Wigmans v AMP Limited & Ors
[2020] HCATrans 182
[2020] HCATrans 182
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
Sydney No S67 of 2020
B e t w e e n -
MARION ANTOINETTE WIGMANS
Appellant
and
AMP LIMITED
ABN 49 079 354 519First Respondent
KOMLOTEX PTY LTD
Second Respondent
FERNBROOK (AUST) INVESTMENTS PTY LTD ACN 068 190 296
Third Respondent
KIEFEL CJ
GAGELER J
KEANE J
GORDON J
EDELMAN J
TRANSCRIPT OF PROCEEDINGS
AT CANBERRA BY VIDEO CONNECTION TO MELBOURNE
ON TUESDAY, 10 NOVEMBER 2020, AT 10.00 AM
Copyright in the High Court of Australia
____________________
KIEFEL CJ: In accordance with the current practice, I will announce the appearance of counsel. The record will show that our colleague Justice Gordon is sitting in Melbourne.
For the appellant, MR J.T. GLEESON, SC, with MR A.M. HOCHROTH and MR P.A. MEAGHER. (instructed by Quinn Emanuel Urquhart and Sullivan)
For the first respondent, MS E.A. COLLINS, SC with MR I.J.M. AHMED. (instructed by Herbert Smith Freehills)
For the second and third respondents, MR C.A. MOORE, SC with MR G.A. DONNELLAN and MR J. ENTWISLE. (instructed by Maurice Blackburn Lawyers)
KIEFEL CJ: Yes, Mr Gleeson.
MR GLEESON: Thank you, your Honours. Your Honours, the principal question in the appeal can be expressed this way. It is whether, under the class action regime established in almost uniform manner in various jurisdictions of Australia, the court has authority to conduct a carriage motion. I use the term “carriage motion” to reflect the jurisprudence from the United States and Canada which, as the law currently stands, has been imported here via GetSwift in the Federal Court and ultimately in this case in the Court of Appeal in New South Wales.
We note at the outset that the class action regime in the US and Canada expressly requires certification at the outset, certification before the class action may proceed and, therefore, there is no right to commence. Everything is subject to the court’s authority. Secondly, as an adjunct to certification, where there are more than one class actions in respect to the same controversy, the court has, we submit, an express authority to conduct the carriage motion and the essence of the carriage motion is that the court selects the action which exhibits the most adequate representatives, representative lawyers and funding model for advancing the interests of the class. So, the search is for the most adequate person of that character and the ultimate objective is for the court to choose the vehicle likely to produce the best return on the plaintiff’s side of the record against the defendant.
Our regime, we submit, has made fundamental and radically different choices. The first is no certification and so the action commences as of right under section 157 - to use the New South Wales provisions, that is in volume 1 of the authorities at page 84 - when the relevant conditions are met.
The second critical choice, which you will see from section 157, is that the adequacy of the representative to represent the class is not made a condition of commencement and related to that adequacy is instead dealt with under section 171 on page 88 in a different fashion, namely, a group member has standing to challenge the adequacy of the representative plaintiff and, if successful, the court order is one of substitution, the effect of which is that no more than one action continues on foot, it simply continues with a different representative.
Your Honours, I might pause there to note this is one of the differences between the regimes. Your Honours will see in the heading to the section, the comparative section is section 33T of the Federal Court Act, and that is in similar provision. The difference is, if your Honours go back to section 166(1)(d) on the previous page, in New South Wales, but not in the federal regime, adequacy can also be raised on the motion of the court or the defendant with the remedy being, in this case, an order that the proceeding no longer continue as a representative action and, instead, under section 167, it will continue as a normal action, although members of a group can join as co‑plaintiffs if they wish. So at least in New South Wales, the topic of adequacy has been dealt with in those various ways on the motion of all relevant parties.
GAGELER J: On a motion that concerns adequacy under section 166 or section 171 is the court drawn into the sort of questions that arise on a carriage motion?
MR GLEESON: In general, the answers are – the answer would be no in the sense of the court is not, in our submission, to try and pick the representatives and the lawyers and perhaps the funding model which will produce the greatest settlement or judgment and the greatest net returns. Instead, the court’s focus is on whether this representative exhibits the qualities which are appropriate to perform the quasi‑fiduciary rule of – quasi‑fiduciary role of carrying forward the action for the class.
GAGELER J: Taking into account the funding model and taking into account the adequacy of the lawyers?
MR GLEESON: In general, the answer to that would be no. If a party wished to take on an adequacy burden by saying there was something about, for example, the funding model which represented a sacrifice of the interests of the class, perhaps equivalent to a mortgagee being charged with an abuse of the power of sale or a trustee being charged with an abuse of power, it may well be that that could come within the question of adequacy.
What, in our submission, does not come within it is the exercise that is being transported from the United States which is at the commencement of the action. There are two elements to it. The first is to predict which action is likely to produce the highest settlement or judgment sum. That, we submit, is outside all parts of this Act and the second exercise is at the commencement of the action to try and predict what will be the comparative fees and commissions which different actions may burn at the end of the matter.
The reason I put that second matter is, following this Court’s decision in Brewster, we know that a common fund order is not available at the commencement of a matter. It is outside the power that was relied upon, section 183, which is on page 93.
What, according to the recent authority of the New South Wales Court of Appeal and the Federal Court of Appeal, that I will come to, in the last few weeks remains for consideration is the types of orders that might be made at the conclusion of a matter, that is on settlement or judgment by way of remuneration to, for example, a funder.
What we submit, therefore, arises in the Australian scheme is a deliberate decision that the question of the fees and commissions of funders are to be dealt with on a particular occasion, namely the end of the matter, and they are to be dealt with through a particular prism which is whether they are fair and reasonable. What we submit is outside our model, our legislative scheme, is at the commencement of the matter for the court to be seeking to predict what fees and commissions might be recognised at the end of the matter between different models.
Now, that is why we have referred in our submissions to the difference between the gross returns basis and the net returns basis. In the Federal Court in GetSwift the carriage motion is said to be conducted primarily with a view to the gross returns. The aim is said to be to pick the lawyers and the funding model who exhibit the best qualities and the best incentives to maximise the largest settlement or judgment.
KEANE J: That does not sound like adequacy, does it?
MR GLEESON: No.
KEANE J: The question of adequacy in 166 and 171 is a binary question. You either are adequate or you are not.
MR GLEESON: Yes.
KEANE J: It is not relative, it is not more adequate than others.
MR GLEESON: I accept that, your Honour, and one of the critical differences we draw attention to is expressed at its simplest. Our legislative choice is adequacy or not for the action which is binary. The legislative choice in the United States and Canada is the court is charged with searching for the most adequate or the more adequate representative lawyers and funding model out of the available alternatives. That step, the search for the most adequate, or the more adequate, is the step we submit has not been taken in this scheme and directly contradicts the basic precepts of the scheme.
KIEFEL CJ: Does the inquiry in (d), adequacy of representation of the interests of the group members, have regard to whether or not the representative party and the group members’ interests are co‑extensive?
MR GLEESON: It could, your Honour, yes.
KIEFEL CJ: But might not be limited to that, but you would think as a first question one would be looking to see whether or not the claim made by the representative party was sufficient to cover the interests of all group members.
MR GLEESON: Yes, it will probably need to do something like that anyway by reason of 157, as in you will need to have the common claims and the common questions of law in fact. I would accept what your Honour is putting to me, the court may wish to see whether the particular representative, in the claims that it is bringing, does fairly allow the various claims of the group to be litigated in the action, and it could well be you are not the right person, so you are removed. So the slight differences under 166 and 167, if you fail under 166, the remedy is that you are allowed to continue your action under 167 as an ordinary action and you can have, joined in it, any one who wishes to join with you.
KIEFEL CJ: The regime for which you contend, which has regard to the proceedings first filed, one would think that the first question would be whether or not the claim was broad enough to cover the interests of group members. That would be probably a first question.
MR GLEESON: That would be a central question, your Honour, and the case is divided into two broad areas. Our fact case is one of duplicative proceedings. Her Honour Justice Ward found, and one accepts, on proper analysis there is no substantial difference between the classes or the claims or the causes of action or the relief. In other cases they may well be overlapping, and in overlapping cases the range of remedies available to the court ‑ ‑ ‑
KIEFEL CJ: It might be clearer than duplicated proceedings.
MR GLEESON: They may well be clearer, and what courts would often do is carve out the overlapping claims from one so that different actions will identify what are truly different claims, and then the court would be left with a traditional case management decision of how to manage to trial two matters that may have similarities in them, so all those options are clearly available.
Our contention is, if you are in the position of Komlotex, where on the present facts it was not a matter of days or hours, some five or six weeks after the Wigmans proceedings was filed and with full knowledge of that proceeding – there is no suggestion Mr Watson of Maurice Blackburn just coincidentally chanced upon it – you know you are covered by that first filed proceeding, you know that the claims you wish to bring are either the same claims or a subset of them - in the present case it was a subset because by the time Mr Watson got to file on 7 June he was satisfied that he could only allege a three‑year class group and it took him five months to match the Wigmans group. That is really by the by.
If you are in that category, this scheme does not contemplate doing what happens here, which is simply the second, third, fourth and fifth file the duplicative action. What the scheme contemplates is, if Maurice Blackburn and Komlotex had grounds for a section 171 motion, they could bring it. Clearly, they did not have grounds and they did not bring that motion.
If they wished to opt out, they could do that under the opt‑out provisions of section 162 and Komlotex could, for example, have filed a proceeding on its own behalf. It could have opted out of our proceeding and, indeed, there would have been no objection to Komlotex seeking to represent a class, being all persons who chose to opt out of Wigmans. That would have been permitted under section 162; no abuse there.
The one thing the scheme does not permit, we submit, is exactly what Maurice Blackburn and Komlotex did and, therefore, it does not contemplate the court having to go through the task which Justice Ward at great length attempted to do, consistent with what she correctly understood to be the then authority of GetSwift.
EDELMAN J: Why is that not very close, if not equivalent, to a “first past the post” argument?
MR GLEESON: Your Honour, it is not a “first past the post” argument for these reasons. Firstly, as I said to her Honour the Chief Justice, there is a distinction between essentially duplicative proceedings and merely overlapping proceedings. It is only in the area of essentially duplicative proceedings that we are urging that the common law principle can sit consistently with the statute that a second filed proceeding will be, prima facie, vexatious and oppressive. If the proceedings are merely overlapping, we are not urging a common law principle of a prima facie presumption. The court will simply consider all the relevant matters.
The second answer is that, even in the duplicative case, it is only a prima facie principle and it is always open to the later filed matter, if there be one, to point to a legitimate juridical advantage to seek to overcome the fact of what is otherwise prima facie vexation, and one of the examples we have given and never resiled from – and we are criticised for it by Mr Moore, is security for costs.
If you had two duplicative actions and the second was filed five or six weeks later, but it displayed security for costs, whereas the first action had a pauper as a representative, the law has traditionally recognised that as a juridical advantage or matter properly taken into account, and that is for two reasons. One is it is a matter that can readily be assessed under the judicial method and has long been done; and the second is that security for costs reflects justice across the record. It is there to protect the defendant consistent with the usual rule that costs follow the event. So that would be an example, your Honour Justice Edelman, where the second filed proceeding would overcome the prima facie presumption.
The final part of my answer, your Honour, would be the Federal Court cases, as you know, have expressed some very strong statements that there cannot be any form of presumption given to the time of filing because it will encourage…..to the court and encourage poor pleadings. The short answer to that is that concern is misconceived. There are many areas of the law where it is necessary for people to get to court quickly. If you get there quickly and you do not have a good pleading, you will be struck out and that can be dealt with under traditional powers of vexation and oppression.
It is no different really to a party coming urgently to the Court for an ex parte injunction. There is always a balance between how soon must I act in order to institute my proceeding and, on the other hand, how much caution must I show to show that I have a properly arguable case, and that is simply for the professionals to make the call on.
As your Honours know, in the present case there cannot be and never has been the slightest suggestion that there was some undue race to the court house by Ms Wigmans’ team. They produced a comprehensive pleading which has never been challenged.
I should also perhaps mention, your Honours, the final aspect of the answer to your Honour Justice Edelman’s question. There are of course limitation periods, which can expire in these types of matters. In the present case, the class period which was identified in the Wigmans proceedings was six years, going back before the problems at AMP emerged. Therefore, every day that there is delay in commencement is removing the claims of certain people from the class. So the notion that an action may be brought promptly is in fact a good thing and a good thing for the class at least.
GAGELER J: Mr Gleeson, this is an unusual securities class action because of its historical nature. The typical securities class action follows a sudden change in the market price of shares. The approach that you suggest will lead to a race to the court in that typical case, will it not?
MR GLEESON: It may and there is nothing wrong with that. In other words, you do need to get there quickly because limitation periods may well be expiring – that is exactly what happened here – but you need to get there with a properly pleaded case.
One of the recommendations from the Australian Law Reform Commission, which your Honours will have seen, was that the traditional powers of the court to deal with vexation and oppression and suits that were not properly pleaded or trivial, must be retained in the new scheme. That was taken up expressly in the Federal Court scheme in section 33ZG and the manner in which it is done in this scheme, the New South Wales one, is in section 5, which is…..volume 1. All of the court’s traditional powers to sanction a matter that has been brought to the court without the proper basis are there and so there is nothing of difficulty in that area.
Your Honour Justice Gageler, the other answer I would offer is this. Of course, there are a whole range of class actions to which this question relates. We have a securities class action which will often exhibit the features your Honour has said. There may be a vast variety of other class actions. There may be varying incentives as to how quickly a claim is brought referable to an extrinsic event. We submit nothing surprising in that.
But the fundamental question for the courts is, in the light of the provisions in this scheme, is the court given the role of searching for the vehicle which has the most adequate representative, the most adequate lawyers and the most adequate funding model with a view to what, trying to maximum the returns on one side of the record?
We would submit following, amongst other things, this Court’s decision in Brewster where it is now clear that section 183, despite the breadth of its language, is a power to make orders in response to particular issues that have arisen in a proceeding so as to allow those issues to be dealt with in a way which will ultimately lead to a just resolution between plaintiff and defendant makes clear that one thing which is not the court’s role is at the early stage of the proceedings to be making orders concerning the viability of the matter. It is not the court’s role to be making orders which will shore up the proceeding, contrary to the approach particularly taken in the Full Federal Court in Lenthall.
Now, consistently with that what the US/Canadian approach does is in fact give the court a somewhat similar role. It is not a role of, as it were, shoring up the viability of the particular action. Rather, it is a role of choosing between competing actions, even duplicative ones, and trying to pick the one which will be – if I might put it this way – the most viable action, the one which will produce the biggest return on a gross or a net basis, and the question ‑ ‑ ‑
GORDON J: Mr Gleeson, may I raise something with you and that is this? In your outline, your first bullet point, you identified that the process adopted here required the trial judge and permitted competition between representatives, lawyers and funders. When we talk about trying to choose between competing actions and trying to pick the one that is the most viable is not another way of looking at it trying to provide a mechanism for the judge to identify, consistent with both the general powers within Chapter 10 but also the inherent powers, the choice to be made between these competing proceedings - whether they are duplicative or overlapping, I do not think matters for the most.
Here, at least on some views of some of the judges, there are concerns about the fact that the interest of the group members as a whole, as distinct from those who identify being the representatives, lawyers and funders, are not before the court. In a sense, one of the reasons why Justice Ward described the process as “unedifying” was because, in effect, she was the investigator and also the selector of trying to work out which one should go forward.
There is at least some idea, I think, in some of the cases that by resort to things which you and I would understand to be drawn from chancery practice, that it might be possible to appoint a member who is common to all three competing actions, on an assumption that there are three, and have them, in effect, put forward themselves, having retained their own solicitors and counsel, all of these issues to enable the appropriate choice to be made, not by reference to what is the most viable, but provide advice to the judge and the judge, of course, can reject. That addresses these issues, the things that are of concern to you.
I raise it for this reason, because it seems to me it then meets so many of your concerns. …..the judge is not, in effect, choosing, the judge is faced with independent submissions and possibly evidence. Someone is there, acting independently and representing the interests of the group members as a whole. It builds on existing chancery practice. One can think of at least two examples - appointment of a representative party for a beneficiary in a wills contest, trustees advise a whole range of things - in a sense, aimed at the one question as to which is to go forward, not by reference to what is the most viable, but what is in the interests of the group members as a whole?
MR GLEESON: Thank you, your Honour. Could I try and give a number of responses to that and the first, which is just a preface, but it is not a formal preface, is we represent Ms Wigmans. Ms Wigmans, we accept, has a quasi‑fiduciary duty to represent the class to the extent she is permitted to do so. I do not represent the funder or the solicitors. So when I put all of my submissions to your Honours, I must attempt, as best I can, to put submissions which not only are helpful to you and hopefully correct, but submissions which do not argue for any narrow view of the court’s powers, because it is clearly in the duty of the representative and the interests of the members that if the court has power which can protect the interests of the members, it should be recognised. So I do not want to argue for a narrow approach to it.
The second is, is it possible that there could be a procedure by which the court appointed a person to play the role your Honour has said? The answer to that would be yes. We would not argue against that possibility, and it is a possibility which, of course, the courts, particularly the Federal Court, have employed at the stage of settlement and at the stage of other controversial aspects of the matter where they consider that they need to hear a different voice to that of the representative and those who lie behind them. So is that a possible solution? The answer is yes.
But my third answer, which is the critical one, is, even if there be that independent voice, one is still left with determining what is the ultimate question or the ultimate task of the court in that case, and while there are a whole range of issues that the independent representative might advance, we would still be arguing that the two features of this current process, which we particularly challenge, would be outside the frame.
GORDON J: What are the features?
MR GLEESON: The two features of the process are, firstly, the court at the commencement of the matter seeking to predict which of competing matters will produce a better settlement or judgment on a gross basis. The second is the court at the commencement of the matter seeking to predict what legal fees and funding commissions will be allowed or are likely to be allowed at the end of the matter given that they are questions which the scheme defers to the end of the matter when all the facts are known.
So, on one aspect, we cannot criticise Justice Ward which was that at the time she decided the matter we did not have the benefit of Brewster in the High Court and so one of the assumptions her Honour made was that there was a realistic likelihood that a CFO would be made and certain other orders would be made in certain terms. We now know that they are matters to be dealt with on settlement or judgment. So, your Honours, they are the two key matters we say would be outside the process whatever form it takes.
Your Honours, on paragraph 3 of the outline, as your Honour has raised that, could I just go to the key paragraphs where Justice Ward identified the nature of the exercise. At paragraph 33 on page 22, her Honour identified the exercise at a level of generality and her Honour said some of the comparisons were “unedifying”, but she did not accept the multifactorial analysis did not involve the principle exercise of judicial power.
Then, at paragraph 113, again her Honour confirmed that she would not accept our submission that the GetSwift analysis was not available. She accepted some of our complaints, but she regarded the process as not “inimical to the overriding purpose”, even recognising there may be some delay and some cost in the carrying out of the motion. I am sorry, your Honours, I passed over 104, could I go back to that, it is of some importance. What is clear at the end of that paragraph is that her Honour said she could not accept our submissions because it would:
reduce the competition amongst solicitors and funders which is beneficial to group members –
It is a positive aspect of the process which her Honour was carrying out, consistent with GetSwift, that it is part of the court’s role to preside over a process which encourages competition. We call it an auction. We do not think that is an overstatement. The idea is that over the period in which the motions are on foot – that is, six months in this case – the competing representatives, funders and lawyers are able to improve their bids, to call them that, and that is a good thing.
