FEDERAL COURT OF AUSTRALIA
Kadam v MiiResorts Group 1 Pty Ltd (No 4) [2017] FCA 1139
ORDERS
DATE OF ORDER: |
THE COURT ORDERS THAT:
1. The matter be listed for a further case management hearing at 10.15 am on 26 September 2017.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
(Revised from the transcript)
LEE J:
A Introduction
1 An informed participant or observer would likely conclude that the conduct of modern litigation reflects a number of interrelated developments, several of which are relevant for present purposes. The first is the increased complexity and size of litigation. The second, connected to the first, but also partly explained by technological innovation, is the size and scale of the evidentiary material placed before courts in the process of quelling disputes. The third is the commercialisation of the law, discussed by a number of economic analysts of civil procedure who have observed that the primary modern method of remuneration of lawyers provides an incentive to maximise work and perform tasks that may genuinely be thought desirable or justifiable, but are unnecessary for the determination of the true issues in proceedings. The fourth is that the courts are an arm of government dependent upon public resources at a time of focus on efficient allocation of those resources.
2 The response to these and related developments has caused what might be described as a revolution in case management. Over the last 20 years, almost every Australian jurisdiction has introduced a provision by either legislation or by way of Rules of Court, setting out the ‘overriding’ or ‘overarching’ purpose of procedural rules: see Federal Court of Australia Act 1976 (Cth) (FCAA), Part VB (overarching purpose provisions); Civil Procedure Act 2005 (NSW), ss 56-58; Supreme Court Civil Rules 2006 (SA), r 3; Court Procedure Act 2004 (ACT), s 5A (formerly Court Procedures Rules 2006 (ACT), r 21); Uniform Civil Procedure Rules 1999 (Qld), r 5; Civil Procedure Act 2010 (Vic), ss 7-8; Supreme Court (General Civil Procedure) Rules 2005 (Vic), r 1.14; Supreme Court Rules (NT) r 1.10. I will return the overarching purpose provisions in more detail below.
3 Of course, this stress on active case management is not entirely new nor has it arisen spontaneously. In 1935, the Supreme Court of the United States appointed an Advisory Committee comprised of academics and lawyers (including a former Senator), to prepare a unified system of general rules for federal courts. The procedural rules that resulted, two years later, provided that the rules were to be construed and administered “to secure the just, speedy and inexpensive determination of every action and proceeding”: Federal Rules of Civil Procedure (US), r 1. More recently, in 1996, the report by Lord Woolf, Access to Justice: Final Report to the Lord Chancellor on the Civil Justice System in England and Wales, highlighted how considerations of public and private efficiency necessitated major reform, and the regulatory result of the Woolf Report (Civil Procedure Rules 1998 (UK), r 1.1) was the immediate progenitor of the various Australian case management reforms.
4 The developments in modern litigation which partly spurred this case management revolution have deep roots. Like turning a battleship, it is to be expected that there is some ‘time lag’ before the changes sought to be wrought by the procedural reforms become fully realised. Many practitioners, however, were ‘early adapters’ and it is fair to say that behavioural change is generally evident, but no-one with experience of large scale litigation would suggest that there is not further work to be done. One way is to recognise that the efficiency of commercial litigation in this Court would be enhanced by the profession giving increased and early attention to the prospect of suitable questions arising in a proceeding being referred to a referee for inquiry and report.
5 It is now over seven years since the commencement of the overarching purpose provisions and over a quarter of a century since Gleeson CJ, the then Chief Justice of New South Wales, said in Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549 at 558:
The proposition that all litigants are entitled to have a judge…decide all issues of fact and law that arise in any litigation, is unsustainable.
6 For reasons I will explain, the expedient of appointing a referee with the necessary power to conduct a just, efficient and cost effective procedure to provide answers to identified questions relating to Indian domestic law seems to me to be appropriate in the circumstances of this case. At the commencement of submissions on this application, by way of context for the argument, I identified the orders I proposed to make if a reference was ordered. I have set out these proposed orders at [95] below. The balance of these reasons will be divided into the following headings:
Section B: Background to the dispute;
Section C: Relevant procedural chronology;
Section D: The reference proposal;
Section E: The reference provisions – history and relevant statutory framework;
Section F: The objections of the Janlok applicants;
Section G: Why the orders should be made;
Section H: SEBI’s position and the overarching purpose; and
Section I: Orders and conclusion.
