FEDERAL COURT OF AUSTRALIA

Wileypark Pty Ltd v AMP Limited [2018] FCAFC 143

ORDERS

IN EACH PROCEEDING, THE COURT ORDERS THAT:

1.    Upon the expiry of 28 days, or such shorter or longer period as the Court may order, the proceeding be transferred to the Supreme Court of New South Wales pursuant to s 1337H of the Corporations Act 2001 (Cth).

2.    Within seven days, the parties file submissions on costs of no more than two pages.

IN EACH PROCEEDING, THE COURT DECLARES THAT:

In respect of proceedings to which s 1317K of the Corporations Act applies, upon the transfer of the proceeding provided for in order 1, s 33ZE(1) of the Federal Court of Australia Act 1976 (Cth) continues to apply to group members to which these proceedings relate according to its terms until any relevant operation of s 182(2) of the Civil Procedure Act 2005 (NSW) (CP Act) picked up by s 79 of the Judiciary Act 1903 (Cth), or, alternatively, upon said transfer s 182(1) and (2) of the CP Act apply to group members to which these proceedings relate by s 79 of the Judiciary Act.

THE COURT DIRECTS THAT:

A copy of these reasons be served by Komlotex Pty Ltd on the Attorney-General and Solicitor-General of the Commonwealth and the Attorneys-General and Solicitors-General of the States and Territories.

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

REASONS FOR JUDGMENT

ALLSOP CJ:

1    There have been filed in this Court four representative proceedings under Part IVA of the Federal Court of Australia Act 1976 (Cth) (FC Act) against AMP Limited (AMP) arising out of the matters raised at the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. Using abbreviations of the lead plaintiffs’ names they will be referred to as the Wileypark proceeding filed on 9 May 2018 in the Victorian District Registry, the Georgiou proceeding filed on 25 May 2018 in the New South Wales District Registry, the Fernbrook proceeding filed on 6 June 2018 in the Victorian District Registry, and the Komlotex proceeding filed on 7 June 2018 in the Victorian District Registry. All four proceedings were open class proceedings.

2    All four proceedings were docketed to one judge in the Commercial and Corporations National Practice Area (Middleton J) and listed on 8 June 2018 for initial case management, on which date the matters were stood over until 14 August 2018 for further case management and the hearing of the applications referred to below. One of the obvious aspects of case management was to consider which one or more proceeding or proceedings should proceed, and to consider matters relevant to any such decision. As was clear, the running of multiple actions by different lawyers, with different funders was, in principle, potentially inimical to the administration of justice and, in particular, potentially inimical to the interests of group members, and potentially oppressive to AMP. Involved in such questions would be class definition, the nature of the causes of action, the terms of any relevant funding agreements and other considerations of the kind discussed by Lee J in Perera v Getswift Limited [2018] FCA 732; 127 ASCR 1, by Beach J in McKay Super Solutions Pty Ltd (Trustee) v Bellamy’s Australia Ltd [2017] FCA 947 and by Foster J in Cantor v Audi Australia Pty Limited (No 2) [2017] FCA 1042 at [38]-[79].

3    Meanwhile, on 9 May 2018 (a few hours earlier on the same day as the Wileypark proceedings were filed in Melbourne in this Court), another lead plaintiff (Ms Wigmans) and another firm of solicitors, and one assumes another funder, caused proceedings to be filed under Part 10 of the Civil Procedure Act 2005 (NSW) in the Supreme Court of New South Wales. The Wigmans proceeding was listed in the Commercial List.

4    On 6, 7 and 8 June, applications were filed in this Court by AMP seeking to transfer the proceedings to the Supreme Court of New South Wales. On 8 June, Middleton J set these down for hearing on 14 August before himself.

5    As yet, there are no standing arrangements between the two courts (or between other Supreme Courts and the Federal Court) for a procedural protocol for the approach to this problem of “competing” proceedings (really, competing self-interests of those promoting and hoping to manage these proceedings).

6    In June 2018, the four Federal Court applicants approached the Commercial List seeking the transfer of the Wigmans proceeding to the Federal Court. The application was heard on 28 June 2018. It was opposed, including by AMP, whose senior counsel told the judge hearing the application that his client was “more content” to be sued in the Commercial List than in the Federal Court. Ms Wigmans also sought an anti-suit injunction against the parties to the four Federal Court proceedings taking any steps in this Court.

7    On 9 July 2018, a judge in the Commercial List delivered judgment. His Honour refused to transfer the Wigmans proceeding to the Federal Court. At [54] of his judgment ([2018] NSWSC 1045), after referring to Santos Ltd v Helix Energy Services Pty Ltd [2009] VSC 282; 28 VR 595 as the basis for his chosen course, his Honour said:

I propose to … invite the Federal Court applicants to consider whether they will now agree that the four Federal Court proceedings be transferred to this Court and to inform me, and the other parties, of their decision by 5.00 pm on 16 July 2018. If they do not, I will consider whether to grant an anti-suit injunction in the terms of the second alternative sought by Ms Wigmans.

8    One of the difficulties with this course of action is that it presupposed that the only way two courts in an integrated federal judicature could and should resolve competing actions in their respective courts was by issuing anti-suit injunctions in protecting proceedings begun marginally earlier than others. Another difficulty was that it demanded a course of conduct from the persons involved in four class actions, within a week, and would threaten the entitlement of the parties to return to the Federal Court in the exercise of federal jurisdiction, including to debate the pending transfer applications brought by AMP that had been set down for 14 August.

9    Two days later, on 11 July, the Federal Court proceedings came before Lee J (in the absence of Middleton J on leave). Lee J expressed some concern as to the protection of the integrity of the process of this Court pending the proceedings coming before Middleton J on 14 August in the face of the threat of an anti-suit injunction the following week. The transfer applications are the applications this Court is now dealing with. Lee J said the following at [17]-[19] of his reasons ([2018] FCA 1052):

17    Notwithstanding his Honour’s invitation in Wigmans at [54], in the light of what all parties agree is a prospect of an anti-suit injunction being made, it is necessary for this Court to give consideration as to whether the subject matter of the Transfer Applications needs to be protected, so as to vindicate the authority and processes of this Court, pending the applications coming before the docket judge in accordance with the existing orders of this Court and being dealt with following submissions by all interested parties and on the basis of the circumstances then existing (including the existence of the orders now made by Stevenson J on 9 July 2018).