What this process does is encourage multiplicity at the outset. It encourages as many proceedings as different groups wish to bring forward within a timeframe for the purpose of competition between them, leading ultimately to resolution of the competition through the Court’s order. To come back to your Honour Justice Gordon’s question, that process, we submit, is outside what is permissible even if one were to allow for an independent representative of the group.
GORDON J: Well, no, because the independent representative process would take it outside of the court process. That is the point of it. In other words, it would permit the independent representative to seek to identify and provide submissions to the court about those things. Your complaint is that the judge is undertaking this process.
MR GLEESON: That is our complaint, yes. I would still stick to my submission that the types of factors we are looking at should not be part of the process on any view, but if your Honours’ contemplated process ‑ obviously not this case but for other cases – is one has a sort of independent referee who looks at everything and provides a report to the court on what is in the best interests of the members, having regard to all factors, then I suppose one would have to see where that is sourced to the statute, whether that is within section 183.
EDELMAN J: It would not be all that different, would it, from the provision of independent legal advice, on a trustee’s advice, for example, where the court is not descending to the level of saying you are going to win, or you are going to lose? The only concern for the court is whether or not the trustee could bring the action or should not or would be in error in bringing the action, but the court can consider independent legal advice that has been provided as to the merits of the action.
MR GLEESON: Your Honour, I accept clearly there are those analogies and if it were done with the restraint of the advice process for a trustee, then it has a respectable pedigree, et cetera. However, one still has to ask: what are the parameters of the advice or the process? A concern we still raise is, if the court is instituting that process, what is the purpose of the process.
If the purpose is paragraph 104 of the primary judgment, which is, amongst other things, the interests of the members include the encouragement of competition between the rivals for who can produce the bid which the independent person considers is likely to produce the highest settlement or judgment or the best net return, if that is what the question is, we still respectfully submit that is not expressly reflected in Part 10 and would appear to contradict a number of its basic precepts and, although the court is doing it at one stage removed, it appears to have the court moving into the territory of encouraging multiplicity of proceedings instead of what it should be doing, given the tools it has, of saying the tools are here to ensure that no multiplicity were to arise.
EDELMAN J: What is it about section 67 that would or could prevent a court from considering, for example, an independent report saying the best interests of the class would be served by their representation by X, and that report having considered all of the factors including prospects of success and so on?
MR GLEESON: Your Honour, I think my hesitation is at the level of unpacking the best interests of the class and what is in that. At a general level, I have not put a submission against what your Honour has put to me or what your Honour Justice Gordon to me - in principle that may be available, it has pedigree, et cetera. But the question is what is the purpose of the task and how does that purpose sit with the court’s functions, including under section 67?
So, if the Court has section 67, which is on page 46 of volume 1, we just have a general stay power. True it is, we then have the guidance from sections 56 to 58, and section 56 - “just, quick and cheap resolution” - that sits over the top of everything. Section 58:
the court must seek to act in accordance with the dictates of justice.
. . .
must have regard to . . . 56 and 57 –
and may have regard to anything else which is relevant. So we are still left with these terms of the dictates of justice and we are left with what are the relevant matters and we are left with what is involved in “just, quick and cheap”. Given your Honour’s question, it is probably convenient to go directly to the outline at paragraph 7 and then come back to the earlier points because the Court of Appeal ‑ ‑ ‑
GORDON J: Sorry, Mr Gleeson, is this paragraph 7 in the Court of Appeal?
MR GLEESON: No, paragraph 7 in the outline, your Honour. I am just dealing with section 67, as that has been raised.
GORDON J: Thank you.
MR GLEESON: The Court of Appeal dealt with section 67 and section 58 at paragraphs 88 through to 98, and these are the submissions we would make on those paragraphs in the light of the questions your Honours have raised about the possibility of independent person. The Court of Appeal said in 89 that by referring to cases such as Henry v Henry we had:
obscured the breadth of the power and the discretion to grant a stay –
and said in 90 that the doctrinal debate in GetSwift does not arise because 58 provides all of the answers. At 91, there was no error of principle because her Honour acted in accordance with the dictates of justice.
Now, we submit that one still has to unpack what are the dictates of justice, and the essential dictates of justice, as this Court has reaffirmed in Brewster, are the court using its powers to make orders dealing with issues which arise in the proceedings to make sure they will go forward to a just resolution between both sides of the record. It is not an unfettered expression. What is in paragraph 92, we submit, does not take the matter any further.
KIEFEL CJ: Mr Gleeson, do I take it from what you say that you are submitting that nowhere did her Honour identify how the power under section 67 was actually being used to stay the proceedings?
MR GLEESON: We submit that her Honour nowhere specifically identified that, did not draw the bridge between the generality, and ‑ ‑ ‑
KIEFEL CJ: Inferentially, the only basis could be to prevent a multiplicity of proceedings. Is that not the only real basis, on what you say that would be the only basis upon which stays are normally made that would fit with this scenario?
MR GLEESON: Ultimately, yes, because ultimately your Honour was saying AMP, as the defendant, cannot be vexed by two actions ‑ ‑ ‑
KIEFEL CJ: Yes.
MR GLEESON: ‑ ‑ ‑ so in the end we have to get rid of one of them, her Honour was saying. But the path to the end was to say, over this six‑month period what you are each permitted to do is to keep improving your offers, or your bids, so that at the end of the day the court decides which is likely to produce the highest outcome. It is that step which it is very difficult to tailor to the statutory regime or to any traditional function of a court.
KIEFEL CJ: But do you say that the usual approach to a stay would have regard to the proceeding sought to be stayed and then to determine whether having regard to that proceeding – I am just trying to work out how one determines the – to overcome the multiplicity of proceedings, if that is a correct approach, how one determines that question.
MR GLEESON: Your Honour, that is ‑ ‑ ‑
KIEFEL CJ: I mean, it does not take you terribly far, does it?
MR GLEESON: It is certainly not a traditional type of stay that has been done. There is not identification that there is something in the Wigmans action which is vexatious or oppressive or not likely to lead to a just resolution of the issues tendered by that proceeding. What instead has been done is to say we have several actions lined up next to each other and we are now going to develop some criteria by which we will choose the winner and then we will stay all others. So the stay is the default after the choice has been made.
KIEFEL CJ: But what you are saying is that the approach under section 67 must have regard to the proceeding sought to be stayed, here the Wigmans proceedings ‑ ‑ ‑
MR GLEESON: Exactly.
KIEFEL CJ: ‑ ‑ ‑ and then to determine whether that should be stayed so as to allow another proceeding to go ahead.
MR GLEESON: That must be what her Honour was doing.
KIEFEL CJ: But inherent in what you are saying is that the court must first ‑ must look at the proceeding first filed, otherwise you have a look at – you would look at each proceeding the subject of the stay application and ask yourself the same question and you would get nowhere. Your premise must be that you look to the proceeding first filed, must it not?
MR GLEESON: Your Honour is correct, that there are cross‑stay motions on foot and there is a logical question: which one are you asking the question about first?
KIEFEL CJ: Yes. So which one do you choose?
MR GLEESON: But your Honour’s question respectfully throws up a critical part of the carriage motion - and I will come to the express basis for it - which we just do not have. A critical part of the carriage motion is because the court is certifying and choosing the matter to go forward the court is first - it is really asking itself not the question your Honour has put, the question it is asking is – question 1 is which of the competing matters has the most adequate representative lawyers and funding model. Once I have answered that question, what happens under the carriage motion is the court puts its stamp on that proceeding and authorises that proceeding to go forward. The stay power is then used as a residual to eliminate all of the people who have lost the carriage fight.
KIEFEL J: Stay is used merely as relief, but it is not the process that has been undertaken.
MR GLEESON: It is not the process and that is one of the critical differences in the statutory basis. I will show your Honours in due course, the form of the order adopted in the US and Canada usually is a double order which says, first, we appoint, or we authorise, or we nominate A, B and C to be the representatives to conduct this piece of litigation and then the second order is we stay all other matters. It is used as the residual relief after the primary question has been identified.
So, my hesitation with the questions from your Honours Justice Gordon and Edelman is in principle there could be a process for independent contradictor, but the question remains is that being done in aid of the court as its primary question selecting the action most likely to produce the best return for the group. If that ‑ ‑ ‑
GORDON J: I think the question might be a bit different, is it not? Is it not a process being adopted in order to assist the court to identify and overcome multiplicity of proceedings which is a fact and the fact is that we have multiple proceedings? They cannot go forward in a sense of the multiplicity cannot go forward across the record but in terms of the group members and in terms of the defendant. In identifying the mechanisms or the factors that you describe them to be taken into account in the exercise of what ultimately will be a consideration of the…..
MR GLEESON: Your Honour, that really highlights – your Honour’s question highlights the differences in the approach. On the approach we are contending, we do not start from a premise of multiplicity. We are starting from a premise that if this scheme works as we submit it does, in most cases there will not be multiplicity because when Mr Watson decided to file his pleading on 6 or 7 June, on our view of the law, he simply should not have filed that pleading because his pleading was liable to be stayed.
On our approach, it was liable to be stayed because his proceeding was clearly second in time. It was duplicative. It was seeking to raise claims which were all already before the courts and he could point to no traditional juridical advantage by which to overcome the prima facie vexation. There was, therefore, nothing by way of multiplicity for the court to do other than to stay his proceeding.
Then, coming back to your Honour the Chief Justice’s question, when it is then asked about our proceeding, our proceeding did not suffer any of those defects. It was first filed. It had every legitimate juridical advantage that could be identified in a case like the present and under ordinary common law rules it could go forward. So our point of difference is whether the problem actually arises if one takes the approach to the statute that we are commending.
GAGELER J: Mr Gleeson, you said earlier in an answer to a question by Justice Gordon that your client, as a representative party, has a quasi‑fiduciary duty to pursue the best interests of the class. That is so for each of the other representative parties in contest, is it not?
MR GLEESON: Yes, to the extent ‑ ‑ ‑
GAGELER J: Everyone has the same goal of pursuing the best interests of the clients.
MR GLEESON: Well, your Honour, one has to be careful with that. Ms Wigmans files in late May. She has a properly filed pleading under section 157. She has those duties I have recognised. They continue at all times up until her proceeding is litigated or stayed and so on. With Komlotex, come 7 June, Komlotex’s position is twofold. First of all, it is a member of a properly filed open class action. All of Komlotex’s claims against AMP are in issue in the proceedings already. To that extent, its claims are there. That is one aspect of Komlotex’s position.
The second is it has the right to opt out of Wigmans, if it wishes, and it can gather other people with it if such people wish to join, so that is also a right it can exercise. By filing, yes, it is true Komlotex is tendering the proposition to the court and to the opposing parties, I wish to be considered as the person who will have the carriage of the matter, assuming it is reduced down to one…..and if Komlotex gets carriage, Komlotex, yes, has those quasi‑fiduciary duties.
But they sit within the landscape of this scheme and if the scheme has said as an anterior step, your position, Komlotex, is, if you want to challenge adequacy you can. If you want to opt out you can. But apart from that, what the scheme has said is the traditional common law principles otherwise exist unimpaired and for you to start that action, creating the multiplicity, duplicating the proceeding, creating the vexation, that is prima facie the wrong thing to do. Can you point Komlotex to an advantage, traditional advantage - the answer is no. So what is left is, in effect, an empty proffer, “I would like to be the quasi‑fiduciary”, but it has to sit within that scheme that we contend for.
GAGELER J: When you refer to traditional common law principles, it was of course equity that dealt with what we now call class actions.
MR GLEESON: Yes, your Honour.
GAGELER J: The common law principles were really concerned with the position between plaintiff and defendant, were they not?
MR GLEESON: I am using traditional common law to embrace a range of things, including the class actions that grew up in equity, but including the common law principles dealing with multiplicity of proceedings, which had both common law and equitable aspects to them. Your Honours, if I just complete what is on paper ‑ ‑ ‑
KIEFEL CJ: Just while you are interrupted, getting back to your argument that the first filed matter should be looked at first, this is perhaps overly simplistic but since it was the power to stay that the court was using, would you contend that the court was obliged to look at your client’s action simply because the multiplicity did not arise until the later proceedings were brought?
MR GLEESON: Yes, your Honour, yes.
KIEFEL CJ: That is what it comes down to.
MR GLEESON: When we filed, there was no multiplicity ‑ ‑ ‑
KIEFEL CJ: Multiplicity, and that is why your matter has to be considered in relation to traditional stay principles and determined on that basis.
MR GLEESON: Yes.
KIEFEL CJ: To see if there is anything that did not cover the representation of the others.
MR GLEESON: Yes, and if nothing can be pointed to of those traditional factors, the ability to cover the whole group, then there was no basis for a stay of our action and the corresponding answer was Komlotex should never have filed. Your Honours, just to complete page 183 of the core book, and then come back to the earlier points, at paragraph 93, the President says that:
Her Honour took the view which was, in my opinion, open to her on the material before her that the stay of the Wigmans proceedings would be just in the sense of likely to maximise the return to group members without prejudicing AMP in the event that Komlotex succeeded –
That has to be read together with 94, that:
The net cost . . . would also . . . be “cheaper” as a result of –
the stay. That could not be known with certainty, but it could be reached on the materials before her Honour. So our central point of difference on the construction of sections 56 to 58 and what they authorise is that those types of provisions have never, in our submission, been construed as authorising a court to try to maximise the returns on either a gross or a net basis.
No one can point to any case in Australia where the court has engaged in that type of exercise prior to Justice Lee in GetSwift in late May 2018. So this is not looking at justice in the sense of justice across the record and the just resolution of the issues, this is looking at maximising returns for the plaintiff.
We would say in respect to 94, when New South Wales adopted the “just, quick, and cheap” rule, “cheap” was relatively clearly understood as being, try to get the legal costs of a matter under reasonable control, both generally and with a view to making sure that the winner, when they recovered their cost, was not left out of pocket.
The concept of “cheapness” has never, prior to these cases been taken to mean the court trying to predict the funding terms that might be approved at the end of the matter and trying to aim for the lowest funding terms. That, we submit, runs perilously close to contradicting what the majority said of this Court in Brewster, for a court to be trying to involve itself in picking the cheapest funding terms.
Your Honours, could I then come back, perhaps, to paragraph 4 of the outline and just give you the submissions on the radical differences in the legislative regimes and show where the carriage motion has actually come from. If your Honours have volume 3 of the authorities, in the United States, behind tab 6 we have the Federal Rules of Civil Procedure. This is the 2019 version, but the relevant provisions were substantially in the form I am going to take you to from no later than 2003 and some of them much earlier.
If your Honours could go to page 568 of the book, rule 23, rule 23(a) established four prerequisites for a class action. The first three are similar to Australia. The fourth is the critical one which Australia did not take up as a prerequisite for the action, but instead left for a motion of the defendant bearing an onus. It is that provision, 23(a)(4), which under the early United States jurisprudence was interpreted as allowing the court to review the legal fees at the outset of the matter and thereby choose not only the most adequate representative, but the most adequate set of lawyers.
If your Honours then go over the page to rule (C), that is the duty on the court to certify and the things that must be certified and in the form from 2003 onwards the court actually appoints class counsel under rule (g). Prior to 2003 that is what the court did as a matter of practice. Post 2003 it is an express statutory duty.
There is then a range of other provisions but coming to (g), which is on page 572. A court must appoint class counsel and must consider a range of matters, including (iv), “the resources that counsel will commit to representing the class”; (B) may consider any other matter going to the adequacy to represent class; (C) can require information about proposed fees; and (D) can include in the order provisions about fees.
Then your Honours will see under subsection (2) – this is why I made the submissions about the most adequate approach – if there is one applicant, they can only be appointed if adequate. If there is more than one applicant:
the court must appoint the applicant best able to represent the interests of the class.
That is speaking of the lawyers at that point. So it is a central part of certification that the court is choosing the most adequate lawyers and that the court is permitted to assess their fees and returns at the outset of the matter and, indeed, appoint them at the outset of the matter. It should be tolerably clear how different that is to our statutory regime and to this Court’s decision in Brewster that the return in Australia - it could be lawyers or funders; in the US it is lawyers – is not to be dealt with until the end of the matter.
KEANE J: Mr Gleeson, that provision in (g)(2), that was in the American rules when the Civil Procedure Act was adopted in New South Wales - is that correct?
MR GLEESON: That is correct, your Honour, and when the Federal Court Act was adopted it was not there in (g)(2) but the US practice reflected that process. In the notes which accompany the 2003 amendment ‑ which we can provide the Court with if necessary, which are extrinsic material properly considered in the US – it is made clear that (g)(2) was making explicit what had been the established US practice.
KEANE J: But that was a practice that adhered to and worked out rule 23. Is that right?
MR GLEESON: Yes. So, one can see that carriage has come out of the express terms of the certification regime and the decision that the court controls and authorises the action, the representative and the lawyers. We have provided your Honours in volume 6 the Federal Judicial Centre manual, the fourth edition in 2004. It is at page 1438, tab 29. It takes into account the effect of the 2003 amendments, and on page 1443 in the second full paragraph the manual indicates that the first step in the US is to consolidate the pleadings so that you really get down to one pleading. Then you can answer the question which is page 1444, second full paragraph:
A single pleading, in a single action . . . serve[s] as the vehicle for defining the . . . class and deciding class certification.
There is then a discussion in section 26 about the appointment of the representative, and then class counsel is dealt with in 21.27, and one sees there the broad nature of the task under rule 23(g). The next paragraph refers to the criteria in 23(g), and over on page 1447, in the second full paragraph it is said that:
The judge must choose the class counsel when more than one class action has been filed . . . If there are multiple applicants –
as the rule says:
the court’s task is to select the applicant best able to represent the interests of the class.
What is then indicated is that in the US three methods have been adopted for choosing the best counsel. The first is “private ordering”, essentially agreement between the competitors. The second, on page 1448, is probably where the Australian jurisprudence has got to, which is a “selection from competing counsel”.
So the court selects between those who filed actions and “The lawyer best able to represent” the group emerges “from an examination of the factors listed in Rule 23(g)(1)(C)”. So that is a clear indication that the search for the best or most adequate lawyer has been expressly sourced to rule 23(g)(1)(C) where the court has a range of factors and a range of information gathering tools expressly given in the statute.
The third method is described as “competitive bidding” where the court invites applicants to submit competing bids. The difference seems to be that the court there actively encourages persons who may not yet have filed actions to bring forward a bid ‑ again that is sourced to these same rules ‑ and then the court makes a choice, and certain factors are mentioned. Footnote 859 indicates some of the earlier cases which preceded the 2003 amendment where the court was adopting this competitive bidding process. I say that the Australian practice has at least gone to the second stage of selection from competing counsel.
In the recent decision of Justice Lee, which is in volume 5 of the authorities at tab 17, CJMCG at page 1147 and following, it is possible that his Honour is moving towards the third stage – that is, competitive bidding. If I can explain why that is so. Your Honours will see from that short case that there was a first filed proceedings and then, paragraph 5, Maurice Blackburn filed a second filed duplicative proceeding and while his Honour was trying to case list those, paragraph 8, he found out there was another firm who might also have an interest in the matter and counsel for that firm appeared, that is even though they had not yet filed a proceeding. In paragraph 10, his Honour noted:
multiplicity disputes present challenges -
and he expressed the view that:
The time has long since passed, if it ever existed, where firms of solicitors can sit back and stay schtum when a not unrealistic prospect exists that a substantially duplicative open class proceeding will be commenced . . . both experienced class action firms stayed mute when the matter was first before the Court.
