FEDERAL COURT OF AUSTRALIA

Elliott-Carde v McDonald’s Australia Limited [2023] FCAFC 162

ORDERS

THE COURT ORDERS THAT:

1.    The question reserved under s 25(6) of the Federal Court of Australia Act 1976 (Cth) for hearing and determination by the Full Court being:

If it was just to do so, does the Court have the statutory power, pursuant to s 33V of the Federal Court of Australia Act 1976 (Cth), to make an order distributing money paid under a settlement in the form of a “Settlement CFO”, as that term is defined in Davaria Pty Ltd v 7-Eleven Stores Pty Ltd [2020] FCAFC 183; (2020) 281 FCR 501 (at 506–507 [19], [22]–[25])?

should be answered as follows:

Yes.

2.    There be no order as to costs.

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

REASONS FOR JUDGMENT

BEACH J:

1    Before the Full Court are various issues that have been raised concerning the existence and exercise of statutory power to make a settlement common fund order (CFO) under s 33V(2) of the Federal Court of Australia Act 1976 (Cth).

2    The occasion for the Full Court to consider these issues has arisen because of a question reserved for our determination under s 25(6) of the FCA Act by the docket judge, Lee J in the following terms:

If it was just to do so, does the Court have the statutory power, pursuant to s 33V of the Federal Court of Australia Act 1976 (Cth), to make an order distributing money paid under a settlement in the form of a “Settlement CFO”, as that term is defined in Davaria Pty Ltd v 7-Eleven Stores Pty Ltd [2020] FCAFC 183; (2020) 281 FCR 501 (at 506-507 [19], [22]-[25])?

3    His Honour has been case managing two related and in one sense competing proceedings from which the question reserved has been conceived.

4    The first proceeding is a representative proceeding under Part IVA of the FCA Act brought by two applicants against McDonald’s Australia Limited (the Elliott-Carde proceeding) asserting various contraventions of the Fair Work Act 2009 (Cth) and claims concerning workplace entitlements.

5    The first applicant was a McDonald’s employee. The second applicant was an employee of a McDonald’s franchisee. They represent group members who were McDonald’s employees or employees of McDonald’s franchisees. They have brought claims in a representative capacity for declarations, compensation and pecuniary penalties for contraventions of ss 45, 50, 550 and 558B of the FW Act; some of their claims assert a failure to comply with a 2013 enterprise agreement and a 2010 award. Orders for compensation are sought under s 545. A declaration is sought under s 550. And an order for a pecuniary penalty is sought under s 546.

6    The second proceeding has been brought by the Shop, Distributive and Allied Employees Association (the SDA) against McDonald’s Australia Ltd and its franchisees involving analogous claims (the SDA proceeding).

7    The SDA, being a registered organisation under the FW Act, has brought its proceeding asserting that it is “entitled to represent the industrial interests” of in essence the same employees the subject of the Elliott-Carde proceeding under the relevant 2013 enterprise agreement and the 2010 award. The SDA asserts similar contraventions of the FW Act and a failure to comply with the said agreement and award as asserted in the Elliott-Carde proceeding. As a registered organisation, it also seeks declarations, orders for compensation and pecuniary penalties under ss 545, 546, 547 and 547A.

8    In the context of both the SDA proceeding and the Elliott-Carde proceeding, there are to my mind five issues that require our determination. How such issues have arisen as between the respective sets of parties, how they have been set up for our resolution and why they require our determination now has been cogently explained in the reasons of Lee J, a draft of which I have had the advantage of considering. Let me identify these five issues, although I accept that the fourth and fifth issues could be seen as one issue with two dimensions.

9    The first issue concerns the operation of ss 539 and 540 of the FW Act. In unabashedly pushing the envelope, it is said by the SDA that these provisions, which permit proceedings to be brought on behalf of employees concerning workplace entitlements, exclude utilising the procedures of Part IVA of the FCA Act to pursue such claims in a representative proceeding under Part IVA. In essence it is said that s 33D of the FCA Act has been partially impliedly repealed by ss 539 and 540 of the FW Act, such that the applicants in the Elliott-Carde proceeding do not have standing to pursue a Part IVA proceeding concerning the FW Act contraventions. I would reject this argument.

10    The second issue, which only arises in the present context if I have rejected the SDA’s position on the first issue, is whether as a matter of statutory construction s 33V(2) of the FCA Act empowers the making of settlement CFOs. In my view, it does, and so the reserved question should be answered in the affirmative.

11    The third issue is whether, in a constitutional sense (ss 76 and 77 of the Constitution), there is currently a matter before the Court. There clearly is, if only because there has been a live controversy before us concerning the first and second issues. Alternatively it may be said that these issues are part of a broader matter. I have put this third issue in this part of the sequence because it is convenient to how I propose to discuss these issues. But this is not to deny its primacy above all else, including whether it is even appropriate to embark on the second issue.

12    The fourth issue, on the assumption of an affirmative answer to both the second and third issues, is whether the exercise of power under s 33V(2) to make a settlement CFO is in a constitutional sense the exercise of judicial power given that such an order is said to create new rights and obligations. Now even if such a characterisation of such an order is correct, that does not entail that the exercise of judicial power is not involved.

13    The fifth issue, on the assumption of the correctness of my views on the second to fourth issues, is whether an exercise of judicial power is involved in making a settlement CFO given that it is said that there is no objective standard to set a rate, the Court would be the market setter and policy issues would be involved. There is no substance to this point.

14    Let me turn to the first question concerning s 33D of the FCA Act.

Standing – the implied partial repeal of s 33D

15    Let me begin by setting out the SDA’s position, which was opposed by the Elliott-Carde applicants and also by the Minister for Employment and Workplace Relations who was given leave to intervene, and for that purpose identify the relevant statutory provisions.

16    Sections 539 and 540 of the FW Act provide:

539    Applications for orders in relation to contraventions of civil remedy provisions

(1)    A provision referred to in column 1 of an item in the table in subsection (2) is a civil remedy provision.

(2)    For each civil remedy provision, the persons referred to in column 2 of the item may, subject to sections 540 and 544 and Subdivision B, apply to the courts referred to in column 3 of the item for orders in relation to a contravention or proposed contravention of the provision, including the maximum penalty referred to in column 4 of the item.

(table omitted)

(3)    The regulations may provide that a provision set out in the regulations is a civil remedy provision.

(4)    …

540    Limitations on who may apply for orders etc

Employees, employers, outworkers and outworker entities

(1)    The following persons may apply for an order under this Division, in relation to a contravention or proposed contravention of a civil remedy provision, only if the person is affected by the contravention, or will be affected by the proposed contravention:

(a)    an employee;

(aa)    a prospective employee;

(b)    an employer;

(c)    an outworker;

(d)    an outworker entity.

Employee organisations and registered employee associations

(2)    An employee organisation or a registered employee association may apply for an order under this Division, in relation to a contravention or proposed contravention of a civil remedy provision in relation to an employee, only if:

(a)    the employee is affected by the contravention, or will be affected by the proposed contravention; and

(b)    the organisation or association is entitled to represent the industrial interests of the employee.

(3)    However, subsection (2) does not apply in relation to:

(a)    items 4, 7 and 14 in the table in subsection 539(2); or

(b)    a contravention or proposed contravention of:

(i)     an outworker term in a modern award; or

(ii)    a term in an enterprise agreement that would be an outworker term if it were included in a modern award.

(4)     …

Employer organisations

(5)    An employer organisation may apply for an order under this Division, in relation to a contravention or proposed contravention of a civil remedy provision, only if the organisation has a member who is affected by the contravention, or who will be affected by the proposed contravention.

Industrial associations

(6)    An industrial association may apply for an order under this Division, in relation to a contravention or proposed contravention of a civil remedy provision, only if:

(a)    the industrial association is affected by the contravention, or will be affected by the proposed contravention; or

(b)    if the contravention is in relation to a person:

(i)    the person is affected by the contravention, or will be affected by the proposed contravention; and

(ii)    the industrial association is entitled to represent the industrial interests of the person.

(7)    If an item in column 2 of the table in subsection 539(2) refers to an industrial association then, to avoid doubt, an employee organisation, a registered employee association or an employer organisation may apply for an order, in relation to a contravention or proposed contravention of a civil remedy provision, only if the organisation or association is entitled to apply for the order under subsection (6).

(8)    …

17    It is convenient here to set out items 1, 2, 4, 11 and 12 of the table in s 539(2):

18    The SDA contends that ss 539 and 540 of the FW Act impliedly repeal s 33D of the FCA Act to the extent that s 33D confers standing on current or former employees in a representative capacity to apply for an order in relation to a contravention of a civil remedy provision of the FW Act on behalf of other employees.

19    Now it is convenient to note at this point that ss 33C and 33D of the FCA Act provide:

33C    Commencement of proceeding

(1)    Subject to this Part, where:

(a)    7 or more persons have claims against the same person; and

(b)    the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances; and

(c)    the claims of all those persons give rise to a substantial common issue of law or fact;

a proceeding may be commenced by one or more of those persons as representing some of all of them.

(2)    A representative proceeding may be commenced:

(a)    whether or not the relief sought:

(i)    is, or includes, equitable relief;

(ii)    consists of, or includes, damages; or

(iii)    includes claims for damages that would require individual assessment; or

(iv)    is the same for each person represented; and

(b)    whether or not the proceeding:

(i)    is concerned with separate contracts or transactions between the respondent in the proceeding and individual group members; or

(ii)    involves separate acts or omissions of the respondent done or omitted to be done in relation to individual group members.

33D    Standing

(1)    A person referred to in paragraph 33C(1)(a) who has a sufficient interest to commence a proceeding on his or her own behalf against another person has a sufficient interest to commence a representative proceeding against that other person on behalf of other persons referred to in that paragraph.

(2)    …

20    Save for the SDA’s contention, it is not in issue for present purposes that the applicants in the Elliott-Carde proceeding have satisfied ss 33C and 33D.

21    Now the orders sought in the Elliott-Carde proceeding for group members are orders under Part 4-1 Division 1 and in relation to contraventions of the civil penalty provisions (s 539(2)).

22    Now SDA says that ss 539 and 540 of the FW Act were enacted to confer rights on employees, groups of employees acting for others, and organisations to apply for orders in relation to a contravention of a civil remedy provision only if certain conditions were met.

23    But it is said that in this case the conditions have not been met by the applicants in the Elliott-Carde proceeding, other than in relation to the Part 4.1 Division 1 orders sought concerning the contraventions that affect Ms Elliott-Carde and Mr Dunlop personally.

24    Now by way of background the SDA has said that in 2009 the FW Act expanded the types of representative actions that could be brought under the FW Act. It is said that it created a new scheme in s 539 and s 540 that elaborately and exhaustively defines who can make applications for orders in relation to contraventions, the conditions those applicants must meet to do so, and limits the types of contraventions that can be the subject of those applications.

25    It is said that the text, context, purpose and history of ss 539 and 540 evince a legislative intention to restrict the standing of applicants identified in s 540 to apply for such orders to those who are not excluded by the newly created limitations.

26    It is said that this scheme impliedly repeals and is inconsistent with s 33D of the FCA Act to the extent that s 33D confers standing on employees and groups of employees to apply for an order in a representative capacity in relation to a contravention of a civil remedy provision. It is said that the implied repeal arises as the result of necessary implication.

27    It is said that the limits in ss 540(1), (2), (5) and (6) that allow applications “only if” certain conditions are met are inconsistent with the s 33D scheme allowing applications regardless of those limits.

28    Now the SDA accepts that prior to 2009, s 33D conferred standing to make representative claims in relation to contraventions of the Workplace Relations Act 1996 (Cth) and its predecessors. But it is said that in 2009 “the legislature introduced a standing provision which departed substantially from its predecessor” (Regional Express Holdings Ltd v Australian Federation of Air Pilots (2016) 244 FCR 344 at [59] per Jessup J, North and White JJ concurring).

29    It is said that the explanatory memorandum to the relevant Fair Work Bill identified (pp i to iii) that a major reform was that the new Act “enhances compliance with the new workplace relations system by providing a single, accessible compliance system”. It declared (at [2120]) that “Part 4-1 establishes a single compliance framework for the new workplace relations system”.

30    Generally, it is said that in 2009 the FW Act introduced a specific and comprehensive standing scheme that defined the types of representative actions that could be brought and provided that those actions could be brought “only if” certain conditions were met.

31    It is said that the text and context support the conclusion that s 540 was intended to limit the standing of employees, groups of employees and organisations to apply for Division 1 orders in relation to contraventions of civil remedy provisions to those who satisfy the limitations in s 540. It is said that the substantive right to apply for relief is conferred by s 539, subject to s 540. It does not contemplate an alternative means of enforcing awards and enterprise agreements. Section 540 is titled “limitations on who may apply for orders etc.”

32    It is said that s 539(2) confers a right of standing on 13 types of person to apply for orders “in relation to contraventions” of civil remedy provisions: cf s 718(1) of the WR Act. Subsections 540(1), (2), (5) and (6) impose limitations on the right of standing on 9 of those 13, including limits on the right of standing of employees and, through s 540(6), groups of employees.

33    It is said that the rights of standing granted to employees by ss 539(2) and items 2 and 4, read with the limits in s 540(1), confer on an employee the right to apply for a Division 1 order in relation to a contravention of an award or enterprise agreement “only if the person is affected by the contravention”. It is said that the words “only if” in this context mean “if and not otherwise”. The intent is to limit the standing of an employee to apply for an order in relation to the particular contravention that affected that particular employee, and not confer standing on an employee in relation to contraventions that only affect other employees.

34    It is said that the limits imposed by s 540(1) are incompatible with a concurrent s 33D right of standing.

35    Section 33D permits an application by an employee in relation to contraventions that do not affect the applicant employee. But it is said that an employee who has a right under ss 539 and 540 to seek orders against an employer would not have a right to seek orders against the employer for or on behalf of employees who were not employed by that employer. But it is said that if s 33D operates concurrently, the employee would be able to seek orders for those employees. In that circumstance it is said that the limit in the FW Act would thereby be circumvented by allowing that concurrent operation.

36    Further, it is said that a concurrent s 33D right of standing is not consistent with the words “only if” in s 540(1). And it is said that those words or similar words of limitation were not contained in the predecessor of s 540; see s 718 of the WR Act. It is said that the words “only if” in s 540(1) should not be read as “if”. And it is said that such words reflected the legislative intention to create a single compliance framework.

