West v Rane (No 2)

Case [2020] FCA 616

FEDERAL COURT OF AUSTRALIA

West v Rane (No 2) [2020] FCA 616

File numbers: NSD 875 of 2019,   NSD 1590 of 2012
NSD 539 of 2019,   NSD 881 of 2019
NSD 882 of 2019,   NSD 889 of 2019
NSD 1247 of 2019, NSD 1257 of 2019
NSD 1596 of 2019, NSD 1631 of 2019
NSD 1652 of 2019, NSD 1673 of 2019
Judge: LEE J
Date of judgment: 11 May 2020
Catchwords:

REPRESENTATIVE PROCEEDINGS – where a large number of individual proceedings with a common issue have been commenced separately in Federal Court and various state courts – where applicants in those various proceedings are also group members in one of three extant class actions in this Court – course that should be taken in relation to the individual proceedings in this Court in the light of such group membership – interests of justice in determining entire justiciable controversy concurrently – proceedings temporarily stayed

REPRESENTATIVE PROCEEDINGS – application by 88 applicants in various individual proceedings who are also group members in Gill v Ethicon Sàrl (NSD 1590 of 2012) proceeding that they be permitted to participate in Court ordered mediation of that proceeding – application dismissed – representative applicant be allowed to communicate with solicitors for the individual applicants and to have regard to their interests as part of the negotiation of any conditional settlement

HIGH COURT AND FEDERAL COURT – application to cross-vest four proceedings to state courts – all proceedings being matters in federal jurisdiction – whether in the interests of justice that the matter be determined by another court – natural forum – whether the proceedings have common issues – whether the proceedings could be case managed in Federal Court as if they were a representative proceeding – inefficiencies if hearings listed in different Registries of Federal Court – considerations of Court’s workload and potential for delay if proceedings remain with one Judge of Federal Court

COSTS – inefficient conduct of proceedings – where respondents in all proceedings sought costs orders on indemnity basis against applicants in respect of all case management hearings to date – where respondents in some proceedings sought costs orders against applicants’ solicitors – whether solicitors constrained from advancing full explanation for inefficient conduct of proceedings due to legal professional privilege – consideration of relevant principles with respect to personal costs orders under s 37N of the Federal Court of Australia Act 1976 (Cth) – comparison between overarching purpose provisions and s 99 of Civil Procedure Act 2005 (NSW) – consideration of whether case law pre-dating introduction of overarching purpose provisions relevant to determination of personal costs orders in Federal Court – personal costs order awarded
Legislation:

Civil Procedure Act 2005 (NSW) s 99

Competition and Consumer Act 2010 (Cth), Sch 2 ss 60, 61

Federal Court of Australia Act 1976 (Cth) Pt IVA, Pt VB, ss 33C, 37M, 37N

Judiciary Act 1903 (Cth) s 79

Personal Injuries Proceedings Act 2012 (Qld)

Central Practice Note: National Court Framework and Case Management (CPN-1)
Cases…

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AGLC
West v Rane (No 2) [2020] FCA 616
Case
[2020] FCA 616
Decision Date

CaseChat Overview and Summary

In West v Rane (No 2), a large number of individual proceedings with a common issue were commenced separately in the Federal Court and various state courts. The applicants in those proceedings were also group members in one of three class actions in the Federal Court. The court was required to determine the appropriate course of action in relation to the individual proceedings, considering the interests of justice in deciding the entire justiciable controversy concurrently. The court also had to decide whether the 88 applicants should be permitted to participate in the court-ordered mediation of the class action. Additionally, the court addressed the application to cross-vest four proceedings to state courts, considering whether it was in the interests of justice for the matter to be determined by another court and whether the proceedings could be case managed in the Federal Court as if they were a representative proceeding.

The court found that it was in the interests of justice to determine the entire justiciable controversy concurrently and temporarily stayed the individual proceedings. The application for the 88 applicants to participate in the mediation of the class action was dismissed, but the representative applicant was allowed to communicate with the solicitors for the individual applicants and consider their interests during the negotiation of any conditional settlement. The application to cross-vest the proceedings to state courts was also dismissed, with the court considering it more appropriate to case manage the proceedings in the Federal Court. The court awarded a personal costs order against the applicants' solicitors for the inefficient conduct of the proceedings, taking into account the principles of legal professional privilege and the overarching purpose provisions of the Federal Court of Australia Act 1976.