That is Maurice Blackburn and Phi Finney McDonald –
Such a course should not happen again -
His Honour has said, in effect, as soon as there is one open class action, given that will usually be known in the press, any firm who wants to file a substantially duplicative open class action has – when I say “firm”, legal firm – a professional duty to not stay schtum and come forward to the court, even before it has filed proceedings, and say, “I might be interested in the prize.” Then the court can preside over process, which apparently involves firms who have not yet even filed proceedings in the court.
GORDON J: May I ask how a firm can come forward if they do not have a client.
MR GLEESON: Exactly, your Honour. It appears the implicit assumption of this process is that the clients are fictional, and that assumption should not be made. I go to this only to show that his Honour then, in a perhaps passionate fashion in paragraph 16, defended the notion that his approach does not encourage multiplicity, his Honour referred to the transcript of the special leave application in this case and said that certain counsel had the matter completely wrong. Then in paragraph 17, he appeared to make some orders that Phi Finney McDonald – so it is an order on the solicitors; it is not on the client, if there is one – is to contact the associate if they are about:
to commence a proceeding, so that any such proceeding can be made returnable at the same time as the extant proceedings.
I think it is no exaggeration to say that is competitive bidding, as per the Federal Judicial Manual, which is interpreted at least by one judge in the Federal Court as not just a bad thing but a positively good thing, and so it is expected that law firms will turn up with or without clients, with or without proceedings, and indicate their interest and the court will preside over an option.
Now, in the US we can see perhaps how that has been sourced to rule 23(g). Absent any such source in Australia that process, we submit, is well beyond the statute and the Court should fairly firmly so rule. I need to show your Honours in Canada where the statutory framework is. Again, it is in volume 3, this time at tab 7. This is the 1992 Class Proceedings Act of Ontario in force at the time of the present motions but subsequently amended, which I will come to. On page 660, it is rule 2(2) which creates the positive duty on the person who commences to make the motion for certification and “appointing the person representative plaintiff”.
To answer your Honour Justice Kiefel’s question, that is why I said that the first and primary stage of the process is the court appointing the plaintiff, positively doing that. Then, the motions have to be made within a certain period, in this case 90 days. Now, that is one of the things which, with respect, the Federal Court judges in Australia are, in particular, trying to do without an express statutory footing. They are saying what we should have is a fixed period of competition in the 90 days, in effect, no one can go forward. After the 90 days we then know the full field of bidders and then the court makes a choice. Now, one could do that perhaps in Canada but not in Australia.
Rule 5, that is the certification and 5(1)(e) matches America, the United States, because the representative party must:
fairly and adequately represent the interests of the class –
and, indeed, has to set out a plan for the proceedings and a workable method of advancing the proceeding. Now, we submit that consistent with Brewster that is just not permissible in Australia and yet that is part of what this approach commends.
Then, rule 8 you see the certification and in Canada, in this model at least, the court’s supervision of the selection of the lawyers occurs through the certification in rule 5 together with the order in rule 8. Then one comes down to some further powers. I will draw attention to rule 12 and to rule 13. Rule 12 has some similarities to section 183 of the Civil Procedure Act but it is not identical. Rule 13 is an express stay power including on the court’s own initiative of:
any proceeding related to the class proceeding before it, on such terms as it considers appropriate.
So to come back to your Honour the Chief Justice’s question, the stay power sits in the certification regime, as does the section 12 general power, and the stay is used as the relief after the court has determined the question under rules 5 and 8, which involve the adequacy of the representative and the lawyers.
Your Honours, the amended Ontario statute, I can give you the reference, it is in our supplementary book of authorities at tab 3. Its significance, at page 11, section 13 is that it has drawn out the practice on carriage motions in Canada and in the United States and made the provisions even more explicit, including ‑ ‑ ‑
EDELMAN J: Which tab is this?
MR GLEESON: This is the appellant’s supplementary book, tab 3, commencing at page 4, the amended Ontario, but at page 11 you will see rule 13.1, on the carriage motion, subrule (4), the things that you have to do are, the court must consider:
(b) the relative likelihood of success . . .
(c) the expertise and experience of, and results –
of the lawyers:
(d) the funding –
of the action and so on. Now, we would submit that they are the types of criteria which would need to be in the Australian statute for generally‑worded provisions would be interpreted to cover the present task.
KIEFEL CJ: Yes. The Court will take its morning adjournment.
AT 11.16 AM SHORT ADJOURNMENT
UPON RESUMING AT 11.30 AM:
KIEFEL CJ: Yes, Mr Gleeson.
MR GLEESON: Thank you, your Honours. Just on Canada, could I refer you to the two authorities to make good some propositions I made. In volume 5 of the authorities at tab 25 there is the decision in the Vitapharm Canada matter at first instance in 2000 which is taken up in many of the later cases. In paragraph [2] on page 1360 the carriage motion was described as a motion:
seeking a resolution of the issue as to which action(s) shall proceed and hence, who is to be lead counsel.
So, confirming the first question is which action following on lead counsel. At paragraphs [25] to [27], the source of the carriage motion in Canada is said to be section 13, the general stay power in section 106 and section 12. There is no further precise examination in the Canadian cases as to which of those provisions authorises which part of the carriage motion process, they treat it as a package.
It is clear from [26] and [27] that the US practice had strongly influenced the Canadian jurisprudence interpreting the Canadian statutes. At [47] to [49] one sees the types of factors which are regarded as proper to be considered, again, relying on the American jurisprudence and in [49] a US textbook and the form of the order which I mentioned this morning at paragraph [58] - the first order is naming the successful lead counsel for the group of actions; the second order is the stay of all other proceedings and then there is a further protective order.
The other Canadian case which is of importance is in the same volume at tab 19, the decision in Mancinelli in the Ontario Court of Appeal in 2016. I might note that GetSwift in the Full Court referred to this decision at first instance not to the appeal decision. This was the operative decision at the time of GetSwift. I would refer to paragraphs [11] to [12]. That is the source of the power for the carriage motion. Again, it is back to the same provisions identified in the previous case. They are all provisions which come out of a certification regime and there is no precise analysis of which provision authorises which part of the process.
It is clear from paragraph [19] that the primary judge had recognised the competitive bidding procedures from the US relying upon at that stage the third edition of the Federal Judicial Centre manual. Then there is a discussion which ultimately finds no appealable error in the decision below, but one sees the breadth of the factors which are there permitted.
Your Honours, that brings me to paragraph 5 of the outline. I think it is clear from our submission to date that we contend there is a series of deliberate legislative choices in Part 10 of the Civil Procedure Act which point strongly away from the US/Canadian precedents and I have summarised the choices there in writing.
Those choices came about following the Law Reform Commission report which is in our supplementary book of authorities at tab 7 where, on page 108 at paragraphs 146 to 147, the key decision not to require certification is explained and it is made clear that instead of certification group members will have the remedy to challenge adequacy.
Paragraphs 148 and 149 are the passages I mentioned confirming the traditional powers of the court in respect to vexatious or oppressive or trivial proceedings are retained. Paragraph 176 is the discussion of adequacy, and there is some discussion that analogies might be drawn from certain fiduciary cases. At 180 the Law Reform Commission had recommended that the adequacy motion could be brought by a group member, the court or the defendant, and I have explained how that was responded to in the Federal Court scheme and in the New South Wales scheme.
Your Honours, that brings me to point 6 of the outline. In the written submissions, while section 183 has not been abandoned by the respondents, it is fair to say it is pressed by them faintly at best. We would submit that section 183 does not provide the power for the carriage motion, particularly in the light of this Court’s decision in Brewster.
If I could ask your Honours to go briefly to Brewster, which is in volume 5 at tab 15. We would submit that paragraph [3] in the plurality is a statement of the ratio of the decision of the majority about the limitations upon section 183. We would refer to paragraphs [46] and [47] which explain its supplementary character and particularly at paragraphs [49] to [51] that one must find an issue arising in the proceedings and one must identify an order which will advance the proceeding towards a just and effective resolution of the issues, and it is extraordinarily hard to squeeze the carriage motion into that text.
In the present case, it is very difficult to see how the premature termination of the Wigmans proceedings under the stay, such that it never determines the issues on the pleadings, is the resolution of an issue arising in the proceeding and advancing it to a just resolution. We draw attention to paragraph 59, that the problems with the early CFO included not just practical and prudential ones but the conceptual difficulty of the absence of the necessary criteria – and that, we would submit, is very strong apposite with the carriage motion also – and then there is the incongruity of reading the power into generally worded provisions when other provisions make specific provision apt to accommodate a task.
The parties differ at this point. Our submission is that the task can broadly be identified as: is there an issue with the adequacy of representation so as to require the proceeding to be taken away from the representative? That task has been dealt with in the provisions of sections 171 and 166.
Another task in the scheme is the dealing with fees and commissions and that is to be dealt with at the end of the matter, based on fairness and reasonableness, not based on some assessment at the outset that one matter will do better than another. Finally, the task of multiplicity, we submit, has been addressed by our construction of a scheme which will remove the problem in most cases. Finally in the plurality, paragraphs 68 and 69 emphasise similar themes and to like effect, differently expressed, Justice Nettle at 124 to 125, and your Honour Justice Gordon at 138 to 140, 143 and 147.
Your Honours, if section 183 is not the source of the carriage motion, the respondents fall back – and this is perhaps their primary argument, section 67. We deal with that in paragraph 7 of our outline. It might be sufficient for me to invite your Honours to review paragraph 7, which pulls together some of my submissions from this morning.
The one additional matter that I would add to paragraph 7 is the authority in 7(d), which is a surprisingly similar named case, Wigmans v AMP. Yes, your Honours, they are the same parties. It is [2020] NSWCA 104. That case is in our supplementary authorities. Can I go to it for this purpose - it is behind tab 6?
What happened, which you will see from the headnote at paragraph 65, is that in May of this year, at a time when Komlotex held the carriage of this matter, it wanted to issue some notices to group members stating – this is about point 6 – that if you did not positively register to participate in the proceeding, the intent of Komlotex and AMP was to seek a court order binding and barring those members from participating in any settlement.
GORDON J: Is this…..
MR GLEESON: This is class closure, and what Komlotex wish to do in this very matter before the Court was to get court sanction for an approach to settlement where it would go into the settlement and say to AMP, you can settle on the basis that the moneys you pay we will allocate to people who have registered, but those who do not register will not only get nothing from the settlement, but they will have their causes of action extinguished.
What the court held, and it has not been challenged before this Court, can be seen at paragraph 102, which is that no provision of the scheme, whether 183, 175 and 176 or the powers in parts 56 to 61, that is, the ones relied upon here, extend to making orders which are inconsistent with the basic precepts of Part 10. The inconsistency arose in this case because Part 10 provides for opt out, but nothing in Part 10 says that if you do not opt out your claim will be extinguished without compensation if you fail to register. So we take from this decision, paragraph 102, that if the carriage motion process is contrary to the basic precepts of Part 10, then it is proper to rule that it is not available under, for example, section 67.
The one other aspect of this case, which is important, and it leads into ground 2, which I will come to shortly, what this case demonstrates is a matter which ought really be common sense, that different representatives and legal teams and perhaps funders will inevitably take different approaches to how they will seek to litigate or settle matters. That is just obvious.
In this case we see as an example that the Maurice Blackburn approach, until the court found it was beyond power, was that they thought the best way to get a settlement for the class was to proffer to AMP that anyone who did not register would not only miss out but would have their cause of action extinguished. Clearly, Ms Wigmans would be taking a different approach to settlement.
But what that illustrates is that there can be no assumption, and there is in fact no process by which the court, consistent with the judicial method, particularly at the outset of the matter, can make predictions as to which legal team will produce the better settlement. It is simply unknowable by the judicial method as deployed in this country, and it is demonstrated by the very behaviour of Komlotex in this matter.
Your Honours, before I develop the submission on ground 2, I just need to deal with the common law principles which we refer to in paragraph 8 of the outline. There are really four points we wish to make there. The first is that the well‑established principle in Carron Iron picked up in CSR v Cigna that it is prima facie vexatious and oppressive to commence a second action if one is already pending in respect of the same controversy and in which complete relief is available is a principle that can be applied to Part 10. The learned President said no, it cannot be applied to Part 10 for the reason which he gives at paragraph 78 on page 178 of the core book.
What he said is because Komlotex is represented in our action but is not a party then this principle of prima facie vexation and oppression can never apply. But, of course, what that misses is that the Carron Iron principle is not concerned with precise identity of parties, it is concerned with whether complete relief is available in respect to the same controversy in the earlier action. Based upon the findings of her Honour at paragraph – in the late 300s, that is the case here, complete relief is available on Komlotex’s claims and the claims of every other person in the class within the Wigmans action. It is paragraph 347 of her Honour.
Our second submission on the common law is in relation to McHenry v Lewis. The learned President discussed that at paragraph 55 and then at paragraph 84 said it was remarkably similar to the carriage motion. In other words, the carriage motion has always been there in equity. We would beg to differ. The Court has McHenry v Lewis in volume 5 at tab 20.
McHenry v Lewis was a case in which there were three overlapping actions which can be picked up from page 1192 of the book, or 401 of the report in the last paragraph. The first action was by a Mr Conybeare against Lewis and co-trustees for breach of trust and it was on behalf of himself and all other shareholders in the railway. The second action was by Mr McHenry on behalf of the same class against the same defendants but as said at the foot of the page it was “wider” in that it extended to other relief for other breaches and against other persons as well as joining personal individual claims of McHenry. So, two is wider than one.
Then, over the page, the third action is also by Mr McHenry in the United States brought against the same defendants but also had additional defendants and offered the ability to get enforcement in the United States. So, three was wider than two. The motion which was brought was solely to stay number two and that motion failed for the reason at page 403, point 3 that there was a good reason for the second action which was that enforcement was not readily available without actions in two jurisdictions. So that was the reason for the second action. It was not to be stayed.
Then at the foot of page 403 his Honour referred to what he calls the “third action”, but in fact that is the first in time by Conybeare, and he repeats that it did not cover quite the same ground. So they were not duplicative; they were overlapping. There was then a procedural problem that Mr Conybeare was not joined before the court, so the court had no power to do anything against the Conybeare action.
What then follows on page 404 is the passage to which the learned President refers as to the courts having a practice of bringing all the matters together, seeing what is in them and then sorting out what is to happen. There is no doubt that certainly in the context of overlapping matters the courts faced with the multiple actions could bring them together and determine what is to happen.
What is instructive though from about point 5 are the sorts of factors that even in the case of overlapping matters the court considers to be traditional juridical matters. It may be, for example, the first action is collusive. So, just pausing there, the first action may have the prima facie claim to be the action but if it can be shown it is collusive, then it might be stayed in favour of a later action, coming back to your Honour Justice Edelman’s question this morning.
One action may embrace further relief than another, one may be better framed to raise the question, one may be more perfect as to parties. So there is a range of factors where one has overlapping matters doing different things where the court can consider those matters and respond appropriately. The next example given is that one may be a solvent and one may be pauper, and I have explained this morning we embrace that could be a relevant factor for the court to consider. Then his Honour goes on to say:
sometimes . . . we excise from one action so much of the relief as can be properly attributed to an earlier [action], and allow the second or third action to go on for the additional relief –
again, the assumption being that the earlier action may well have prima facie claims to continuance, and the second or third action may have to yield to the claims in the first action.
What is critical in McHenry v Lewis is there is no retreat from the Carron Iron principle which your Honours will find in Lord Justice Cotton’s judgment, page 405, point 8. In the judgment of Lord Justice Bowen on page 408 one sees the court ultimately dealing with conventional questions of:
vexation and oppression to prevent the administration of justice being perverted for an unjust end.
We would submit it is a little difficult to get the US/Canadian carriage motion out of that case.
Your Honours, completing point 8 of our outline, the third point is a short one, that Lubbe v Cape - I do not need to go to it - that was the case where there was a finding that based on the legal system of South Africa which would otherwise have been the natural forum, it was impossible for the plaintiffs to get justice because there was no mechanism for financing representation. The court took that into account in deciding not to stay the English proceedings. Again, looking at the President at paragraphs 85 to 86, it is very difficult to get the carriage motion out of Lubbe v Cape. Our final point is as set out in paragraph 8d - I have already made it.
Your Honours, I have covered paragraphs 9 and 10. The inherent power received little attention in the respondent’s submissions, and it is difficult to think it could take their argument any further than their argument under section 67, so could I come to ground 2. For this purpose, your Honours will need volume 2 of the book of further materials to see Mr Watson’s affidavit.
The affidavit commenced at page 392 and you will see from paragraph 7 the circumstances in which Maurice Blackburn managed to eliminate some of the competition, including in paragraph 7ii that Maurice Blackburn and the joint plaintiffs intended to ask the court on settlement to pay $350,000 in respect of costs of one of the losers, Fernbrook.
KIEFEL CJ: This is a truly alternative submission, is it?
MR GLEESON: Yes, it is completely alternative, your Honour. The essence of the submission is that if one is to conduct this process and one is to search for the proceeding with the highest prospects of settlement or judgment in amount and/or net returns, which are tasks which courts have never undertaken in Australia, one would need to have a clear evidentiary record, which did not exist. So what then happened is that at paragraph 13, Mr Watson gave evidence that:
the primary determinant of the ultimate return to class members in any class action, including a securities class action, is not the amount of costs incurred (including funding costs, where applicable), but rather the gross amount of the settlement sum –
and that may be taken to be a reasonably fair statement. If one is asking what is in the best interests of the members in terms of what they are ultimately going to get, the biggest determinant is going to be what is the settlement sum, if they are lucky enough to get one.
Then what the affidavit proceeded to do - and there is no criticism for this, this is what GetSwift required the parties to do - was for Mr Watson to advance an argument as to why Maurice Blackburn would get the biggest settlement. That is based on their experience and qualities and so on. They are the sort of factors that GetSwift, in the Full Court, says the court must try and assess, consistent with Canada and America, we say completely beyond power.
Now, then at 25 he starts talking about competing funding models and there are legal costs and there are disbursements. Then when he comes to compare them at 38 what he first does is to say the court should simply assume the same number of solicitor hours, solicitor rates, counsel hours, counsel rates, et cetera. So that gets you through to the costs and disbursements which are on paragraph 45. That is the first aspect of the standardisation which has gone on. It is a minor point given the matters before the Court.
Where the matter then really turns is at paragraph 46. He says, I have then carried out some modelling to demonstrate the expected return to class members, and the modelling your Honours will find at pages 493 to 494 of this book. If I could start at page 493 and focus only on Maurice Blackburn - that is MB; and on Quinn Emanuel and Burford – that is QE; if one takes a settlement, for instance, of 80 million – it is about four or five columns over – you see first that Maurice Blackburn has some legal fees, disbursements, at that stage it had an ATE, and it gets an uplift, $1.9 million, that is the 25 per cent allowed uplift. Then because that uplift does not raise further, that remains constant throughout, whatever be the settlement.
If you go down to the Quinn Emanuel and Burford, at that same $80 million figure, the costs are 12 million and the Burford commission is said to be 10 million. Now, pausing there, that is not the Burford commission because we know that ‑ we will not know whether Burford gets a commission or what commission they get until the end of the matter.
Then if you go to 494 and you follow that same one down you see that on an $80 million settlement Maurice Blackburn would return 64 million to the class whereas, mathematically, Quinn Emanuel returns 57 million, or 58 million, to the class. Now, what her Honour in the Court of Appeal has done is to say this: we are going to assume that whether the Maurice Blackburn team run this matter or Quinn Emanuel run this matter, there is an equal probability of achieving every outcome in the table between 40 million and 500 million.
If there is such an equal probability then, mathematically, you can see that the return to the class is bigger for Komlotex than it is for Quinn Emanuel and, mathematically, that is true, that is just a function of comparing solicitors’ fees plus an uplift as against solicitors’ fees plus a commission.