37    Now actions by employee organisations, registered employee associations, and industrial associations are all types of representative actions. The applicants in those actions are each entitled to represent the interests of a class (s 540(6)(b)(ii)).

38    It is said that ss 539 and 540 delineate the contraventions that can be the subject of each type of representative action; see for example the limited rights of industrial associations in s 539(2) items 11 and 12.

39    It is said that the creation of that scheme in 2009 was not intended to operate concurrently with s 33D and the Part IVA scheme that creates a form of representative proceeding free of those restrictions.

40    Now the SDA accepts that prior to the enactment of the FW Act the persons who had standing to apply for relief on “the employee side” were employees, types of registered or recognised organisations and, through s 33D, certain employees on behalf of other employees (see s 718 of the WR Act). But it is said that in 2009 the FW Act replaced the former scheme and conferred standing for the first time on an informal association consisting of a group of employees to apply for relief for some contraventions: s 539 and s 540(6). It is said that this reform was significant in two respects.

41    First, it created a representative action scheme available to members and non-union members unique to the FW Act.

42    Second, it altered how s 540 was to be construed. Now it is said that the text construed includes the defined terms in it. The words of the definition of “industrial association” from s 12 are substituted for that defined term in s 540(6) and then the substantive enactment is construed in its context. As a consequence, s 540(6) may be read as:

An association of employees … (whether formed formally or informally), a purpose of which is the protection and promotion of their interests in matters concerning their employment … may apply for an order under this Division, in relation to a contravention or proposed contravention of a civil remedy provision, only if …

43    The association need not have corporate status. And it can simply be a group of employees who come together informally for the identified purpose. The intention is to confer a right of standing on groups of employees in a manner similar to the standing conferred in s 33D. However, the new right is subject to conditions, and for limited purposes.

44    It is said that the creation of the new scheme is inconsistent with the s 33D scheme operating concurrently without those limits and for different purposes.

45    The right of employee organisations to bring enforcement proceedings attracts a strict regulatory environment. Registration as an employee organisation is only available to genuine associations, formed for protective purposes which are free from control by, or improper influence from, an employer; see s 19(1)(a) and (b) and s 20(1)(a) and (b) of the Fair Work (Registered Organisations) Act 2009 (Cth). These restrictions articulate a legislative concern, reflected in the definition in s 12 of industrial associations, that those who take representative enforcement actions should be limited to groups of employees formed for protective purposes. It ensures that the core function of those taking the actions is to protect employees.

46    It is said that permitting s 33D to have a concurrent operation allows for the prosecution of representative actions without that protection.

47    Now I would reject the SDA’s position.

48    Part IVA of the FCA Act can apply to the types of claims under the FW Act advanced in the Elliott-Carde proceeding.

49    Now as to the doctrine of implied repeal by later statute, it was said in Saraswati v The Queen (1991) 172 CLR 1 at 17 by Gaudron J that:

It is a basic rule of construction that, in the absence of express words, an earlier statutory provision is not repealed, altered or derogated from by a later provision unless an intention to that effect is necessarily to be implied. There must be very strong grounds to support that implication, for there is a general presumption that the legislature intended both provisions should operate and that, to the extent they would otherwise overlap, one should be read as subject to the other.

50    And in Firebird Global Master Fund II Ltd v Republic of Nauru (2015) 258 CLR 31 at [87], French CJ and Kiefel J said:

For a court to conclude that a later statute impliedly repeals an earlier statute the court must be satisfied that the two statutes are so inconsistent that they cannot stand or live together. This will be so only if the provisions of the two statutes cannot be reconciled.

(footnote omitted)

51    Further, we have had our attention drawn to the decision of Beech-Jones CJ at Common Law in Fakhouri v Secretary, NSW Ministry of Health (2022) 316 IR 221 at [39] to [51]. Of course, he was dealing with different statutory provisions and so it is unproductive to draw too much from his detailed analysis. But I would endorse his statement that the notion or principle (call it what you will) of implied repeal is “a rule of last resort to be deployed if one cannot determine that one set of provisions is subject to the other”.

52    In the present case the text of the relevant provisions discloses no inconsistency, because the provisions are directed at different ends. Sections 539 and 540 regulate the standing of a party principal. They control standing by limiting the persons permitted to apply, and the contraventions to which their applications can relate.

53    But s 33D does not derogate from these controls. It does not purport to expand the classes of permitted person or contraventions beyond the limits contemplated by ss 539 and 540. Rather, its work is different and authorises a person to commence a proceeding on others’ behalf provided that the terms of s 33D(1) are met.

54    Moreover, Part IVA including ss 33C and 33D establish a limited form of statutory agency between the lead applicant and the group members. In one sense therefore, a class action under Part IVA involves each group member through the representative applicant applying for orders pertaining to the contraventions that the group members are “affected by”. Accordingly, there is no inconsistency with s 540, particularly s 540(1)(a). An employee has standing to pursue the relevant rights under s 540(1)(a). But s 540(1) says nothing whatsoever to deny that the employee may act in a representative capacity.

55    Now the SDA conceives of the relevant provisions as equivalents dealing with like subject matter. The SDA deals with the standing afforded by s 540(6) to industrial associations, and contends that the intention is to confer a right of standing on groups of employees in a manner similar to the standing conferred under s 33D.

56    But putting to one side for the moment that industrial associations have no standing to commence proceedings for contraventions of the National Employment Standards, enterprise agreements or awards (see s 539, items 1, 2 and 4), ss 539 and 540 do not give rise to any relationship of privity between an industrial association and the employee affected and do not found any relationship of agency. Section 540(6)(b) does not involve derivative standing. And the association does not stand in the shoes of the employees, as Lee J has explained. Employees are able to pursue for themselves the relevant statutory rights and to do so using representative mechanisms such as Part IVA as they see fit.

57    Accordingly, the SDA’s submissions about the limitations on standing in the relevant provisions of the FW Act go nowhere. Those provisions may be elaborate and specific, but apart from dictating who has a sufficient interest they do not otherwise interfere with representative proceedings of the kind authorised by Part IVA of the FCA Act.

58    Moreover, this construction is supported by the relevant purposes of each statute. Both the FW Act and Part IVA are intended to enhance access to justice. Now nothing further need be said concerning the obvious purpose of Part IVA. But let me refer to s 3 of the FW Act.

59    Section 3 of the FW Act provides that an object of the Act is to ensure a “guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards…” and speaks of “effective compliance mechanisms”.

60    Clearly, the relevant aspects of both statutory regimes concerning the standing question have a remedial purpose and should be construed broadly, not narrowly. A liberal rather than literal construction should be taken to remedial legislation.

61    In IW v The City of Perth (1997) 191 CLR 1, Brennan CJ and McHugh J said (at 12):

The injunction contained in s 18 of the Interpretation Act is reinforced by the rule of construction that beneficial and remedial legislation, like the Act, is to be given a liberal construction. It is to be given “a fair, large and liberal” interpretation rather than one which is “literal or technical”. Nevertheless, the task remains one of statutory construction. Although a provision of the Act must be given a liberal and beneficial construction, a court or tribunal is not at liberty to give it a construction that is unreasonable or unnatural. 

(footnotes omitted)

62    Gummow J said (at 39):

There is ample authority that remedial legislation, such as that found here, is to be accorded “a fair, large and liberal” interpretation rather than one which is “literal or technical”. These were the phrases used by Thorp J in Coburn v Human Rights Commission. They are of importance in this case, particularly in construing the term “services” as it appears in the statutory phrases “a person who … provides goods or services” and “by refusing to provide the other person with those goods or services” in s 66K of the Act. Nevertheless, as will appear, the legislation must be read as a whole and such a term must be construed in the context in which it appears. 

(footnotes omitted)

63    Now if the SDA’s contentions were to be accepted, groups of employees subject to a breach of an enterprise agreement or award and who could not afford prohibitive litigation costs could do nothing except hope that the Fair Work Ombudsman or a registered organisation might take up their claims. Even then, in respect of enterprise agreement contraventions the registered organisation would need to be covered by the relevant enterprise agreement in order to do so (see s 539, item 4, column 2).

64    Let me now say something about matters of history which the SDA prayed in aid. A key premise of its stance was that the enactment of the FW Act comprised a major reform to the standing provisions. But this premise was exaggerated.

65    Of course ss 539 and 540 depart from the antecedent standing provisions. But whilst Regional Express at [59] said that “the legislature introduced a standing provision which departed substantially from its predecessor”, the Full Court was addressing two specific changes, namely, the consolidation of what was previously a miscellany of standing provisions into ss 539 and 540, and the removal of the express requirement that a person affected by a contravention be a member of an organisation for that organisation to have standing in respect of the contravention.

66    So, the Full Court was concerned with the construction of the phrase “entitled to represent the industrial interests” in ss 540(2) and (6). That phrase controlled the standing of organisations and industrial associations. But the Full Court did not consider the standing of employees under s 540(1)(a).

67    And when one correctly focuses on the present context where the SDA’s argument is that it is the FW Act’s conferral of standing on employees that brings it into conflict with Part IVA and creates the implied repeal, when that specific issue of employees’ standing is compared with its antecedents, little changed. Section 540(1)(a) controls standing for employees by limiting it to employees who are “affected by” the contravention. But this controlling device has been employed in each iteration of the predecessor legislation since 1904.

68    The Commonwealth Conciliation and Arbitration Act 1904 (as originally enacted) at s 44(2) provided that a breach of an order or award could be the subject of a proceeding commenced by “any member of any organisation who is affected by the breach or non-observance”. This provision was later re-ordered to s 119(2) but remained until that Act was repealed.

69    The Industrial Relations Act 1988 (Cth) (in force at 18 December 1996) at s 178(5)(ca) provided that a penalty for a breach of a term of an award or order may be sued for and recovered by:

(ca)    a person:

(i)    whose employment is, or at the time of the breach was, subject to the award; and

(ii)    who is affected by the breach;

70    The WR Act before WorkChoices (in force at 10 June 2003) at s 178(5)(ca) similarly provided.

71    The WR Act (in force immediately prior to the enactment of the Fair Work reforms) at ss 718(1) and (2) relevantly provided standing for employees whose employment was subject to the Australian Fair Pay and Conditions Standard, awards and collective agreements (items 2, 3 and 4) and who were “affected by the breach of the applicable provision”. Self-evidently this continuity is not consistent with the SDA’s inconsistency thesis. The FW Act did not involve any major reform to standing for employees. The introduction of the words “only if” in ss 539 and 540 did no more than make explicit an already extant reality.

72    Further, the broader statutory context discloses no inconsistency. Of course, it may be accepted that the FW Act provides a comprehensive scheme of enforcement, with specific mechanisms for obtaining orders in relation to contraventions of the FW Act. But nothing in the text of the FW Act evinces an intention that the scheme is to operate to the exclusion of other mechanisms available to an applicant to enforce their rights, or for a group of applicants to collectively enforce their rights, under federal law.

73    First, nothing in the FW Act expressly excludes the operation of Part IVA. The lack of a provision in the FW Act expressly excluding the powers conferred on the Federal Court by Part IVA is not determinative, but this hardly assists the SDA.

74    Second, the FW Act as a whole demonstrates an intention to work alongside the general statutory powers conferred on the Federal Court. So, for example, s 545(1) is cast in the broadest terms and allows the Federal Court to “make any order the court considers appropriate”. Further, s 562 confers broad jurisdiction on the Federal Court in relation to any matter arising under the FW Act. Further, s 564 expressly provides that nothing in the FW Act limits the Federal Court’s powers under ss 21, 22 or 23 of the FCA Act. The explanatory memorandum (at [2213]) stated that the cognate clause was “intended to address authorities which have held that federal industrial laws exhaustively contain the remedies available to enforce those laws”.

75    Further, the enactment of the FW Act in 2009 was accompanied by the enactment of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth). Schedule 17 to that Act made various amendments to the FCA Act. This shows that Parliament turned its mind to the way in which the FW Act would interact with the FCA Act and made changes to the FCA Act to reflect its intention. However, Parliament did not indicate any intention to exclude representative proceedings under Part IVA from claims arising from contraventions of the FW Act.

76    Further, Division 3 of Part 6-1 of the FW Act prohibits certain applications under the FW Act where an application has been made in relation to the same conduct under other legislation. So, the legislature was aware of the coextensive relationship between the FW Act and other remedial legislation and the potential for conflict.

77    The legislature sought to impose controls where necessary but omitted any express exclusion of Part IVA. So, there was no manifestation of intention that the FW Act would not work in parallel with Part IVA. Admittedly the nature of the overlap dealt with in Division 3 of Part 6-1 is qualitatively distinct from what I am addressing. But nevertheless such provisions indirectly confirm the thesis that Part IVA was not intended not to work in parallel.

78    Generally, the legislature turned its mind to the Court’s powers under the FCA Act and the way in which the FW Act would interact with them. And having turned its mind to how the FW Act would work together with the powers of the Federal Court, the legislature could have but did not express in s 564 or provide in any other provision an intention to exclude the powers of the Federal Court under Part IVA.

79    Third, the FW Act does not provide for representative proceedings within the meaning of or akin to those in Part IVA. The standing in ss 539 and 540 of the FW Act provided to employee organisations and to a limited extent industrial associations is provided to both as party principals. Claims brought by either of them under the FW Act are not brought in a representative capacity and are to be distinguished from proceedings brought under Part IVA. Relevantly, there is no equivalent or analogue to Part IVA in the FW Act.

80    Fourth, a number of representative proceedings under Part IVA were brought to enforce contraventions of predecessor workplace laws in the period between the enactment of Part IVA and the commencement of the FW Act. In the many years between the commencement of Part IVA and the commencement of the FW Act, more than 30 class actions concerning subject matter arising under the WR Act were commenced (Meagher L, Employment Class Actions: Past Use and Present Utility, [2022] No 4 UNSW Law Journal Forum p 6). Some were the subject of published decisions.

81    The legislature may be taken to have been aware of these decisions. In that context, its decision to omit any express exclusion of Part IVA proceedings in the FW Act is significant.