18    To this end I have indicated to the parties that if any application is to be made to preserve the status quo of the Transfer Applications being dealt with by Middleton J in accordance with his Honour’s orders (as foreshadowed by Mr Donnellan), it may be appropriate for any such application to be heard and determined at short notice. Moreover, given its novelty and perceived importance for this Court, arrangements are likely to be required to allow any such application, to be referred to a Full Court (and provide for the Full Court to exercise original jurisdiction in relation to any such application or applications). Given any such application is likely to involve relief being sought against a third party by separate originating application, it may also be necessary to deal with issues as to short service.

19    In all the circumstances, pending the return of Middleton J, it is appropriate to direct the Federal Court applicants to inform the Court by 4.00 pm on 13 July 2018 (via my Associate, copied to the Associate to the Acting Chief Justice), as to whether any application is proposed to be made to preserve the status quo pending the current hearing of the Transfer Applications as ordered. The parties will then be informed as to whether a direction pursuant to s 20(1A) of the Federal Court of Australia Act 1976 (Cth) is to be made and as to any listing arrangements before a Full Court.

10    These remarks apparently led Ms Wigmans, through her lawyers, to file a notice of motion one day later, on 12 July 2018, for what was described as an anti-anti-anti-suit injunction. The motion was referred to the Chief Judge in Equity at the direction of the Chief Justice. The Chief Judge refused to grant any injunction and made consent orders holding the position pending the applications before this Court: [2018] NSWSC 1118. The Chief Judge recognised the importance of comity, saying at [13]-[18]:

13    In CSR Limited v Cigna Insurance Australia Limited, to which I have already referred, the plurality (comprised of Dawson, Toohey, Gaudron, McHugh, Gummow and Kirby JJ) said (at 395-396):

… [A]lthough [an anti-suit injunction] … operates in personam, it nevertheless interferes with the processes of the foreign court and may well be perceived as a breach of comity by that court. [Citation omitted.] Comity, relevantly, was explained by the Supreme Court of the United States in Hilton v Guyot [(1895) 159 US 113 at 163-164] in the following terms:

“Comity”, in the legal sense, is neither a matter of absolute obligation, on the one hand, nor of mere courtesy and good will, upon the other. But it is the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having regard both to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its laws.

14    The plurality went on to say (at 396):

For this reason, the cases also emphasise that the power to grant injunctions in restraint of foreign proceedings should be exercised with caution. And that is so whether the injunction is sought in the exercise of the inherent or equitable jurisdiction.

15    It has been recognised in a number of cases, including by Allsop J (as the Chief Justice then was) (with whom Finn and Finkelstein JJ agreed) in Comandate Marine Corporation v Pan Australia Shipping Pty Limited (2006) 157 FCR 45; [2006] FCAFC 192 (at [252]) that the grant of an anti-suit injunction or an anti-anti-suit injunction involves a potentially complex exercise of discretion in which comity is a real consideration.

16    There is no doubt that there is power in this Court, in its inherent jurisdiction and/or in the equitable jurisdiction, to grant an anti-anti-anti-suit injunction of the kind which was sought by the plaintiff today, and it was impressed upon me by counsel for the plaintiff that it was sought in aid of preserving the integrity of the processes of this Court. Concern as to the importance of steps which might affect or undermine the integrity of the court and its processes was a matter also referred to by Lee J when the matter came before his Honour in the Federal Court yesterday.

17    The cases in general that have dealt with anti-suit injunctions or anti-anti-suit injunctions or the like have tended to be cases involving matters where proceedings were commenced in the court of the forum as well as in international courts. This is a relatively unique case where there are present proceedings in the Supreme Court and, at the same time, proceedings in the Federal Court.

18    I am of the firm view that, as a matter of policy, this Court should not take steps that may interfere with or undermine the processes of the Federal Court; just as I would expect that judges of the Federal Court would be concerned, as a matter of comity, not to take steps which would interfere or cause interference in the integrity or processes of this Court. In my view, there would need to be powerful reasons given for an anti-anti-anti-suit injunction of the kind that was sought in the notice of motion filed today to be made (just as there would need to be, I would hope, recognised a need for powerful reasons before any anti-anti-suit injunction might be granted in the Federal Court if to do so would affect or undermine the integrity of the processes of this Court).

11    I wish to express, emphatically, my complete agreement with the Chief Judge that comity between the Supreme Courts of the States and Territories and the Federal Court in the concurrent exercise of federal jurisdiction is of the utmost importance. Indeed, to put it thus may be to suffer understatement. In an integrated federal judicature such comity is a Constitutional assumption of the utmost practical and institutional importance. As Kirby P stated in Beecham (Australia) Pty Ltd v Roque Pty Ltd (1987) 11 NSWLR 1 at 3:

It is unseemly, at this stage in the history of the Australian Federation for arguments as to the most convenient forum within Australia for the hearing of a case to be resolved by such a procedure [referring to an anti-suit injunction]. After Federation, the former colonies of Australia, as States, acquired constitutional status as component parts of the Federation. The State courts, although not Federal courts, are recognised in Chapter III of the Australian Constitution as constituents of the judicial system of the Commonwealth. In these circumstances it is constitutionally inappropriate, in my view, to proceed in a State court to apply principles of private international law which have been developed to govern the relationships between courts of foreign countries. Not only does this do offence to the ordinary use of language and common expectations in Australia today. In my opinion, it ignores the terms of and implications in the Australian Constitution as to the relationship between State courts as part of the court structure of the Australian Commonwealth.