The critical question then is: what basis did the court have to find that the probability was that each matter would produce the same – had an equal chance of producing the same outcome within the range because you only need to look at this table and compare 80 million with 100 million and if the Wigmans proceeding managed to achieve $100 million settlement whereas Komlotex only achieved 80 million for all sorts of reasons, then the return to the class would be higher under the Wigmans proposal. It would be 74.9 million as against 64 million.
So, what that shows is that one cannot make any judgment about which proceeding would produce a higher return on a net basis, which is what the Court of Appeal and her Honour did, without first making an assumption as to how the proceedings are going to compare on a gross basis. Then the question is what material was there to make findings as to how the proceedings would compare on a gross basis.
The answer was that - if you could go back to the core appeal book, please - her Honour made a finding at paragraph 208 that to the extent the different funding models had different incentives and disincentives - it all depended on your perspective, an incentive for one might from a different perspective be a disincentive - her Honour gave some examples of why that might be.
So, in other words, coming down to the beginning of 212 her Honour positively recognised that there were differing incentives and disincentives in the models and recognised that she could not make a finding as to how they would play out, so her Honour could not find which proceeding would produce a higher settlement or judgment and then resolve the problem by resorting to what is called the standardised assumption, the relevant one being that each proceeding would achieve the same outcome.
Now, it is that last step which we submit had no rational foundation. While I have said to your Honour the Chief Justice this is an alternative ground – it is a strict alternative ground but what it illustrates is that if one is to carry out the carriage motion process the court is necessarily asked to do the very exercise that her Honour found impossible to do and then, with respect, resolve the impossibility by making an assumption without a basis for it.
That really just shows that the entire exercise is not capable of being carried out consistent with the judicial method certainly without a statute which provides the type of express criteria you need to support it. Could I just ask your Honours to go to Komlotex’s submissions to see how they defend this alleged error? It is paragraphs 57 and 58. At the end of 57, Komlotex argues:
If there is no material, and no basis, to suggest that one proceeding is likely to produce a better judgment or settlement sum than another (as was the situation in the present case) –
Pausing there, we accept that is a fair reading of her Honour’s findings:
then it could hardly be said to be erroneous to conclude that the proceedings that produced a smaller return to group members out of any given settlement sum or judgment was not to be preferred.
That logic, which we find a little difficult to follow, is repeated at the end of 58:
If there is nothing to separate the matters (as was the case here), it is not erroneous to assume they produce the same result.
Now, ground 2 collapses to whether it is permissible to reason in that fashion. If it is not permissible to reason in that fashion, apart from illustrating the whole problems of the carriage motion, then the factor which her Honour relied upon to stay our proceeding was not made out, therefore it was an irrelevant consideration, and what ought then to have been done was that our proceeding first in time ought to have been allowed to proceed. It was first in time, it adequately covered all claims, it was the most advanced of the proceedings, and the Komlotex proceeding would then be stayed on the principles I have expressed earlier.
GAGELER J: What sort of evidence do you suggest her Honour should have been looking for?
MR GLEESON: Our first proposition, your Honour, is the task is impossible.
GAGELER J: I follow that, but this is ground 2.
MR GLEESON: Well, as long as your Honour appreciates that part of the thrust of ground 2 is to say when you actually look at a judge conscientiously attempting to do it, the task cannot be done.
GAGELER J: That is ground 1 ‑ ‑ ‑
MR GLEESON: That is ground 1.
GAGELER J: ‑ ‑ ‑ but what is ground 2? What should she have been looking ‑ ‑ ‑
KEANE J: Well, ground 2 is it was not done. Ground 1 is the task cannot be done; ground 2 is it was not done.
MR GLEESON: It was not done, and what her Honour needed to say was – her Honour gave about 50 paragraphs quite correctly saying, “You have both joined battle and you have tried to do what Justice Lee in the Full Court said you have to do in GetSwift. You have tried to prove” – and perhaps the answer is in the Full Court in GetSwift, which is the answer to your Honour’s question of what you were meant to do.
But what her Honour said is, “You’ve tried to do it and at the end of this long battle I’ve found it’s a nil all draw. I can’t make any safe conclusion”. So then the one thing her Honour had to do was to say, “I’ve tried. No one has proved anything to me on this question. The result is the court does not know which matter will produce the higher settlement or judgment”. Once that is done, then that plank in the judgment is gone.
So, your Honours, if I could just conclude with GetSwift in the Full Court. It is in volume 5 at tab 22. At the first instance in GetSwift this sort of exercise was done, and the Full Court found no error. But critically at paragraphs 276 to 278 the court said:
where the other relevant considerations are essentially equivalent . . . the decisive consideration . . . may be argued to be the lower legal costs and funding charges –
between the proceedings. As desirable as those are:
one of the real benefits of litigation funding has been the levelling of the playing field for claimants . . . The Court should not give an undue focus to lower costs and funding charges as doing so is likely to promote a “rush to the bottom” by funders and solicitors keen to win the tender . . . there are already signs of this in the market.
So the Federal Court approach is do not give so much attention to who has the lowest legal costs and funding charges because then we will be presiding over a race to the bottom. We say none of this should be the Court’s concern. Then at 277, there is protection of settlement, which we agree with:
Having regard to that protection the Court should focus less on achieving the lowest possible costs and funding charges . . . and more on selecting the proceeding with a funding and costs models likely to best motivate the applicant’s solicitor and funder to work assiduously to achieve the best outcome . . . and to take responsible risks.
So the sort of evidence, to answer your Honour’s question, is that you tender your funding and your costs models, perhaps then expert evidence, as was attempted in this case and failed as inadmissible, where you try and say if a person was faced with these incentives under their model, they would be likely to do better.
So the argument, which was then tried to be run, for example, was, if you are a funder hoping for a 10 per cent commission, which rises to 15 per cent if you get above a certain settlement, you have this continuing incentive to keep pushing harder for settlement and, depending on your balance sheet, you may be better able to manage and bear risk as the action gets more expensive and the time value of your money which is out becomes even more critical.
You try to analyse all that. You then try to say, “You are Maurice Blackburn. You have a strong incentive to get to 80 million, at which point you pick up 2 million free dollars, but you do not pick up a single dollar after $80 million. Therefore, does that mean that your incentives to keep going are less? What are your resources, Maurice Blackburn? What is your balance sheet? How many funding actions do you have on foot? What are your bank loans?” ‑ all of those questions. You then try and ask the judge to say - based on all of that - Quinn Emanuel/Burford were likely to do better than Maurice Blackburn. That is one sort of evidence.
Then you come to the question of: how are the competing parties likely to try and run the case? A piece of evidence that might have been relevant is we now know that Komlotex was intending to try and engage in class closure and, as we would put it, sacrifice the interests of the group members who did not register. That would be highly relevant to how the two actions would play out. On the Full Court’s Federal Court approach, that is what you are meant to do. You see it over the page in paragraph 278:
The Court should be astute to select the proceeding with the legal team that is most likely to achieve the largest settlement or judgment, ie the most experienced and capable.
So at that point, you try and lead evidence to say, as Mr Watson did, “I am the class actions king of Australia. I’ve won lots of matters.” Then you have that sort of contest going on. That is the evidence that the process says
is required. You Honours have our submissions on how ground 1 and ground 2 fit together. May it please the Court.
KIEFEL CJ: Thank you, Mr Gleeson.
MR MOORE: If it is convenient to the Court, my learned friend Ms Collins and I have agreed that I would go first.
KIEFEL CJ: Yes, thank you, Mr Moore.
MR MOORE: Can I start with some matters of overview, in light of the way that the arguments have developed this morning, in the exchanges with the Bench. The Australian representative proceedings legislation, legislative scheme is facilitative and permissive. It permits representative actions. It does not prevent proceedings or prevent a plaintiff from bringing his or her own proceedings, including as representative proceedings, and I will take the Court through the scheme in due course.
That involves, we submit, a legislative choice which did not take up a central aspect of the recommendations of the Australian Law Reform Commission, which was that proceedings should be brought as grouped plaintiff proceedings whereby there would be, in effect, a collection of plaintiffs that are forced to commence proceedings against their will, without consent.
That aspect was not taken up and instead a representative proceeding was adopted instead. That is more closely analogous, as your Honour Justice Gageler has observed, to the equitable procedure and that has significance when one considers invocations of notions of abuse of process and the like.
The management of more than one matter is not dealt with expressly by Part 10. That includes, because there are ample powers elsewhere and Parliament expressly did not seek to disturb or alter the existing powers, certainly sections 171 and 166(1)(d) relied upon by our learned friends do not set out some code to regulate multiple actions. They are not dealing with multiple actions at all, they are dealing with a different subject matter, and I will come in more detail to what we say is the focus of those provisions.
Therefore, the consequence is that the court manages multiple proceedings which are permitted to be commenced and which were commenced in the old equity proceedings without difficulty, by reference to its broad powers. Those powers are expressly stated to permit consideration of all relevant matters, and of course they require consideration of costs.
KIEFEL CJ: Mr Moore, could I interrupt you to ask a simple question, probably too simple?
MR MOORE: Yes, Chief Justice.
KIEFEL CJ: How do you say the Civil Procedure Act permits multiple proceedings?
MR MOORE: Sorry, your Honour, I was not saying that it - when your Honour says “permit it”, it does not make provision for that ‑ ‑ ‑
KIEFEL CJ: No – comprehends?
MR MOORE: ‑ ‑ ‑ but a plaintiff can file his or her proceeding, another plaintiff can file a different proceeding, but there is nothing in Part 10 that prevents there being more than once proceeding. Indeed, it is contemplated that there might be more than one proceeding. A common example would be separate individual proceedings. There could be different closed class representative proceedings ‑ ‑ ‑
KIEFEL CJ: But there would be a difference between them, and that is not the case here.
MR MOORE: There would be a difference between them. There were, of course, also some differences here in terms of pleadings and the like, and that is a matter that is relevant to consider.
KIEFEL CJ: But materially, we are proceeding on the basis that there was no material difference, that they – do you take issue with Mr Gleeson’s assertion that they were essentially the same, they duplicated?
MR MOORE: They were broadly the same. There were differences in pleadings and causes of action, including as a result of the amendments that were made by my learned friend’s solicitors after their proceeding had originally been commenced.
KIEFEL CJ: But nothing her Honour did turned on that.
MR MOORE: What her Honour did – and there may be an important but subtle distinction in this ‑ her Honour decided that the differences were not sufficient to prefer one matter over the other. She did not find there were no differences, she found that they were not sufficient. So when she was engaging in the process of which matter do I prefer she found that the differences were not such as to prefer one matter over the other or to overcome any of the other matters that she was having regard to.
EDELMAN J: Do you say these are duplicative proceedings, or not?
MR MOORE: Well, they were not quite the same, and one important aspect of that, your Honour, is that a plaintiff under our system can choose to bring its own proceeding. It can choose to bring a proceeding in the way that it wishes to frame the proceeding using its lawyers and its pleading – I am sorry, I am using “its”, it is a corporate plaintiff – his or her own lawyers or own pleading, and that is a choice that Part 10 does not prevent. Part 10 does not prohibit ‑ ‑ ‑
KIEFEL CJ: It says nothing about it really. It leaves it to the usual inherent rules of procedure about vexing actions.
MR MOORE: Precisely, your Honour, and therefore what was being exercised here – and we rely upon this – is the court’s general power to deal with multiple proceedings. When one looks at, for example, how the court dealt with that in its equitable jurisdiction – and I will come to the decision of McHenry v Lewis – the approach that was taken in such a case ‑ ‑ ‑
KIEFEL CJ: Where is the general power to deal with multiple proceedings derived from?
MR MOORE: From section 67 and the power to order a stay on proceeding.
KIEFEL CJ: Well, that is sort of inverting it a little, is it not? Section 67 gives the specific power to order a stay of proceedings in circumstances where it would be not desirable and in the interests of justice for the matter to proceed further.
MR MOORE: Correct.
KIEFEL CJ: It says nothing about multiple proceedings either.
MR MOORE: It does not expressly deal with multiple proceedings but what it does ‑ ‑ ‑
KIEFEL CJ: It might cure them.
MR MOORE: What it does, relevantly, is it gives the court the broadest possible power to deal with any situation in which a stay might be warranted and it expressly provides that the court may have regard to any relevant consideration. So, in circumstances where one has a broad and unlimited power in section 67 when read with section 58 and also with sections 56 and 57 – and I will come to those provisions – and in circumstances where nothing in Part 10 prohibits the bringing of another proceeding or cuts down the ability to do so, there is simply no proper basis to say, for example, first in time wins, or some other basis derived from the principles that my learned friend has sought to advance this morning.
KIEFEL CJ: In the ordinary course of litigation if there was a proceeding dealing with the same cause of action, particularly involving substantially the same parties, or one side of the parties having the same interests, if a second proceeding was brought with respect to substantially the same action the second would be stayed.
MR MOORE: Yes.
KIEFEL CJ: So, what you have to argue – and I know you are going to argue, and the courts below have approached it on this basis – is that the regime of the scheme for representative proceedings somehow creates a new dimension to the usual approach of the court in relation to stay applications.
MR MOORE: When your Honour refers to the “usual” position, your Honour is correct.
KIEFEL CJ: The traditional position in litigation.
MR MOORE: Your Honour is correct where there is a plaintiff and defendant in common, where the parties are the same. When there is a second proceeding brought by a second plaintiff, that is the second plaintiff’s own proceedings, they are always entitled, under our system, to bring their own second proceeding. The question that then arises is what happens to the representative aspect of that. That is a creature of statute and I need to take the Court through the ‑ ‑ ‑
KIEFEL CJ: But the plaintiff – it is not a perfect analogy with usual litigation in the sense that the parties here are bringing the proceedings in a representative capacity so that you can put that plaintiff to one side and say here is same group, same class of persons here present before the court pursuing the same cause of action. Just for the moment, I cannot quite see why that does not – why that somehow takes it out of the usual approach to a stay application.
MR MOORE: I understand what your Honour is putting to me and I intended to deal with that. The answer is found in the particular status of the person as a group member and what the procedures provide for - and I will have to take the Court through it - it is that until you get to the process of opt out a person is not going to be bound by the existing procedure and so we have a statutory procedure that provides for the commencement of this new creature, representative procedure, although as we will say, it is quite analogous to the old equity representative procedure.
In equity one did not say one could not commence a separate representative procedure at all as one will see but it is a new statutory creature, the representative action, that confers certain rights and obligations and critically it is not until the process of opt out has passed that any representative or group member is bound by the proceeding.
KIEFEL CJ: But, Mr Moore, at the time the proceedings are brought the scheme is such that any group member knows that there will be an opportunity for opt out and there could be a creation of a new class of opt out persons. That is known at the outset. That is how the scheme is intended to operate.
MR MOORE: What they do not know at the outset is that the action is even commenced and what the scheme provides for is for notice to be given so that people are told about this thing called a representative action brought on their behalf. They are given, in effect, an option. They can either opt out or if they do nothing – that is why it is an opt‑out procedure, they can do nothing, they are from the date of opt out taken to be bound and at that point but not before they are bound by the proceedings.
That is why, for example, the Federal Court has held in a different case that until the date of opt out it is not an abuse of process for an individual to commence their own separate proceeding against the defendant. That approach, we say, is entirely correct and orthodox. So, they are not analogous to a plaintiff and a defendant suing each other more than once.
The scheme gives the court – sorry, the Act, the Civil Procedure Act gives the court broad powers as we have submitted. The court manages multiple proceedings by reference to those broad powers and those powers are expressly stated in consideration of all relevant matters…..and require, not just permit, but require consideration of costs.
The suggestion by our learned friends that the considerations that her Honour took into account, and my learned friend has not spent much time focusing on what her Honour actually did and we want to spend a little more time on that, but the considerations that her Honour took account, the suggestion that they were somehow alien, we say, is wrong.
The two matters that her Honour used to determine the matter were, firstly, which matters provided better security for costs. That distinguished two of the matters from two of the other matters. It distinguished the Komlotex matter and Wigmans matters from the Georgiou and Wileypark matters, and our learned friends accept that was an entirely legitimate basis of discriminating between one matter and another matter.
The second matter that her Honour took into account is properly described as a concern about costs. Although it has been dressed up by our learned friends as a prediction of outcomes and a statement about net returns, at base it was a concern about costs. The Wigmans matter was more costly than the Komlotex matter because of the higher commission rate, as costs in these matters are a combination of legal costs and funding commission rate, and the Wigmans matter simply had higher costs.
When one goes through the statutory scheme and Civil Procedure Act, one sees that in fact the court is required to take into account costs, because the overriding objective is to provide for the just, quick, and cheap resolution of proceedings. So her Honour’s concern about costs was not alien and, indeed, was entirely proper and, indeed, orthodox.
An approach, we submit, that rules out certain relevant considerations but not others, and which gives presumption to the first in time matter, is not consistent with a proper understanding of the court’s power, nor is it in the interests of either party, but rather is only in the interests of the first in time party’s funders and lawyers.
When our learned friend says that the court should not prefer the interests of the group members over the interests of the defendant, it is important to understand that when one is dealing with the question of costs, it does not prefer the interests of one party over the other. Indeed, lower costs are likely to benefit both plaintiff and defendant.
Any experience in litigation suggests that it is easier, for example, to resolve matters when costs are lower, and that if costs are much higher it might end up meaning that the plaintiff gets less, but also that the defendant has to pay more to resolve a matter, and so low costs do not prefer the interest of one party over the other, but rather are an important consideration for the court to consider and, indeed, are required, as we said, by the terms of section 58 when read with sections 56 and 67, and I will come to those provisions.
The use of the term “multiplicity”, we submit, is a misleading term. As your Honour Justice Gageler noted, we are not dealing with multiple cases between the same plaintiff and defendant. The second action is a different plaintiff. The plaintiff can always bring his or her own action, and representative proceedings existed in equity, and the proper approach there was to bring the different actions before the court and consider which is the best one, and that was a general law position.
Therefore the power to grant a stay in multiple representative proceedings, consistently with the approach in equity, is to say that it would be unacceptable to allow multiple actions to go forward, and of course that was common ground between all parties before her Honour. The approach in that regard can be seen by some observations by the Full Court in the GetSwift Case. Can I go to that briefly - volume 5, behind tab 22 and I want to go to page 1238 of the court book?
GORDON J: What paragraph, please, Mr Moore?
MR MOORE: Paragraph 122, your Honour.
GORDON J: Thank you.
MR MOORE: There their Honours observed that:
In the present case the primary judge reached the view that allowing the continuance of three competing class actions was likely to be more expensive for the parties and group members and less efficient than staying two of the cases . . . We would respectfully agree. In our view three class actions brought primarily against the same respondent . . . involve increased use of judicial and Court resources; (b) move more slowly –
et cetera. Then in 123:
Once it is accepted that competing class actions may have such effects it is plain that the power to permanently stay a competing class action is readily found in the Court’s express and implied power to manage the cases before it.
In 124, their Honours then turn to what is the power that the Federal Court can employ. Of course, your Honours will appreciate that the New South Wales provisions are different and there are different provisions in section 57 and 58 in relation to the stay power, but their Honours refer to the overarching purpose and also in 125 that:
The Court also has a general power to control its own proceedings -
In 126 their Honours observe that:
These powers are not constrained by any necessity to fit them into a specific category such as “abuse of process”.
In 127 their Honours go on to doubt whether section 33ZF, equivalent to 183, is a source of power. Again, just continuing my overview ‑ ‑ ‑
GORDON J: Sorry, Mr Moore, do you rely upon 183?