B Background to the dispute
7 The circumstances giving rise to the underlying substantive dispute in these proceedings are explained, in general terms, in Kadam v MiiResorts Group 1 Pty Ltd [2016] FCA 1205 (Kadam (No 1)) and Kadam v MiiResorts Group 1 Pty Ltd (No 2) [2016] FCA 1343; (2016) 118 ACSR 1 (Kadam (No 2)). The summaries contained in those judgments and the following will serve as an adequate exposition of the relevant background facts.
8 There are two proceedings before the Court. The first proceeding is a closed class representative proceeding pursuant to Part IVA of the FCAA (representative proceeding). The applicants in the representative proceeding (Janlok applicants), make a large number of factual and legal allegations, but at the core of their case is a contention that a ‘Ponzi’ scheme was conducted in the Republic of India which operated in that country as a form of unauthorised ‘collective investment scheme’. As Edelman J explained in Kadam (No 1) at [2]:
…More than $9 billion is said to have been invested by 58.5 million people on trust. The applicants are members of the management committee of a Community Action Group in India which, senior counsel for the applicants said, represents approximately 46,000 investors. The applicants, in their current pleading, make numerous different allegations against numerous respondents. Some involve claims which are based upon allegations of knowing receipt of property transferred in breach of trust. Part of their case involves the allegation that funds from the alleged Ponzi scheme were traceably used in the purchase of properties by the first respondent, MiiResorts Group 1 Pty Ltd…(MiiResorts), and the second respondent, Pearls Infrastructure Projects Limited (India) (PIPL). The property acquired by the first respondent was the Sheraton Mirage on the Gold Coast, for $62.5 million with an additional $20 million spent in renovations. The applicants’ claims include that the respondents hold those properties on trust for the investors.
9 The circumstances which gave rise to the second, separate proceeding (separate proceeding) should also be explained. Initially, as a non-party, a statutory body, being the Securities and Exchange Board of India (SEBI), made an application to be joined as a fourth applicant in the representative proceeding. SEBI’s application to be joined as an applicant was said to arise by reason of its statutory duties (and duties arising under orders of the Supreme Court of India) to bring in the assets of the trust constituted by the collective investment scheme, liquidate those assets and then return such proceeds as can be returned to the 58.5 million investors.
10 In Kadam (No 1), Edelman J determined that, although the Court had power to join SEBI as a party to the representative proceeding, in the circumstances, it was not an appropriate exercise of discretion to do so. Instead, his Honour made an order that SEBI be given leave to intervene in the representative proceeding with what his Honour described as “broadest role as intervener”. His Honour further noted that if SEBI sought independent relief, then it should commence a separate action (at [4]).
11 Presumably as a consequence of his Honour’s comments, the separate proceeding was commenced by SEBI. The relief sought by SEBI in the separate proceeding is identified in an originating application as follows:
1.1 a declaration that:
1.1.1 the proceeds of the sale of the Sheraton Mirage by the first respondent that are held on trust by McCullough Robertson Lawyers pursuant to the Order of 24 February 2017 of Justice Greenwood of the Federal Court of Australia, and any subsequent order of the Federal Court of Australia, are held on trust for all of the investors who invested monies in the collective investment scheme operated by PACL Limited;
1.1.2 further, or in the alternative, all of the investors who invested monies in the collective investment scheme operated by PACL Limited are entitled to equitable compensation and an account of profits from the first respondent; or
1.1.3 further, or in the alternative, such other declaration as the Court consider appropriate;
1.2 an order for restitution by the first respondent to the investors who invested monies in the collective investment scheme operated by PACL Limited, or some of the investors, of the amount of AUD 132,900,000, or such other amount as determined by the Court;
1.3 a declaration that:
1.3.1 the second respondent holds the Sanctuary Cove Properties, or will hold any proceeds from the sale of those properties, including any profits, on trust for all of the investors who invested monies in the collective investment scheme operated by PACL Limited;
1.3.2 all of the investors who invest monies in the collective investment scheme operated by PACL Limited are entitled to an equitable charge on the Sanctuary Cove Properties in such amount as determined by the Court; or
1.3.3 in the event that the Sanctuary Cove Properties are sold, all of the investors who invested monies in the collective investment scheme operated by PACL Limited are entitled to equitable compensation and an account of profits from the second respondent; or
1.3.4 such other declarations as the Court considers appropriate;
1.4 an order for restitution by the second respondent to all of the investors who invested monies in the collective investment scheme operated by PACL Limited of the amount of AUD 5,218,243.30, or such other amount as determined by the Court
12 This is not the time for examination of the form or taxonomy of relief. Leaving aside the unusual way in which the prayers for relief seeking an “order for restitution” are framed, the relief sought by SEBI relates to what its Senior Counsel, Mr Bradley QC, described, very generally, as a contention that, pursuant to the domestic law of India, SEBI “stands in the shoes” of the third respondent in the representative proceeding (PACL), which operated the scheme whereby Indian investors were invited to purchase small lots of lands in different parts of India. As I understand the argument, SEBI (or a Committee of SEBI) is obliged (or at least authorised) to get in the trust assets. This is said to arise by a combination of circumstances but was not developed in any depth for the purposes of this application.