12    To put the matter thus may raise the spectre of the need for a notice under s 78B of the Judiciary Act 1903 (Cth). I would read the President as referring to the Constitutional assumption of an integrated Australian judicature, now accepted as a reality in Kable v Director of Public Prosecutions (NSW) [1996] HCA 24; 189 CLR 51. Understood thus, I do not consider that s 78B demands a notice.

13    The reality and practical significance of this Constitutional assumption is made clear in circumstances where a party seeks, or it is otherwise suggested, that one court in Australia would, or should, entertain an anti-suit injunction against proceedings in another court with the possible interference with the integrity of the processes of that other court, and so, of the integrated judicature itself. The undesirability of that course has a number of other unwanted features which are unnecessary to canvass.

14    It is important to look at the appropriate management of these competing class actions from the correct perspective. They are not inter partes individual proceedings in which a plaintiff chooses to commence litigation solely for its own benefit, and for which it chooses lawyers to act on its behalf to vindicate its personal rights. These are proceedings brought not only for the benefit of the named lead plaintiff or plaintiffs, but also on behalf, and for the benefit, of all group members. Sometimes, though not always, such actions are funded for commercial reasons by litigation funders. This is especially so in shareholder class actions of the type before the Court here. They are capable (as representative proceedings involving litigation funding) of being characterised as managed investment schemes: see the majority in Brookfield Multiplex Pty Ltd v International Litigation Funding Partners Pte Ltd [2009] FCAFC 147; 180 FCR 11.

15    It is to be recognised that there are sensitive and difficult issues to be addressed where five groups of interests (in two courts), all within days or weeks of each other, bring proceedings on behalf of largely the same group members over largely similar causes of action. Those bringing the action have their own self-interests: any funders for their percentage take, lawyers for their professional fees, and, sometimes, lead plaintiffs for any special position they can negotiate in the overall arrangement. There is the risk of procedural arbitrage based on a view by those in control of the litigation as to the likely approach of different judges in different courts not only about the law and facts, but about funding agreements and lawyers’ fees; and the risk of the possible placement of that self-interest above the interest of those whom the Court is bound to protect: the group members.

16    It is apparent that similar proceedings, for similar groups, raising similar issues in more than one open class action would likely be unsatisfactory.

17    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. Such circumstances will involve the kinds of considerations to which I have already referred, including the definition of the classes, whether they are open or closed, the issues raised in the causes of action pleaded, the apparent quality of the pleading, the terms of any funding agreement and any other surrounding and relevant circumstances. The timing of any such decision will likewise depend on all the circumstances.

18    Ordinarily, little weight should be given to the factor of reaching the Court first in circumstances where all courts should be astute to protect the best interests of all group members, not the desires of the promoters and managers of the litigation (in particular, the commercial funders and the lawyers) to be first to the filing gate. Beyond that broad recognition of the position of those involved, there are specific dangers involved in giving weight to first filing. It involves an encouragement for hasty preparation and lack of mature reflection. In some cases, mature reflection enables it to be appreciated that there is a need for preliminary discovery to assess the strength of a possible case. Further, commercial decisions about funding made in haste to get in first may interfere with decisions about the interests of group members. Haste may also lead to less focused pleading and preliminary analysis which may undermine, not reinforce, the policy objectives of modern dispute resolution and court statutes. Using such a first-is-best approach may deny the Court the ability to make a considered and balanced case management decision as to which action or actions proceed conformably with the interests of all group members and any properly considered prejudice of the respondent. This is not to countenance delay; it is to deprecate any approach where any real weight is given to the first-in-best-dressed approach for those promoting and managing this kind of litigation.

19    All this is compounded, not alleviated, when the respondent is “more content” to be sued in one court rather than another.

The applications before the Court

20    The four interlocutory applications are made under s 1337H of the Corporations Act 2001 (Cth) to transfer the proceeding to the Supreme Court of New South Wales. There is no appeal from a decision of this character: s 1337R.

21    Given the background to the proceedings and the importance of the legal points to which I will come, I considered that the matter was of sufficient importance to make a direction under s 20(1A) of the FC Act for the jurisdiction of the Court in relation to the applications to be exercised by a Full Court.

22    The applications were supported and contested by various affidavits read by the parties. It is unnecessary to refer in any detail to the matters traversed by the affidavits. It can be accepted that AMP has its head office in Sydney, but its operations are nationwide. The place of residence of individual lead plaintiffs is of little relevance when group members are Australia-wide. Convenience of (and so perhaps cost of) lawyers is a consideration, but as a national court the Federal Court could hear the case, including case management hearings, anywhere in Australia.

23    All this is by the by, however, as the Supreme Court has refused to transfer the Wigmans proceeding. None of what might be called the usual considerations in a forum conveniens or transfer application outweigh the convenience of ensuring only one substantive hearing. No party put the submission that two proceedings (one in this Court and one in the Supreme Court) could be managed simultaneously and co-operatively. This kind of inter-court co-operation has a precedent in large insolvency litigation in the United States and Canada in the Nortel Case: see Nortel Networks Corporation (Re), [2015] ONSC 2987; In re Nortel Networks Inc., et al., Debtors 532 BR 494 (2015). The very similar nature of the cases here means that that co-operative expedient is perhaps not necessary. 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 to resolve the issue for the lead plaintiff or plaintiffs and group members, and on what terms. This is an important decision, not without its commercial and professional aspects. To this question the interests of group members are paramount. At the risk of criticism for repetition, it should be obvious that this important decision, so vital to group members, should not be forestalled by an anti-suit injunction seeking to protect the first suit filed.

24    Were it not for the legal issues raised by some of the applicants in the proceedings I would transfer the applications to the Supreme Court in the anticipation that the judge managing the proceedings will consider which one or more of the proceedings should proceed, and on what terms as to funding terms and fee, legal costs and management of the litigation.

25    I gave some consideration to the question as to whether this Court would conduct a “carriage motion” among the four Federal Court proceedings and transfer one or more proceedings to the Supreme Court (staying the others), enabling a second carriage motion involving the Wigmans proceedings to be heard in the Supreme Court. On reflection, it would be better to transfer the four proceedings to the Supreme Court so that Court can decide which one or more actions should go forward, taking into account all relevant matters and the best interests of the group members.