MR MOORE: Your Honour, we do not place primary reliance on 183. We place primary reliance on section 67 of the CPA together with the court’s inherent power.
GORDON J: Thank you.
MR MOORE: The implication of US and Canadian procedures, we submit, is a distraction. There has been no uncritical receipt of overseas procedure into Australia. On the contrary, the fact that relevant matters pursuant to our regime might also be relevant to be considered in a different regime does not make them inappropriate to consider here.
Further, we say that the submission confuses carriage motions and certification motions. As we will see, the Canadian carriage motion may occur prior to any certification procedure and is based in that context on provisions that are very similar to the New South Wales provisions in issue in the present case. We say that ground 2 raises no issue of principle and that the appellant’s submissions do not give proper effect to the factual findings of her Honour and the way in which that issue was raised before her Honour.
Can I commence with some observations on the approach of her Honour the primary judge in the present case? There have been lots of comments about other decisions, lots of references to his Honour Justice Lee, but we are dealing with what was done in this case, and what her Honour did was not to conduct some elaborate auction‑type exercise, which is what the plaintiff asserts. She did not impose any process on the parties. She did not call for any offers. She did not invite submissions on defined topics. She did not do what his Honour Justice Lee did in the CJMCG Case that our learned friend took the Court to in volume 5 at page 1149.
KIEFEL CJ: The appellant’s reference to an auction process, I think, is reference to a decision of Justice Finkelstein.
MR MOORE: Yes.
KIEFEL CJ: Did his Honour actually carry out the process, or was his Honour pointing out what the process could look like?
MR MOORE: I do not think anyone has conducted an auction process.
KIEFEL CJ: No, I wondered how much tongue‑in‑cheek it was.
MR MOORE: I think a little, your Honour. Rather, in this case, her Honour had before her motions from each of the represented plaintiffs brought regularly, asserting that the other matters should be stayed, and with a very slight qualification in relation to the Wileypark proceedings, which is not relevant now, that only one matter should proceed. Each representative plaintiff thus invoked the jurisdiction of the Supreme Court to stay proceedings, and asked her Honour to exercise that jurisdiction, which we say is a broad jurisdiction not sourced in Part 10 but sourced inter alia in Part 6. Her Honour was dealing with applications that had been regularly raised by notices of motion in each of the proceedings, quelling a controversy that had been raised by the parties, not one created by the court.
GAGELER J: Mr Moore.
MR MOORE: Yes, your Honour.
GAGELER J: Was each representative party a member of Mr Gleeson’s class at the time of the commencement of proceedings?
MR MOORE: I think the answer to that is yes. Yes.
GAGELER J: Thank you.
MR MOORE: There was a change - I am sorry, perhaps I have answered that slightly too hastily.
GORDON J: I do not think that is right, Mr Moore. I think ‑ ‑ ‑
MR MOORE: I have been too hasty. That is not right because what, in fact, happened was that the Wigmans’ claim was amended to change the claim period and, therefore – after it had been commenced. So, whilst it ultimately became the widest claim period, it was not so initially and immediately.
GAGELER J: Did that amendment occur after the commencement of the competing proceedings?
MR MOORE: Yes. I will be corrected if that is wrong, but I understand it ‑ ‑ ‑
KIEFEL CJ: Perhaps you could provide us with the references for that since there might be something in that point – after lunch sometime.
MR MOORE: Yes, I am concerned there might – not everything might be in the materials, but I will have that checked. That is my understanding.
GAGELER J: Yes, I mean, if the question is who is first in time then it might be quite important.
MR MOORE: It may be. Now, in the appeal book at page 17, the core appeal book, her Honour commences at paragraph 17 to set out the various motions that are filed. Of course, everyone sought by motion that the other proceedings be permanently stayed. The various motions are set out in paragraph 17, paragraph 20 - the relevant paragraph is 1d, paragraph 22 and 24 refers to the fact that Fernbrook proceedings, the fifth proceedings, “consolidated with the Komlotex proceeding”, and relief was sought to that effect.
Then in paragraph 46, there were the Komlotex proceedings. Interestingly, the Komlotex proceedings were the only proceedings where a notice of motion was filed in each of the other proceedings; everyone else simply filed a motion in their own proceedings seeking a stay of other proceedings.
In terms of the matters or factors that her Honour considered, her Honour did not raise these matters herself for the parties to comment on but, rather, dealt with the factors that the parties themselves had advanced as relevant considerations, and one sees that from paragraph 126 of the decision:
propose to address the relevant factors identified by the parties on the present applications in the following order –
and that was an entirely orthodox approach. In the case of the appellant, the proceeding as considered by the primary judge was not the proceedings as first commenced. There were three changes. The first was to expand the end date of the relevant period from 15 April 2018 to 17 April 2018. That took up some of the time during which Mr Regan was speaking in the Royal Commission during which the share price started to be affected, so the Wigmans amended claim actually extended the period to a period during which the relevant disclosure was occurring.
The second was to add a non‑disclosure to ASIC information continuous disclosure contravention relating to AMP’s alleged failure to disclose certain information to ASIC and expanding the group definition to include in relation to the unconscionable conduct claim any persons who bought shares at any time prior to 17 April 2018 on the basis that those persons first suffered loss or damage when the unconscionable conduct was revealed. The Wigmans proceeding was the only proceeding that had an unconscionable conduct claim in it.
Contrary to the appellant’s submissions, the primary judge, her Honour did not seek to ascertain or prefer the proceedings was likely to produce the highest net return. That is not how she proceeded. She did not seek to ascertain or prefer anything. She considered, we submit in a judicial manner, the various factors which the parties had identified and undertook a detailed analysis, over 200 paragraphs. Obviously, I cannot go through all of that, but a number of factors were held to be mutual or of no weight, including the relative skill and experience of the legal practitioners.
The fact that the appellant’s proceedings were further advanced was a factor that might have preferred it, if other factors were neutral, her Honour decided at paragraph 324. The Wigmans v Komlotex proceedings were preferred over the Georgiou and Wileypark proceedings on the basis not of return but of superior security for the defendant and that is apparent from her Honour’s decision at paragraph 233, and of course that is a factor which our learned friends say is a proper factor for the Court to take into account.
Then the fact that three proceedings sought a common fund order and our proceeding did not was held to confer a small advantage on our proceeding, given that special leave had at that stage been granted in what ultimately became the Court’s decision in Brewster. Her Honour concluded that at 214 to 215. That would, we submit, correctly remain the relevant distinguishing feature.
Further, as between the present proceedings that are before this Court, the fact that the Wigmans proceeding involved higher costs when considering both solicitor and funding costs was a factor that preferred our proceeding, and her Honour found that at 212 to 213. Of course, as remarked, that did not prefer any plaintiff over the defendant. It was about reducing the costs of proceedings more generally.
The order in the present case was made on the basis of, inter alia, section 67 of the Civil Procedure Act, and one can see that at page 139 of this book, the core appeal book at order (6). Can I then go to the Civil Procedure Act itself? Section 67 provides that:
Subject to rules of court, the court may at any time . . . by order, stay any proceedings before it, either permanently or until a specified day.
Section 58 provides that:
In deciding:
(a)whether to make any order or direction for the management of proceedings, including:
. . .
(ii)any order granting an adjournment or stay of proceedings –
Then underneath (b):
the court must seek to act in accordance with the dictates of justice.
Then subsection (2) elaborates that concept:
For the purpose of determining what are the dictates of justice in a particular case, the court:
(a)must have regard to the provisions of sections 56 and 57, and
(b)may have regard to the following matters to the extent to which it considers them relevant –
Then after various matters are listed. The last matter is:
(vii)such other matters as the court considers relevant in the circumstances of the case.
That is a very broad set of considerations. The mandatory requirement to have regard to the provisions of section 56 picks up in section 56(1):
The overriding purpose of the Act . . . is to facilitate the just, quick and cheap resolution of the real issues in the proceedings.
“Cheap”, obviously, will invoke notions of costs and that is further spelt out in section 57. Your Honours, I note the time.
KIEFEL CJ: Yes, thank you. The Court will adjourn until 2.15.
AT 12.44 PM LUNCHEON ADJOURNMENT
UPON RESUMING AT 2.17 PM:
KIEFEL CJ: Yes, Mr Moore.
MR MOORE: Thank you, your Honour. In answer to your Honour Justice Gageler’s question just before lunch, the answer has led me into a swamp over lunch, the question being was every representative party a member of the Wigmans proceeding – Wigmans class as first filed ‑ ‑ ‑
EDELMAN J: Sorry to interrupt, Mr Moore, could I ask you just to speak up a little please.
MR MOORE: Yes, I am sorry, your Honours. The answer to that question is a little complicated. Being very strict about it, the answer is I do not know but it is likely that they were, however, can I indicate the basis on which that claim is formulated. In the appellant’s book of further materials in volume 1 at page 208 of the book, using the numbering up at the top left, is the group member definition in what was a proposed amended pleading.
I said before lunch the pleading was amended. In fact, what happened was the parties brought forward proposed amended pleadings and said this was the case that they wanted to run, and her Honour dealt with the matter on the basis of the parties’ proposed amended claims. That group member definition marks up the changes from the original definition. And so what one can see, looking at paragraph 1 on page 208, is that the original period was:
10 May 2012 to
1517 April 2018 –
That was not narrower than anyone’s original period, although Wileypark, like Ms Wigmans, later said they wished to amend to extend the period to 17 April 2018, and one sees there the proposed amendment from Ms Wigmans to extend that period. So, certainly, people who would be caught by the Wileypark extended period were not in the Wigmans original period but would be in the Wigmans extended period.
Another aspect of that definition is that persons who acquired an interest on the financial market operated by the Australian Securities Exchange, and an issue arose in the proceedings as to whether that would deal with people who had an off‑market transaction, or people who held American depository receipts, her Honour dealt with that question in paragraph 241 of the judgment.
The short answer, without going through it in detail, is that although Ms Wigmans made an argument to say the breadth of the description somehow caught those people, although arguably it does not, they then said that if it needs clarifying it can be done by a simple amendment, and her Honour then proceeded on the basis that that is a further amendment that was sought to be made. And then, of course, another aspect of the definition ‑ ‑ ‑
KIEFEL CJ: But did not deny the possibility that the interests were sufficiently the same that that could be done.
MR MOORE: No, she certainly did not deny that possibility, but in answer to the strict question I was asked, who was in and who was out, it was a bit of a movable feast.
GAGELER J: As originally drawn, was your client in paragraph 1.1?
MR MOORE: Correct, because we had an on‑market transaction, so my client was squarely within that period and was an on‑market, ordinary, conventional purchaser of shares.
GAGELER J: And the other competing representative parties, were they all within that definition?
MR MOORE: That is why I said I do not know but I suspect that they would be, but I just do not know what their position was. But there is another aspect of this which is that – and this is part of the complexity of these group member definitions. Your Honours see paragraph 1.2, another criterion to be in the class is that you had to suffer:
loss or damage by or resulting from the contraventions by AMP pleaded –
in various paragraphs. So, it all hangs on precisely what form did the pleading take and precisely what contraventions are alleged and if, for example, there was a gap in the pleading or some different contravention in one pleading versus another pleading then that would lead to potentially different groups of members.
KIEFEL CJ: There cannot be this kind of vagary up to the point when the notice goes about opting out. I mean, if the pleadings are not clear enough, they would have to be cleared up at some point. So, I do not think there is going to be a lingering uncertainty is there? Perhaps the pleadings were not cleared up enough for the purpose of these applications.
MR MOORE: No, your Honour, and I am not suggesting there would be lingering uncertainty, although, of course, one aspect of the opt‑out proceeding and the notice is that sometimes it is a complicated assessment for a group member to make as to whether they are in or out of a particular definition and courts have said that it may be complicated and that people may even need expert advice to know whether they are in or out provided it has been defined with some certainty.
My point is, simply, that an answer to what seemed like a simple question is a little complicated as to what the various overlapping groups were, and they may have included different groups of people. Her Honour dealt with that on a practical and pragmatic basis of, in effect, saying that amendments are proposed to be made ‑ ‑ ‑
KIEFEL CJ: Could be made.
MR MOORE: ‑ ‑ ‑ if there is a – if there was a valid claim to be made and it is a good claim, a competent lawyer would amend their pleading to pick it up. But it also does highlight, in our respectful submission, some difficulty with simply dealing with these cases on the basis of first filed in time because the very nature of them is that they are applications by a representative plaintiff representing a group of people who, in turn, are going to be defined in a class definition and who, in turn, will either be in or out of the group depending upon events that happened subsequent to the initial filing of the matter. I will come to that when I deal with the scheme of Part 10.
KIEFEL CJ: Mr Moore, one thing that Mr Gleeson commented upon in submissions in relation to the power to stay was that I think he accepted that it would be a relevant factor if there was, for instance, a security for costs regime, or costs could become a relevant factor under more or less traditional principles in relation to a stay.
MR MOORE: Yes.
KIEFEL CJ: If the representative party bringing the second proceedings were able to point to the likelihood that the first proceedings would be too expensive, that they could actually just prove that as a matter of course, firm X who is running it, or the funder charges X and that would be oppressive to the group members, it might follow ‑ I asked Mr Gleeson to clarify it – from what he said that that might be a sufficient reason in an appropriate case to make a stay in relation to the first proceeding. Would you agree with that approach?
MR MOORE: Yes, your Honour. And, indeed, one matter that we rely upon is that having recognised properly by my learned friend, Mr Gleeson, that the question of security would be a proper basis ‑ ‑ ‑
KIEFEL CJ: It would seem to follow from that.
MR MOORE: ‑ ‑ ‑ it would seem to follow that there is no relevant point of principle that would distinguish adequate security to the defendant from, for example, a fair and reasonable set of costs for a plaintiff and group members. And so to take an extreme example, if somebody came along and said, I have an action and my funding commission rate is 95 per cent of the proceeds, a court might say, well, that is an inappropriate funding commission rate, it does not fairly reflect your investment in the matter.
KIEFEL CJ: It would then be a question of how far does the court undertake this process. It would be one thing if the other party came along and said, we can show, as a matter of course, this is their funding regime, they can deny it if they would like, or say that that is not what they are going to do, but it is rather a different thing for the court to go in there, to go behind the actions, in a way, in relation to the juridical basis for the actions, and undertake the court’s own inquiry as to what looks like the best outcome.
MR MOORE: Yes, and relevantly, we submit, that is not what her Honour did here, and my learned friend wants to characterise it that way, but what her Honour did was a much more straightforward exercise of looking at which was the action that was more costly than other actions, and one of them, as she said, in her judgment ‑ ‑ ‑
KIEFEL CJ: Would be more costly, I think.
MR MOORE: ‑ ‑ ‑ was notably more expensive, yes. Well, simply had a higher cost rate. So, your Honour put to me earlier, if somebody had a high rate of legal costs, for example a high commission rate, that might be a relevant matter to take into account. That is precisely what her Honour did here, she looked at one matter and said it is out of line and significantly so from the other matters in terms of its funding commission rate, and therefore it was more expensive than the other matters.
That was, we say, a proper matter to take into account, and there is no principle that our learned friends have identified as to why you would distinguish that case from the cases that your Honour is putting to me, or indeed the security case that our learned friend has conceded. And where our learned friends are seeking to find, in effect, a limitation on the power of the court to consider these matters, we submit he has not identified one.
KIEFEL CJ: Could you remind me what the power of the court is at the conclusion of the proceedings, either with settlement, as is often the case in class actions, or when there is an order of the court ‑ ‑ ‑
MR MOORE: Yes.
KIEFEL CJ: ‑ ‑ ‑ for compensation or damages? What is the power of the court in relation to the commission or costs that are charged?
MR MOORE: Your Honour has asked a good question, section 173 ‑ ‑ ‑
KIEFEL CJ: Thank you for that.
MR MOORE: I am sorry, with respect ‑ section 173, which is the equivalent of 33V of the Federal Court Act, makes provision in relation to settlement or discontinuance, and that provides that:
If the Court gives such approval, it may make such orders as are just with respect to the distribution of any money –
And in subsection (1):
Representative proceedings may not be settled or discontinued without the approval of the Court.
And that is the mechanism by which ‑ ‑ ‑
KIEFEL CJ: That is commonly the case, that it is either settled or – it is not so often that the court actually makes an order in the plaintiff’s favour.
MR MOORE: Quite, your Honour, and what that has meant is that what has not yet been explored, as far as I am aware – someone will correct me if this is wrong – is what is the equivalent power on a judgment to investigate those matters, although we are not suggesting there is not such power, but there is no express provision.
KIEFEL CJ: If the representative party has some kind of fiduciary role, I would think that is the opening.
MR MOORE: We would say there is undoubted power on the court upon a judgment to likewise inquire into those matters, but one cannot point to the section in the same way.
KIEFEL CJ: Yes, thank you, Mr Moore.
MR MOORE: Section 173 is certainly the provision that is used to consider such questions, as your Honours observed, as commonly happens, on a settlement of the matter, which of course is the most common way that those matters are resolved.
Now, can I then return to the consideration of the statutory scheme. We would say, in light of the breadth of the power in section 67 read with section 58, one would not read that broad power down. We say there is no limitation to the power by necessary implication and in this regard we refer to what was said by this Court in the Owners of Shin Kobe Maru (1994) 181 CLR 404, at page 1421, which was that:
It is quite inappropriate to read provisions conferring jurisdiction or granting powers to a court by making implications or imposing limitations which are not found in the express words ‑
Now, in relation to Part 10, we submit there is nothing in that scheme that prevents the commencement of a second proceeding, nor is there anything which, either expressly or by necessary implication, restricts the exercise of powers found elsewhere, including the matters that can be taken into account when considering whether to stay proceedings.
In the decision of this Court in Brewster, which is the first case in volume 5, at paragraph [136], your Honour Justice Gordon made some observations about the nature of the legislative scheme in Part IVA and your Honour observed that it:
is procedural, not substantive, it permits representative proceedings . . . [it] is concerned with the commencement, and composition, of representative proceedings . . . [it] sets out the threshold requirements for a representative proceeding. It allows one or more persons to commence a representative proceeding, where there are seven or more persons . . . The representative proceeding may represent some or all of those who have such a claim.
Then at the bottom of that page your Honour observed:
In practical terms, it is those seeking to generate, capture and record interest in a specific class action . . . that determine the group members to whom the proceeding, or proposed proceeding, relates; the nature of the claims to be made on behalf of those group members; the relief to be claimed; and the questions of law or fact common to the group members.
Then, in [137] also emphasises the importance of opting out:
Opting out is important: the hearing . . . must not, except with the leave of the Court, commence earlier than the date before which a group member may opt out of the proceeding.
We note that pursuant to the scheme in section 157 there could be more than one proceeding, indeed more than one representative proceeding. Can I turn to section 157 and subsection (1) simply provides where:
(a) 7 or more persons have claims against the same person –
and then the other two criteria are satisfied:
(b) . . . same, similar . . . circumstances, and
(c) . . . substantial common questions of law or fact,
proceedings may be commenced by one or more of those persons as representing some or all of them.
So, of course, there could be multiple representative proceedings. The effect of the scheme is to permit one person to sue on behalf of a number of other people in a representative sense, but it does not preclude plaintiffs from commencing their own individual actions or permitting – or prohibit plaintiffs from commencing another representative action. An important aspect of the scheme is that it is an opt‑out scheme. Proceedings can be commenced without notice to group members and without their consent.