13 The two proceedings have been case managed together. A dispute has arisen between the Janlok applicants and SEBI as to whether SEBI has (what has been described as) ‘standing’ to seek the relief it seeks in the originating application in the separate proceeding. The matter came before Murphy J on 16 June 2017, at which time his Honour made orders that both sets of proceedings be heard together and that evidence in one proceeding be evidence in the other. His Honour also made a number of detailed orders to ready the matter for a separate trial of issues which arise in each proceeding. Those questions were set out in annexure A to the orders made by Murphy J. Relevantly for present purposes, those orders included the following questions:
(1) Does the court have jurisdiction to determine the claims made in these proceedings?
…
(9) Does SEBI have standing to bring the claims for relief set out in Originating Application in Federal Court proceeding QUD147/2017?
14 The matter came before me for the first time on 13 July 2017. At that time there was a lengthy case management hearing in which I considered the most efficient way to bring all the issues identified in the orders of 16 June 2017 to a final hearing. During the course of that case management hearing, I raised with the parties my view that questions of jurisdiction and ‘standing’ ought be resolved with celerity and my preliminary view that the most efficient way of resolving any questions which arise in relation to expert evidence on Indian domestic law may be to refer those questions to a referee for report (while concurrent and unrelated interlocutory steps could take place readying the matter for hearing next February).
15 I was told that rather than adopting the approach of a reference, a timetable could be put in place for the exchange of expert evidence, and I was content to allow such a course to occur; however, I foreshadowed that if the preparation of opinion evidence could not be completed in a satisfactory form within the then expected timeframes, it may then be appropriate for the parties to each nominate an expert, and for the Court to order a referee to liaise with the experts and prepare a reference report.
16 In any event, procedural directions were made for the early determination of both questions. In relation to the question of jurisdiction, being question 1 (referred to at [13] above), I delivered ex tempore reasons on 11 September 2017 in which I determined that both proceedings were indubitably within the jurisdiction of this Court.
C Relevant procedural chronology
17 For reasons that I will now come to, the procedural history in relation to the determination of the question of SEBI’s ‘standing’ (or, more precisely, its rights and duties pursuant to Indian domestic law, which impact, or may impact, on its ability to seek relief in a foreign court of the type sought) (Relevant Issue) has been more problematic. The circumstances in which the Court was left in the position of being asked to resolve this Relevant Issue without opinion evidence which reflected any exchange (let alone a considered exchange) between experts, requires some context and explanation.
18 The decision in Kadam (No 1) was delivered in October 2016. As I have indicated, the separate proceeding was commenced in March 2017. No doubt because of the necessity for those acting for SEBI having a reasonable basis upon which commence a proceeding, an expert report was obtained by SEBI in January 2017, from a former justice of the Supreme Court of India, Justice K S P Radhakrishnan (Radhakrishnan report). The Radhakrishnan report was not then served on the other parties to the representative proceeding.
19 When the matter came before me on 13 July 2017, questions arose as to the issue of the authority pursuant to which SEBI had commenced the separate proceeding and how this issue would be resolved (given the objections of the Janlok applicants). As noted above, I indicated to the parties that I considered this question should be determined as soon as possible. Mr Hodge, who then appeared on behalf of SEBI, advised that it had already obtained the Radhakrishnan report, which dealt with “Indian law issues” but noted that the report had not yet been provided to the other parties. He also submitted that there was “further expert evidence that needs to be obtained” (T 40). Mr Hodge later returned to the topic and indicated that it “would be easier if my client just provides the report to everybody and files it with the court” rather than Mr Hodge seeking to provide a potentially inaccurate summary of its contents (T 42). Later, Ms Kenny QC, who appeared for the Janlok applicants, explained that the appropriate course was for her clients to get access to the Radhakrishnan report quickly as possible so that expert material could be provided in response. I then indicated that there was no reason why the Janlok applicants should not receive the Radhakrishnan report “forthwith” (T 63).