26    The arguments in opposition to this course are of importance. They were arguments most forcefully put on behalf of the interests behind the Komlotex proceedings.

27    Each of the proceedings raises claims under the Corporations Act, seeking declarations and compensation orders under Part 7.10 of the Corporations Act in particular under s 1041I. Proceedings for a declaration of contravention and a compensation order “may be started no later than 6 years after the contravention”: s 1317K of the Corporations Act. The Wigmans proceedings also contain claims for declarations of contraventions of the Corporations Act and compensation orders under s 1041I.

28    If representative proceedings are commenced, subject to the matters in the following paragraph, s 33ZE(1) suspends the time limitations as contained in s 1317K. Section 33ZE of the FC Act provides as follows:

33ZE Suspension of limitation periods

(1)    Upon the commencement of a representative proceeding, the running of any limitation period that applies to the claim of a group member to which the proceeding relates is suspended.

(2)    The limitation period does not begin to run again unless either the member opts out of the proceeding under section 33J or the proceeding, and any appeals arising from the proceeding, are determined without finally disposing of the group member’s claim.

29    AMP argued, and during argument it appears to have been conceded by Komlotex, that the commencement of proceedings under s 33C “on behalf” of group members (see the definition of “group member” under s 33A) was the “start” of proceedings for the purposes of s 1317K, by each group member. Given the way the argument proceeded it is unnecessary to express a final view, but for my part, the proceeding is commenced (that is, started) by the persons referred to in s 33C(1) as the persons representing the group. On this hypothesis, the group members do not commence or start proceedings; another or others commence proceedings on group members’ behalf. If group members start the proceeding, s 33ZE(1) would have little work to do until an engagement of the circumstances in s 33ZE(2).

30    On the other hand, taking s 33ZE(1) as relevantly operative, one law of the Commonwealth Parliament (s 33ZE(1)) suspends for all group members the running of time under another law of the Parliament (s 1317K) until the events contemplated by s 33ZE(2) occur.

31    Part 10 of the Civil Procedure Act 2005 (NSW) (CP Act) is in similar terms and structure to Part IVA of the FC Act in providing for representative proceedings. Section 182 of the CP Act (the equivalent of s 33ZE) is in the following terms:

182 Suspension of limitation periods

(1)    On the commencement of any representative proceedings, the running of the limitation period that applies to the claim of a group member to which the proceedings relate is suspended.

(2)    The limitation period does not begin to run again unless either the member opts out of the proceedings under section 162 or the proceedings, and any appeals arising from the proceedings, are determined without finally disposing of the group member’s claim.

(3)    However, nothing in this section affects the running of a limitation period in respect of a group member who, immediately before the commencement of the representative proceedings, was barred by the expiration of that period from commencing proceedings in the member’s own right in respect of a claim in the representative proceedings.

(4)    This section applies despite anything in the Limitation Act 1969 or any other law.

32    Section 162 of the CP Act concerning opt out, and referred to in s 182(2), provides as follows:

162 Right of group member to opt out

(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.

(3)    The Court may, on application by a group member, the representative party or the defendant in the proceedings, fix another date so as to extend the period during which a group member may opt out of the representative proceedings.

(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.

33    Sections 1337N and 1337P of the Corporations Act provide for the effect of transfer of proceedings as follows:

1337N Transfer of documents

If, under section 1337H, 1337J or 1337K, a court (the transferor court) transfers a proceeding, or an application in a proceeding, to another court:

(a)    the Registrar or other proper officer of the transferor court must transmit to the Registrar or other proper officer of the other court all documents filed in the transferor court in respect of the proceeding or application, as the case may be; and

(b)    the other court must proceed as if:

(i)    the proceeding had been originally instituted in the other court; and

(ii)    the same proceedings had been taken in the other court as were taken in the transferor court; and

(iii)    in a case where an application is transferred—the application had been made in the other court.

1337P Conduct of proceedings

(1)    Subject to sections 1337S, 1337T and 1337U, if it appears to a court that, in determining a matter for determination in a proceeding, the court will, or will be likely to, be exercising relevant jurisdiction, the rules of evidence and procedure to be applied in dealing with that matter are to be the rules that:

(a)    are applied in a superior court in Australia or in an external Territory; and

(b)    the court considers appropriate to be applied in the circumstances.

(2)    If a proceeding is transferred or removed to a court (the transferee court) from another court (the transferor court), the transferee court must deal with the proceeding as if, subject to any order of the transferee court, the steps that had been taken for the purposes of the proceeding in the transferor court (including the making of an order), or similar steps, had been taken in the transferee court.

(3) In this section:

relevant jurisdiction means:

(a)    jurisdiction conferred on the Federal Court of Australia or the Family Court with respect to civil matters arising under the Corporations Legislation; or

(b)    jurisdiction conferred on a court of a State, the Capital Territory or the Northern Territory with respect to matters referred to in subsection 1337B(3).

34    Notwithstanding that during argument Komolotex accepted that commencement of the four proceedings in the Federal Court had the effect of group members starting proceedings for the purposes of s 1317K, it still argued that group members would be prejudiced by any transfer.

35    The argument was that transfer to the Supreme Court would destroy that suspensive protection of s 33ZE(1). This affectation was, it was submitted, the consequence of the change to the character of the proceedings brought about in the transfer, and the lack of application of s 182 of the CP Act to suspend a limitation provided for under a law of the Commonwealth Parliament. That is, s 79 of the Judiciary Act 1903 (Cth) does not pick up s 182 in the face of s 1317K. How this caused prejudice if group members are to be taken to have started proceedings for the purposes of s 1317K is not clear to me.