Some of them might not wish to bring proceedings and some of them, of course, might not know that proceedings have been commenced unless and until they receive an opt‑out notice so it would not be at all unlikely that somebody might commence a personal action against a defendant not knowing that a proceeding had been commenced, being a representative proceeding which had as a category of group members a description that might include them. There is nothing that precludes that. The court must then deal with that in due course and that is a matter for the management of multiple proceedings. In due course it may be that a person will have to choose, do they continue with their own proceeding and opt out of the representative proceeding or are they going to not opt out of the representative proceeding and not continue with their own proceeding. The statutory scheme provides for notice in due course which is in section 175:
Notice must be given to group members of the following matters in relation to representative proceedings:
(a)the commencement of the proceedings and the right of the group members to opt out of the proceedings before a specified date, being the date fixed under section 162(1) –
Then subsection (4) provides that:
Unless the Court is satisfied that it is just to do so, an application for approval of a settlement under section 173 must not be determined unless notice has been given to group members.
Section 176 provides that:
(1)The form and content of a notice under section 175 must be approved by the Court.
The practical effect of those provisions is that, as we commonly see, such applications for the distribution of an opt‑out notice do not happen the second the proceeding is commenced. They happen some way down the track and a court will hear an application to send out an opt‑out notice and notification of the proceedings. There may be debate about the form of that notice and it is only once that notice is sent that some people may receive notice that such a proceeding has commenced. Group members have a right to opt out, which is provided for in section 162:
(1)The Court must fix a date before which a group member may opt out of representative proceedings in the Court.
(2)A group member may opt out of the representative proceedings by written notice given under the local rules before the date so fixed.
Then subsection (4), which your Honour Justice Gordon emphasised in the Brewster Case, is that:
(4)Except with the leave of the Court, the hearing of representative proceedings must not commence earlier than the date before which a group member may opt out of the proceedings.
The combined effect of these provisions is that the participation by a group member in the representative proceedings is not crystallised until the date of opt out. Once that date is passed they are deemed to be part of the proceeding whether they are actually aware of the proceedings or not, and they will be bound by any resulting judgment or settlement.
Whether a settlement judgment binds a person or not, as in usual proceedings – sorry, whether a judgment binds a person or not is not, as in a usual proceeding, determined by whether they are a party, but rather is determined by the operation of a specific statutory regime which includes the opt‑out provisions, the notice provision and section 179 which in turn operates with the opt‑out regime because section 179 provides that:
A judgment given in representative proceedings:
. . .
(b)binds all such persons other than any person who has opted out of the proceedings under section 162.
It is only once the statutory procedures are satisfied that the person becomes bound and certainly prior to the opt‑out date their status is entirely provisional. That statutory scheme is different in form from the scheme that was proposed by the Australian Law Reform Commission in its report. That scheme was for group proceedings to constitute individual proceedings by each member of the group, i.e. the commencement of proceedings would involve the commencement of a proceeding by each person as a plaintiff without their knowledge or authority. Can I go in that respect to the book which consists of the second and third respondents’ supplementary authorities?
GORDON J: Which decision are you taking us to, Mr Moore?
MR MOORE: Sorry, your Honour, I am actually going to the ALRC report.
GORDON J: Thank you.
MR MOORE: Parts of it unfortunately are in different volumes of the authorities book, but part of it is here. Can I go to the page which is page 33 at the bottom of the page, it is page 31 at the top of the page, paragraph 139 of the report? It is proposed that ‑ ‑ ‑
EDELMAN J: Is this in the supplementary book, or the further book?
MR MOORE: Yes, I am sorry, it is the second and third respondents’ supplementary book of authorities, tab 4 of that, I am told.
GORDON J: I am sorry to ask, just a question, what page are we going to?
MR MOORE: Paragraph 139, page 33 at the bottom, or 31 at the top, or page 60 of the report, and that provides that:
Under the Commission’s recommendations, there will be as many proceedings commenced as there are group members plus the principal applicant. For example, if 50 people were injured in a bus crash, one of those persons can commence . . . and can also commence 49 group members’ proceedings with his or her principal proceeding.
GORDON J: It is not clear where we are going with this, Mr Moore, that is not adopted by the Act.
MR MOORE: No, and I am simply noting that what was ‑ ‑ ‑
GORDON J: It is just that – sorry.
MR MOORE: No, I am sorry, your Honour, I cut your Honour off.
GORDON J: That is all right, I am just saying that that is not adopted. We have adopted a procedure, which I thought you just explained to us, where we have a representative proceeding ‑ ‑ ‑
MR MOORE: Yes.
GORDON J: ‑ ‑ ‑ ‑ we have group members who are, in effect, conditional in the sense that they are caught by the class definition or group definition member, but their position is not crystallised until an opt‑out procedure is put in place.
MR MOORE: Yes, your Honour, and I was simply observing ‑ and it is relevant because there are a number of observations about this report, for example, in our learned friends’ written submissions ‑ that the model that was proposed was quite a different one, and that was not adopted. I think I have now made the point, and I can move on. But the distinction meant that the bringing of a representative proceeding did not immediately affect the ability of a person to bring his or her own action, unlike what was proposed by the ALRC.
Now, I mentioned earlier that as well as the scheme not preventing a separate action by an individual, the scheme does not prevent a separate representative action. One could have, for example, two closed class proceedings. So assume, for example, that a plaintiff commences a representative proceeding on behalf of eight group members, and assume that another plaintiff commences a representative proceeding on behalf of a different group of eight members, but where two of the members overlap with the first group, what happens in that situation? One thing that is clear is that section 171, relied upon by the applicant, does not provide any answer to that situation, and that is because section 171 deals with what is described as “adequacy of representation”, and it provides that:
If, on application by a group member, it appears to the Court that a representative party is not able adequately to represent the interests of the group members, the Court may substitute another group member as representative party and make such other orders as it thinks fit.
The reference to “the group members” and the use of the word “able” make it clear that it is not, for example, dealing with a question of overlapping group members of the sort that I have just referred to, and indeed, in our submission, section 171 deals with a different matter entirely.
It is in no sense a code to deal with overlapping group members. There would be, rather, in relation to the example I have given, a number of possible remedial responses. One would be to permit the group definition to be amended. Another would be to stay one matter or to stay it until the overlap was removed. All of that emphasises that Part 10 does not, in any sense, contain a code as to how to resolve multiplicity or overlap.
GORDON J: The problem, Mr Moore, for me is that there is no doubt in the past, since these provisions were introduced by the Federal Court and in New South Wales, that courts have adopted a variety of mechanisms to try and resolve the situation of multiplicity of proceedings. As Justice Gageler put to you, the circumstances in which multiplicity arises varies depending upon the underlying nature of the cause of action, the timing, whether you have a quick drop in the share price or whether it is a product claim.
So we have a multitude of circumstances to deal with and in the past, until we got to GetSwift, there had been case management procedures adopted to deal with it, whether it was by closing the class, by meeting group definitions, consolidation, joint trials, a wait and see process.
MR MOORE: Yes.
GORDON J: All that is to be accepted. What we are faced with here in this case, though, is the failure or the inability or the inapplicability of any of those measures giving rise to the court having to make a choice. That is what we need to address, do we not?
MR MOORE: Your Honour, I respectfully agree, but when your Honour talks about a failure of those proceedings, of course one feature of this case – and it is one that has to be borne in mind, particularly when criticisms are directed at the way that her Honour dealt with it ‑ is that what was advanced before her Honour were a series of applications which did not present any other alternatives but simply asked her Honour to stay one proceedings or the other. So there was no application for other remedies, other than that two of the proceedings were consolidated ‑ ‑ ‑
GORDON J: Exactly.
MR MOORE: ‑ ‑ ‑ but not other proceedings, and of course consolidation is one mechanism for dealing with that problem and it dealt with two of the competing proceedings here. But there might be other circumstances which require another solution. All her Honour was doing in what, we would submit, a fairly unobjectionable way, was dealing in a judicial manner with an application that was made supported by submissions that raised particular matters that were said to favour one proceeding over another and that is, in those circumstances, one way that one can resolve multiplicity of actions.
Our learned friends have been searching for, in effect, a principle to cut down that power but we submit that no such principle has been identified. In those circumstances, it was an entirely orthodox exercising of what was a broad power to deal in an effective manner with a number of competing proceedings.
KIEFEL CJ: Mr Moore, I think you explained earlier that these applications for stay, except for one which is brought in the proceeding itself, were actually brought in the other proceedings but had regard to the first brought proceedings.
MR MOORE: Yes.
KIEFEL CJ: I would not have thought that was entirely orthodox.
MR MOORE: Your Honour, I think I agree, with respect, in that we were the only ones who actually filed a motion in every proceeding.
KIEFEL CJ: Even though you were not a party.
MR MOORE: Correct, but we were an interested party in those other proceedings, and we filed a motion in those other proceedings. No point was taken below or at any point that there was something ‑ ‑ ‑
KIEFEL CJ: I see. That could not be cured procedurally.
MR MOORE: ‑ ‑ ‑ procedurally incompetent about the fact that, for example, in Ms Wigmans’ proceeding she only brought a notice of motion in her own proceedings to stay some other proceeding but that really is probably a matter of procedural nicety. One can see that there would be a way of dealing with that. But her Honour treated it, in effect, as a series of motions to seek stays in all proceedings and, of course, as I have indicated all parties were uniform of the view that only one proceeding should go forward. So this was not a case, for example, where it was suggested that there should be partial class closure or matters of that sort.
KIEFEL CJ: No, we are not in that territory, I think.
MR MOORE: We are not in that territory, yes. So, we do say that her Honour’s response is not subject to any limitation that comes from this scheme itself. Can I return to the terms of section 171 and I will have to deal with this in a little more detail because our learned friends have said that this is – in writing and orally have said that this is the appropriate way of resolving these matters and it provides, in effect, some form of code or the mechanism which Part 10 sets out to resolve these matters. We would say that section 171 is not directed to the current situation and that is apparent from the language of it. It provides that where a party:
is not able adequately to represent the interests of the group members, the Court may substitute another group member –
The word “able” has important work to do. The section is dealing with situations where the status or capacity of the representative party is such that the party cannot adequately represent the group. For example, the plaintiff becomes bankrupt or insolvent or is incapacitated or has a conflict of interest or potentially, to take up an example that your Honour the Chief Justice put this morning, was not a representative of the claim that is sought to be pursued.
Another scenario is where somebody simply ceases to participate, a situation that arose in the Volkswagen class action, for example, where one of the representative parties would not return any phone calls or any communication, simply wished to cease participating. That might be another circumstance where you would say that that person is not able adequately to represent the interests of group members.
There is an important role for such a provision because the proceeding may, of course, be on foot for some years and it would be problematic if the inability of the plaintiff would cause the proceeding to fail or have to come to a stop. But what the section is not dealing with is a case where a second proceedings offers better security for the defendant which is one of the examples conceded by the appellant as being legitimate reason to prefer a second filed proceedings or a case where the pleading in the first action is not as good which was another example which our learned friends gave in writing as a situation where you might prefer the second action. Neither of those situations renders someone not able adequately to represent the interests of group members.
That approach that we have just suggested to the construction of section 171 is consistent with the extrinsic materials. Can I go to the appellant’s supplementary book of authorities, and to page 110 of that report which is behind tab 7, just some passages from the ALRC report. In paragraph 176 it is noted that:
The second situation in which a principal applicant may need to be replaced is where he or she is not conducting group members’ proceedings in their interests. This is achieved in the United States by the requirement that the class plaintiff must adequately represent the class -
which is language that is picked up in the statutory provision.
An analogy can also be drawn between the duties of a principal applicant conducting proceedings for a group member and those of a tutor conducting proceedings for an infant or mentally disabled person. There is in each case a fiduciary element –
and there is further reference to that. Then in 177, there is reference to the:
Adequacy of representation test in the United States. In the United States a class action can be maintained only if ‘the representative parties will fairly and adequately protect the interests of the class’.
Then there is, in the last sentence on that page, reference to:
Adequacy of representation is not defined in the legislation but its elements have been discussed at length in various cases.
Reference is made in the footnote to a decision of the Supreme Court in Eisen. Can I indicate that when one goes to the Supreme Court decision there is actually no discussion of that, of that particular criteria, but there is discussion of the fact that there is a discussion in the decisions that led up to the Supreme Court decision, and we have sent separately to the Court a decision of the US Court of Appeal Second Circuit in the Eisen decision at 391 F 2d 555.
I do not want to take the time taking the Court to it, but what it discusses is the test in terms of people being able to appear for someone, which references matters such as whether a matter is collusive, whether a person has antagonistic interests, and matters of that type, in other words, whether they have a conflict, whether there are other reasons that make them unsuitable to act on behalf of the group. So, what it appears to be contemplating is the adoption of that type of approach in dealing with adequacy of representation.
Now, none of that suggests the conclusion that section 171 was intended to operate to restrict proceedings to one proceeding only and specified the only means by which a court could deal with the many issues that might arise and require a stay or some other remedial response. In particular, there is certainly no necessary implication that the broad powers of the court were to be eviscerated in that way.
Can I also provide a reference to a further part of the ALRC’s report which is in the appellant’s further supplementary book of authorities behind tab 5, and can I note that at page 78 of the book there is an appendix, “Appendix C Other models for class actions”, and it is in rule 23, subparagraph (4) referred to there from the United States Federal Rules of Civil Procedure that contains the rule:
the representative parties will fairly and adequately protect the interests of the class.
Over the page at page 80 there is some discussion of “Four pre‑requisites” and it is stated that:
The third and fourth requirements –
in subrule 23(a):
are designed to protect absent members of the class by ensuring that the representative has a claim which is typical of all others and that the representative will be able to protect their interests.
Those are the matters that we submit this provision is directed towards. Now, to similar effect is another provision relied upon by our learned friends, being section 166(1)(d) which uses virtually identical language:
(1)The Court may, on application by the defendant or of its own motion, order that proceedings no longer continue under this Part if it is satisfied that it is in the interests of justice to do so because:
. . .
(d)a representative party is not able to adequately represent the interests of the group members –
Nor, we submit, does the appellant put forward any criteria that are applicable here by reference to the statutory language. The appellant refers to proceedings being essentially duplicative, but that of course is not a term found in the statute. Rather, it emphasises that the similarity or otherwise between proceedings which might be a complex – nuanced assessment is appropriately a matter to be assessed by the court in the exercise of its powers to stay proceedings.
Can I then turn to the submission that the present process has incorrectly imported a procedure from a different statutory regime, one that has a certification process? In our submission, that contention is incorrect for a number of reasons. First, the relevant power is broad here and the court may have regard to any matter it considers relevant. The fact that the list of relevant matters might include matters that also happen to be considered to be relevant matters in another jurisdiction does not mean that they are irrelevant matters for the primary judge to consider or somehow improper considerations.
We say the appellant’s approach inverts the inquiry by starting with whether they are relevant considerations for a different regime rather than asking whether they are relevant considerations for the task being undertaken here.
Secondly, there is nothing, we would say, inappropriate about, for example, taking costs including funding commission into account. Thirdly, having regard to the Canadian jurisprudence, in particular, it is clear that similar considerations and, indeed, a similar statutory basis may inform the carriage motion and in that regard we submit the submissions by our learned friends do not adequately distinguish between carriage motions and certification procedures.
A certification procedure deals with whether a particular matter is suitable to go forwards. A carriage motion is choosing between rival matters. That distinction was recognised in the decision in a case called Grasby which is included in our supplementary book of authorities. Can I go to the second and third respondents’ supplementary book of authorities? It is behind tab 3 of that folder commencing at the beginning.
KIEFEL CJ: I am sorry, where are you, Mr Moore?
MR MOORE: I am sorry, your Honour, there are so many different page numbers I am deciding which one is the best one to use.
KIEFEL CJ: It is the second and third respondents’ supplementary book of authorities.
MR MOORE: Yes, and it is first substantive item behind that – in that folder and looking at the numbering at the bottom of the page, page 9, and looking at paragraph [3] of the decision. The contention in that case was that the court has no jurisdiction prior to the certification of a class action to hear a carriage motion.
In paragraph [14] there is reference to the relevant statutory scheme dealing with class proceedings. The issue that arose is whether something that was not yet certified was appropriately considered or defined as a class proceeding. At paragraph [17] the court noted that:
A review of the case law demonstrates that there have been many pre‑certification motions, including those seeking carriage, considered by the Courts across Canada.
In the quote is a reference in the quoted paragraph 12 to a statement that:
In my view an action commenced as an intended class proceeding is, prior to certification, an ordinary action governed by the Rules of Court.
In 14:
Notwithstanding the fact that this is an intended class proceeding, it is nonetheless important not to lose sight of a very basic objective of our litigation process in British Columbia. Rule 1(5) states that the object of the Rules of Court is to ‘secure the just, speedy and inexpensive determination of every proceeding on its merits’ -
which is remarkably similar to “just, quick and cheap”.
KIEFEL CJ: Does having a two‑day hearing involving multiple parties arguing about which might produce the better result and which might be economically the better approach directed to that objective?
MR MOORE: We would say yes, and I give two answers to your Honour’s question. The first is, as her Honour Justice Ward noted in this case, part of the complexity of the matter before her was this is developing jurisprudence where the principles were not yet settled and therefore a great many matters were argued. Her Honour said, as matters occur over time, that will become much speedier, which one would expect.
But, secondly, one has to balance also that against what was the subject matter of the debate and in circumstances where, on the tables that my learned friend Mr Gleeson went to, the differences in costs, for example, particularly as larger settlement sums or judgment sums might arise, could be very material indeed, then yes a two-day hearing may well be much more efficient in terms of saving costs.
KIEFEL CJ: But if one were looking for a simple, just, cost‑effective method, you would have a stay application and see if the first proceeding substantially represented - if they were basically on the first track, you would have to say why would this proceeding not go ahead. That would take a few hours tops?
MR MOORE: Your Honour, it would depend what issues are raised. What our learned friend puts to the Court is that you somehow squeeze the same analysis through Part 10 and an application of section 171 but, in effect, one would still need to consider, for example, when questions such as security were raised, where questions as to whether the pleading is a better one or not, the very matters which your Honour considered in the present case. So it is difficult to see how that would necessarily involve any efficiency saving, unless there are matters and a great many matters that are ruled out as simply inapplicable, inappropriate to consider.
KIEFEL CJ: I thought that was really Mr Gleeson’s argument. It is very much - a much narrower inquiry.
MR MOORE: When one is looking at what is inappropriate to consider, I come back to the matters observed earlier, which is why, for example, is security an appropriate matter to consider but the costs of the proceedings not an appropriate matter to consider, and that is what is put against us. What is put against us is that you cannot consider the costs of the matter or the commission rate, or matters of that sort, because that is somehow an inappropriate consideration for her Honour to have considered, and we say that no principle has been advanced to support that.
KIEFEL CJ: But whether or not security for costs is going to be provided, it would be a fact before the court – it is the only way it could be considered at this point.
MR MOORE: Yes.
KIEFEL CJ: I think Mr Gleeson’s point is that when you are considering this rather larger comparative analysis of costs and benefits it is predictive, and that is why there is so much more material before her Honour. Her Honour had to write a 300‑odd paragraph judgment.
MR MOORE: It depends what matters are put before the court. Her Honour, in deciding this matter, decided that many of the matters were ‑ ‑ ‑
KIEFEL CJ: I intend no criticism of her Honour.
MR MOORE: Neutral, no, I understand.
KIEFEL CJ: She was undertaking a process that the parties and other decisions of other courts have required her to undertake.
MR MOORE: I understand that, your Honour, and I understand that this Court has a broader frame of reference, but when one is considering, for example, whether there are matters which the court cannot have regard to, there does need to be identified some principle that supports the submission that says you cannot have regard to costs. You can have regard to security, but you cannot have regard to costs, and we simply submit that there is no such principle identified.