20 Given the length and complexity of the matters dealt with in the case management hearing, the parties agreed that it would be efficient to adjourn and for the parties to agree on orders to reflect the matters that arose during the case management hearing. Orders were subsequently made in Chambers. There was no express direction that the Radhakrishnan report be provided to the other parties although, in the circumstances, I would not have thought it necessary for such an order or direction, given the indication made during the course of the case management hearing.
21 What then occurred appears to be as follows: promptly after the case management hearing, Mr McArdle, the solicitor for the Janlok applicants, wrote to the solicitors for SEBI, DLA Piper, noting that Mr Hodge had mentioned that SEBI had obtained a written advice on ‘standing’ and, consistently with my observations made at the case management hearing, asked for it to be provided or to be made available for inspection as soon as possible. This email was sent on 18 July 2017. By 26 July 2017, no response had been received. Mr McArdle followed the matter up, noting that he had not received a response and asked, among other things, for a copy of the “written advice/expert report in relation to the issue of standing”. Mr McArdle referred to the fact that the Radhakrishnan report, among other documents, was necessary for the Janlok applicants to prepare for the hearing and asked that the documents be provided or made available by no later than 28 July 2017.
22 On 27 July 2017, SEBI’s solicitor, Mr Prescott, responded. That response noted that the matters raised in the email from Mr McArdle “do not reflect our recollection of the last hearing” and that he wished to discuss the matter with Counsel (who was otherwise engaged) and foreshadowed a response as soon as possible. I interpolate to note that I consider that Mr McArdle’s communication did reflect what occurred at the case management hearing, although I accept recollections of what was said at a case management hearing can often differ, absent review of the transcript.
23 In any event, on 3 August 2017, Mr McArdle referred to the fact that no substantive response had been received, and advised that unless a copy of the Radhakrishnan report was provided by 10.00 am the following day, the matter would be relisted. This correspondence elicited a response within the deadline notified, which apprised Mr McArdle of the fact that the solicitors for SEBI were currently finalising a substantive response and that it would be provided shortly.
24 What next occurred was somewhat unusual. A letter was sent on 4 August 2017 (which was marked “without prejudice” (but has been adduced in evidence as neither party wishes to maintain any settlement privilege pursuant to s 131 of the Evidence Act 1995 (Cth)), which referred to previous communications and continued:
We enclose on a without prejudice basis the [Radhakrishnan report] on the issue of our client’s standing, dated 19 January 2017…
In providing the [Radhakrishnan report] on this basis, we emphasise that our client does not agree that it is necessary to provide the [Radhakrishnan report] to your client at this time. Our client currently does not intend to file the [Radhakrishnan report], and emphasises that it does not consider itself bound to rely upon the [Radhakrishnan report] in its current form (although our client reserves its right to do so).
Our client has provided the [Radhakrishnan report] in an effort to demonstrate to your client that its complaint as to our client’s standing is misconceived, and to illustrate why an application in this regard should not be made by your client.
25 I pause to note a matter which seems to have given rise to some confusion. The determination of the issues of both jurisdiction and the Relevant Issue were fixed for final hearing. Given the complexity of the proceedings, it is not surprising that a number of other interlocutory applications also needed to be determined. Accordingly, time was set aside, commencing on 11 September 2017, for the determination of questions of jurisdiction and the Relevant Issue, and also any interlocutory application that the parties wished to make. It is not necessary to go into the details of the interlocutory applications, but the orders provided a regime for the service of evidence and submissions in relation to any interlocutory application. There appears to have been a genuine misunderstanding between the parties as to the effect of those orders. The position taken by SEBI was that it anticipated that the Relevant Issue would be crystallised by the filing of an application seeking a strike out of the separate proceeding; the position of the Janlok applicants, on the other hand, was that there was no need for any application to be filed for the issue to be heard.