36    Nevertheless, I deal with why this submission should not be accepted in steps.

37    The first step is the effect of transfer of proceedings begun in the Federal Court under s 33C. It was submitted that s 1337N when read with s 1337P meant that the Corporations Act transformed the proceedings commenced in the Federal Court. They were now to be treated (as the fact) as having been commenced in the Supreme Court. In Webster (Trustee) v Murray Goulburn Co-operative Co Limited (No 3) [2018] FCA 990 at [26], Beach J said that a proceeding transferred to the Federal Court was to be “treated as being brought under Pt IVA of the [FC Act]”. (See also Webster (Trustee) v Murray Goulburn Co-operative Co Ltd [2017] VSC 249 at [1]-[6].) That ss 1337N and 1337P require the transferee court to thereafter treat the proceeding as if it had been commenced there does not somehow deny or obliterate the fact of the antecedent protection provided by s 33ZE(1), by the event of commencement that in fact occurred. Transfer does not destroy the effect of s 33ZE(1). The words of ss 1337N and 1337P do not dictate that it be taken there was no commencement in the Federal Court. If it did, however, such protection by suspension would occur in any event through s 182(1) operating if picked up by s 79 of the Judiciary Act 1903 (Cth) (as it is, for the reasons below).

38    Then it was argued that the suspensory effect of s 33ZE(1) is conditioned on Pt IVA continuing to apply. Upon any transfer, s 33ZE(2) can no longer apply and it must be taken that s 33ZE(1) is somehow exhausted in its operation. I do not accept that submission. Section 33ZE(1) is plain in its terms and effect. Transfer of proceedings under a provision of a Commonwealth statute such as s 1337H (or under some cognate statute) can be anticipated in respect of proceedings under Part IVA of the FC Act. Sections 1337N and 1337P will see the once Federal Court proceedings continue under the CP Act as if they had been commenced in the Supreme Court. One looks to the statute that governs such proceedings in the Supreme Court to understand the legal regime under which the proceedings will continue. Under s 182(2) (if adopted by s 79 as a federal law), if a group member opts out or the other circumstances in s 182(2) occur, the suspension imposed by s 33ZE(1) would end. If this view about the continuing operation of s 33ZE(1) until circumstances in s 182(2) affect it be wrong, then from the time of transfer s 182(1) may be seen to operate in identical fashion to s 33ZE(1) once it is picked up. I accept that the terms of s 1337N and 1337P and the form and structure of s 33ZE(1) and (2) can be taken to found a view that upon transfer s 182(1) and (2) govern suspension and the end of suspension, not s 33ZE(1) and s 182(2). I would prefer the view that I have expressed. In the end, it matters not: there is a suspension and the lifting of a suspension provided for.

39    The legal regime under which the transferred proceedings continue appears to be under State statute. The proceedings are in federal jurisdiction. A State Parliament is incapable of enacting a valid law which governs the exercise of federal jurisdiction by a Court, whether federal or State: Rizeq v Western Australia [2017] HCA 23; 344 ALR 421 at [63]. That, however, explains the function of s 79 and also explains the proper nature and extent of its operation: Rizeq at 435 [63]. There the plurality said:

The incapacity of a State Parliament to enact a law which governs the exercise of federal jurisdiction by a court, whether it be a federal court or a State court, explains the necessity for s 79 of the Judiciary Act and is the key to understanding the nature and extent of its operation. Section 79 is a law, enacted under s 51(xxxix) of the Constitution, which serves to ensure that the exercise of federal jurisdiction is effective. The section fills a gap in the law governing the actual exercise of federal jurisdiction which exists by reason of the absence of State legislative power. The section fills that gap by picking up the text of a State law governing the exercise of State jurisdiction and applying that text as a Commonwealth law to govern the manner of exercise of federal jurisdiction. The section has no broader operation.

40    There was no debate that a law such as s 182 of the CP Act was a law of a State governing the exercise of State jurisdiction and if picked up would govern the manner of exercise of federal jurisdiction, just as State statutes of limitation can be, and often are, picked up.

41    But, Komlotex submitted, s 182 was not picked up by s 79 of the Judiciary Act because it was in conflict with the terms and operation of s 1317K.

42    Section 79 of the Judiciary Act is relevantly in the following terms:

79 State or Territory laws to govern where applicable

(1)    The laws of each State or Territory, including the laws relating to procedure, evidence, and the competency of witnesses, shall, except as otherwise provided by the Constitution or the laws of the Commonwealth, be binding on all Courts exercising federal jurisdiction in that State or Territory in all cases to which they are applicable.

…

43    Section 1317K “otherwise provided”, it was submitted, because its ambit and operation were irreconcilable with the direct terms of s 182, which derogated from the operation of the Commonwealth law: see Austral Pacific Group (in liq) v Airservices Australia [2000] HCA 39; 203 CLR 136 at 144 [17]; Northern Territory v GPAO [1999] HCA 8; 196 CLR 553 at 587-589 [78]-[84], 606 [135], 650 [254]; Grant Samuels Corporate Finance Pty Ltd v Fletcher [2015] HCA 8; 254 CLR 477 at 487 [23].

44    This argument that a Commonwealth law (s 1317K) “otherwise provided” so that s 182 is not picked up was put, in part, on the basis that s 1317K did not just deal with a remedy but created a substantive right or was “jurisdictional”. Reliance was placed on the decision of Almond J in Austructures Pty Ltd v Makin [2014] VSC 544; 290 FLR 153. It is unnecessary to consider the correctness of that view (upon which I do not intend to cast doubt) because it matters not whether the provision (s 1317K) goes to a remedy or a right. Its operation (if looked at in isolation) would be derogated from by s 182 if that provision were picked up; that is, if that were the correct question to ask.

45    The answer to this submission is that to look only to the text of s 1317K and the derogation from its operation if s 182 is picked up is too narrow a focus. Section 79 used the phrase “laws of the Commonwealth”.

46    In construing relevant statutes, State and Commonwealth, in the working through of provisions for the operation of an integrated federal judicature one should adopt an approach to construction, as far as the words of any relevant statute permit, that aids the smooth working of that judicature, not an approach that uncovers difficulty or inconvenience.

