delivery of the stay judgment, I foreshadowed I proposed to make orders arranging for the interlocutory progression of this proceeding (the Webb proceeding), and directed the provision of a draft opt-out notice and foreshadowed fixing a date for an interlocutory hearing, at which time an opt-out notice would be approved. I also granted leave for Mr Perera, the McTaggart applicants, and the funders to appear at that hearing for the purpose of making submissions as to the form of the opt-out notice.
The stay judgment, however, was the subject of an application for leave to appeal. Although leave to appeal was granted, the appeal was dismissed. Prior to the making of orders by the Full Court consequent upon the dismissal of the appeal, a further case management hearing was held, at which time I was asked to fix a date for opt-out immediately. Mr Darke SC, who appeared for the respondent, urged that course upon me as it would allow his client to have a degree of certainty as to the number of group members who remain following opt-out. This would mean that consideration could be given, consistently with the obligations of the parties, as to whether there could be some extra-curial resolution of this controversy.
This course was opposed by Mr Perera, who was granted leave to intervene. What became evident during the course of that interlocutory hearing last December, was that there had been a series of directions made by the Court which (lamentably) had not been complied with by the applicant. This included a failure to advance, in a prompt way, the provision of an amended statement of claim and service of affidavit evidence. In all the circumstances, it seemed to me that the appropriate course was to make directions for the filing of further pleadings and bring the matter back today for the purpose of ascertaining whether or not orders could be made for the future progression of the proceeding towards a hearing date this year including orders for a mediation of the matter as soon as practicable. In furtherance of this objective, on 19 December 2018, I made a variety of orders including that by 4pm on 5 February 2019, the parties provide to my Associate and to Mr Perera’s solicitors, a proposed draft form of opt-out notice. This order was complied with, albeit slightly late.
This morning, prior to the case management hearing which was listed at 2.15pm, my Associate provided a further version of draft orders to the parties which established a regime leading up to an initial trial in the latter part of this year. Following discussion between the parties this morning, my intention is to set down the initial trial for a period of one month, commencing on 1 October 2019.
It is notoriously difficult in representative proceedings to work out an optimal time for a mediation to take place. When the issue of a stay was being considered, all the proposals before the Court envisaged the prospect of there being either an “early” or “late” mediation.
Choosing the best time for a mediation in securities class action cases assumes particular importance because experience suggests that it is far more likely than not that this class action will settle by the payment of some monetary sum to group members. I make this point not to suggest that GetSwift will necessarily make a monetary offer to group members. Nor do I suggest it should do so by reason of the allegations made. No conclusion as to likely settlement is informed by the substantive merits of the case. I make this comment simply as a reflection of the empirical data which suggests that no securities class action has thus far been resolved by a judgment following an initial trial (although I am aware that one such case is presently reserved following hearing before another judge of this Court).
Working on this assumption of a likely settlement – the sooner any mediation occurs, the better. Particularly when it is the respondent that seeks to facilitate settlement discussions sooner rather than later.
Put bluntly, every cent spent in collateral disputation between now and a mediation date will, in my judgment, involve a potential diminution of the amount available to be paid to group members in any settlement. I have no detailed evidence as to the insurance position, nor do I have any other information as to the subject of any “without prejudice” discussions, but speaking from experience in matters such as this, the amount of costs expended by a respondent may rationally affect any amount that the respondent is prepared or able to pay in order to resolve the litigation.
Apart from facilitating settlement discussions, the orders to be made today will provide for a detailed interlocutory regime for the determination of contested legal and factual issues. I also require the parties to spend time identifying the issues in the proceeding which are, as presently advised, proposed to be the subject of opinion evidence. I intend to bring the matter back as soon as practicable for a determination as to how opinion evidence ought be presented before the Court, including the prospect of orders being made pursuant to s 54A of the Federal Court of Australia Act 1976 (Cth) (to appoint a referee or referees in relation to one or other contested factual issues). I have no fixed view as to whether any s 54A order should be made, but that can be the subject of further debate.
Despite any efforts being made to reduce the amount of legal costs incurred before any initial trial, including by the possible appointment of referees, it is plain that there is likely to be very considerable and accelerating expenditure between now and October on legal costs, being outlays that will be diminished or avoided in the event of an earlier settlement of the matter. This again points to the need to facilitate settlement discussions as soon as possible. One part of assisting settlement is to resolve the issue as to which group members wish to participate by undertaking the process of opt-out.
There are essentially four points advanced by Mr Edwards as to why I should, yet again, defer opt-out. The first is that my original intention, reflected in the prior orders of the Court, had been to distribute opt-out notices once appeal rights had been exhausted and there is presently an application for special leave to appeal to the High Court against the orders made by the Full Court dismissing the appeal from the stay judgment. The evidence read on the application discloses that following the filing of reply submissions by the applicant for leave (Mr Perera), and the completion of application books, the High Court registry will then allocate a time for the hearing of the special leave application. This, of course, presupposes that there will be an oral hearing of the application for leave, something which has not yet, obviously enough, been communicated to the parties. In any event, it is presently unclear on the evidence as to when the press of the High Court’s business will allow any special leave application to be determined, irrespective as to whether there will be an oral application for leave listed.