EDELMAN J: Mr Moore, as I understand your submission about the importance of costs, it comes in through section 56(1) as one of the mandatory considerations under section 58.
MR MOORE: Yes, your Honour.
EDELMAN J: How would one assess whether a commission rate is cheap without knowing prospects of success? Is that ever possible because, for example, an extremely difficult and risky proceeding might justify a very high commission rate whereas a very simple proceeding that does not involve a great deal of risk might not.
MR MOORE: Your Honour is I think, right, with respect, but what we were dealing here with was a comparison. We are dealing with proceedings - my learned friend’s jumping‑off point is that the claims were sufficiently similar that they are similar proceedings. In those circumstances, one is then undertaking a comparison. Somebody has a 90 per cent commission rate, somebody has a 20 per cent commission rate. The comparison is relatively straightforward.
EDELMAN J: But does that not depend upon how the proceedings are going to be run by the particular legal representatives?
MR MOORE: It may, and I am going to come to this in relation to ground 2, but this attempt to say that one has to engage in a very elaborate procedure is not necessarily well founded. The position before her Honour, in this case, was tolerably simple in its respect, which was that there were differences in funding commission rate, therefore differences in costs. There was no evidence or material before her to suggest that there would be any likely, different result from the various matters.
There was an attempt by Ms Wigmans to adduce some expert evidence from an economist to say that their particular approach gave a better incentive - I will come to this in more detail when dealing with ground 2, but that particular evidence was rejected by her Honour, for various reasons, and there is no appeal from that rejection.
So there was simply no material before her to suggest that matters would involve any different turn for any different proceeding. In those circumstances, her Honour undertook a fairly straightforward analysis of which matters were more expensive. There was no error, we submit, that has been demonstrated in that approach.
So to come back, I think, to answer your Honour the Chief Justice’s question, if what is being dealt with is the potential for significant cost savings, for example, then we would say that it is consistent with section 56, that one would examine those matters and there is no principle that has been identified to say that that is something that one cannot have regard to and certainly ‑ ‑ ‑
GORDON J: Mr Moore, in terms of general principle, would you say this Court is looking at this proceeding, but it may have application elsewhere possibly. Do you resile from what is set out in McHenry about the approach to be adopted, because the considerations raised there are not…..language which is picked up by the US, i.e. is the first action a collusive action? Does one action embrace relief in the other and those matters that are set out at page 404 of the relevant speech?
MR MOORE: I was going to come to McHenry, but we do rely on that case because what that demonstrates is a potentially broad range of matters are the subject of consideration when deciding – and they were not limited. Some examples were given, but his Lordship, the Master of the Rolls, said various considerations may arise and what one does in a representative proceeding is you get the matters before the court and you decide which should be permitted to go forward and which should not.
GORDON J: Three considerations – three matters are raised in that speech, which I assume you – I would like you to address if you might. One was that the speech demonstrates various considerations may arise and it is not until you get all of the matters before the court that one can identify what are in effect both the relevant considerations and ultimately the determinative ones.
The second is that the speech recognises I think that everyone has to be present and in effect have an opportunity to be heard on these matters. As you set out in your earlier oral submissions, the status of group members is at best conditional, and I put to Mr Gleeson the fact that a number of judges in both the Federal Court and in the New South Wales Supreme Court have expressed concern about potential conflicts of interest. Those conflicts have been described in various terms.
Does that not compel the need for someone to independently represent the group, in effect the commonality between the three to identify and provide their relevant…..to all of these matters?
MR MOORE: I think it is difficult to say yes or no to that question as a matter of generality because, in our submission, it would depend upon the circumstances of a given case, but there may well be, your Honour is right, a circumstance where a court might be concerned that it might not be getting the full picture on behalf of group members and that there might be matters which may need to be addressed.
In those circumstances, I do not think anyone could sensibly resist your Honour’s suggestion that it might be appropriate to, for example, appoint a representative for those group members. But there was no suggestion here that there were matters that were not being properly represented in the interests of the group members and, indeed, a great many matters were canvassed by all parties in some detail.
GORDON J: One of the reasons why I raise it and…..question is because of her Honour’s description at least in two places – it appears at 33 and I forget the other paragraph number; I can find it in a moment – where she describes the process that she was put through as unedifying, and that was not limited to just one or two members, as I read her Honour’s reasons for judgment. In other words, in effect the focus of her task was that of – investigate is to put it too high I think, but it was in effect to undertake a process that she did not think was - as she described it, unedifying.
MR MOORE: Yes. Your Honour, we would read those remarks as primarily being directed to the comparisons between the respective experience and skill of the practitioners involved and the Court of Appeal in this matter had something to say about that, and what the Court of Appeal said is that one would ordinarily not undertake that process unless there was, for example, some clear point of distinction.
The example given – and it is a sensible one, with respect – is that, for example, if the person who commenced representative proceedings was a sole practitioner who was on their first year out from law school and had never run a case, then it might be said, well, is that person really the best person to represent what might be an important claim on behalf of a large number of people.
But in circumstances here where the court found that all practitioners were clearly skilled and experienced, there might not be any occasion to further deal with the question of what is their relative skill and experience, and that is what we understood her Honour was directing her remarks to when she spoke about the process being in some respects unedifying.
GORDON J: There is no doubt that her Honour focused on the comparison of the track record, but I read her identifying criticism to extend beyond that in paragraph 33 because she talks about:
the comparisons made of the respective proceedings and the funding roles proposed by the competing models were indeed unedifying (in particular, as adverted to ‑ ‑ ‑
MR MOORE: If that is what her Honour meant, if one is simply dealing with, for example, the comparison of objective matters that relate to people’s funding proposals, it is difficult to see why that would be of itself unedifying because it is an important matter that on your Honour’s proposal would also have to be considered if there was somebody, for example, representing the interests of group members.
A very important criterion might be: what is the funding proposal and what is the basis on which the funders and promoters are seeking to obtain an interest in the proceedings and therefore which proceedings would better advantage the interests of group members, where, as I have noted earlier, that is not inconsistent also with the interests of the defendant, unlike some other considerations.
What the decision in McHenry v Lewis does not say – and I will come to it – there is no suggestion in that decision and when one is dealing with multiple representative proceedings, that there is any priority given to first in time, and that the first action that has commenced somehow has presumptive validity and can only be displaced by a second action if some compelling reason is shown, not a suggestion of that approach.
KIEFEL CJ: But would you agree that the process undertaken in McHenry v Lewis was to look at the juridical basis for each of the claims and to see whether there was some problem with it or with the jurisdictional questions and determine the matter on that basis.
MR MOORE: No.
KIEFEL CJ: That is the first question. The second is are you able to point to any authority in law or in equity which has the court undertaking a task anywhere like this?
MR MOORE: When your Honour says “a task anything like this” ‑ ‑ ‑
KIEFEL CJ: The evaluative exercise that her Honour went through.
MR MOORE: I do not think I can point to, other than cases in this Court, all of these factors being considered. But what McHenry v Lewis was saying is that one would consider a variety of factors. It was not limiting them to any particular category or factors.
KIEFEL CJ: But did they go beyond, as I said, the juridical basis for the action and jurisdictional questions and whether there would be outstanding questions not dealt with in other proceedings?
MR MOORE: Yes, because security, which was expressly referred to, is not a juridical basis for an action.
KIEFEL CJ: Accepting that – security for costs would always be a question.
MR MOORE: Security for costs is a ‑ ‑ ‑
KIEFEL CJ: But that is a very small springboard for this kind of exercise, is it not? Security for costs is a fact or not.
MR MOORE: I feel I should go to the decision and perhaps I should go there immediately.
KIEFEL CJ: Yes.
MR MOORE: It is in volume 5 of the joint bundle of authorities at page 1188. It is important to understand there were two aspects of this decision, of course. One was the fact that there was a US proceeding and a British proceeding, but the other factor was that there were two English proceedings. What the court did not do is treat this in a similar manner to what our learned friends refer to as the traditional stay jurisprudence which is relevant to where you have the same party, same plaintiff, same defendant or same interests on each side, for example, husband and wife. What was then considered were representative actions, so whereas at page 400 in the first full paragraph there is a reference to the position:
where the two actions are by the same man in Courts governed by the same procedure –
At the bottom of 403 ‑ ‑ ‑
KIEFEL CJ: I think there is a reference to it being prima facie vexatious to bring two actions where one will do?
MR MOORE: Yes, where it is the same party. The important point for this decision is that is not the approach that is taken where you have representative proceedings brought by different parties on behalf of ‑ ‑ ‑
KIEFEL CJ: Well, it is a fine distinction, though, is it not, if they are representing the same class of persons and they are only a representative, they are not by themselves a distinctly different party?
MR MOORE: The point is the court did not say that it was to be dealt with in that way and it is not to be and was not to be. At page 403 at the bottom, when dealing with the competing English actions – as I said, it needs to be understood that this action has two aspects to it. The first was the competing foreign and local action brought by the same person - that was the reference to “the same man” - and then at 403 and following, how the court would treat the two English actions brought by different people:
the two actions do not cover quite the same ground. I am not now saying that if notice of motion for consolidation had been given . . . I quite agree that you ought not to allow a company, or directors of a company, to be sued by a multitude of shareholders in a multitude of separate actions . . . You might have a hundred actions . . . and therefore of course the Court has power to stop all but one of the actions if they are all for exactly the same thing.
That is precisely, of course, what her Honour did in this case:
But the course of the Court is well settled. The defendants take out a summons to stay the actions which have been previously transferred of course to the same Judge or Court –
It is exactly what happened here, matters originally were in different courts, they were brought before the one court before the one judge:
and then the Court decides which of the actions is to go on as a test action, and which are to be stayed. You cannot tell until you have all the plaintiffs before you the right course to take. The first action may be a collusive action, one action may embrace further relief than another, one action may be better framed than another –
so simply which has a better pleading:
one action may be more perfect as to parties than another, in one action the plaintiff may be a solvent person, and able to answer costs –
which of course is a reference to security. Then, without limiting those examples:
Various considerations may arise, and until you get the whole of the actions before the Court the Court cannot decide which is to be allowed to proceed, or on what terms. It sometimes happens that we allow one action to proceed for one purpose and another for another purpose‑‑that is that we excise from one action so much of the relief . . . and allow the second or third action to go on for the additional relief; but all that can only be discussed in the presence of all parties.
No suggestion in any of that - not a suggestion at all that the first in time gets precedence and the second in time is abusive and should be stayed unless it can, for example, show some demonstrative superiority to the first.
KIEFEL CJ: The court’s idea of what might be involved in costs might be rather more limited too, because there certainly were not litigation funders then. They were not talking about commissions on top of costs. They were talking - their Honours would have understood that costs would be a matter which would be controlled simply by the process of taxation in the courts.
MR MOORE: Quite, your Honour, but we rely on that factor, and we say what we are dealing with now, in modern representative proceedings, is of course funded actions with commission rates and the like, and that means that one of the various considerations that may arise, as referred to in this case, might be, what are the terms of your funding agreement. It is, we would say, clear that if funding agreement is such that it imposes an oppressive burden on the class then that would be a relevant factor for the court to take into account in considering which of the various actions should be permitted to proceed. That is what her Honour did here. She distinguished, as I said earlier, the matters on two bases. One was security of costs, one was costs. Those matters were, we submit, perfectly legitimate ways of working out ‑ ‑ ‑
KIEFEL CJ: Mr Moore, I think the question you posed was if funding were proved to be an oppressive burden that would be one thing.
MR MOORE: Yes.
KIEFEL CJ: That is not the question, though, that was posed for her Honour.
MR MOORE: Well, her Honour was considering which of the matters was more expensive than the other. What her Honour found, the finding was that they were broadly comparable with the notable exception of the Wigmans matter. That was her Honour’s finding. So, for three of the matters funding did not distinguish them, but the Wigmans matter was, as her Honour observed, the notable exception. So she used that conclusion along with, for example, the common fund matter that I have referred to earlier, as two bases to distinguish the Wigmans action from the Komlotex action. Again, that was, we submit, a perfectly legitimate approach.
In relation to the other authorities relied upon by our learned friends in the context of abuse of process, to save time can I rely on what we say in our written submissions as to why we say that the particular principles identified there are not apt to apply in the present circumstance and in particular do not apply in relation to contests between two representative actions and no authority has been identified that says that they ought to or do in any circumstance analogous to the present. We do say that the Court of Appeal was correct to reach the conclusion that they did in connection with those matters.
I think I was at some point considering a Canadian case and had not quite completed that, and we went on a particular pathway. Can I return to the case in our second and third respondents’ supplementary book of authorities?
GORDON J: Is this the Grasby decision?
MR MOORE: Yes, Grasby, yes, your Honour, and the reason we went on a pathway is because I referred to the “just, speedy and inexpensive” determination which I said was similar to “just, quick and cheap”. On page 123 in paragraph [17], the court in this case was observing the basic objective of the litigation process in British Columbia, which was to secure the just, speedy and inexpensive determination of every proceeding on its merits. There is reference over the page at paragraph [20] to the decision in Nelson – again, a “just, speedy and inexpensive determination” of a proceeding and then the observation is made:
Such a goal can only be met by determining the carriage issues prior to certification.
Similar observations are made in paragraphs [23] and [24], and in paragraph [25], the court concludes:
I have no difficulty in finding that this Court has inherent jurisdiction to order that a carriage motion proceed to certification. The inherent jurisdiction of this Court to control its processes and to manage litigation support this finding -
Then the various decisions referred to there:
all demonstrate the practice of carriage motions preceding certification. This approach is primarily to streamline the process and speaks to the issue of judicial economy and access to justice.
GAGELER J: There is a checklist that is repeated several times in the judgment – paragraph [86] is an example. Are all those considerations which in a particular case might be taken into account?
MR MOORE: Quite, your Honour, yes, and as I said earlier, we would say the fact that they are relevant considerations in this particular context does not make them irrelevant considerations in our context. What we do not find is our courts being somehow illegitimately influenced by some approach that itself is bound up in a particular statutory regime. In that regard, can I note what was said in the GetSwift decision in volume 5 of the authorities book at page 1252, paragraph 189, where their Honours noted that:
We have no difficulty in accepting that an application to stay one of several competing class actions can be seen as analogous to the Canadian “carriage motion”, and we have no difficulty in accepting that in some cases of competing class actions it will be appropriate to follow that course. It is though, important to keep in mind that there are some important differences, as Beach J discussed in Bellamy’s at [49] et seq.
There is then discussion of various differences. Then, at 196:
The Canadian experience and analogue is informative . . . but the distinctions are import. Under Pt IVA there is no certification process; representative proceedings can be issued as of right . . . Each representative proceeding is presumptively entitled to go forward –
But the very matters that our learned friend referred to this morning as distinguishing the regimes were uppermost in the minds of the judges.
GORDON J: Before you leave that passage, Mr Moore ‑ ‑ ‑
MR MOORE: Yes.
GORDON J: ‑ ‑ ‑ what it recognises, consistent with McHenry, is that, for example, in 197, the court refers to the fact that there might be a substantial number of group members who have signed funding agreements.
MR MOORE: Yes.
GORDON J: And, therefore, this carriage motion process:
has less application.
MR MOORE: That is right. There might be a circumstance, for example, where somebody has signed up a large portion of the class. That may be a relevant consideration for the court in dealing with what to do with the respective matters. But all of that – in fact, everything we have emphasised – simply points out that there may be a range of relevant considerations – indeed, there are – and were, in the present case, and her Honour took them into account.
Can I deal briefly with the public policy aspect? The appellants suggest that by not adopting a “first in time” rule, the courts have encouraged multiplicity. We say the submission obscures the true policy issues. The adoption of a “first in time” approach will encourage two undesirable behaviours. The first is a race to the courthouse. That danger was summarised by his Honour Chief Justice Allsop in the Wileypark proceedings.
In paragraphs 17 and 18 – I will not take the Court to them in view of the time – but his Honour observes a number of issues that arise from that. It is not an answer to say – as our learned friends put – well, if it is a bad pleading, it could be struck out. There could well be an inferior pleading and there are various other matters that his Honour refers to that would have to be considered, including poor reflection, poor thinking, potentially poor funding agreements and other problems that will bedevil matters if they are rushed to the courthouse, which they never really will be and must be if a “first in time” approach is adopted.
The second problem is that by considering a range of factors including which matter offers a better funding rate that has, of course, allowed for competition in the funding market that may drive down prevailing commission rates which was, of course, evident in the present matter which in turn is more consistent with the overall objectives stated in the Civil Procedure Act and, again, that would not be available if a first in time or it was simply given presumptive validity.
Could I then turn to ground 2? Ground 2, we say, raises no issue of principle but concerns matters of fact and the evidence before the court. Our learned friend’s argument commences at the wrong starting point. In relation to the multiple proceedings before her, her Honour the primary judge concluded that there was no reason for preferring one matter over another in relation to any differences in claims or pleadings, and her Honour found that at paragraph 246.
Her Honour also concluded that consideration of the skill and experience of the legal teams was a neutral factor and her Honour reached that conclusion at paragraph 311. Specifically, she concluded that each of them had the skill and capacity to conduct proceedings of this kind in the interests of class members.
In light of those factual conclusions, the prima facie position was that there would be no reason to distinguish between the matters in terms of the likely outcome though each properly funded proceeding was being advanced by legal teams who are relevantly skilled and experienced.
Her Honour also made the factual finding that with the notable exception of the Wigmans model there was broad comparability and outcome across the funding models. That was not surprising because the Wigmans model, of course, had a materially higher percentage of funding commission.
In light of those matters, Ms Wigmans sought to avoid the consequences by asserting that although it was a higher cost model, her funding model under which the percentage of commission payable rose the longer proceedings went on would provide an incentive to obtain greater recoveries. That proposition was not self‑evident. Indeed, on the face of it, was not even particularly logical.
The greater rewards were not given to the lawyers or those actually striving on the matter but to the funder and a commission rate rising the longer the proceedings last is an incentive not to resolve the matter early but to litigate for longer thus incurring greater legal costs. But if the material that the parties put before the court does not distinguish between matters in terms of mechanisms for obtaining a likely greater return then there is, we submit, no reason to distinguish between matters in terms of likely gross proceeds.
That will probably usually be the case because you have matters that each have properly funded lawyers with skill and experience in running such matters, then there would need to be some cogent reason for why you would assume that one matter would produce greater gross proceeds than another. On the facts and evidence of this case, there was no reason to distinguish between the matters in terms of expected returns and instead, on the facts, the Wigmans matter was simply more expensive, was a higher cost matter.
So we would submit in those particular forensic circumstances, which were a product of the particular evidence and facts in the given case, there was no error whatsoever in her Honour concluding as she did. There was nothing to suggest that there was any other reason to prefer the Wigmans matter over the Komlotex matter and no error has been demonstrated in her Honour’s reasoning.
It is certainly not the case that one would conclude that absent, for example, some economic evidence, one is simply unable to do anything in terms of making some prediction and, therefore, cannot take into account the fact that one matter is more expensive or has greater costs than the other. There was just simply no reason for her Honour to draw a relevant distinction and her Honour did not do so and that, we submit, is an answer to ground 2. May it please the Court, those are the matters I wish to advance on behalf of the second and third respondents.
KIEFEL CJ: Thank you, Mr Moore. Yes, Ms Collins.
MS COLLINS: May it please the Court, I propose to be very brief. If your Honours have the outline that was provided this morning, the only matters I would propose to say something in relation to are the points that are addressed at paragraphs 5 and 6 which is the approach which in fact was taken by the primary judge, and the submission that is put at paragraph 13 which really is just to provide your Honours with a reference to some extrinsic material which we say is relevant to the ultimate determination of what the primary judge did and whether she was authorised in doing it.