47    The Commonwealth Parliament has enacted two laws – s 1317K of the Corporations Act and s 33ZE of the FC Act that deal with time limits in relation to certain proceedings arising under a law of the Parliament and to be vindicated in federal jurisdiction by representative proceedings in the Federal Court. It must be taken that it was plain to Parliament that such claims could be brought in State Courts as well as the Federal Court if Parliaments of different polities adopted representative proceedings legislation. It is not to be presumed that Parliament intended a suspension of time running if representative proceedings were commenced in the Federal Court, but no suspension if the representative proceedings were brought in a State Supreme Court operating under a cognate legislative regime as the Federal Court under Part IVA of the FC Act. The proper approach is to look at the relevant Commonwealth laws (s 1317K and s 33ZE) and ask whether such otherwise provide, preventing s 182 being picked up. Once that correct question is posed, the answer is obvious: no, there is no derogation and Commonwealth laws do not otherwise provide. Section 182(1) and (2) being picked up will provide, in substance, the same regime of suspension for group members as does s 33ZE(1) and (2) in relation to claims under Commonwealth law commenced in the Federal Court and otherwise limited by s 1317K. There is no derogation and no inconsistency.

48    Thus, I would reject the submission that s 182 of the CP Act is not picked up by s 79 of the Judiciary Act in the Wigmans proceeding or the four proceedings in this Court if transferred to the Supreme Court.

49    It is unnecessary to deal with the remedy or right point. Whether or not AMP’s undertaking in the Wigmans proceeding not to plead s 1317K is effective, the same position, if it be a difficulty, will obtain in relation to any of the proceedings.

50    Once the Federal Court proceedings are transferred to the Supreme Court, the provisions of Pt 10 of the CP Act will apply to the conduct of the proceedings in federal jurisdiction: s 79 of the Judiciary Act and ss 1337N and 1337P of the Corporations Act. Thereafter, the protection afforded by s 33ZE(1) (or s 182(1)) will be affected by any opt out under s 162 because of the terms of s 182(2), both picked up and made applicable by s 79. Once picked up by s 79, provisions such as s 162 (on opt out) and s 182 apply as federal law.

51    Thus if a group member opts out under s 162 (now federal law through the picking up by s 79), s 182(2) operates to end the suspension. Section 182(2) is relevantly identical to s 33ZE(2) and so, like s 182(1), is picked up by s 79.

52    It should be noted that no other disadvantage to group members was asserted to flow from transfer to the Supreme Court applying Pt 10 of the CP Act compared to Pt IVA of the FC Act. The arguments in these applications, however, illuminate the wisdom of and need for the representative proceedings regimes of the Commonwealth and States to be substantially identical. In the face of competing class actions it may be difficult to require a group to be transferred to a Court where there would be some lessening of procedural and substantive rights. For instance, if s 182 provided for suspension or lifting of suspension in a manner more unfavourable to group members than s 33ZE that would be a consideration militating against transfer, and it may affect the question of “otherwise provided” under s 79.

53    There is no appeal from an order for transfer: s 1337P. This Court is, of course, amenable to the operation of s 75(v) of the Constitution, though any error of this Court in statutory construction in deciding a transfer application may not amount to necessary jurisdictional error. These are important questions. If Komlotex’s submissions are correct and the above analysis is wrong, damage may possibly be done to the legal interests of group members by the transfer. It is not clear how that damage could be done if the concession made by Komlotex is correct in that the beginning of representative proceedings by a lead plaintiff on behalf of group members amounted to those group members starting proceedings for s 1317K. However, I have difficulty with that concession and the statutory interpretation underlying it. In these circumstances, the Court raised the issue of whether declaratory relief should be given that would provide an avenue for special leave if any party thought it appropriate. Such declarations could be to the effect that the transfer of proceedings to the Supreme Court does not affect the suspension of the running of any limitation period by s 33ZE(1) of the FC Act, or s 33ZE(1) and then s 182(1) of the CP Act, and that the operation of the suspension of the running of the limitation period commenced by s 33ZE(1) or s 182(1) will thereafter be governed by s 182(2) of the CP Act upon transfer of the proceeding to the Supreme Court. Given the view I have of the arguments the making of the declarations will not prejudice group members. But if the view underlying the declarations is based on error group members could ultimately be prejudiced. The making of declarations will facilitate an application for special leave if thought appropriate.

54    I would therefore delay making orders transferring the proceedings to the Supreme Court for 28 days, or a shorter period should the parties decide not to seek special leave to appeal to the High Court.

55    Given the importance of the questions and the proximity of Constitutional considerations, I would also direct that a copy of these reasons be served on all State, Territory and the Commonwealth Attorneys-General and Solicitors-General. Komlotex should undertake this task as the propounder of the points in question.

56    The orders that I would make in each proceeding are as follows:

(1)    Order that upon the expiry of 28 days, or such shorter or longer period as the Court may order, the proceeding be transferred to the Supreme Court of New South Wales pursuant to s 1337H of the Corporations Act.

(2)    Declare that, in respect of proceedings to which s 1317K of the Corporations Act applies, upon the transfer of the proceeding provided for in order 1, s 33ZE(1) of the FC Act continues to apply to group members to which these proceedings relate according to its terms until any relevant operation of s 182(2) of the CP Act picked up by s 79 of the Judiciary Act, or, alternatively, upon said transfer s 182(1) and (2) of the CP Act apply to group members to which these proceedings relate by s 79 of the Judiciary Act.

57    I would hear the parties as to costs.

Associate:

Dated:    29 August 2018

REASONS FOR JUDGMENT

MIDDLETON J:

58    I agree with the analysis of the Chief Justice and the orders and declarations that he has proposed, which are also agreed with by Beach J, subject to some further observations of his own.

59    I would also stress that the management of class actions (and competing class actions) is just one aspect of proper judicial case management, involving as it does many discretionary decisions made by a docket judge as to matters of practice and procedure. This has been recently recognised by the Full Court in Ethicon Sàrl v Gill [2018] FCAFC 137 (Allsop CJ, Murphy & Lee JJ).