82    In Electrolux Home Products Pty Ltd v Australian Workers' Union (2004) 221 CLR 309, McHugh J at [81] said:

Nothing in the Act suggests that this approach is no longer applicable. The Act still defines “industrial dispute” in s 4(1) as a dispute “about matters pertaining to the relationship between employers and employees”. Division 3 agreements operate in respect of “industrial disputes” (see, eg, s 170LN). These provisions give rise to the inference that Div 2 and Div 3 agreements have a common element, namely, that for such an agreement to be certifiable, it must be about matters pertaining to the requisite relationship or to “the relationship between employers and employees” in their capacity as such. Because the Federal Parliament enacted the Act two years after the Re Alcan decision, the drafters of the Act almost certainly knew of the decision and the interpretation applied by this Court to the expression “about matters pertaining to the relationship between employers and employees”. The principle that the re-enactment of a rule after judicial consideration is to be regarded as an endorsement of its judicial interpretation has been criticised, and the principle may not apply to provisions re-enacted in “replacement” legislation. However, industrial relations is a specialised and politically sensitive field with a designated Minister and Department of State. It is no fiction to attribute to the Minister and his or her Department and, through them, the Parliament, knowledge of court decisions — or at all events decisions of this Court — dealing with that portfolio. Indeed, it would be astonishing if the Department, its officers and those advising on the drafting of the Act would have been unaware of Re Alcan.

(emphasis in original, footnote omitted).

83    Nothing in the text of the FW Act or in relevant extrinsic material suggests that the legislature sought to change that existing practice.

84    Fifth, although the explanatory memorandum stated (at [2120]) that “Part 4-1 establishes a single compliance framework for the new workplace relations system”, the explanatory memorandum is here referring to the consolidation of the miscellany of standing provisions into one place. So, although the standing and compliance provisions had been scattered throughout the predecessor legislation, the FW Act integrated them into ss 539 and 540. So, the explanatory memorandum (at [2121]) said:

having a single compliance framework ensures consistency across the Bill in terms of when particular persons can apply for orders and the types of orders that the courts can make.

85    The reference to a single compliance scheme is not a reference to an exclusive compliance scheme, in the sense that it indicates any intention to exclude another enactment such as Part IVA.

86    In my view, there is no inconsistency between Part IVA and ss 539 and 540 of the FW Act and they may operate in parallel. Sections 539 and 540 of the FW Act work harmoniously with s 33D(1) of the FCA Act, so that where a person satisfies the standing requirements of those FW Act provisions, they have a sufficient interest to commence a Part IVA proceeding on behalf of 7 or more persons who have claims against the same person.

87    Properly construed, ss 539 and 540 of the FW Act do not by themselves evince an intention to impliedly exclude Part IVA. Sections 539 and 540 are concerned with an applicant’s standing to enforce civil remedy provisions of the FW Act. The phrase “affected by the contravention, or will be affected by the proposed contravention” in s 540(1) is a statutory expression of ordinary common law standing principles. The phrase does not of itself evince an intention to exclude the operation of Part IVA.

88    So, there is no inconsistency in the text of the respective provisions when read in context, let alone an inconsistency such as to engage the rarely successfully applied doctrine of implied repeal.

89    In summary, I would reject the SDA’s argument that the applicants in the Elliott-Carde proceeding lack standing under s 33D of the FCA Act.

Does s 33V(2) empower the making of a settlement CFO?

90    The question of the existence of the relevant power to make a settlement CFO under s 33V(2) has arisen in two respects.

91    First, it goes to the SDA’s stay application concerning the Elliott-Carde proceeding and the relevant comparison between the competing proceedings and the different funding models proposed. Moreover, if the stay application fails, group members in the Elliott-Carde proceeding may have to choose between that proceeding and the SDA proceeding. In that regard, a consideration is the likely ultimate cost to group members depending upon the particular proceeding that they choose to participate in. Clearly the potential making of a settlement CFO in the Elliott-Carde proceeding will feed into that calculus.

92    Second, the question of the existence of the relevant power goes to the question of whether the proposed ss 33X and 33Y notices may or may not be misleading. The proposed notices to group members in the Elliott-Carde proceeding have foreshadowed a potential settlement CFO in the event of a successful outcome. But such a notice would be misleading if there was no statutory power to make a settlement CFO.

93    Now in my view such controversies as to carriage, the possible choice for group members as to which proceeding to stay in, and the content of such notices provide an appropriate vehicle for determining the question whether s 33V(2) empowers the making of a settlement CFO.

94    I will return to the “matter” question later. But for the moment let me concentrate on the question of whether there is statutory power under s 33V(2) to make a settlement CFO.

The relevant statutory power

95    Section 33V provides:

(1)    A representative proceeding may not be settled or discontinued without the approval of the Court.

(2)    If the Court gives such an approval, it may make such orders as are just with respect to the distribution of any money paid under a settlement or paid into the Court.

96    Its proper construction and ambit is to be determined by its text, context, and purpose.

97    Section 33V(2) employs language importing a wide judicial discretion. As it stipulates, the Court “may make such orders as are just”. And the only requirement beyond justness is that the orders be “with respect to the distribution of any money paid under a settlement or paid into the Court”. Moreover, the phrase “with respect to” is itself of wide import.

98    Now the broad discretion conferred by s 33V(2) is not to be read down by reference to implications or limitations not found in its express words, construed according to their natural meaning and in their proper context.

99    In my view, none of the terms used in s 33V(2) would, as a matter of natural meaning, be read as precluding a settlement CFO. “Distribution” refers to the function and exercise of allocation. It says or implies nothing about the identity of the recipient. Even more clearly, “paid” describes the action of the respondent. And again, it implies nothing about the ultimate recipient. Moreover, “paid” could not merely imply only payment to the applicant or group members. Such a narrow reading would preclude the Court from invoking s 33V(2) to require that settlement funds be used to pay the legal costs incurred by the class applicant; s 33ZJ would not be available on such occasions as it only addresses an award of damages and not a settlement.

100    It would appear uncontroversial, for example, that s 33V(2) could be used to make an order for the payment of legal fees to lawyers directly from the settlement proceeds. If that is accepted, there is no reason in principle why s 33V(2) could not similarly be used to make an order for the payment of fees to a litigation funder for their services, albeit that the fee is expressed by way of a percentage funding commission, because of the nature of the financial services provided. So what that the litigation funder may have been self-interested in providing the funding?

101    And as to context, s 33V(2) is a settlement specific power, which is qualitatively different from the ambulatory but limited gap-filling power in s 33ZF.

102    Further, as to the question of purpose, no specific guidance is obtained from the relevant extrinsic materials. The 1991 Second Reading Speech was silent as to class action financing (Hansard, House of Representatives, 14 November 1991 at 3174 to 3176). The explanatory memorandum adds nothing to the language of Part IVA as enacted. The 1988 ARLC Report 46 “Grouped Proceedings in the Federal Court” acknowledged the possibility of private third-party finance for class actions, including making reference to financing from trade unions and special interest groups (at [315]). It recommended a limited abolition of the prohibition on maintenance, but not of champerty (at [318]). The suggested draft legislation was to like effect: see ALRC Report 46 Summary of Report and Draft Legislation at [25] and draft ss 28(4) and 33. So, the relevant extrinsic materials do not assist in construing s 33V(2).

103    But it is not in doubt that the purpose of Part IVA is to enhance access to justice by making some small claims economically viable to litigate, and to enhance efficiency in the administration of justice by enabling the Court to deal with common questions once and for all related claims. And it is not in doubt that commercial litigation funding has been firmly established as being conducive to the achievement of the legislative objectives of Part IVA. And in that regard CFOs and funding equalisation orders (FEOs) are also conducive to such objectives.

104    There is a further aspect to context and purpose. If context is broadened beyond the confines of Part IVA, there is analogical guidance to be obtained from dealing with a context where a stranger by his exertions creates for the benefit of other persons a fund that would not otherwise have been available to them. It would be orthodox to construe the broad discretionary power in s 33V(2) as accommodating by adaption and adoption mechanisms developed in analogous situations arising in other areas of law.

105    The situations in which the question of a settlement CFO will arise are analogous to situations of maritime salvage, notwithstanding that Nettle J in BMW Australia Ltd v Brewster (2019) 269 CLR 574 at [125] sought to spike such a discussion when dealing with s 33ZF(1). Of course, we are here not concerned with s 33ZF(1) but rather s 33V(2). As with salvage, the exertions of a stranger, which here is the funder who has assumed the financial burden of the litigation commenced by the applicant, result in the obtaining of a fund or retrieval of property, which can be levied as the source of remuneration for the stranger. And like salvage, the rate of remuneration ought equitably to reflect not merely the out of pockets incurred by the stranger but also the opportunity cost of forgoing other uses for the funds expended (Brewster at [199] per Edelman J).

106    Further, one can conjure up an analogy from the alchemy of equity. As Lee J observed in Asirifi-Otchere v Swann Insurance (Aust) Pty Ltd (No 3) (2020) 385 ALR 625 at [39], no group member has an ascertained interest in the settlement fund created by a class action, and each requires the aid of the Court to claim their share. Each claim is at the least closely analogous to that of a beneficiary. And because he who seeks equity must do equity, it is inequitable for the person who has created or realised a valuable asset not to have their costs, expenses and fees incurred in producing the asset paid out of the very fund or property that that person’s efforts have created. This is not to say that the funder has any legal or equitable right to a share of the unfunded group members’ awards under these principles.

107    For present purposes I do not need to linger further on such questions, let alone approach the event horizon of restitutionary theory.

108    Let me now turn to Brewster as this is said, surprisingly, to be authority against the existence of statutory power to make a settlement CFO under s 33V(2).

What did Brewster actually decide?

109    What is clear from Brewster is that it concerned neither s 33V(2) nor settlement CFOs. The case dealt with the now described gap filling s 33ZF(1) and early CFOs to be made, so it was said, for the purpose of facilitating the interests of funders and to maintain the financial viability of proceedings.

110    Let me begin by re-iterating aspects of what I said in Evans v Davantage Group Pty Ltd (No 2) [2020] FCA 473 at [49] to [57], referred to in Davaria Pty Ltd v 7-Eleven Stores Pty Ltd (2020) 281 FCR 501 (Davaria FC) at [33] per Lee J, and see more generally his views at [34] to [42] with which I agree.

111    The plurality in Brewster, Kiefel CJ, Bell and Keane JJ, emphasised that whilst the power provided by s 33ZF(1) is wide, it is essentially a supplementary or gap-filling power. And as a supplementary source of power for Part IVA, it is not to be supposed that s 33ZF(1) was intended to meet the exigencies of litigation not adverted to at all by the provisions of Part IVA. So, s 33ZF(1) may not be “relied upon as a source of power to do work beyond that done by the specific provisions which the text and structure of the legislation show it was intended to supplement” (at [70]). Section 33ZF(1) “cannot be given a more expansive construction and a wider scope of operation than the other provisions of the scheme”. And to do so would be to use s 33ZF “as a vehicle to rewrite the scheme of the legislation” (at [70]). Rather, s 33ZF(1) has the effect of “support[ing] any interlocutory procedural order necessary to ensure that the pleaded issues are resolved justly between the parties” (at [21]). Of course, a just resolution could include a judgment (s 33Z) or an approved settlement (s 33V).

112    Let me say something about Nettle J’s analysis, which resonates harmoniously with that of the plurality, so that I can then synthesise the common themes of the majority. I will discuss the reasons of Gordon J later to the extent that they travel beyond the views of the plurality and Nettle J.

113    As I have said, the issue before the Court concerned the exercise of power under s 33ZF(1) to make a CFO at an early stage of the proceedings. The issue did not concern any settlement approval under s 33V(1) or the exercise of any power under s 33V(2).

114    Understandably then, Nettle J carefully expressed himself by reference to s 33ZF(1) and referred to “a common fund order (“CFO”) of the kind in issue in these matters” (at [122]) and “the kind of CFOs sought in these matters” (at [125]). His context and kind was an early CFO which he held was not empowered by s 33ZF(1) and was outside the legislative purpose; such a purpose “did not extend to addressing uncertainties on the part of litigation funders as to the financial viability of funding such proceedings” (at [126]). But contrastingly, s 33V speaks to the other end of the time spectrum where the action is for all practical purposes over and no such in futuro uncertainties or financial viability of funding questions are in play.

115    So, he was clearly contrasting “the broad generality of s 33ZF(1)” with “the detail and specificity of other provisions such as… s 33V…” (at [124]). But he accepted that s 33ZF(1) could be used as a supplementary power to do what was necessary or incidental to achieving the objectives of, inter alia, s 33V itself including facilitating a just outcome and finality. Of course, necessarily anterior to that is a settlement in principle that may have been achieved through mediation. In other words, exercising a power to facilitate a mediation is consonant with achieving such an objective, and within the power or purpose of s 33ZF(1).

116    It would seem that Nettle J considered that his analysis was consistent with the plurality’s views on the matters that I have just described. And if you take the plurality’s view together with Nettle J’s view, then you can synthesise the following themes from the combination.

117    First, s 33ZF(1) is a power only to be exercised in the context of how an action should proceed in order to do justice.

118    Second, s 33ZF(1) can be used “to support any interlocutory procedural order necessary to ensure that the pleaded issues are resolved justly between the parties” (at [21]) or “to bring the matter to a fair hearing on a just basis” (at [45] citing the words of Tamberlin J). But s 33ZF(1) is essentially supplementary or “gap-filling” notwithstanding that it is broad (at [46], [60], [69] and [70]). So, and importantly, it was in the context of those observations that it was said that s 33ZF(1) could be used to “ensure that the proceeding is brought fairly and effectively to a just outcome” (at [47], [50], [51] and [54]). And the concept of just outcome was not to be decontextualised and read up to be looked at from the perspective only of the applicant and group members.

119    But clearly, none of this says anything about the proper construction and ambit of s 33V(2) let alone the power to make settlement CFOs under s 33V(2).

120    Now Gordon J in Brewster did not see s 33V(2) as “envisag[ing] a Court making orders with respect to the economics of a proceeding by ensuring that a litigation funder obtains a particular return on funds invested” (at [141]). But that observation does not deny that the Court could find that it is just to make a settlement CFO under s 33V(2). A settlement CFO is made only after such funding has been provided and drawn down. It is not concerned with the economics of a proceeding as such. And the words that follow “by ensuring …” are subordinate to the preceding phrase. The lens is what is “just”, but the after the event output of course has economic consequences. Further, Gordon J’s view is obiter dicta and expressed without the benefit of argument on the ambit and operation of s 33V. And reasons for judgment must be read secundum subjectam materiam.