The first point, as your Honours will have seen in the submissions in‑chief in writing and also I think heard from Mr Gleeson this morning, is that the appellant says that the approach taken by the primary judge was an attempt to ascertain and prefer the proceeding likely to produce the largest settlement or judgment and the highest net return for group members.
I wish to take your Honours just briefly to some passages of the decision of the primary judge which I am reasonably sure your Honours have not been taken to, to date. It is in the core book. The section of her Honour’s judgment headed “Determination” starts on page 128 at paragraph 332. I can pass over – or I will pause briefly on page 129 at the top of 334. Your Honours will no doubt have noticed that while there is no reference to section 58 of the Civil Procedure Act in its terms, her Honour in that paragraph does say that:
Nor is it in dispute that that power must be exercised having regard to the overriding purpose in s 56 –
which of course is one of the mandates of section 58. Your Honours will recall that in this context her Honour was considering a debate whereby relevantly the Wigmans and the Komlotex applicants contended that their proceedings, each of them did in fact have a juridical advantage and equally were not a duplicate, although her Honour ultimately decided that they were essentially duplicative and there is no appeal from that decision.
If your Honours go to page 133, at paragraph 349 is the passage which is cited in the outline and this, in my respectful submission, is a very important part of her Honour’s judgment, being the issue:
as to which of the competing proceedings should be permitted to continue (in the interests both of justice and of group members, and consistent with the overriding purpose . . . or as AMP put it, looking to the best and most efficient result for group members and the fairness to the defendant.
So when one stands back and looks at, for the purpose of considering ground 1 of the appeal, what was the approach taken by the primary judge, it is necessary, in my submission, to look at paragraph 349 because it was a much wider inquiry than Ms Wigmans has put forward.
The fact that her Honour’s inquiry was much broader than simply seeking to ascertain and prefer the proceeding most likely to produce the largest settlement and judgment is reinforced by some other paragraphs in her Honour’s judgments. If your Honours can go back to paragraphs 93 to 95, which are on page 45, your Honours will see quite extensive references by the primary judge to the decision of the Full Court in Wileypark v AMP.
Now, this part of their Honours’ - the Full Court’s decision, was unquestionably dicta, but her Honour had placed some reliance upon it, in my submission. Your Honours can see that it says:
The decision as to how to manage competing class actions is quintessentially a case management issue to be answered by reference to all the circumstances at hand.
I will not read the rest of it, but then you go over to paragraph 94, and you can see that his Honour the Chief Justice there said, at 23 of that decision:
What does need to happen, however, is that a careful and balanced case management analysis be made as to which one or more of the five proceedings go ahead . . . and on what terms.
If your Honours then go ahead a few pages to paragraphs 104 and 105, which are on page 50, Mr Gleeson, I think, took you to the conclusion of paragraph 104, but it is important, in our submission, to look at the start of the paragraph as well, which is again a reference to the issue of multiplicity of proceedings being:
approached by reference to case management principles (and that in so doing the overriding purpose mandated by s 56 of the Civil Procedure Act must be steadfastly borne in mind). What I do not accept is that the present applications should be determined without consideration of the factors articulated as being of relevance in cases such as the GetSwift proceedings.
Now, just pausing there, the factors that have come from what might be described as the carriage motion cases in the US and Canada, of course, refer to different factors, from time to time, and the jurisprudence has developed, as I think Mr Gleeson took the Court to, by different cases saying, well, additionally in this particular case I think this one is relevant.
What ultimately her Honour decided was that certain matters were relevant. There was not a complete identity with what the Full Court, or indeed Justice Lee identified as being the relevant matters for the purpose of the carriage motion, which I will take your Honours to. If your Honours then go to page 56, paragraph 121, this is where her Honour sets out the factors that Justice Lee had regard to in GetSwift. Her Honour notes, at the very bottom of the page:
the Court is not confined in the factors to which it may have regard in this exercise and not all of those considered by his Honour may here be relevant.
I would simply pause to note that matters which did not arise, therefore were not put to and therefore not considered by the primary judge, in this case included (e):
the respective merits of the common issue cases as pleaded –
and (f):
the respective strength of the individual cases of the representative applicants -
There was a good deal of attention placed upon the pleading and whether one did or did not confer a juridical advantage, but in terms of the individual claims of the applicants, there was no attention. If your Honours then look at page 58, paragraph 124, her Honour then cited the matters that the Full Court in GetSwift articulated were to be considered and balanced as including (a), (b) and (c) were matters taken into account by her Honour.
EDELMAN J: Do you accept that, for example, factors such as (e) and (f) in an appropriate case could be taken into account?
MS COLLINS: I think the answer to your Honour Justice Edelman’s question is yes because in ‑ ‑ ‑
EDELMAN J: Would the same judge taking those into account be able to then hear the matter?
MS COLLINS: That is a good point, your Honour, with respect.
GORDON J: It has always been the view, has it not, that it has to be not the trial judge?
MS COLLINS: That may well be the case, depending upon what the findings of the primary judge were ‑ for instance, in determining the respective strength of the individual cases. These matters arise often in terms of security for costs applications, in terms of strike-out applications. I think it is sometimes the case that it then has to be allocated to another judge and in other cases it is not, but I accept it is a risk.
Going back to paragraph 124, the “relative priority of commencing the class action” her Honour considered but gave no weight to, “the resources, experience and competence of counsel” was not considered and “the presence of any conflict of interest” was not considered.
What her Honour did is that her Honour determined on the basis of the evidence put before her what were and were not relevant matters to take into account in order to answer what she really poses as the ultimate issue, which is as set out at paragraph 349, being which of the competing proceedings should be permitted to continue in the interests both of justice and group members and consistent with the overriding purpose of achieving the just, quick and cheap resolution of the real issues.
KIEFEL CJ: But in the end, it came down to costs.
MS COLLINS: I accept that. In the end, once security for costs had eliminated the two other applicants, as between the two applicant parties present in this Court, it came down to net return and we do not take a position in relation to whether or not it should have.
KIEFEL CJ: Yes, I understand.
MS COLLINS: Nor do we take a position in relation to ground 2. I am conscious of the time. The only other thing I would wish to draw your Honours’ attention to is perhaps a difference in the legislation and whether or not it should be considered a difference with distinction, and when I say “a difference”, I mean Part IVA of the Federal Court of Australia Act versus Part 10 of this Act. If your Honours have the legislation folder, the Civil Procedure Act starts at page 21.
KIEFEL CJ: I think you can just refer to the section because we have pamphlet copies.
MS COLLINS: Thank you, your Honour. Mr Gleeson referred very briefly to section 5, which provides that:
Nothing in this Act or the uniform rules limits the jurisdiction of the Supreme Court.
Section 9 says:
The Uniform Rules Committee may make rules, not inconsistent with this Act, for ‑
the purpose of:
carrying out or giving effect to this Act.
There is then a reference to Schedule 3. I will not take your Honours to that but there is to be found in Schedule 3, a reference to the power to order a consolidation of proceedings – which is both the Full Court in GetSwift and the Court of Appeal in this case. Note, it is something that is often used in order to cure multiplicity. But the point is it comes in through this part of the Civil Procedure Act and also the stay of proceedings power in section 67 – although there is no uniform civil procedure rule which directly is on point in relation to the stay of proceedings.
In relation to Part IVA, it was done a bit differently because of the inclusion of section 33ZG, which is a saving of rights provision:
Except as otherwise provided by this Part, nothing in this part affects:
. . .
(b)the Court’s powers under provisions other than this Part, for example, its powers in relation to a proceeding in which no reasonable cause of action is disclosed or that is oppressive, vexatious, frivolous or an abuse of the process of the Court –
The explanatory material that is in the appeal books – and I will just give your Honour the references, makes it plain that that was a deliberate decision of the ALRC to make it very clear in the federal Act that those other powers given to the court in different parts of the Act were to be retained, not eliminated, in the case of representative proceedings.
Indeed, in the Komlotex supplementary materials, there is a reference in the second reading speech in the Senate – so this is in the Komlotex supplementary folder at page 55, using the numbers at the top, Senator Tate – in providing a second reading of the Bill – says in relation to the main features of the Bill and in relation, in particular, to the powers of the Federal Court:
It will retain all its current powers including the power to stay or dismiss any application it considers to be vexatious, oppressive or trivial.
There is no equivalent, as I have indicated, to 33ZG in the Supreme Court Act, but the explanatory material in relation to the insertion of Part 10 in 2010 into the Civil Procedure Act made it clear that the legislation was substantially modelled on Part IVA and it drew specific attention to two or more rules which were present within Part IVA which it had made a deliberate decision to change. But it noted also the broad consistency with the federal and the Victorian regimes. The second reading speech of the 2010 Act is right at the back of the authorities folder at page 1451, at page 1453. That is all I wish to say.
KIEFEL CJ: Yes, thank you, Ms Collins.
MR MOORE: Your Honour, before Mr Gleeson rises, there was something I meant to raise and forgot. My learned friend says we did not say anything in writing and so it would be remiss of me not to mention something if your Honour will hear me. It relates to disposition. We say that if our learned friends succeed, the matter should go back – not simply be decided in his favour – because there are a range of considerations that might arise on the Court’s consideration of it.
KIEFEL CJ: This is “just, quick and efficient” as well, is it?
MR MOORE: Yes, your Honour. But there may be a range of matters that – depending on the way this Court decides the matter – might need to be considered. If it was an erroneous determination of matters by her Honour, then there might need to be a different determination of matters. That is all we say about that.
KIEFEL CJ: Yes, thank you, Mr Moore. Yes, Mr Gleeson.
MR GLEESON: Thank you, your Honours. Your Honours, as to that last matter, making no presumption, in the event we were successful on either ground 1 or ground 2, your Honours should make the order which the primary judge should have made in 2018 based on the correct application of the law to the material before her.
At that stage on our approach the correct order would simply have been to say that there was no basis established to stay the Wigmans proceedings. The Komlotex proceedings should be stayed, and nothing has been identified in writing or in the last intervention as to why you would order a remitter in gross in order for Mr Moore to think up another argument.
Your Honours, on the more substantive points, dealing first with AMP, based on their written outline, their written submissions and what Ms Collins said briefly this afternoon, they take no position on the ultimate issue in this appeal. Not only do they take no issue on ground 2, they take no issue on ground 1 as to whether this exercise can be done in a way which extends into costs and funding commissions in the way that the primary judge considered she was required to do following GetSwift. So the real battleground for us, we would submit, is with Komlotex.
Through that framework, could I deal with these matters, including your Honours’ questions. Firstly, in answer to your Honour Justice Keane, I referred to the commentary on the rules. We have now provided the Court with that commentary, together with the US Supreme Court authority which says that it is relevant extrinsic material. That is the Eisen decision at paragraph 8 and the relevant commentary is at pages 163 to 165.
Next, your Honour Justice Gageler asked a relatively straightforward question, with respect, which was at the time each of the subsequent actions was filed was the representative a member of the Wigmans class. The answer is not Mr Moore’s complicated “swamp”. It is yes. That is apparent from the findings of her Honour. It is apparent from any review of the pleadings and also at page 92 of the common book at paragraph 224, in fact, each of those representatives positively asserted they were members of our class in order to avoid cost orders being made against them for their motions. So, that point should not detain the Court.
Your Honour Justice Edelman asked Mr Moore whether he accepted that the proceedings were essentially duplicative. He did not, with respect, give a clear answer to that question. There is a finding that they are. It is paragraph 347. It is based on the reasoning at paragraphs 242 to 246 and in language which reflects some of your Honour the Chief Justice’s questions, in the last sentence of 350 her Honour found:
there is no real juridical advantage in the pleading put forward by any of the parties over that of the others.
That is the last sentence of 350 and we submit that captures the essence of the essentially duplicative proceedings. Your Honours, next, some criticism was made by both respondents as to our characterisation of what her Honour did. According to Mr Moore, her Honour engaged in a conventional and vanilla exercise. She received cross‑motions. She allowed the parties to lead their best evidence and make submissions on the relevant factors. She made findings as to which factors were relevant and, accordingly, there is not much more for the Court to consider.
A little more than that, in fact, occurred. If the Court, hopefully – definitely for the last time today, looks at the core book at paragraph 95 on page 46, her Honour found as a matter of law that our primary argument had to be rejected, and at paragraphs 100 to 101, she again found, as a matter of law, that our primary argument, as I have sought to put it today, had to be rejected as a matter of law. At 104 she found, as we have noted, that competition was a good thing, not a bad thing.
Importantly, at the passages Ms Collins went to, which is around 126, her Honour actually drew together the eight relevant factors that she identified as a matter of law and, in essence, our argument is reduced to saying the first factor was not a relevant or proper factor, the sixth factor was not a relevant or proper factor and the factor which was wrongly excluded was the prior filing of the Wigmans proceedings otherwise presenting all the issues in the controversy.
Could your Honours note at 127 to 128 her Honour in fact instructed herself, again, quite understandably, that she had to try and carry out the GetSwift analysis, at paragraphs 276 to 278 of the judgment that I referred to this morning. So this was not simply a case of her Honour saying, “What is the least cost, what’s the cheapest action?” Her Honour was actually looking at this question as posed by GetSwift and in 128 engaging the detailed analysis of the models and that, we submit, is the question that is simply beyond the exercise of any framework.
That is the reason why her Honour, between paragraphs 164 to 207, set out at great detail the arguments on this question of the first factor, the funding models. That led her at 208 to a finding, we submit, to this effect. The different models do create different incentives and disincentives, but it is simply impossible for the court to conclude how they might play out. You can see that in particular in paragraph 209 where her Honour said in respect to one of the incentives being pressed she had doubts about it:
and which cannot here be tested.
Now, that in fact hearkens to a question of your Honour Justice Edelman which is can you simply assume anything about whether a funding commission is cheap or, indeed, cheaper than another funding commission unless you are making assumptions about the risks of the matter, the prospects of success and whether the particular legal and funding team is likely to produce any particular outcome.
We would submit that is one short answer to Mr Moore’s argument that the court was just looking for the cheapest action. It was impossible to determine one funding commission was cheaper than another if this other larger exercise could not be done and her Honour recognised it could not be done.
That is why at 212 we submit the essence of this judgment is not as Mr Moore says there was no evidence to suggest any likely differences in the settlement, rather it was all the evidence suggested there were good reasons to think they might play out in different ways and the court simply could not conclude on that matter.
Your Honour, next, on the question of costs, Mr Moore’s argument that looking for the cheaper commission is just a court looking for the cheapest costs within the Civil Procedure Act, in fact raises a larger question which is whether the concept of costs within the Civil Procedure Act includes funding commissions at all. The answer to that question, if the Court needs to reach it, may well be that “costs” is used in the traditional sense that your Honour the Chief Justice put to Mr Moore in respect to security for costs. “Costs” has a definition in section 3 as meaning:
costs payable in or in relation to the proceedings, and includes fees, disbursements, expenses –
and the word is added “and remuneration”.
GAGELER J: The word is “cheap”.
MR GLEESON: Sorry?
GAGELER J: Is not the word “cheap”?
MR GLEESON: I am coming to “cheap” next, but the first step is many of his submissions were in terms of costs. The first step is whether the funding commission is to be regarded as a cost in the sense it is used in this Act and might ‑ ‑ ‑
GORDON J: It may not be necessary for either “cost” or “cheap” if you take her Honour’s approach at 349 working out what is in the best interests.
MR GLEESON: I am sorry, your Honour, I missed that question.
GORDON J: It may not be tied exclusively to either “costs” or “cheap” if you take into account her Honour’s approach at 349 that she was trying to determine what was in the best interests of group members.
MR GLEESON: One needs always to unpack what was meant here by “best interests”, and the way her Honour understood that, which is clear from paragraph 354, is that it brings us back to the assumption that each proceeding is likely to produce the same result and so the “no win, no fee” action will beat a funded action. That, we submit, is not the approach that is permitted.
Your Honour, just to complete the other submission, it was that the concept of costs is littered throughout the Civil Procedure Act, including section 98, which is the core provision for costs, and it appears in section 181, and it may well be that is not talking about funding commissions at all, but even if ‑ ‑ ‑
GAGELER J: Are we interpreting Mr Moore’s submissions when he said “costs”? I mean, what are we doing with this excursus into the meaning of “costs”?
MR GLEESON: Well, let me come to it directly. A theme of Mr Moore’s argument was there is nothing unusual about what happened here. We have a statute which says, look for the just, quick and cheap, and her Honour said, if I assume every action gets the same gross sum, then mathematically the funded action will take out more than the “no win, no fee” action, QED. Now, that is the submission that I am seeking to meet. My submission is that section 56, when it talks about “just, quick and cheap” is not mandating that type of exercise, either in a multiplicity action or, in fact, in any context. Take a simple, funded action, where there are no overlapping actions.
We would submit it is no part of the court’s role by reason of section 56 to say I am going to conduct an inquiry, either directly or through a contradictor or through any other mechanism into this funding commission to see if this is the lowest possible funding commission that ought to be charged to these group members, bearing in mind following Brewster, it can never be said until the end of the matter anyway.
That inquiry is not an inquiry into “just, quick or cheap” and it is not such an inquiry, at least for the matter raised by your Honour Justice Edelman’s question that how is one to assess whether it is cheap without then doing a complete inquiry into what risks have been taken on by the funder, what are the prospects of the action, how likely is it to succeed?
GAGELER J: So “cheap” is limited to recoverable costs, is it?
MR GLEESON: “Cheap” is essentially limited to recoverable costs, and at least in traditional jurisprudence, as we would apprehend it, courts have not made on judgments positive orders against defendants requiring them to pay commissions to funders. They have made orders for legal costs, so “cheap” is limited to costs. Now, if that is right, the entire exercise which Mr Moore says explains why her Honour was simply doing a traditional thing, we would submit collapses.
Your Honour Justice Gordon raised the question about McHenry v Lewis. Our submission is that the types of factors in McHenry do indicate the traditional juridical factors and on none of those factors would there be any basis to stay a Wigmans action, and even within those factors there is an indication that the second action will need to overcome the preference given to the first action.
Your Honour the Chief Justice asked a question of Mr Moore and perhaps of me, what of a case where a group member was able to prove that the representative’s decision to commit to certain costs, whether legal or funders, could be seen to be oppressive and could there be a remedy to that situation. We submit that could squarely fall within section 171 because you would not be performing your functions adequately if you were to engage in terms oppressive of the members, and the parallel would readily be drawn, as I mentioned in‑chief with a trustee or mortgaging on a power of sale. So that matter can squarely be dealt with within 171.
Security for costs in fact also can be dealt with within 171, because if a representative is unable to provide security, the natural consequence is the action will be stayed. So if another person in the class comes along and says I can find security, it would be a perfectly straightforward exercise, it would take five minutes to say, “Substitute me for the existing inadequate representative”. So, section 171 does provide the mechanism to deal with many of the problems that have been raised.
Your Honours, just finally, the Grasby decision in Canada, your Honours will have picked up that while that decision says that you can conduct carriage before certification it does not say the opposite, namely, carriage can occur after certification. All it really stands for is that because
of the certification provisions and their spirit and guiding influence, the inherent power in Canada can allow for the carriage motion whether together with certification or, indeed, in advance of it. May it please the Court, they are our submission in reply.
KIEFEL CJ: Thank you, Mr Gleeson. The Court reserves its decision in this matter and adjourns to 9:30 am tomorrow.
AT 4.14 PM THE MATTER WAS ADJOURNED
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