26 On 23 August 2017, reflecting their view of the way in which the orders following the case management hearing operated, the solicitors for SEBI wrote to the solicitors for the Janlok applicants, noted that the question of SEBI’s ‘standing’ was one that had only been raised by the Janlok applicants, and referred to the fact that the Janlok applicants had previously indicated their intention to bring an application to strike out the separate proceeding. SEBI’s solicitors also indicated, in fairly clear terms, their understanding of the effect of the orders and that they had anticipated that if the contentions of the Janlok applicants were to be maintained, then, as the moving party, the Janlok applicants should have filed and served their written submissions and any affidavit evidence upon which they intended to rely on the question of ‘standing’, prior to the date of the letter.
27 This asymmetry of understanding is also reflected in the letter of 4 August 2017, to which I have already referred at [24] above. In any event, on 4 September 2017, the solicitors for the Janlok applicants wrote to SEBI’s solicitors, requesting that SEBI indicate whether it intended to rely upon, among other things, the Radhakrishnan report.
28 A few days earlier, on 1 September 2017, the solicitors for the Janlok applicants had served an expert report by another former justice of the Supreme Court of India, Justice A K Patnaik (Patnaik report). At that time, it was communicated that the Janlok applicants intended to rely on the Patnaik report for the purposes of the upcoming hearing.
29 On 5 September 2017, the solicitors for the Janlok applicants again wrote to SEBI’s solicitors, confirming their intention to rely on the Patnaik report and requesting that SEBI’s solicitors confirm whether they required Justice Patnaik to be available for the purposes of cross-examination.
30 Pursuant to the orders made following the case management hearing, the parties provided submissions on the Relevant Issue. The submissions on the part of the Janlok applicants, dated 8 September 2017, set out, in some detail, why it is asserted that SEBI does not have ‘standing’. SEBI’s submissions were filed on 8 September 2017. This would seem to leave the impression that the submissions were filed within a short time of one another, which is literally correct, but the added contextual matter to which reference should be made is that I was informed that ‘draft’ submissions on ‘standing’ were served by the Janlok applicants at some earlier time.
31 On the same day as SEBI’s submissions were filed, the Radhakrishnan report was also filed with the Court and served on an open basis. This was the first time that SEBI indicated an intention to rely on the Radhakrishnan report for the purposes of this hearing.
D The reference proposal
32 Not surprisingly, given this background, SEBI’s written submissions made the point that the experts, who had provided materially different conclusions, had not conferred. It was also pointed out that owing to differences in the questions (which were somewhat minor) and assumptions, “it is unclear whether and to what extent that there is disagreement between the two experts”. The submissions went on to note that given the “lack of clarity as to the extent of any disagreement between the experts”, and “presuming neither of them has had the opportunity to consider the other’s report, SEBI respectfully submits that the preferable and practical course would be to adjourn [the determination of the standing issue] … until after the experts have conferred and prepared a joint report”. It was said, and I accept, that this would assist the Court and the parties to understand the metes and bounds of any differences of opinion between the experts and also, importantly in my view, would avoid the undesirable spectre of having two former justices of the Supreme Court of India being cross-examined in circumstances where they have not had a proper opportunity to confer and discuss the differences between them.
33 As a result of the speed with which the Relevant Issue had come on and the unusual circumstances in which the respective expert opinions had been served, following review of SEBI’s submissions, my preliminary view was that further consideration should be given to obtaining assistance about Indian domestic law by way of a reference. When the matter was called on 11 September 2017, I raised this prospect with the parties. The position of the Janlok applicants, at least initially, was to agree, that with the benefit of hindsight, the adoption of a reference process would have been a “sensible course” (T 11, 14). Other than SEBI, the other parties did not have any substantive submissions to make in relation to the question of a reference, although the issue did impact upon the determination of a number of interlocutory applications, which had also been set down for hearing (it is unnecessary to deal with these matters for present purposes).
34 The matter was stood down for some time in order to allow each of the parties to consider their position and when the matter resumed, the position taken by the Janlok applicants was to oppose orders for a reference. The precise objections of the Janlok applicants are considered in section F below. Prior to coming to those objections, it is useful to say something about the conduct of references in this Court.
E the reference provisions – history and relevant statutory framework
35 At the risk of generalisation, there seems to be an imperfect recognition by the profession generally as to the flexibility and cost savings which can be achieved by the early adoption of references in this Court. Many appear to assume that a stately procession of expert reports, followed by a conclave and joint report is somehow a ‘given’ in this Court in presenting a technical question for resolution, or that all matters of law must be resolved by a judge. This is obviously incorrect but partly is explicable by reason of the fact that the provisions relating to references in this Court are not of long standing and that references have not been a usual feature of commercial litigation in this Court. It is also perhaps understandable given the history of references in Australia and, in particular, the different reception of the reference procedure throughout the various States.