121    I should say for completeness that there is another way of reading what her Honour said (at [141]) which may bring her within the tent so to speak, that is, in conformity with the plurality and Nettle J where s 33V(2) was irrelevant to the controversy being adjudicated upon. If you read [141] in context, structurally it appears in a broader section which is just describing the legislative scheme ([136] to [145]). In other words, in this part of her Honour’s reasons there is no attempt to chart the metes and bounds of s 33V; and she does not undertake that task later, unsurprisingly, because it was not in play. Further, in the immediately preceding [140], her Honour discusses a viability threshold and the like, which is all concerned with the context of an early CFO. Now all of this may suggest that the last sentence of [141] is not addressing s 33V(2) and settlement CFOs, but merely pointing out that s 33V(2) has nothing to do with early CFOs and viability thresholds concerning “the economics of a proceeding…”. And if that be so, then there is no member of that Court who has poured cold water on the idea that s 33V(2) empowers the making of a settlement CFO. Of course though, the plurality and Gordon J have telegraphed their preference for FEOs over CFOs, although to do so does not deny the existence of power to make a settlement CFO under s 33V(2). Rather, such a preference could only at most go to the exercise of power under s 33V(2). Let me return to s 33V(2).

122    Section 33V(2) is not a “gap-filling” power. Rather, it is precisely the kind of specific power to make orders as to the distribution of claim proceeds which the plurality and Nettle J in Brewster held that s 33ZF(1) did not provide. Indeed, the plurality referred to the making of orders distributing the proceeds as the “appropriate occasion for orders for meeting and sharing the cost burden of the litigation because the value of the litigation and the extent of the burden will have been rendered certain” (at [68]).

123    Further, there is no incongruity with the rest of Part IVA in reading s 33V(2) as I have indicated. So, whilst s 33Z(2) and (4) and s 33ZA, which confer powers on the Court to make orders with respect to damages, specifically refer to the distribution of money to group members, s 33V(2) is not limited in that way. That is a contextual reason in favour of reading s 33V(2) as including a power to make orders that allow for money to be distributed to other persons, relevantly including the funder but also to legal representatives. The omission of the words “to group members” in s 33V(2) is not insignificant.

124    Before moving on I should make six other points.

125    First, one should not confuse the question of the ambit of the power with the question of purpose. On any view, s 33ZF(1) is broad. Now to use s 33ZF(1) to make a CFO for the dominant purpose of preferencing the interests of a funder to ensure the financial viability of a proceeding is, as Brewster explains, impermissible. But less obvious is why it would be impermissible to make an early CFO where you have two competing open class proceedings, where both are financially viable absent a CFO in any event, say where there are a substantial number of signed up group members in both, but where the CFO is being used to select at necessarily an early stage between the two competing proceedings with the winning action having pitched for the lowest CFO, with all else being equal. It is difficult to see how that would not be “appropriate or necessary to ensure that justice is done” (s 33ZF(1)) in both of the proceedings, with the exercise of power having a permissible purpose. In such a scenario an early CFO would not be being made to ensure the financial viability of either or both proceedings or to advance the interests of the funders.

126    The CFO made in one proceeding could be seen as the price extracted as the quid pro quo to enable that proceeding to go forward as the one open class proceeding. Control of the commission rate would be ceded to the Court as the price of success. Utilising that mechanism, one could in essence drive down the commission rates of the funder in that proceeding, to the advantage of the group members and to the disadvantage of the funder. In that context then, the CFO would be principally of advantage to the group members in that proceeding.

127    Second, it is not explained why, on the assumption that s 33ZF(1) is a gap-filler as the plurality characterised it, it could not also be used as an adjunct to a likely or anticipated future use of s 33V(2).

128    In other words, if the parties shortly after completing discovery wanted to mediate their dispute and the applicant and group members wanted some clarity as to what might be available in terms of the net potential settlement proceeds after deduction for all expenses including funding expenses, could a CFO be made at that time utilising s 33ZF(1) to facilitate a later exercise of power under s 33V(2)? It is common for claimants to want to have an idea of what they will ultimately pocket net of expenses before they reach an agreement with a respondent on the gross settlement sum figure. Such a CFO could facilitate both the anticipated mediation and the settlement and anticipate the likely exercise of power under s 33V(2). None of this would, of course, have anything to do with threshold questions as to the financial viability of the proceeding or the empty shibboleth of somehow preferencing the interests of funders. Anyway, judges for the moment have treated the use of s 33ZF(1) in this way as being chilled by Brewster and accordingly have dealt with the matter in other practical ways by indicating informally at case management hearings that they may be favourably disposed to making a settlement CFO in due course if the occasion arises. And so doing, one can only wonder what the practical difference is between so indicating on the one hand or making an interlocutory CFO at that time on the other hand, which can be later varied in the known world of an exercise of power under s 33V(2). Anyway, because of Brewster, the latter option is out.

129    Third, s 23 of the FCA Act can also be invoked as a source of power for settlement CFOs, and perhaps even early CFOs, although judges of our Court post-Brewster have refrained from using it for early CFOs.

130    Section 23 is broader than s 33ZF(1). Moreover, s 33ZG(b) confirms that s 33ZF(1) does not affect the amplitude of s 23; Part IVA is neither an exclusive nor an exhaustive code concerning representative proceedings. In Money Max Int Pty Ltd v QBE Insurance Group Ltd (2016) 245 FCR 191, it was said at [168] per Murphy, Gleeson and Beach JJ that s 23 was also an available head of power. As best as I can tell, there is no other authority which grapples with or would deny that reality.

131    Moreover, the “gap-filler” reading down by the plurality in Brewster of the language of s 33ZF(1) does not entail any reading down of the plenary power of s 23. Indeed, the more s 33ZF is read narrowly, the greater the amplitude for s 23 to operate. It is counter-intuitive to suggest that a narrower reading of one general power can carry with it by necessary implication a consonant reading down of an even broader power, particularly in the face of s 33ZG(b).

132    Further, and by parity of reasoning, s 23 can also be used to make a settlement CFO, particularly if it be suggested that s 33V(2) cannot be used.

133    Fourth, as to purpose, s 33V reflects the court’s important supervisory role in respect of settlements of representative proceedings for the protection of group members. That role extends to the supervision of legal costs and funding charges. It is consistent with that supervisory role for the Court, in considering what orders are just, to assess the remuneration that should be provided to a litigation funder, without which compensation may not have been payable to group members at all, having regard to the interests of the group members and the amount of compensation that they would ultimately receive.

134    Fifth, it has been said that a settlement CFO creates a relationship between a funder and an unfunded group member. But I am not convinced.

135    The first way to look at it is that a settlement CFO is an order made by the Court under s 33V(2) requiring the deduction from a settlement fund from an otherwise entitlement of an unfunded group member which is then ordered to be paid to the funder. There is no consensual or other relationship between the funder and the unfunded group member. Rather, a third party, namely, the Court is imposing its own order which affects both the funder and the unfunded group member in a complementary way. A is directing B and C. But for A to do so does not entail any relationship between B and C. But even this construct is inaccurate as there is no prior “otherwise entitlement” of the group member; such an entitlement only arises after all deductions including costs are made as allocated in accordance with any s 33V(2) order.

136    The second way to look at the settlement CFO is that it is making an order against the fund (in rem), rather than the parties or group members.

137    But in any event if this relationship point were good, you could say something analogous about an FEO. That could be seen as creating a relationship between a funded group member and an unfunded group member where none existed; they are both strangers to each other.

138    Generally I do not see this relationship point taking the matter far. And in any event it distracts from the real question, which is the ambit of the statutory power under s 33V(2).

139    Sixth, the fact that other possible mechanisms may be available to address the problem of “free-riding” does not entail that a settlement CFO could never be considered just in a particular case.

140    Let me turn now more directly to the question of FEOs as it was suggested that the so-called spirit of Brewster requires the Court to prefer FEOs over CFOs and that somehow if an FEO can be made then the Court ought not make a CFO. But what if the Court cannot make an FEO because group members have not been signed up? What then? Can the Court make a settlement CFO? Brewster does not negate such a possibility. But in any event, the Court under s 33V(2) is required to do what is “just” and to act upon the basis of evidence before it, rather than to simply resonate with any vibe emanating from preferences expressed for particular funding expense allocation models.

Funding equalisation orders

141    Brewster does not contain majority considered obita dicta justifying the proposition that FEOs are to be preferred as an exercise of power on settlement under s 33V(2), and that no settlement CFO could be made.

142    Further, to the extent that Cantor v Audi Australia Pty Ltd (No 5) [2020] FCA 637, which is an outlier as Lee J has demonstrated, suggested otherwise it may be put to one side. In any event Foster J’s expression of views were obiter as he himself recognised (at [429]). And as for O’Callaghan J’s decision in Davaria Pty Ltd v 7-Eleven Stores Pty Ltd (No 13) [2023] FCA 84, which relied upon Cantor, it is under appeal concerning the orders ultimately made. It rises or falls with Cantor and I do not propose to say anything further.

143    Let me turn more directly to the discussion in Brewster concerning FEOs.

144    First, it would seem that these are said to have the additional advantage that they do not impose, as CFOs are said to, an additional cost on the unfunded group members (Brewster at [88] per the plurality). But what does any of that really mean?

145    An FEO includes some deduction from the moneys otherwise paid to unfunded group members. So there is a cost. But what then does it mean to say “additional cost”? In some scenarios, the arithmetic is such that an FEO will impose more of a cost on an unfunded group member than a CFO, as was discussed in Money Max. I will return to this in a moment.

146    Second, it is said that it is of advantage that FEOs take as their starting point the actual costs incurred in funding the litigation (Brewster at [88] per the plurality). But if FEOs, in contrast to CFOs, involve unnecessary, expensive and inefficient book-building as they do, then the “actual costs” incurred have been unnecessarily increased; of course there are also hidden and indirect costs from any delay resulting from book-building. Book-building is necessarily incentivised by FEOs because, predictably, a funder has an incentive to maximise its contractual entitlements against the largest pool of group members that it can sign up.

147    I noted the fiasco associated with incentivising book-building, as the distortion of preferencing FEOs appears to do, in Stanwell Corporation Ltd v LCM Funding Pty Ltd (2021) 157 ACSR 401 at [6] where the class included more than a million electricity consumers in Queensland and where I said:

[T]he proceeding dispels the myth of the so called advantages of book building in a case of this type. The book building here has resulted in an unnecessary, costly and inefficient delay of seven months in order that over 50,000 retail customers be separately signed up to individual funding agreements. There is little justification for such a barrier to entry so to speak or justice.

148    So, you have the perceived virtue of taking as the starting point the “actual costs”, but the real vice of using FEOs which has resulted in an unnecessary inflation of the “actual costs”. The so-called advantage of the starting point being “actual costs” is illusory, where the base has been unnecessarily inflated to the disadvantage and expense of all group members under an FEO.

149    Third, Brewster did not consider let alone analyse how an FEO could work where only the representative applicant had signed a funding agreement or where only a small number could do so because the majority of the class were unascertainable within a reasonable time frame as to their identity or where the nature of the characteristics of most members of the class due to their education or other socio-economic factors was such that it was not feasible to expect them to understand let alone sign up to relatively complex funding agreements.

150    Fourth, if FEOs only are available, it is also conducive to closed classes. But the very philosophy underpinning Part IVA and the opt-out model is open classes, not closed classes. In other words, those who are promoters of FEOs, which they assert is in keeping with the Part IVA regime, are counter-intuitively pushing the antithesis of what Part IVA was intended to operate on, namely, open classes.

151    Now one can appreciate the evolution of the equalisation technique and FEOs. But it ought not to be forgotten that a funding equalisation method was first introduced as an ad hoc innovation posited by solicitors seeking to expediently resolve a practical problem that had arisen in Dorajay Pty Ltd v Aristocrat Leisure Ltd [2009] FCA 19. It did not arise through extensive judicial evolution and exposition. And it is fanciful to suggest that there is only one form of the mechanism that is somehow to be timelessly preserved and suitable for all occasions.

152    Initially, most securities class actions were commenced on a closed class basis where membership of the group was limited only to persons who had signed a funding agreement with the litigation funder. If the class was closed in this sense, the common form litigation funding agreement usually entered into by all class members made contractual provision for each group member to bear their proportionate share of almost every kind of conceivable cost incurred by the funder, the solicitors or the representative applicant, but importantly only out of their proportionate share of the recovery from the litigation. In this sense, in a truly closed class the settlement sum was properly to be described as a common fund out of which all deductions were contractually to be regarded as common and deducted accordingly.

153    The next “innovation” was the technique of the opening up of a closed class by amending the group definition to include persons who had not entered into funding agreements. This was done for the purpose of ensuring that litigation finality could be achieved for respondents, rather than being plagued with an interminable succession of further closed class actions each time they settled one such action, until the expiration of any limitation period barred the commencement of a new closed class action; any s 33ZE suspension only applied endogenously within a particular closed class action. But such an opening up of the class posed a problem in terms of class members’ relationships inter se. Why should persons newly admitted to the class who had not agreed to pay the costs of the action get a free ride at the expense of those who had agreed to pay those costs, including the litigation funding commission?

154    So in these circumstances and whilst legal costs continued to be deducted on a common fund basis, as had occurred in closed class actions, so far as litigation funding commission was concerned what was developed in a succession of settlements approved by this Court under s 33V was the device of an FEO to redistribute the additional amounts received in hand by unfunded class members pro rata across the class as a whole; of course they were otherwise receiving more because they had no contractual obligation to pay the commission.

155    Now it does not seem to have been appreciated that two different formulae for equalisation enshrined in FEOs have been employed so far as litigation funding costs are concerned.