When I distributed the draft orders this morning, I did so in circumstances where I had assumed that the parties, in an informed and considered fashion, had determined that it would not be appropriate for there to be a mediation of this matter until September. In these circumstances, I was initially prepared to fall in with such a timetable, notwithstanding my preference was for an earlier mediation date. I had thought that the September date reflected some aspect of the case of which I was unaware. It now appears that I was acting on a misapprehension and the respondent, GetSwift, in fact wishes a mediation to occur as soon as practicable but cannot proceed to engage constructively in making any offer at such a mediation until it obtains some certainty as to the metes and bounds of the group membership who are maintaining claims against it.
This submission has a great deal of force as, although it is possible to mediate matters prior to opt-out, in a case such as this, it is difficult to envisage that mediation prospects will be optimal unless there is certainty as to the ultimate aggregate claim made against GetSwift. Of course, at the time that I had reached the preliminary view that it was best for me to defer opt-out until the exhaustion of appeal rights, I was anticipating that there would be no further disputation after the Full Court’s determination and that opt-out could proceed immediately. Things have now changed.
The second point made by Mr Edwards was that there was no evidence to substantiate the submission made by Mr Darke SC, that a failure to conduct opt-out would be a fundamental obstacle that would greatly inhibit the possibility of settlement. In essence, I have already dealt with this submission in noting that the real question is: when will the prospects of settlement be optimised? If the respondent says that it wants a mediation after opt-out and the applicant agrees, I do not think I should gainsay this assessment by experienced Part IVA practitioners. Opt-out is not invariably completed before mediation (although it usually is); but here both parties agree that settlement prospects are best once the opt-out process is completed – this points to opt out occurring now. No claim is made here, for example, for aggregate damages where the utility of opt-out may assume less importance.
Thirdly, Mr Edwards made the point that the applicant, Mr Webb, was initially “quite content” with the orders that I proposed which deferred opt-out until early June. No doubt this was done conscious of the obligation under s 37N(2) of the Federal Court of Australia Act 1976 (Cth) (Act) that the lawyers for the applicant must assist Mr Webb to conduct the proceeding, including negotiations for settlement, in a way that is consistent with the quick, inexpensive and efficient resolution of the case. However, the position put by Mr Collins QC, on behalf of Mr Webb, was somewhat more nuanced than how it was characterised by the intervener. Mr Collins stressed that the applicant wished to do what he could to ensure GetSwift be put in a position to make an offer as soon as possible. One would expect no less.
Fourthly, Mr Edwards placed a great deal of emphasis on the overriding imperative for the notice to be as clear as possible and the fact that there was an extant special leave application (or, if special leave was granted, an appeal) would complicate the process of opt-out, requiring the insertion of material than would not otherwise be included if: (a) opt-out is deferred and the special leave application had been determined adversely to Mr Perera at the time notice was despatched; or (b) opt-out was deferred until after any appeal had been determined. A successful appeal would, of course, require different material to be communicated to group members.
Although there is some force in this point, and an opt-out notice would be somewhat simpler in circumstances where it occurred following proceedings being determined one way or another by the High Court, I consider that any opt-out notice could now be crafted in such a way as to make the present position clear to recipients so they can make an informed decision as to whether to opt-out.
In addition to my consideration of these four points, there seem to me to be a number of factors which weigh significantly in favour of opt-out proceeding now.
The first is that opt-out is currently occurring. Evidence on the application makes it clear that even without an opt-out date being set, 15 group members have already opted-out. As part of my protective and supervisory role, I consider that any opt-outs should take place in circumstances where those making this important decision have been apprised of all relevant information. We have reached the stage in the proceeding where, in the ordinary course, opt-out would be appropriate, and there does not seem to me to be any sound reason to allow group members to be left in ignorance of matters which might conceivably be material to such a decision.
Secondly, as noted above, it is likely this matter will resolve at mediation, although I may be mistaken. Such a settlement, if it occurs quickly, will avoid further demands on public as well as private resources.
Thirdly, and connected to the last point, 37M(3) of the Act provides that practice and procedure powers must be exercised or carried out in a way that best promotes the overarching purpose of the just resolution of this dispute according to law, and as quickly, inexpensively and efficiently as possible. The promotion of steps to facilitate the efficient conduct of a mediation as soon as possible is consistent with this statutory mandate.
In these circumstances, I will hear from the parties now as to what orders should be made to facilitate opt-out commencing in the course of the next few weeks. Following my rulings, and after having heard from the parties and the intervener, I will direct the parties to provide a form of notice. In doing so, my intention will be to approve a notice which provides all the information that is required to be given to the Webb group members which is material to their decision to opt-out. Needless to say, in approving these documents, I am cognisant of the fact that if the High Court was to grant leave and allow the appeal (and the Perera proceeding came back to this Court), it would, of course, be necessary for group members to be apprised of further information in order to give them an informed choice as to the proceedings then before the Court. This would involve a further opportunity being given to group members to opt-out given these changed circumstances. Hence the notice I will approve will ensure that the group members have accurate information as to the position that exists at present, but will foreshadow that further information may be provided identifying the options that may be available to them should matters change.
An order for costs is sought by GetSwift in relation to the interlocutory application dated 19 December 2018. This was the process before the Court identifying the orders sought by the intervener. Although I propose to dismiss prayers for relief 1 to 4 in that application, I would not be disposed to order costs against the intervener. This is because Mr Perera was partly successful in deferring opt-out for a period for the reasons I have already explained and, in any event, today’s case management hearing was necessary. Although the argument today has taken a considerable period of time, it has been necessary (at least in part) so as to ensure that I am provided with all available assistance in ensuring the group members are provided with all the material they need in order to make an informed decision concerning opt-out.
I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lee. Associate:
Dated: 26 February 2019
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