Some background
36 In both the United Kingdom and parts of Australia, over a long period of time, references have been adopted by commercial courts as a way of ensuring that discrete issues in litigation are determined with maximum efficiency. Reference type procedures are not a recent invention; for a very early example, see Gyles v Wilcox (1740) 2 Atk 141; 26 ER 489.
37 A useful account of the history of the early provisions for references, at least in New South Wales, is recorded in the reasons of Stephen J in Buckley v Bennell Design & Constructions Pty Ltd [1978] HCA 20; (1978) 140 CLR 1 at 15-22. In the same case, Aickin J expressed the view that the likely consequence of overruling a previously restrictive approach to references “will be beneficial in allowing a useful and flexible procedure to be adopted” (at 39)
38 Section 3 of the Common Law Procedure Act 1854 (UK) empowered applicable courts to refer either the whole or part of proceedings to “arbitration” on the proviso that the matter in dispute consist wholly or in part of “Matters of mere Account” which “cannot conveniently be tried in the ordinary Way”. It is fair to say that this provision caused some disquiet in the profession in the United Kingdom. In Knight v Coales (1887) 19 QBD 296 at 300, Lopes and Fry LJJ opined:
We are of [sic] opinion that this discretion should be exercised with extreme caution, regard being had to the relative importance of that which is matter of account compared to that which is not. The matter of account giving the jurisdiction should not be incidental or subordinate to the other questions in dispute, but should be a substantial element to be decided in the action to justify a compulsory reference.
39 Later, upon the passing of the Supreme Court of Judicature Act 1873 (UK), further procedural mechanisms were provided for references, including s 56, which permitted the High Court or Court of Appeal to refer “any question” to a “special Referee” for “inquiry or report”. The legacy of the adjective ‘special’ has been adopted in some of the Rules of Court throughout Australia.
40 Again, the operation of these provisions was the subject of some debate and controversy. Shortly thereafter, in New South Wales, the first statutory power to appoint ‘special’ referees was contained in the Arbitration Act 1892 (NSW). A subsequent, but not materially different, provision (s 12) was considered by the Full Bench of the Supreme Court of New South Wales in Sydney and Suburban Hydraulic Power Co v Mercantile Mutual Insurance Co (1896) 17 NSWLR 323; (1896) 13 WN(NSW) 18 (Darley CJ, Manning and Cohen JJ). The decision in Sydney and Suburban was later described by Jacobs J in Buckley at 37 as being “stultifying”.
41 It is convenient to pass over this period of stultification to when things started to change, subsequent to Buckley and during the period of the mid-1980s, when the developments I referred to at [1] above, became more manifest. At around this time a new, separate Commercial Division of the Supreme Court of New South Wales was being considered (and later commenced). This coincided with a series of reforms made to the commercial arbitration provisions in New South Wales. This included the introduction of what was then Part 72 of the Supreme Court Rules 1970 (NSW). These rules reflected an approach to references that was broader than the original counterparts to which I have referred. A number of detailed protections were also afforded within the rules.
42 Notably, a procedural matter, which reflected a more liberal approach to references, was reflected in the form of Commercial Division summons and response created by Rogers CJ in Comm D. These documents included a requirement that each party was required to give the earliest possible (and specific) attention as to whether or not there were any issues in the proceedings that were appropriate to refer to a referee.
43 Writing some years later (and extra-curially) in 1996, Giles JA (a successor Chief Judge of the Commercial Division, before it later returned to become part of the Equity Division of that Court), made reference to the continued hesitation of some of those within the profession to adopt readily the process of references. Among other things, Giles CJ in Comm D noted that “[i]t is not correct to see reference under Pt 72 as an illicit deprivation of a right to trial and decision by a judge and of traditional procedures and appellate rights” (see “The Supreme Court Reference Out System” (1996) 12 Building and Construction Law 85 at 92).