156    The first method, which was used traditionally in the first equalisation cases, worked by notionally deducting from the share of the settlement attributed to unfunded group members, that is, those people who had not entered into funding agreements but had identified themselves prior to the settlement, amounts equal to the funding costs that would otherwise have been payable by them if they had entered into a funding agreement. What was then done was to distribute those notional amounts across the whole class. The relevant formula distributed the notional amounts calculated such that the net outcome to both the cohort of funded group members and the cohort of unfunded group members was the same. The formula allocated more money to the funded group, so that after the funders’ contractual entitlements were satisfied the funded group was in the same position as the unfunded group. This can be called FEO method 1. It is what was described in Davaria FC by Lee J at [57] to [59]. Further, I said in Blairgowrie Trading Ltd v Allco Finance Group Ltd (in liq) (No 3) (2017) 343 ALR 476 at [99]:

…When a percentage amount is deducted from unfunded group members and added back pro rata across all group members, that incrementally increases the recoveries for the funded group members…

157    Contrastingly, the second method operated differently. It redistributed the amounts which the funded group had collectively agreed to bear across the whole group, so that the whole group shared the expense contractually incurred only by the funded group. This can be called FEO method 2. Now this was not the way in which the formula had traditionally operated, but this approach has been referred to in some authorities, including Brewster. The description of funding equalisation by the plurality at [88] (“the making of a FEO, which takes, as its starting point, the actual cost incurred in funding the litigation”) is a description of FEO method 2. Contrastingly, Gordon J at [134] cited the Full Court’s description of funding equalisation in Money Max, which was a description of FEO method 1. She then indicated that although she accepted that a funding equalisation order distributed notional amounts, it was also “limited to redistributing actual costs incurred”. Edelman J at [183] to [185] referred to FEOs developed by the Court of Chancery to ensure costs incurred were borne pro rata by all who benefited, which is consistent with FEO method 2.

158    Now both FEO method 1 and FEO method 2 are predicated upon the basis that benefiting group members should obtain equal returns, rather than litigation funding commission only being borne by the funded group members. But the difference between them was that FEO method 1 was premised upon the notional deduction from the unfunded group members and then grossing up the allocations of the settlement sum to funded group members such that after application of the obligations under the funding agreements to those grossed-up allocations, net returns were equal, whereas FEO method 2 was predicated upon allocating the settlement sum pro rata and then applying the funding agreements to determine the aggregate contractual expense to be then spread across the group as a whole.

159    In terms of strict formalism, FEO method 1 results in only the funded group members paying commission out of the share allocated to them, whereas FEO method 2 results more directly in commission being paid by both groups. Both methods have continued to be used.

160    Let me address some other matters about funding equalisation mechanisms and restate some of the points I made in Blairgowrie (No 3) at [97] to [102].

161    If one has the scenario of an open class proceeding with few (if any) group members signed up to funding agreements, the context for discussing and applying a funding equalisation mechanism simply may not exist. And as I have already indicated, that scenario may exist because the nature of the matter is such that book-building is not feasible, for example, a mass tort where the ambit of the class may not be known or where the characteristics of group members, say a vulnerable class that have been preyed on, do not make this feasible.

162    But assume another scenario where a substantial number of group members have signed funding agreements and the issue at the time of settlement approval under s 33V(1) is whether a funding equalisation mechanism ought to be applied in preference to a settlement CFO. There will be a number of variables to consider including the following.

163    First, one will need to consider the percentage of group members who have signed funding agreements as compared with the percentage of group members who have not.

164    Second, one will need to consider the percentage commission rate posited for the expense sharing order (the rate being the cost paid for the third party finance reflecting risk) as compared with the percentage commission rate(s) stipulated in the funding agreements, and whether the rate in each case is on the net settlement sum or gross settlement sum.

165    Third, one may have to assume, in relation to the funding agreements, that a judge on a s 33V application could not modify the rate set or its payment as part of approving the settlement as distinct from not approving the settlement if the commission rate is unacceptable. Judges who have applied funding equalisation mechanisms appear to have assumed that they lack the power to modify.

166    Fourth, one would have to consider whether, if a funding equalisation mechanism was used, the funder would receive a greater share in any event. When a percentage amount is deducted from the unfunded group members and added back pro rata across all group members, that incrementally increases the recoveries for the funded group members. Litigation funders may then assert that they are contractually entitled to an additional amount, that is, a percentage on the incremental amount. Money Max considered the prospect that under contract, the funder could say to a funded group member that if the group member received an additional increment arising from a funding equalisation mechanism (a pro rata part of the deduction from the unfunded group members added over all funded and unfunded group members), the increment itself would be part of the "recoveries" of the funded group member on which the percentage commission rate would be payable. Now the Full Court in Money Max was told that in all cases where a funding equalisation mechanism had been applied, the funder had also obtained a percentage of the increment added back to the recoveries of funded group members. It is not clear to me whether other judges who applied such mechanisms pre-Money Max were ever aware of this. Their reasons do not expressly say so. Moreover, from the arithmetic applied in those cases, it seems implicit that they may not have been so aware.

167    Now the plurality in Brewster considered that a CFO is not an obvious solution to the problem of “free-riding” and that an FEO might be preferable on the basis that a CFO is apt to impose an additional cost. But whether a CFO produces a greater return to funders than an FEO will depend on the case and the various variables that I have just mentioned.

168    Finally, as Mr Lachlan Armstrong KC explained before us, the opponents of settlement CFOs usually put arguments that suffer from numerous enthymematic infelicities. For example, an unstated premise of those who argue against settlement CFOs is that the appropriate valuation methodology of the group members’ rights is a top-down methodology. In other words, their implicit foundation is that the group members start with a right with a particular gross value, and a CFO subtracts from that right. But this mischaracterises the right and the nature of a CFO. The group members’ rights should properly be understood from the bottom-up. The net value of the right is properly understood to be subject to the costs of realising the right. And a cost of realising any value from the right in such proceedings will almost always include the expense of a risk premium to secure litigation funding.

169    But whatever one’s personal preferences between an FEO or a CFO, the question for any settlement judge under s 33V(2) is to do what is just. And that provision does not deny the use of either mechanism as an appropriate choice from the menu.

Conclusion

170    In my view s 33V(2) empowers the making of a settlement CFO.

171    Let me note one other matter.

172    Professor Vince Morabito pointed out recently in his latest valuable empirical report that “the 15 years or so preceding Money Max involved an almost unanimous judicial refusal to scrutinise the funding commissions (and recoupment on costs) provided for in proposed settlement agreements” (Morabito, V, Empirical perspectives on twenty-one years of funded class actions in Australia, April 2023 at p 28, and see also at p 7).

173    Fortunately that position has now changed. The availability of tailored settlement CFOs has been an important part of the solution.

174    Having disposed of the statutory power points, let me turn to the constitutional issues raised by the contradictor. I should note that necessary s 78B notices were given and that the Court had the benefit of submissions not only from the contradictor and the parties, but also received submissions on behalf of the Attorney-General of the Commonwealth on these questions.

The constitutional issues

175    There are three constitutional issues before us, although two relate to the characterisation of judicial power. Let me address each in turn and begin with the question of whether there is a matter before us.

Is there a “matter”?

176    The matter question is:

whether the determination of the reserved question presently gives rise to, or forms part of, a ‘matter’ within the meaning of Ch III of the Constitution that is appropriate for resolution by a court exercising federal jurisdiction.

177    The contradictor says that there is no matter. It is said that the s 33V(2) power is only enlivened at the time of settlement approval, but that stage has not yet been reached in the Elliott-Carde proceeding. Moreover, it is said that such an application might never be made. In these circumstances, it is said that there is no “immediate right, duty or liability to be established by the determination of the Court” (see In re the Judiciary Act 1903 and the Navigation Act 1912 (1921) 29 CLR 257 at 265 per Knox CJ et al).

178    Now the contradictor accepts that the answer to the reserved question may have some bearing on the SDA’s stay application, the choice that group members might make between the Elliott-Carde proceeding and the SDA proceeding, and the form of the notice to group members. But it is said that this is insufficient to amount to a matter.

179    Now the contradictor says that the matter question has two elements, namely, subject matter and justiciability. The contradictor says that the first element is satisfied here, but the second is not.

180    It is said that the justiciability question involves an evaluative exercise to determine whether the dispute involves an immediate right, duty or liability to be established by the determination of the Court. Whether this is so will often involve questions of degree without bright line distinctions. It is said that a determination of the reserved question will, from a practical perspective, have little to no bearing on the outcome of the interlocutory contests.

181    The contradictor says that it is not sufficient that the reserved question forms part of a broader matter for it to give rise to a presently justiciable dispute. It is said that whilst the underlying proceedings each give rise to a “matter”, it does not follow that every interlocutory dispute that arises in those proceedings also constitutes a matter or forms part of the broader matter.

182    Further, the contradictor says that the reserved question concerns the Court’s future power. In other words, the question remains abstract and hypothetical. It is said that the Court may never be asked to decide on the reserved question in the context of the Elliott-Carde proceeding.

183    Further, the contradictor disputes that the answer to the reserved question will be significant, central and of real, immediate and unavoidable consequence to a determination of the pending interlocutory disputes.

184    Further, the contradictor says that even if it were accepted that any comparison between the funding models in the Elliott-Carde proceeding and the SDA proceeding could only be made on the basis of the applicants’ putative CFO in the Elliott-Carde proceeding, the difference between the competing funding models is neither central nor significant to the controversy.

185    Further, the contradictor says that in relation to the approval of the opt-out notice in the Elliott-Carde proceeding, it is difficult to imagine any group member having even a passing interest as to the form of order by which the substantial class action costs would be extracted from their recoveries given the existence of a no-cost alternative.

186    Further, the contradictor says that the Court could approve a notice in which any uncertainty arising from the reserved question could be conveyed to group members in plain terms and without misleading anyone. It is said that such a notice could encompass with clarity the realistic range of possible funding outcomes. And it is said that any future clarification could be addressed by a subsequent notice.

187    In any event, the contradictor says that a resolution of the reserved question could not eliminate the inherent uncertainty as to the form of any distribution order under s 33V(2) which might ultimately be made. It is said that even if the reserved question is resolved in the affirmative, the Court may decline to exercise that power if it forms the view that an FEO or some other order would be a just outcome.

188    It is said that when one has regard to the ease with which a notice could be drawn which takes account of the unavoidable uncertainties as to how the burden of the costs of the class action would be distributed, and without misleading or confusing group members, the inutile nature of an advance determination as to power becomes plain.

189    More generally, it is said that determining the reserved question now would involve the Court impermissibly considering a hypothetical question and engaging in the provision of an advisory opinion with no real utility to the pending interlocutory disputes.

190    Further, it is said that the Court should decline to answer the reserved question even if it were satisfied that the matter requirement were met on other grounds. It is said that the performance of the Court’s adjudicative function “proceeds best when it proceeds if, and no further than is, warranted to determine a legal right or legal liability in controversy” (Mineralogy Pty Ltd v Western Australia (2021) 274 CLR 219 at [58] per the plurality, citing Clubb v Edwards (2019) 267 CLR 171 at [137] per Gageler J), and that “the adjudicatory process is most securely founded when it is exercised under the impact of a lively conflict between antagonistic demands, actively pressed, which make resolution of the controverted issue a practical necessity” (Mineralogy at [58], citing Poe v. Ullman 367 US 497 (1961) at 503).

191    I would reject the contradictor’s arguments concerning whether there is a matter.

192    Now of course the question whether or not there is a matter in the constitutional sense is itself a constitutional question. But let me proceed beyond that nicety for a moment.

193    Now I accept that whether there is a matter has two elements, being subject matter and justiciability.

194    The subject matter element is satisfied by establishing that the subject matter of all claims made within the scope of the controversy satisfies relevantly at least one of the descriptions in s 39B(1A) of the Judiciary Act 1903 (Cth). That is not in doubt in the present circumstances.

195    The justiciability element requires that there be an immediate right, duty or liability to be established by the determination of the Court, that is, a justiciable controversy. This element is not co-extensive with a legal proceeding. It is identifiable independently of proceedings brought for its determination, and it encompasses all claims made within the scope of the controversy. And only a claim is necessary, since a matter can exist even though the asserted right, duty or liability has not yet been and may never be established.

196    The requirement for a justiciable controversy reinforces that the court is concerned to resolve genuine controversies, not give advisory opinions. Where the relief sought is declaratory, relief will not be granted if the question is purely hypothetical, claimed in relation to circumstances that have not occurred and might never happen, or if the Court’s declaration will produce no foreseeable consequences for the parties.

197    Further, the existence of a matter is to be determined by reference to the foundational controversy between the parties. If there is such a matter, the Court then has authority to adjudicate all the questions raised by the various claims and under that umbrella.

198    Now before proceeding further I should say that I have reviewed the recent decision of the High Court in AZC20 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2023] HCA 26.

199    The ratio is straight-forward. An intermediate appellate court exercising federal jurisdiction must satisfy itself that there is a matter before it, which matter may be different from that before the trial judge, but nevertheless must involve a live controversy over some immediate right, duty or liability. The live controversy in the appellate context is almost always whether the orders of the trial judge the subject of appeal should have continuing effect. But if they do not have continuing effect there can be no correlative controversy. Of course, in most cases costs orders made below, which have continuing effect, are live issues on appeal. Another related type of live controversy on appeal arises from the scenario where it is said that the trial judge should have made orders that he refused or neglected to make. But all of this does not touch and concern us as we are exercising original jurisdiction rather than appellate jurisdiction.

200    Further, rather than seeking to execute the judicial equivalent of a reverse somersault with triple-pike maneuver to reconcile or rationalise it, Mellifont v Attorney-General for the State of Queensland (1991) 173 CLR 289 should be seen only for what it is, being the exercise of appellate jurisdiction by the High Court under s 73 of the Constitution where there is no “matter” requirement (as explained at [43] by Kiefel CJ and Gordon and Steward JJ, and at [93] by Edelman J).

201    Let me return to the context before us.

202    In this Court, jurisdiction is express, first, as to subject matter, and second, as to the intermediate issues and interlocutory disputes that arise in the course of the controversy. There is also an implied jurisdiction. For present purposes I do not need to say anything about the Court’s associated jurisdiction or accrued jurisdiction.

203    Once jurisdiction is established, then subordinate questions arise as to whether or how it is exercised, that is, power, and finally discretion. But the constitutional question of matter is not to be revisited for every intermediate question of fact or law that arises, and nor for the myriad interlocutory issues including case management steps that might be necessary or appropriate to address on the way to trial or final orders. Once there is a matter in this Court, the Court can deal with all issues that arise in the course of its resolution, including all case management issues.

204    Now there is no dispute that the underlying claims in the proceeding give rise to an immediate controversy in which this Court has subject-matter jurisdiction and which otherwise satisfies the test for a matter. Rather, the question raised is whether the controversy over the choice between the two proceedings and over the content of the notices to group members, and within those controversies the specific issue of the power under s 33V(2) to make a settlement CFO, are within the scope of the underlying constitutional matter.