The court's orders included the temporary stay of the individual proceedings, the dismissal of the application for the 88 applicants to participate in the mediation of the class action, the dismissal of the application to cross-vest the proceedings to state courts, and the award of a personal costs order against the applicants' solicitors. The court also required the parties to provide short minutes of the order reflecting the reasons and allowed the legal representatives of the applicants to file submissions on the question of preventing recovery of costs from the applicants associated with the legal representatives of the applicants attending or preparing for the case management and interlocutory hearings.

Orders

Orders of the court

1. Within seven days, the parties are to provide to the Associate to Justice Lee short minutes of order reflecting these reasons.

2. The legal representatives of the applicants have leave to file submissions within seven days if they wish to be heard on the question as to why an order ought not be made preventing recovery of any costs from the applicants associated with the legal representatives of the applicants attending or preparing for the case management and interlocutory hearings on 12 September 2019, 8 August 2019, 29 October 2019, 18 December 2019, 24 February 2020 and 22 April 2020.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

The second was where lawyers facing a potential costs order are constrained by a claim of legal professional privilege, the lawyers are entitled to the benefit of doubt and, in this regard, reference was made to the speech of Lord Bingham (with whom Lord Hoffmann and Lord Rodger agreed) in Medcalf v Mardell[2002] UKHL 27; [2003] 1 AC 120 at 134–5 [23]–[24].IV The Submissions on the Evidence and on Application of Principle As a consequence of the application of these principles and cautions, the Solicitors submitted that notwithstanding that it was “hardly surprising” the Court made the order reserving the question of whether a costs order against the Solicitors should be made, the better course is that the determination of whether the Solicitors should pay the costs of the overlap proceedings should be reserved for later determination. If not reserved, it is said the following matters arising from the evidence “tell against a finding that the conduct by the Solicitors involves a ‘serious dereliction’ by them”:(1)Mr Barakat, the solicitor with principal conduct of the proceedings, was faced with a difficult and complex problem and did attempt to give consideration to the appropriate procedure to address that problem; (2)Mr Barakat believed that the strategy that was adopted of commencing the proceedings which may be stayed in this Court was appropriate and that this strategy was the subject of advice sought from senior and junior counsel;(3)the choice of counsel, being senior and junior counsel also retained in the Ethicon Class Action, “was at least arguably prudent”; and (4)there is no evidence to support a finding of an abuse of process. Further, the Solicitors stressed that they were constrained from advancing “a full explanation” to the Court and that this was an important consideration in the present case. The evidence is said to reveal that “[t]here plainly are privileged communications, particularly between the Solicitors and counsel … which are capable of being relevant to the exercise of the Court's discretion”. By reference to the speech of Lord Bingham in Medcalf v Mardell (at 135 [23]), it was contended that the present case is not one of those rare cases where the Court is able “to make ‘full allowance’ for the inability of the practitioner to tell the whole story or to conclude that there is no room for doubt” as to what occurred.V ConsiderationAn Observation as to the Relevant Principles The concession by the Solicitors that the introduction of ss 37M and 37N of the Act may have broadened the circumstances in which the Court may make a personal costs order against a lawyer is well founded. In Kadam v MiiResorts Group 1 Pty Ltd (No 4) [2017] FCA 1139; (2017) 252 FCR 298 at 300–1 [1]–[4], I observed in relation to Part VB that:An informed participant or observer would likely conclude that the conduct of modern litigation reflects a number of interrelated developments, several of which are relevant for present purposes. The first is the increased complexity and size of litigation. The second, connected to the first, but also partly explained by technological innovation, is the size and scale of the evidentiary material placed before courts in the process of quelling disputes. The third is the commercialisation of the law, discussed by a number of economic analysts of civil procedure who have observed that the primary modern method of remuneration of lawyers provides an incentive to maximise work and perform tasks that may genuinely be thought desirable or justifiable, but are unnecessary for the determination of the true issues in proceedings. The fourth is that the courts are an arm of government dependent upon public resources at a time of focus on efficient allocation of those resources.The response to these and related developments has caused what might be described as a revolution in case management. Over the last 20 years, almost every Australian jurisdiction has introduced a provision by either legislation or by way of Rules of Court, setting out the ‘overriding’ or ‘overarching’ purpose of procedural rules. …Of course, this stress on active case management is not entirely new nor has it arisen spontaneously. In 1935, the Supreme Court of the United States appointed an Advisory Committee comprised of academics and lawyers (including a former Senator), to prepare a unified system of general rules for federal courts. The procedural rules that resulted, two years later, provided that the rules were to be construed and administered “to secure the just, speedy and inexpensive determination of every action and proceeding”: Federal Rules of Civil Procedure (US), r 1. More recently, in 1996, the report by Lord Woolf, Access to Justice: Final Report to the Lord Chancellor on the Civil Justice System in England and Wales, highlighted how considerations of public and private efficiency necessitated major reform, and the regulatory result of the Woolf Report (Civil Procedure Rules 1998 (UK), r 1.1) was the immediate progenitor of the various Australian case management reforms. The developments in modern litigation which partly spurred this case management revolution have deep roots. Like turning a battleship, it is to be expected that there is some ‘time lag’ before the changes sought to be wrought by the procedural reforms become fully realised. …