44 Despite this, throughout Australia, approaches to references have varied and some courts have been more willing than others to accept the appointment of referees (or ‘special’ referees, as they are sometimes known). Another more direct way of putting it would be that the period of stultification did end without some resistance. An example of this reluctance to refer questions out is, with respect, seen in AT & NR Taylor & Sons Pty Ltd v Brival Pty Ltd [1982] VR 762 at 765-766 where, in refusing the application for the appointment of a referee, Beach J said:
Where a party to litigation wishes the sort of dispute which normally calls for judicial determination to be tried by a judicial tribunal, it will only be in cases of an exceptional nature that his wishes will be disregarded and the matter referred to an arbitrator or special referee. In my opinion, the so-called complexities pointed to by the plaintiff in support of its applications do not constitute special circumstances in the present case. It is by no means unusual for a judge of this Court to be called upon to investigate and resolve such matters assisted as he invariably is by expert witnesses called by the parties. The fact that such a process may be time consuming is of itself no reason to deprive a party of its right to have the matter of matters determined by a judicial tribunal.
See also Honeywell Pty Ltd v Austral Motors Holdings Ltd [1980] Qd R 355 at 359-360 per WB Campbell J; Bold Park Senior Citizens Centre & Homes Inc v Bollig Abbott & Partners (Gulf) Pty Ltd (1998) 19 WAR 281 at 285 per Ipp J; Abigroup Contractors Pty Ltd v BPB Pty Ltd [2000] VSC 261 (Byrne J).
45 This restrictive view has been strongly challenged, including by Mahoney JA in SJP Formwork where, at 567, his Honour noted:
There has been, for many years, a use by the superior courts of various facilities for determination of disputes between the parties coming before them. The courts have not merely supervised arbitral and similar proceedings undertaken by parties outside court proceedings. The courts have themselves, for many years, made use of procedures akin to arbitration and the like as part of the resolution of disputes brought by the parties into the court system. In earlier times, the court made use of proceedings analogous to those followed by present referees…in my opinion, it remains true that the mode of determining disputes in the Supreme Court is not limited to trial by judge in the sense to which reference has been made in this case.
(citations omitted)
46 More recently, the traditional reluctance to use the reference powers over objection by one of the parties, unless special circumstances exist, has been rejected, even in superior courts where there has been traditionally more reluctance to order references: see, for example, Talacko v Talacko [2009] VSC 98 at [27] per Kyrou J and Bill Express Ltd (In Liq) v Pitcher Partners (A Firm) [2014] VSC 482 at [28] per Macaulay J.
47 Despite this, it is fair to say that there appears to remain some residual reluctance on behalf of practitioners and parties to adopt fully the expedient of referees, absent the consent of the parties, notwithstanding the potential for significant savings in Court time.
48 What is clear, however, at least since the decision of the High Court in Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175, is the need for close attention to be given to the Court’s role of ensuring that modern and flexible principles of case management are brought to bear in the resolution of disputes. This is made a statutory requirement by reason of the overarching purpose provisions. So-called ‘revolutions’ only work if parties recognise the fact that there has to be change: reality has to match rhetoric. The time has now long passed where the role of the courts is only to focus on the interests of the immediate parties to a dispute. As King CJ observed in United Motors Retail Ltd v Australian Guarantee Corporation Ltd (1991) 58 SASR 156 at 158:
…a party is entitled to his day in court but not to somebody else’s day in court.
49 The more expensive and time-consuming litigation becomes, the more it becomes inaccessible to potential litigants. In short, justice looked at from a perspective that transcends the individual litigant, must take into account considerations of access to justice generally. This was a point made by French CJ in Aon at 182, where his Honour noted:
…the time of the court is a publicly funded resource. Inefficiencies in the use of that resource … are to be taken into account.
50 I have already referred to the fact that a number of writers have written about an economic analysis of civil procedure: see, for example, Richard Posner, “An Economic Approach to Legal Procedure and Judicial Administration” (1973) 2 Journal of Legal Studies 399 at 399 and, by the same author, Economic Analysis of Law (Wolters Kluwer, 7th ed, 2007). One aspect of this analysis is to have regard to what Posner refers to as the public and private goals of procedure and also the notion of “error costs” and “direct costs”. An economically rational approach to litigation does not prioritise one goal of procedure over the other. Put simply, from an economic perspective, the lower the overall costs, the better the procedure. Even without wholesale acceptance of an economically rational approach to procedure, and keeping as the lodestar the just resolution of disputes according to law, as French CJ noted in Aon, the overarching purpose involves consideration being given to the public interest in saving court time and hence achieving more with the resources allocated to the courts.