205    The underlying constitutional matter encompassing the claims made in the Elliott Carde proceeding, has given rise to two subordinate but immediate controversies, being first as to the valid comparison between the competing proceedings involving a consideration of the different funding models, and second as to the appropriate content of a notice to class members. Those controversies arise in the course of readying the underlying matter for final determination. The conduct of the proceeding in a manner consistent with Part IVA, and in particular reflecting the Court’s responsibility to safeguard the interests of the class members, requires that the controversies be resolved now. And inherent in both controversies is the question whether the assumption that the Court even has power to make the CFO order contemplated by the funding model and the proposed notices is correct. That question has real, immediate and unavoidable consequences for both of the controversies presently before the docket judge.

206    Now in the SDA proceeding, the Court has before it an application for a stay of the Elliott-Carde proceeding. In determining the stay application, one of the relevant factors that may be considered is the comparative position of group members as between the two proceedings in the context of a stay of one of the proceedings. The difference in litigation funding models as between the two proceedings is squarely raised as a factor by the Minister for Employment and Workplace Relations intervening on the stay question. The question whether a court has power to make a settlement CFO in the Elliott-Carde proceeding, which may in turn affect the damages group members receive in hand, is therefore significant as part of that assessment.

207    Central to that argument are the different funding arrangements in the various proceedings. The SDA has undertaken that it will not seek to deduct in the SDA proceeding its costs from any amounts recovered on behalf of the affected workers. Contrastingly, the applicants in the Elliott-Carde proceeding, which is externally funded, intend to apply for a CFO if a settlement is reached or they succeed at final hearing. If a CFO is ultimately made, a portion of any amounts recovered on behalf of the affected workers will be applied toward payment of remuneration to the funder.

208    In these circumstances, the question of whether the funding model contemplated by the applicants in the Elliott-Carde proceeding is even possible is central to the comparison the Court is required to undertake. If there is no power ever to make a CFO then the calculus is necessarily and materially different.

209    Further, the suggestion that the question of a CFO power is neither significant nor essential to the disposition of the stay application is untenable.

210    First, the touchstone for determining the stay application is the interests of justice. That calls for a consideration of the relative positions of the affected workers under the competing proposals. In terms of the financial comparison, the proposal in the Elliott-Carde proceeding is the CFO.

211    Second, the relevant present question of the power to make a CFO is distinct from the question whether or how the Court might in future exercise its discretion to deploy the power.

212    Third, the Court cannot sensibly determine the controversy as to carriage on other bases. The funding question is fundamental. It cannot be assumed away. Even deferring resolution of the CFO question would be of obvious practical significance, because it changes the comparison from one between two clear funding models, to one that compares the SDA’s relatively uncontroversial model against an alternative over which there is some uncertainty.

213    Further, the present case is dissimilar to Davaria FC where at an interlocutory and pre-settlement stage the question was proposed as to whether, in the possible event of settlement, the Court would have power to make a CFO under s 33V(2). There the question stood alone, as one seeking advice or guidance. But in the present context the question arises because the challenge as to whether one of two competing funding models is available is central to an extant case-management controversy as to which proceedings ought go forward. Moreover, even if the stay application failed and both proceedings went forward, the question is still relevant to a group member’s choice in the Elliott-Carde proceeding as to whether to opt out.

214    Now in Edwards v Santos Ltd (2011) 242 CLR 421 it was argued that the declaration there sought had no foreseeable consequences and was hypothetical. But Heydon J held (at [37]):

The jurisdiction to grant a declaration “includes the power to declare that conduct which has not yet taken place will not be in breach of … a law”. The jurisdiction also includes the power to declare that conduct which has not yet taken place will be a nullity in law. The plaintiffs are claiming that the petroleum defendants had no right to apply to the Minister under s 40 of the Petroleum Act because the ATP had ceased to be valid. The plaintiffs are claiming that there is no power in the Minister to grant a “production licence”, ie lease, under s 40, and that any attempt to grant it can be restrained by injunction. These claims are not outside the Federal Court’s jurisdiction to grant declaratory and injunctive relief. The plaintiffs have a sufficient interest to make those claims, because success in those claims would advance their interests in the negotiations which the parties were contractually obliged to conduct. The plaintiffs have standing because they have an interest in the question whether the ATP is valid which is greater than that of other members of the public. The questions which the plaintiffs wished to agitate were not hypothetical. The first defendant’s letter of 4 November 2005 had sufficiently indicated the intention of the petroleum defendants to make an application to the Minister under s 40 of the Petroleum Act and it had predicted that success would be “automatic”. If so, the plaintiffs would be seriously disadvantaged because their negotiating position would be gravely weakened; if not, the plaintiffs would be correspondingly better off. If the plaintiffs obtained the first declaration sought, it would produce foreseeable consequences for the plaintiffs and the petroleum defendants by allowing them to continue the process of negotiating the new [indigenous land use agreement] armed with knowledge of the correct legal position in relation to the ATP.

(footnotes omitted)

215    The declaration there was directed to resolving a legal uncertainty affecting the bargaining positions of the parties. Similar considerations attend the resolution of the carriage motion here.

216    Let me move to the next dimension of the question of an extant controversy concerning the giving of notices in the Elliott-Carde proceeding under ss 33X and 33Y.

217    In the Elliott-Carde proceeding, the Court has before it an application to approve opt-out notices under s 33Y(2). The purpose of opt-out notices is to ensure that group members can make an informed decision concerning their rights. Decisions about opting out should not be based on a notice that is apt to mislead them.

218    The proposed opt-out notice relevantly states that if the class action results in a settlement, then “the Court will be asked to make an order that some of the money be deducted and used to pay a share of … remuneration (commission) to the litigation funder for having taken the financial risk of the Class Action”. It also goes on to state that the Court will decide what funding commission is reasonable, but that group members should assume that it will be in the range of 20 to 30%. The notice therefore contemplates an application for a settlement CFO. Now this information would be misleading if the Court in fact had no power to make a settlement CFO. So, a question has arisen as to whether the content of the notice might be misleading. That is a present issue or a real and immediate controversy about which the Court must be satisfied in order properly to exercise its role under s 33X.

219    Further, the question cannot be satisfactorily avoided by softening the terms of the notices by telling group members that there remains a real question whether the CFO power is even available. The Court has a present obligation under Part IVA to protect class members’ interests, at least to the extent of ensuring that they are not misled as to the ramifications of the group proceeding. Group members ought be required to make their opt-out decisions based on their assessment whether the proposal in all its respects is one they approve, but they ought not be left uncertain as to what that proposal is, and certainly not as to a fundamental consideration like the funding arrangement.

220    Further, it is no answer to say that the notices could be amended to remove any misleading aspect. The fact that a settlement CFO may be made is relevant to a group member’s informed assessment of whether to opt out. Any omission of that topic would itself be misleading. And even if the opt-out notice were drafted in a more general way, for example, that might contemplate the making of an FEO, that may also be misleading insofar as it fails to give sufficient information about the nature of the order that is intended to be sought and the potential impact on what group members will receive. Ultimately, the question whether any aspect of the notice is misleading can only be answered having regard to whether the Court has power to make a settlement CFO.

221    So, the proposed notice must in fairness inform the class members about the funding proposal, and do so in a way that is not misleading. It follows that to ensure a fair notice to class members, the Court must resolve now the question whether the CFO that the notice foreshadows is even available.

222    Let me deal with some other broader points.

223    First, notwithstanding that there is no present application for a settlement CFO under s 33V(2) does not entail that the reserved question about the power to make such an order does not give rise to or is part of a matter. There is a genuine question whether the Court is capable of making a settlement CFO under s 33V(2) that now arises in the course of determining the rights and obligations of the parties in the applications before the Court in each proceeding. And it would not be premature to answer the reserved question.

224    Second, it is unnecessary for the answer to the reserved question to be significant or essential to the outcome of those applications. Indeed, it is not necessary that the answer ultimately affects the outcome at all. It is sufficient that the answer to the reserved question may have some bearing. In any event, the answer to the reserved questions is significant.

225    Third, the power question that has been raised is part of the broader matter raised by the two proceedings in any event. Each issue or sub-issue does not have to separately constitute a constitutional matter.

226    Fourth, not only is there a matter before the Court, but answering the reserved question has, as both Lee J and I have indicated, real and immediate utility. And it is not premature for this Court to determine the reserved question, in circumstances where the question arises directly in the applications before the docket judge, with the controversy live before him and as alive before us given the reservation for our consideration.

227    Let me turn to the second question raised by the contradictor.

Judicial power – the creation of new rights and obligations

228    The contradictor submits that the making of a settlement CFO pursuant to s 33V(2) does not fall within the judicial power of the Commonwealth for two reasons. First, it is said that it would involve the creation of new rights and obligations for which the FCA Act does not provide. Second, it is said that it would involve the application of non-judicial, policy considerations in quantifying the amount of commission to be paid.

229    Let me begin by addressing the first point.

230    The contradictor says that the creation of new rights and obligation is prima facie outside the realm of judicial power where the object of the adjudication is not to resolve a dispute about determining existing rights and obligations, but instead about determining what rights and obligations should be created.

231    The contradictor says that a CFO would create new rights and obligations as between the unfunded group members and the funder where no such rights otherwise exist. Additionally, it is said that a CFO invites the Court to order the establishment of a relationship between unfunded group members and the funder.

232    It is said that no other part of the FCA Act could be seen to allow for the creation of rights and obligations in the context of a settlement of a Part IVA proceeding. Moreover, it is said that the failed constitutional challenge over 20 years ago to the s 33J opt out mechanism does not preclude the conclusion that s 33V would impermissibly create new rights and obligations as between the unfunded group members and the funder if invoked to make settlement CFOs. It is said that unlike s 33V, s 33J is clearly intended to create rights and obligations.

233    The contradictor says that it is a point of distinction that a settlement CFO involves the creation of new rights and obligations involving third parties. It is said that those new rights and obligations are not merely rights and obligations between the parties and group members inter se. It is said that they also relate to the creation of new rights and obligations as between the unfunded group members and a third party with whom they otherwise have no legal relationship.

234    Further, the contradictor says that it is not correct to say that a settlement CFO merely affects the representative party, the funder and the person holding the fund, or that it is directed only at the trustee or administrator of the fund.

235    It is said that this is so because the unfunded group members, being bound by any such settlement, will also have an equity in the fund, or at the least a claim on the fund, which crystallises upon proving their status as a group member. It is said that any order under s 33V(2) with respect to the distribution of the fund is therefore bound to affect them, and create rights and obligations as between them and the funder. It is said that the position is even stronger where the fund is ascertained. Conversely, it is said that a funder has no antecedent interest in the fund, or not one that is superior to that of a group member.

236    Now the contradictor accepts that the creation of rights or obligations is not always inimical to judicial power, especially where such rights and obligations are created pursuant to interlocutory orders. Nonetheless, the contradictor says that it is clear that a purported exercise of a largely unfettered statutory power which creates new rights or obligations will, in the absence of certain conditions, generally not be a proper exercise of judicial power.

237    Now in Cominos v Cominos (1972) 127 CLR 588 it was held to be within judicial power to make property settlement orders in the context of a matrimonial dispute. In that case the applicable statutory power allowed the court to make such orders that it considered to be “just and equitable” and as “necessary … to do justice”. But the contradictor says that there are two important distinctions between the sources of statutory power in Cominos and s 33V(2) of the FCA Act.

238    First, it was said that the statute in question in Cominos expressly empowered the court to create or modify rights and obligations only as between the nuptial parties. It was said that whilst the statute in question enabled the court to make orders including for the benefit of any children of the marriage and therefore allowed the court to take into account the children’s interests, the power to effect a property settlement, that is, to create and vary rights and obligations, was not stated to extend beyond the nuptial parties themselves; see ss 86(1) and (2) of the Matrimonial Causes Act 1959-1966 (Cth). In any event, it was said that no party in Cominos sought to argue that the statute enabled the court to create rights in favour of, or obligations on the part of, any non-party children.

239    Second, it was said that the context and historical basis of the matrimonial jurisdiction in Cominos was a significant consideration justifying the characterisation of the statutory power in that case.

240    The contradictor says that both these factors enabled the Court to determine that the exercise of statutory power in question had been judicial.

241    Conversely, the contradictor says that in the present context, the use of s 33V(2) to make a settlement CFO would sanction the distribution of group member funds to a non-party, thereby preferring the interests of a funder over unfunded group members. It is said that this is a different proposition to the outcome sanctioned in Cominos and finds no support in the scheme of Part IVA.

242    Further, the contradictor says that there is no authority where a Court has held that it is consistent with judicial power to make orders creating rights and obligations in favour of non-parties where such a power is not referred to and conferred through the express terms of the statute. In this case the third party in question is a funder.

243    Generally, the contradictor says that the rights and obligations that would be created by a settlement CFO would be entirely new. It is said that a settlement CFO does not simply recognise and give effect to rights that differed from a previously settled understanding. No rights previously existed as between the unfunded group members and the funder, and there is no pre-existing right or obligation between them for the Court to adjudicate on.

244    I would reject the contradictor’s arguments concerning this first dimension to his judicial power argument. Let me begin with some general concepts before specifically addressing the contradictor’s points concerning the creation of new rights and obligations.

245    The concepts of judicial and non-judicial power are not mutually exclusive. The legislature may commit some functions to courts falling within Chapter III although much the same function might be performed administratively.

246    Where a power is conferred on a court, the focus of inquiry is not whether the power falls within the core or heart of judicial power. Instead, the determinative question is whether the power is inherently non-judicial because it is directed to an ultimate end which is peculiarly legislative or executive, or is otherwise incapable of being exercised judicially.

247    In contrast, where a power is conferred on a non-court, the determinative question is different. In those cases, the determinative question is whether the power is essentially and exclusively judicial. As Gummow and Crennan JJ explained in Thomas v Mowbray (2007) 233 CLR 307 at [88], “[c]are is needed in considering the authorities in this field. The vantage point from which the issues were presented is significant.”

248    Further, there is “no single combination of necessary or sufficient factors [which] identifies what is judicial power” (Attorney-General for the Commonwealth v Alinta Ltd (2008) 233 CLR 542 at [93] per Hayne J). Some decades earlier, a related way of putting the open-endedness was expressed in terms that “[it] has never been found possible to frame a definition that is at once exclusive and exhaustive” (The Queen v Davison (1954) 90 CLR 353 at 366 per Dixon CJ and McTiernan J). Moreover, it is well accepted that judicial power is not to be defined or limited in any narrow or pedantic manner.