Decision

Reasons for decision

It goes without saying that if such an application is made, the matter should be listed before me for directions to be made, including fashioning orders so that any person against whom any relief is sought is provided with the necessary procedural fairness.H CONCLUSION A number of orders need to be made to reflect these reasons. I will ask that the parties provide to my Associate within seven days short minutes of order reflecting these reasons. The legal representatives of the applicants, if they so wish, can also provide a short submission within the same period on the topic referred to in [87] above. I should make a final point. One matter raised by the Solicitors was that if the Court determined now that the Solicitors should bear part or all of the costs, the Solicitors also face the possibility of a later application for different costs, presumably on different grounds of which the Solicitors have no notice, by parties to the proceedings and this places the Solicitors in a difficult position, in circumstances where they are entitled as a matter of procedural fairness to full notice of any complaint made against them. This concern is misconceived. Subject to any application made to attribute responsibility as between the lawyers for the applicants, the orders I propose are the only costs orders that will be made concerning the case management hearings and the interlocutory applications made at those hearings.

Ratio Decidendi

Legal Principle Established

Further, the Solicitors stressed that they were constrained from advancing “a full explanation” to the Court and that this was an important consideration in the present case. The evidence is said to reveal that “[t]here plainly are privileged communications, particularly between the Solicitors and counsel … which are capable of being relevant to the exercise of the Court's discretion”. By reference to the speech of Lord Bingham in Medcalf v Mardell (at 135 [23]), it was contended that the present case is not one of those rare cases where the Court is able “to make ‘full allowance’ for the inability of the practitioner to tell the whole story or to conclude that there is no room for doubt” as to what occurred.V ConsiderationAn Observation as to the Relevant Principles The concession by the Solicitors that the introduction of ss 37M and 37N of the Act may have broadened the circumstances in which the Court may make a personal costs order against a lawyer is well founded. In Kadam v MiiResorts Group 1 Pty Ltd (No 4) [2017] FCA 1139; (2017) 252 FCR 298 at 300–1 [1]–[4], I observed in relation to Part VB that:An informed participant or observer would likely conclude that the conduct of modern litigation reflects a number of interrelated developments, several of which are relevant for present purposes. The first is the increased complexity and size of litigation. The second, connected to the first, but also partly explained by technological innovation, is the size and scale of the evidentiary material placed before courts in the process of quelling disputes. The third is the commercialisation of the law, discussed by a number of economic analysts of civil procedure who have observed that the primary modern method of remuneration of lawyers provides an incentive to maximise work and perform tasks that may genuinely be thought desirable or justifiable, but are unnecessary for the determination of the true issues in proceedings. The fourth is that the courts are an arm of government dependent upon public resources at a time of focus on efficient allocation of those resources.The response to these and related developments has caused what might be described as a revolution in case management. Over the last 20 years, almost every Australian jurisdiction has introduced a provision by either legislation or by way of Rules of Court, setting out the ‘overriding’ or ‘overarching’ purpose of procedural rules. …Of course, this stress on active case management is not entirely new nor has it arisen spontaneously. In 1935, the Supreme Court of the United States appointed an Advisory Committee comprised of academics and lawyers (including a former Senator), to prepare a unified system of general rules for federal courts. The procedural rules that resulted, two years later, provided that the rules were to be construed and administered “to secure the just, speedy and inexpensive determination of every action and proceeding”: Federal Rules of Civil Procedure (US), r 1. More recently, in 1996, the report by Lord Woolf, Access to Justice: Final Report to the Lord Chancellor on the Civil Justice System in England and Wales, highlighted how considerations of public and private efficiency necessitated major reform, and the regulatory result of the Woolf Report (Civil Procedure Rules 1998 (UK), r 1.1) was the immediate progenitor of the various Australian case management reforms. The developments in modern litigation which partly spurred this case management revolution have deep roots. Like turning a battleship, it is to be expected that there is some ‘time lag’ before the changes sought to be wrought by the procedural reforms become fully realised. …