60    Undoubtedly, it is important for a docket judge to recognise, understand and implement the principles involved in the proper case management of class actions. However, most class actions before the Court will involve a variety of facts and circumstances pertaining specifically to those class actions or competing class actions. These facts and circumstances will decisively impact upon the preferable approach to be taken by the docket judge, and there will not necessarily be only one suitable approach that may be available for a docket judge to adopt. Nevertheless, the importance of remembering that a class action is brought not only for the benefit of the named lead applicant or applicants, but also for the benefit of all group members cannot be underestimated: to fail to do this would undermine the whole purpose behind the introduction by the Commonwealth Parliament of Part IVA of the Federal Court of Australia Act 1976 (Cth) (FC Act).

61    As to the views expressed by Beach J on several of the issues concerning s 1317K of the Corporations Act 2001 (Cth) (Corporations Act), s 33ZE of the FC Act, and s 182 of the Civil Procedure Act 2005 (NSW) (CP Act), I need express no final view in light of the way the argument proceeded and the agreement amongst the members of this Full Court.

62    Whether the “limitations clock” has stopped under s 1317K rather than under s 33ZE(1) will turn upon the proper construction of the terms “proceedings” and “started” in s 1317K, and the ambit of s 33ZE(1) in particular. My preferred view is that the proceeding is started (commenced) by the persons referred in s 33C(1), namely the persons representing the persons (not the claims of persons) identified as group members. As such, the group members do not start the proceedings.

63    As to the question whether upon transfer s 182(1) and (2) of the CP Act govern suspension and the end of suspension, not s 33ZE(1) and 182(2), I would prefer the view that all elements of s 182 of the CP Act would be picked up by s 79 of the Judiciary Act 1903 (Cth), which could then be applied consistently with the other relevant provisions of the Corporations Act. On this basis, s 182(1) and (2) would govern the situation upon transfer.

64    Whatever view on these matters prevails leads to no different result as all roads lead to Rome, or rather in this case, to Sydney. There can be no prejudice arising to any group member by reason of the transfer to the Supreme Court of New South Wales alone. If a group member later decides to opt out, the suspension and the lifting of a suspension of the limitation period is effectively continued in the Supreme Court of New South Wales as it was in operation before the Federal Court.

Associate:

Dated:    29 August 2018

REASONS FOR JUDGMENT

BEACH J:

65    I agree with the analysis of the Chief Justice and the orders and declarations that he has proposed, save that I would express several of the issues concerning s 1317K of the Corporations Act 2001 (Cth) and s 33ZE of the Federal Court of Australia Act 1976 (Cth) differently. In my view, in terms of the limitation question that has been argued, there is no prejudice arising to group members in the four Federal Court representative proceedings just from their transfer to the Supreme Court of New South Wales. Any potential prejudice on the limitation question could only be hypothetical at this stage. It could only contingently arise after transfer and upon a group member later opting out of the relevant proceedings or the proceedings being determined without finally disposing of that group member’s claim. But even that potential prejudice is removed by s 182 of the Civil Procedure Act 2005 (NSW), which is picked up by s 79 of the Judiciary Act 1903 (Cth) as the Chief Justice has pellucidly explained.

66    The starting point is to consider s 1317K of the Corporations Act and its proper construction. Section 1317K provides:

Proceedings for a declaration of contravention, a pecuniary penalty order, or a compensation order, may be started no later than 6 years after the contravention.

67    The question is whether the expression “(p)roceedings for… a compensation order…” within the meaning of s 1317K includes and can be satisfied by a claim made on behalf of a group member by the applicant in representative proceedings under Pt IVA of the Federal Court of Australia Act in circumstances where the group member is not formally a party to the representative proceedings. That construction question is not answered in the first instance by reference to s 33ZE of the Federal Court of Australia Act, but by the proper construction of s 1317K in context. Importantly, that context includes s 1317HA of the Corporations Act which provides:

Compensation for damage suffered

(1)    A Court may order a person (the liable person) to compensate another person (including a corporation), or a registered scheme, for damage suffered by the person or scheme if:

(a)    the liable person has contravened a financial services civil penalty provision; and

(b)    the damage resulted from the contravention.

The order must specify the amount of compensation.

Damage includes profits

(2)    In determining the damage suffered by a person or scheme for the purposes of making a compensation order, include profits made by any person resulting from the contravention.

Damage to scheme includes diminution of value of scheme property

(3)    In determining the damage suffered by a registered scheme for the purposes of making a compensation order, include any diminution in the value of the property of the scheme.

(4)    If the responsible entity for a registered scheme is ordered to compensate the scheme, the responsible entity must transfer the amount of the compensation to the scheme property. If anyone else is ordered to compensate the scheme, the responsible entity may recover the compensation on behalf of the scheme.

Recovery of damage

(5)    A compensation order may be enforced as if it were a judgment of the Court.

68    Now it is not in doubt that a representative applicant under Part IVA represents and brings claims on behalf of group members. And even though a group member is not a party, nevertheless his claim is treated as having been made and brought on his behalf by the representative applicant at the time the representative proceedings were commenced. In my view, in terms of the proper construction of s 1317K, at the time representative proceedings were filed under Part IVA, a group member can be taken to have commenced “(p)roceedings” as that term is used in s 1317K. Accordingly, the limitations clock stopped for the group member when the representative proceedings were commenced. I say this for a number of reasons.

69    First, the meaning of “proceedings” under s 1317K does not necessarily have the same boundaries and content as the meaning of “proceedings” under Pt IVA.

70    Second, the text of s 1317HA makes it plain that the proceedings contemplated under that provision do not require the claimant (group member) to be a party. The party can be just the named applicant pursuing the claim for and on behalf of the claimant (group member).