249    Now the power to make a settlement CFO is neither inherently non-judicial nor otherwise incapable of being exercised judicially. Moreover, it is at least incidental to the exercise of a judicial power given the very language of s 33V(2) being that the Court “may make such orders as are just”.

250    Now it may be accepted that the making of a common fund order creates rights and liabilities, by fixing (until further order) an amount to which a litigation funder will be entitled from the proceeds of any judgment or settlement. But the fact that the order creates rights does not require the conclusion that the power is inherently non-judicial.

251    There are undoubtedly circumstances in which a power to create rights may be appropriate for exercise by a court in federal jurisdiction. Examples include where the power has some historical analogue, or in which the provision conferring the power performs a “double function” of creating rights and conferring jurisdiction. Those two classes do not exhaust the circumstances in which a power to create rights may be exercised in federal jurisdiction: they are merely examples of when such a power is not directed to an ultimate end which is peculiarly legislative or executive. Moreover, consideration of those examples suggests that the impugned power here is similarly directed to an end which is appropriately achieved through a judicial process.

252    As to “double function” provisions, the High Court has long-accepted that a law performing a “double function” may confer judicial power on a court, notwithstanding that the power is discretionary and to be exercised by reference to broad criteria.

253    So, for example, in Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51 Gummow J described (at 130) the power to detain under the Community Protection Act 1994 (NSW) as performing a double function “proleptically, by presenting criteria which require the Supreme Court to decide whether it is more likely than not that the appellant is likely to act in a particular fashion.” McHugh J said in Fardon v Attorney-General for the State of Queensland (2004) 223 CLR 575 at [34] that “[t]he exercise of judicial power often involves the making of orders upon determining that a particular fact or status exists”. In this case, the status determined by the Court to exist is that the making of a settlement CFO is “just with respect to the distribution of any money paid under a settlement”. That is a standard sufficiently precise to engage federal judicial power.

254    Now the power under s 33V(2) is analogous to the similar provision upheld in Cominos.

255    In Cominos it was held that a power conferred on a court to order parties to a marriage to make such settlement of property as the court considered “just and equitable” was “a recognized part of judicial power” (at 591 per McTiernan and Menzies JJ).

256    The relevant provisions conferred “powers in aid of the exercise of the jurisdiction to hear and determine proceedings for divorce” (at 593 per Walsh J) that are ancillary to and “take their colour from, the valid grant of jurisdiction to hear and determine matrimonial causes” (at 591 per McTiernan and Menzies JJ).

257    Similarly here, the power under s 33V(2) is enlivened as part of the hearing and determination of a representative proceeding under Part IVA, and so would fall within those powers in aid of the exercise of that jurisdiction. It follows that, if s 33V(2), on its proper construction, is capable of authorising the making of a settlement CFO, then the making of a settlement CFO also involves an exercise of judicial power.

258    Moreover, the argument that the making of a CFO under s 33ZF did not involve judicial power has previously been rightly rejected. By analogy, the same reasoning applies concerning s 33V(2).

259    In Money Max, in a decision that has not been challenged or questioned on this aspect, it was observed that the exercise of judicial power was analogous to the power considered in Cominos. It was said by Murphy, Gleeson and Beach JJ (at [171]):

… [QBE] contends that the proposed orders do not involve an exercise of judicial power. This is a surprising argument. We accept that ss 33ZF and 23 are to be construed as not permitting the making of orders that do not involve the exercise of judicial power or are not incidental thereto. But the proposed orders do involve an exercise of judicial power. Under Pt IVA, the Court has a supervisory function to protect the interests of class members. This is not unlike other protective jurisdictions that a Court may have, such as with persons under a disability. Moreover, the exercise of judicial power is analogous to that described in Cominos v Cominos (1972) 127 CLR 588 at 608 per Mason J (as he then was); see also Precision Data Holdings Ltd v Wills (1991) 173 CLR 167 at 190 and 191. More generally, there is little doubt that a Court can make orders creating rights or liabilities as an exercise of discretionary power, provided the power is exercised according to legal principle and by reference to an objective standard. That is the present case, with s 33ZF(1) setting out that objective standard, albeit a broad one.

(my emphasis)

260    Further, both Gageler and Edelman JJ who also considered the question in Brewster rejected the argument that s 33ZF did not confer judicial power. After noting that the constitutional arguments “[did] not warrant elaborate responses”, admittedly a temptation that I have singularly failed to resist, Gageler J said at [119]:

… As to the suggested want of judicial power, it is sufficient to bring s 33ZF(1) within the judicial power of the Commonwealth that it confers power on the Federal Court as an incident of a strictly judicial proceeding to be exercised by reference to the Court’s assessment of the interests of justice in that proceeding. I agree with the observation of the Full Court that “it is difficult to conceive of a function or standard more appropriate to the judicial branch of government than considering and deciding (upon application and evidence) what is appropriate or necessary to do justice in a proceeding”.

261    The same reasoning is applicable to the making of a settlement CFO under s 33V(2), which is based on what is “just”. No authority need be cited to observe that the paramount purpose of the exercise of federal judicial power is to do justice, although there is one for every occasion (Alqudsi v The Queen (2016) 258 CLR 203 at [1] per French CJ).

262    Now a power does not cease to be judicial merely because it authorises the creation of rights. As was said by French CJ in Momcilovic v The Queen (2011) 245 CLR 1 at [81]:

… courts have long exercised powers to make orders, declaratory in form, which do not merely declare legal rights and obligations but create new legal relationships.

263    It has long been recognised that the exercise of judicial power may include making orders altering the pre-existing legal rights of the parties. In Precision Data Holdings Ltd v Wills (1991) 173 CLR 167 at 191 it was said:

… The Parliament can, if it chooses, legislate with respect to rights and obligations by vesting jurisdiction in courts to make orders creating those rights or imposing those liabilities. It is an expedient which is sometimes adopted when Parliament decides to confer upon a court or tribunal a discretionary authority to make orders which create rights or impose liabilities. This legislative technique and its consequences in terms of federal jurisdiction were discussed by Dixon J. in R. v. Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett. Leaving aside problems that might arise because of the subject-matter involved or because of some prescribed procedure not in keeping with the judicial process, where a discretionary authority is conferred upon a court and the discretionary authority is to be exercised according to legal principle or by reference to an objective standard or test prescribed by the legislature and not by reference to policy considerations or other matters not specified by the legislature, it will be possible to conclude that the determination by the court gives effect to rights and obligations for which the statute provides and that the determination constitutes an exercise of judicial power.

(footnotes omitted)

264    Moreover, in Brewster, Edelman J specifically rejected a similar and equally meritless argument, stating (at [225]) that:

The first submission misunderstands the distinction between the “adjudication of existing rights and obligations” and “the creation of rights and obligations”. The latter is concerned with an attempted judicial creation of new rights whilst simultaneously concluding that those rights should never have previously existed. By contrast, it is entirely within judicial power for courts to create new rights, in the sense of recognising and giving effect to rights that differ from a previously settled understanding. That is often how the common law develops.

(footnotes omitted)

265    Money Max (at [171]) is to the same effect, as I have already set out. These themes were also reinforced in Westpac Banking Corporation v Lenthall (2019) 265 FCR 21 at [97] and [98] per Allsop CJ, Middleton and Robertson JJ.

266    Moreover, there are numerous examples of powers that have been held to be judicial when conferred on a court though they involve the creation of new rights and liabilities, including powers to make orders relating to the maintenance and guardianship of infants, orders for the winding up of companies and the grant of letters of administration, and to vary the terms of a contract that had become inequitable or unduly onerous.

267    Generally, the creation of rights or obligations is not inimical to judicial power. Indeed, the contradictor offers no positive authority in support of the proposition that judicial power does not extend to the creation of rights and obligations involving third parties.

268    Now the contradictor says that those cases in which the court has held that judicial power had not been validly conferred involved third parties, whereas those in which the court held that judicial power had been validly conferred concerned orders in circumstances not involving third parties.

269    But the contradictor’s characterisation of the relevant cases is inaccurate or fails to pay sufficient regard to the court’s underlying reasoning. And in my view the contradictor’s attempted distinction fails.

270    The contradictor characterises three cases cited as holding that judicial power had not been validly conferred to make orders affecting third parties. But two of those cases, Precision Data and Alinta involved powers conferred on non-judicial bodies, being the Corporations and Securities Panel and the successor Takeovers Panel respectively, and the relevant powers were found not to be judicial powers having regard to the nature of the body on which they were conferred. Further, Davison held that the power to make a sequestration order was judicial, and therefore had not been validly conferred on a Registrar. Precision Data and Alinta do not support the contradictor’s distinction, and the reasoning in Davison is contrary to it; a sequestration order affects not just the bankrupt but third party creditors as well and where new rights and restraints are created.

271    Further, the contradictor characterises various cases as holding that judicial power had been validly conferred but only in circumstances not involving third parties.

272    But in Cominos, one of the statutory provisions considered provided that the court may by order require the parties to the marriage “to make, for the benefit of all or any of the parties to, and the children of, the marriage, … a settlement of property”. The children clearly were third parties.

273    Further, in Mowbray at [15] and [16], the examples discussed with approval included orders in relation to matrimonial causes, bankruptcy, probate and the winding up of companies, all of which are also apt to involve third parties.

274    Further, it is not in doubt that a court can create rights or obligations in respect of a non-party. In Knight v FP Special Assets Ltd (1992) 174 CLR 178, it was held that a court can make a costs order against a non-party. Mason CJ and Deane J said (at 192) that:

… there are, however, a variety of circumstances in which considerations of justice may, in accordance with general principles relating to awards of costs, support an order for costs against a non-party. Thus, for example, there are several long-established categories of case in which equity recognized that it may be appropriate for such an order to be made.

275    This passage was quoted with approval by Edelman J in Brewster at [214], who also noted that such reasoning concerning orders for payment of a party’s costs by a non-party was “equally applicable to payment by a party of a non-party’s costs and remuneration”.

276    In any event, the power to make a settlement CFO is at least incidental to the admittedly judicial function of quelling the dispute in the representative proceeding. Incidental powers are a third example of a power to create rights, which is directed to an ultimate end which is not peculiarly legislative or administrative, and which may therefore be exercised by a court in federal jurisdiction. The power to make a settlement CFO is, at least, such a power. The assertion to the contrary is undermined by a necessary premise of this branch of the argument, which is that a settlement CFO may be just under s 33V(2). That provision must be construed and applied as a provision conferring powers in aid of the exercise of the jurisdiction to hear and determine the representative proceeding. Further, there is a sufficient relation between the making of a settlement CFO and the judicial function of quelling the controversy in the matter between the parties.

277    Now it is said by the contradictor that the exercise of the power in s 33V(2) to make a settlement CFO is not ancillary or incidental to the representative proceeding. It is said that the making of the order lacks the requisite connection to the Court’s core judicial task because it has no connection to the substantive proceeding except that in a general way it facilitates the exercise of judicial power in the proceeding. But an order under s 33V(2) must be made in a proceeding that involves the exercise of judicial power. It may only be made if the Court is satisfied that it is appropriate or necessary to do justice in the proceeding. Thus the order must, by definition, have a sufficient relation to the judicial function to which it may be thought to be accessory. Otherwise it could not be made. Further, that connection is more than insubstantial or remote.

278    Let me make one final point. It is accepted that FEOs are an exercise of judicial power, because they seek to allocate rights and liabilities between a class of people whose rights have been vindicated. And whether this is premised on a need to avoid unjust enrichment or upon equitable doctrines is beside the point. But if an FEO, which is also not provided for explicitly in Part IVA, can be made having regard to the justice of the case, so too must a settlement CFO be capable of being characterised as an exercise of judicial power. After all, at least one type of FEO also creates new rights and obligations as between funded group members and unfunded group members.

279    Let me turn to the next topic.

Judicial power—impermissible policy making and market-setting?

280    The contradictor says that an exercise of statutory power involving the balancing of unstated considerations of policy may violate the bounds of judicial power if the policy considerations applied do not clearly emerge from the statutory context and/or the express words of the statute.

281    The contradictor says that s 33V(2) does not state any criteria, other than that the Court considers a proposed distribution of settlement money to be “just”.

282    The contradictor says that the difficulties inherent in making a CFO at any stage of a proceeding without the Court straying beyond the range of considerations supported by the statutory scheme are clear.

283    It is said that it is impossible to sensibly make such an order without compromising the immediate interests of group members for the benefit of funders, or without recourse to justifications based on the viability of the third party funding model; it is said, somehow, that the plurality in Brewster has precluded taking into consideration such matters.

284    It is said that it is difficult to see how the fact of a relatively modest pool for recovery could justify a disproportionate commission reflecting the risk taken on by the funder at the commencement of the proceeding unless the interests of group members are suborned to those of third party funders.

285    Further, it is said that if market rates are applied as the appropriate yardstick, other unstated policy considerations intrude. The following questions are posed by the contradictor. How are such market rates to be determined, and should the Court delve into whether such rates sufficiently reflect the true value of the funding risk? Are the idiosyncratic features of a particular case, the funder and/or the group members to be accounted for, and if so how? And how (if at all) is the Court to account for the role it might play in guiding or reinforcing, by an accumulation of decisions, market prices?

286    Further, the contradictor says that if the solution to inscrutable market complexities of this type may be put to one side in a given case, the question remains: in the absence of statutory criteria or guidance gleaned from the statutory context, what rate should be set?

287    It is said that unlike the remuneration of insolvency practitioners, trustees or lawyers, which are usually set based on hourly rates in light of the amount of work done, the funder’s contribution is untethered to any easily quantifiable metric. Its primary contribution is capital, in respect of which it requires a return. It is said that without clear legislative guidance, the value of that provision of capital and the reasonable rate of return for a given funder is very difficult, if not impossible, for the Court to assess without straying into the realm of impermissible and non-judicial policy-making.

288    It is said that a court acting within the bounds of Chapter III judicial power should not make such assessments in the absence of express legislative guidance or guidance which is otherwise discernible from the statutory scheme. And it is said that Brewster made clear that such assessments form no part of the scheme of Part IVA.

289    It is said that the use of s 33V(2) would in this context involve the Court acting as a market regulator, effectively driving the setting of market rates for funding commission. This would involve policy considerations beyond its proper purview.

290    Further, it is said that the plurality’s observation in Brewster (at [68]) that at the conclusion of a proceeding the value of a funder’s support to group members will be capable of assessment and recognition “because the value of the litigation and the extent of the burden will have been rendered certain” is not an answer to the policy problem.

291    It is said that the value that a funder brings which would fall to be assessed is not limited to the value of the litigation and the extent of the burden rendered through funding the litigation. Other questions that may arise include whether and to what extent the Court should take into account an appropriate return on investment for funders, bearing in mind factors including, for example, the nature and extent of the risk borne at the time of investment, the particular risk appetite of the funder in question and whether and to what extent that appetite should be rewarded, the duration of the investment, the nature of the domestic and international funding market, and the nature of that market compared to other asset classes into which investors may otherwise have invested their capital.

292    But it is said that these do not involve objective criteria or legal principle assessed through any judicial process. It is said that they involve the weighing of policy considerations between funder and group member, assessed in light of value judgments involving how the broader litigation funding market should be rewarded.

293    Now I would also reject this second dimension to the contradictor’s judicial power arguments. At the least I am wary of the contradictor’s position concerning s 33V(2) in this respect, which is calculated to maximise the prospect of constitutional infirmity concerning the making of a settlement CFO.

294    The making of a settlement CFO is not non-judicial because it involves the weighing of policy considerations, which may include assessment of an appropriate commercial return on investment for funders.

295    Further, in my view the contradictor’s position is meritless. Let me repeat what I said in Blairgowrie (No 3) at [120] to [122] shortly after Money Max, and inject a dose of realism into this question of setting a commission rate based upon my own practice and no doubt the practice of Lee J and others which is still the current position.

296    Whether a Court should set a commission rate and the rate to be used is largely a forensic question depending upon the material available to the judge at the time the order is sought. It is not to be determined by some value laden proposition clothed in the language that it is not a suitable issue for the exercise of judicial power. After all, judges set legal costs by scales, rates, individual amounts and total or capped amounts, whether ex ante or ex post; a commission or funding rate may be seen as a relevant analogue. Further, some judges in fixing the remuneration of external insolvency practitioners also readily engage in such exercises, including ex ante or ex post rates of remuneration. In other contexts, judges have set rates of remuneration for trustees administering trust assets. In yet other contexts, judges set discount rates on some aspects of common law damages. They may also set interest rates less than or more than statutory interest rate entitlements.

297    In general, the question is not whether the rate setting for a common fund order is a suitable subject matter for the exercise of judicial power. Rather, the question is whether, in a particular case, a judge is in a position to or should set a rate by the application of the appropriate judicial method tailored to the circumstances of the individual case.

298    And once one appreciates that perspective, the answer to the question of whether a judge should set a commission rate depends upon the forensic context and the adequacy of the information provided. And as with other contexts, such as damages assessments including the value of lost economic opportunities, the judge has to do the best he can on the evidence available, albeit incomplete or imperfect. Moreover, the fact that the question may in part be evaluative and one upon which reasonable minds might differ is no bar to engaging in the task.

299    Yet another argument suggests that the judge ought not be the market setter. But the judge is not setting a market rate, but rather a rate referable to the individual circumstances of the particular case before him or her. But the rate set may be contextually informed by an actual or putative market rate, including reference to rates in foreign jurisdictions, particularly where demand side or supply side substitutability is not necessarily confined by geographic limitations. The rate set may also be informed by the risks faced by litigation funders in investing in litigation generally, not just the case in question, which may also be affected by whether a funder has a diversified spread of litigation investments and not a small pool of such investments thereby producing overall higher risk for the undiversified funder. In other words, what is the equity beta for funders locally or globally? And consequently, what is the rate of return on equity that a funder locally or globally might reasonably expect given the level of risk for such a business, ie funding litigation? And is the funder earning disproportionate returns? If so, that may indicate that there is no true “price” competition in the litigation funding market and that the commission rates are higher than what a workably competitive market might be expected to deliver. Now these are all interesting questions. And no doubt a judge is not in a position to investigate such questions in any detail. But a review of the financial accounts of the funder and other funders might quickly allay concerns that standard commission rates are somehow producing rates of return on equity so outside a reasonable range such as to cast doubt on whether standard commission rates should be used as a benchmark or at least for a contextual check. But if the judge’s concerns are not allayed, all that means is that the judge might put to one side standard or putative market rates as a benchmark and set a rate based only on evidence concerning the case before him. In other words, it is no argument for not setting a rate at all, but rather it may justify putting to one side putative market rates or comparable data.

300    At the end of the day the application is made by the representative party. The Court is being asked to approve of a rate sought by the applicant. The application includes evidence which goes to why the funding has been given on the terms that it has. The Court has a discretion to make or not make the order based on the available evidence. If the Court proceeds to exercise its discretion to make a settlement CFO, it makes an evaluative judgment based upon the evidence before it. This is plain vanilla judging.

301    Further, a similar argument to that put by the contradictor before us was rejected in Brewster by both Gageler J and Edelman J. As Gageler J put it (at [115]):

To the extent that making a CFO involves the Court in an evaluation of the appropriateness of the payments to be made to the litigation funder in the event of success in the proceeding, I reject the suggestion that making a CFO requires the Court to embark on an inquiry which is beyond its institutional competence, which involves the Court in inappropriate speculation, or which is inadequately guided by the broad statutory standard of what the Court thinks appropriate or necessary to ensure that justice is done in the representative proceeding…

302    His Honour cited an example well known to any commercial judge who is frequently called upon to approve contracts entered into by liquidators for funding future litigation on behalf of the liquidated entity and has to assess and approve of rates of remuneration or commission for the funding.

303    And as Edelman J said (at [226]):

… although the calculation of the rate of remuneration for a common fund order will be a difficult exercise and one upon which minds may differ, it must be exercised in accordance with the judicial process, by a process of balancing interests that is quintessentially judicial … such enquiries are a common exercise of judicial power. Examples of courts making assessments by reference to broad, open-textured criteria include the adjudication of whether conduct is "unconscionable", the "just and convenient" considerations involved in interlocutory injunctions, and the power of courts to make preventive orders. In any event, the requirements of propriety or necessity, and doing justice in the proceeding, ensure that the exercise of power is judicial.

(footnote omitted)

304    The same arguments apply in relation to the making of a settlement CFO under s 33V(2), which in one sense is also open-textured. This is a power which is exercised in accordance with the judicial process and which is bounded by the “quintessentially judicial” requirement of what is just; see also Lenthall at [100] and [102] to [106], albeit discussing s 33ZF(1) principally although there is some reference to s 33V.

305    Further, the contradictor’s characterisation of the Court as a market regulator, effectively driving the setting of market rates for funding commission, is inapt. The question for the Court will be whether a settlement CFO, including any funding commission rate, is just having regard to the individual circumstances of the case before it. That is a judicial question that is capable of being answered judicially.

306    Now the contradictor also relies on the observation of the plurality in Brewster, which identified the key problem with the court’s fixing of the funder’s remuneration as being the absence of criteria to guide the exercise of discretion by the court (at [59]). But that observation does not assist.

307    First, that observation was not made in the context of a discussion about whether s 33ZF validly conferred judicial power on a court. It was made in the context of a discussion of whether s 33ZF empowered a court to make a commencement CFO as a matter of statutory construction.

308    Second, and as the second sentence of [59] makes clear, their Honours were concerned with “the problems that attend the fixing of the rate of the funder’s remuneration at the beginning of the proceeding”. Clearly, those concerns do not attend the fixing of the rate at the end of the proceeding pursuant to a settlement CFO. And the plurality in Brewster were not at all concerned with the text, context and purpose of s 33V(2) which are all different.

309    Now the contradictor says that there is no standard for a settlement CFO. But the criterion of “just” in s 33V(2) assumes or embodies an objective standard, although it is vague. Moreover, there is no reason why, in this context, it is impermissible to rely upon the well-recognised technique of giving a broad standard content and more detailed meaning on a case by case basis. Indeed, the words “make such orders as are just” in s 33V(2) “point to the requirement to develop principles governing the exercise of the power”, albeit such as to avoid abuse (Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at [26] per the plurality).

310    Further, in The Queen v Joske; Ex parte Shop Distributive and Allied Employees’ Association (1976) 135 CLR 194, Mason and Murphy JJ said (at 215 and 216):

The prosecutors argue that ss. 171C and 171D confer on the Industrial Court non-judicial power. The attack upon s. 171C was supported largely by reference to the provisions of pars (a) and (b) of sub-s. (2) of that section. They follow sub-s. (1) which empowers the Court, on the application of an organization, a member or a person having a sufficient interest in respect of it, to hear and determine the question whether an invalidity has occurred in the affairs of the organization and to make such declaration as it thinks proper. The sub-section provides:

“171C. (2) Where, in proceedings under sub-section (1), the Court finds that an invalidity of the kind referred to in that sub-section has occurred, the Court –

(a)     may make such order as it thinks fit to rectify or cause to be rectified the invalidity, or to negative, modify or cause to be modified the consequences in law of the invalidity, or to validate any act, matter or thing rendered invalid by or as a result of the invalidity;

(b)     shall, before making such order, satisfy itself that such an order would not do substantial injustice to the organization or to any member or creditor of the organization or to any person having dealings with the organization."

It involves, so the argument runs, the conferment on the Court of functions which differ markedly from the ascertainment and declaration of existing rights, involving as they do, the making of determinations by reference to criteria not enunciated and the making of orders creating new rights. In addition, it is urged that the concept of "substantial injustice" is so vague as not to lend itself to an exercise of judicial power. These considerations, it seems to us, are not enough to bring us within reach of the conclusion which the prosecutors seek to attain. Many examples are to be found in the exercise of judicial power of orders which alter the rights of the parties or are the source of new rights. Likewise, there are countless instances of judicial discretions with no specification of the criteria by reference to which they are to be exercised - nevertheless they have been accepted as involving the exercise of judicial power (see Cominos v. Cominos). It is no objection that the function entrusted to the Court is novel and that the Court cannot in exercising its discretion call in aid standards elaborated and refined in past decisions; it is for the Court to develop and elaborate criteria regulating the discretion, having regard to the benefits which may be expected to flow from the making of an order under sub-s. (2)(a) and the impact which such an order will have on the interests of persons who may be affected.

(footnote omitted)

311    As one can see, the contradictor’s arguments before us have not found favour at appellate level in any analogous setting concerning the conferral of statutory power on a court, where the standard to be applied is very broad.

A coda - the two conceptions approach

312    Let me conclude my observations on the question of judicial power by saying something concerning Gageler J’s two conceptions approach to judicial power.

313    In Palmer v Ayres (2017) 259 CLR 478, Gageler J said (at [47]):

… The first is of the existence of an area of judicial power within which a particular act or thing done is directed to an ultimate end that can be achieved only through the exercise of judicial power. At the centre of that exclusive area is what has subsequently been described as the “unique and essential function” of the judicial power of “the quelling of … controversies [as to legal rights] by ascertainment of the facts, by application of the law and by exercise, where appropriate, of judicial discretion”. Also within that exclusive area of judicial power and more difficult to catalogue are some, but by no means all, other functions that have in the past been exercised only by courts. The second conception is of an area of judicial power, within “[t]he borderland in which judicial and administrative functions overlap”, and within which a particular act or thing done by a court through the application of a judicial process is directed to an ultimate end that might equally be achieved through the application of a non-judicial process. Beyond those two conceptions lies the area of non-judicial power.

(footnotes omitted)

314    The exercise of power under s 33V(2) to make a settlement CFO in my view falls under the first part of the first conception. And if not, it would fall under a modified form of the second conception where “administrative” is replaced with “non-judicial”.

315    Further, Gageler J went on to say (at [48]):

Where the Commonwealth Parliament confers a power to do a particular act or thing on a court, it must be assumed in the absence of some indication to the contrary that the Parliament intends and requires that power to be exercised by that court through the application of a judicial process. If the act or thing is capable of being done through the application of a judicial process, the question whether the power to do it is within the judicial power of the Commonwealth turns on the end to which the act or thing is directed.

(footnote omitted)

316    Let me dwell on this formulation for a moment. Now as I have said, the power in s 33V(2) is to be exercised through the application of the judicial process and a settlement CFO is capable of being determined through the application of the judicial process. The judge receives submissions, receives evidence and makes a ruling, possibly with the assistance of a contradictor. What then is left to consider in order to determine whether the power to do it is within judicial power? The question then “turns on the end to which the act or thing is directed”. But here the matter is put beyond doubt. Section 33V(2) requires that the end to which a settlement CFO is directed is to do what is “just”. It is difficult to see how the making of a settlement CFO under s 33V(2) could be anything other than the exercise of judicial power if the judicial method and process is followed and the order is “just”.

317    Finally, if it be right to say that courts exercise supervisory jurisdiction in many and varied areas, such as applications by trustees, receivers, provisional liquidators, other administrators, infants, persons under a disability and so on, and that to do so is considered to be an exercise of judicial power, perhaps the second part of Gageler J’s first conception, by analogy, is the Court’s protective or supervisory jurisdiction under Part IVA including s 33V so different? And to make a settlement CFO does not involve the Court travelling outside that protective or supervisory jurisdiction.

Other matters

318    I have had the advantage of reading a draft of Colvin J’s reasons. Let me briefly make three points.

319    First, his Honour has made observations concerning the scope of a representative applicant’s authority to conduct and settle proceedings on behalf of group members with which I am not in complete agreement, and in any event are issues that are not relevant to my perspective on or resolution of the issues that I have addressed.

320    Second, it is said variously by his Honour that s 33V(1) does not confer power to approve. In my view, s 33V(1) creates both the necessary condition requiring approval and by necessary implication the power to approve.

321    Third, the process under s 33V may or may not involve a two step process. In cases where I have approved settlements, sometimes I have not given approval under s 33V(1) until I have worked out the allocation protocol to be the subject of an order(s) under s 33V(2), as my views concerning the latter aspect have informed my views as to whether I should approve under s 33V(1). On other occasions I have been able to give my approval under s 33V(1) without needing to decide some s 33V(2) questions and postponing for later consideration my decision concerning aspects of the distribution protocol to be the subject of a later specific s 33V(2) order.