71    Third, it has been accepted that in construing a statutory limitation provision in the context of representative proceedings, whether under Pt IVA or otherwise, the clock stops for the represented person when the representative proceedings have been filed on his behalf. The question of the status of the represented person as a party or otherwise is not the determinative question (see for example Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd (2005) 63 NSWLR 203 at [44] per Mason P, Cameron v National Mutual Life Association of Australasia Limited (No 2) [1992] 1 Qd R 133 at 135 to 137 per McPherson SPJ and Sanda v PTTEP Australasia (Ashmore Cartier) Pty Ltd (2017) 347 ALR 647; [2017] FCA 14 at [51] to [63] per Griffiths J). What these authorities demonstrate is that the appropriate starting point to determine whether the clock has stopped for a group member is the proper construction of the relevant limitation provision said to be applicable, not s 33ZE. And what is looked at is the substantive purpose and scope of the limitation provision, rather than the formal matter of whether someone is a party.

72    In my view, applying s 1317K in the context of s 1317HA, the clock stopped for group members at the time proceedings under s 1317HA were filed. AMP so submitted, and Komlotex properly so conceded. And such a conclusion does not depend upon any operation of s 33ZE. Moreover, that position applies as much after the transfer of the relevant proceedings to the Supreme Court of New South Wales as before the transfer. Accordingly, any transfer does not in and of itself give rise to any prejudice to group members arising from the operation of s 1317K.

73    What then of the relevance of s 33ZE (before transfer) or s 182 of the Civil Procedure Act (after transfer and as picked up by s 79 of the Judiciary Act) to the question of prejudice?

74    Many of the arguments before us seemed to assume that the only way the limitations clock could stop for group members under s 1317K was by operation of s 33ZE(1). But it follows from what I have said that I would reject that premise.

75    First, the clock stopped by reason of the proper construction and application of s 1317K in context at the time the relevant representative proceedings were filed.

76    Second, the intent and purpose of s 33ZE is not to provide the only means by which the limitations clock could stop, at least temporarily until restarted. The purpose of s 33ZE, as the Explanatory Memorandum to the Federal Court of Australia Amendment Bill 1991 at [49] partly explained, is as follows:

The provision is designed to remove any need for a group member to commence an individual proceeding to protect himself or herself from expiry of the relevant limitation period in the event that the representative action is dismissed on a procedural basis without judgment being given on the merits (my emphasis).

77    Section 33ZE is not concerned to regulate the exclusive means by which the clock is to first stop, but rather to address the question of the prejudice to a group member if the group member opts out and commences a new proceeding or the proceeding is not otherwise disposed of concerning the group member’s claim. In order to avoid prejudice, the legislative cure is to suspend time running. Absent that provision, group members may have needed to protect themselves by issuing their own individual proceedings before the limitation period had expired, whatever the reason for the clock stopping in the first place. Both the identified problem and its legislative solution were in part a reflection of the opt out mechanism, an important feature of the Pt IVA model.

78    What then of the plain words of s 33ZE(1)? Do they necessarily imply that the limitations clock can only stop (at least temporarily) for a group member by reason of its operation alone and in no other way? I do not think so.

79    First, there is no support in any of the extrinsic material or indeed the 1988 report of the Australian Law Reform Commission (Grouped Proceedings in the Federal Court, Report No 46 (Australian Government Publishing Service, Canberra, 1988)) for such a position. Indeed, that report did not recommend or discuss any version of a proposed s 33ZE, although at [181] it was said:

“Any mechanism for opting out of grouped proceedings needs to be simple and involve little or no cost. It is also important that, as far as possible, the rights of any group member to commence or continue further proceedings on the same cause of action should be preserved.”

80    Second, the proper starting point is the construction of the limitations provision itself.

81    Third, s 33ZE was designed to be beneficial to and ameliorate a potential problem for group members. It was not designed to remove from group members the position that the limitations clock could in any event stop for a group member by reason of the proper construction and application of the separate limitations provision when the representative applicant first filed the representative proceedings. Section 33ZE was designed to enhance rather than detract from protections otherwise afforded by the proper construction and application of the separate limitations provision itself.

82    Fourth, s 33ZE(1) is not inconsistent with either of two scenarios being:

(a)    where on the proper application of the limitations period provision the clock has stopped for group members; or

(b)    where the application of such a provision has not stopped the clock.

83    For scenario (a), the clock stopping is not inconsistent with but embraced by s 33ZE(1); to stop the clock is the starting point for a suspension. But in scenario (a) the clock has stopped independently of s 33ZE(1). For scenario (b), it is the force of s 33ZE(1) which stops the clock, albeit potentially temporarily; to that extent s 33ZE(1) may over-ride the separate limitations period provision. But both scenarios are covered by the beneficial operation of s 33ZE so far as group members are concerned. The benefit provided by s 33ZE is the recognition or conferral of suspension, howsoever the clock first stopped.

84    Now there have been single judge and intermediate appellate decisions which have recited the operation of s 33ZE by reference to its text (see most recently Ethicon Sàrl v Gill [2018] FCAFC 137 at [27]). But they have not analysed s 33ZE in detail or in a way inconsistent with what I have just said.

85    In summary, for group members in the four Federal Court proceedings the limitations clock has stopped under s 1317K under its proper construction rather than under s 33ZE(1). That position applies now before transfer. And it will continue to be the position immediately after transfer for a group member until a relevant contingency occurs, namely, the group member opting out of the proceedings or the proceedings not finally disposing of the group member’s claim. Accordingly, there is no prejudice arising to any group member in relation to the s 1317K limitation question by reason of the transfer alone. The prejudice only potentially arises from a later act or circumstance, one of which is under the direct control of the group member (i.e. opting out). But this is solved by the answer to the next question.

86    What happens in terms of the clock starting again after transfer if, say, a group member later determined to opt out? In my view, after the transfer of the four Federal Court proceedings, no aspect of s 33ZE would continue to have operation. But all elements of s 182 of the Civil Procedure Act would operate as picked up by s 79 of the Judiciary Act. Not only does this have the advantage of symmetry, but ss 1337N(b)(i) and 1337P(2) of the Corporations Act are consistent with that conclusion. In other words, s 182 as picked up by s 79 is to be applied in a manner consistent with such provisions.

87    For these additional reasons, I agree with the orders for transfer and the declarations proposed by the Chief Justice.

Associate:

Dated:    29 August 2018