The Statutory Framework
51 The factors informing the considerations to be taken into account by this Court in determining whether to order references are found in the provisions of the FCAA. Section 54A was inserted in 2009 by the Federal Justice System Amendment (Efficiency Measures) Act 2009 (Cth) and presently provides:
Referral of questions to a referee
(1) Subject to the Rules of Court, the Court may by order refer:
(a) a proceeding in the Court; or
(b) one or more questions arising in a proceeding in the Court;
to a referee for inquiry and report in accordance with the Rules of Court.
(2) A referral under subsection (1) may be made at any stage of a proceeding.
(3) If a report of a referee under subsection (1) is provided to the Court, the Court may deal with the report as it thinks fit, including by doing the following:
(a) adopting the report in whole or in part;
(b) varying the report;
(c) rejecting the report;
(d) making such orders as the Court thinks fit in respect of any proceeding or question referred to the referee.
52 In his second reading speech (Hansard, House of Representatives, 3 December 2008 at 12296), the Attorney-General, the Hon Robert McClelland MP (as his Honour then was) said:
Court efficiency is important if we are to ensure that the cost of justice remains proportionate to the relief being sought…and it is also important that commercial disputes be resolved as expeditiously and economically as possible.
…this is an important reform and will enable the court to more effectively and efficiently manage large litigation
…the procedural flexibility with which a referee can deal with a question, along with their technical expertise, will allow a referee to more quickly get to the core of technical issues and reduce the cost and length of trial of litigants.
(emphasis added)
53 The broader, relevant statutory context for the referral power is set out, with respect usefully, in the decision of Rares J in Optiver Australia Pty Ltd v Tibra Trading Pty Ltd [2012] FCA 558; (2012) 230 FCR 520 at 524-526 [11]-[15]. I need not repeat that examination here and gratefully adopt his Honour’s detailed exposition of the relevant provisions. In identifying the manner in which the discretion in s 54A(1) is to be exercised, his Honour set out the following (at 530-531 [35]-[36]):
The discretion in section 54A(1) is one that must be exercised judicially, having regards to the subject matter, scope and purpose of the [FCAA] itself ... thus, factors to which the Court ordinarily would have regard in considering the exercise of power to order a reference under section 54A(1) are:
(1) the policy that the usual mode of trial is by judge alone: s 39;
(2) the overarching purpose of the Court’s civil practice and procedure rules and the factors referred to in s 37M so far as they are relevant to the exercise of discretion;
(3) the legislative purpose for the recent introduction of the additional mode of trial for which s 54A provides.
…
The grant of power in s 54A is not confined to any particular situation, category of litigation or otherwise.
(citations omitted)
54 An important point of context needs to be made as to his Honour’s comments. Rares J was dealing with the prospect of the whole of a proceeding being referred out. It involved “complex technical issues enmeshed with allegations of fraud” and his Honour came to the view that the whole of the hearing of that case, before the referee, could proceed without damaging the principles of open justice. In doing so, his Honour rejected the spectre of parallel proceedings before the Court and the referee, noting that this ignored the fact that the FCAA contemplates that while the reference will be in the control of the Court, ordinarily, parties should not be allowed to challenge the conduct of the reference and the appropriate time and forum for disputing what decisions have been made by the referee will be when an application is made for adoption, variation or rejection of the referee’s report. When such an application is made, the report will be before the Court and, ordinarily, the principles of open justice would make the whole of the report available for public scrutiny.
55 Given the nature of the proceeding with which his Honour was concerned and the scope of the proposed reference in that case, it is not surprising that the policy of the FCAA that the usual mode of trial is by judge alone (s 39) and open justice considerations assumed more significance in that case than in a case where only one issue, out of many, is proposed to be referred.
56 Returning to the legislative history, notably, immediately prior to the introduction of s 54A, Part VB of the FCAA was introduced by the Access to Justice (Civil Litigation Reforms) Amendment Act 2009 (Cth) which, of course, included the enactment of the overarching purpose provision and the allied requirement (s 37M(3)) that the Court apply any civil practice and procedure provision, including the power to order references, in a way which best promotes the quick, inexpensive and efficient resolution of proceedings in the Court.
57 It follows that in considering whether to make order a reference, the starting (and in many cases the finishing) point will be the consideration of the overarching purpose. Of course, s 37M(2) gives some guidance as to how this is done by setting out a number of objectives which, without limiting s 37M(1), comprise the following:
(a) the just determination of all proceedings before the Court (s 37M(2)(a)) (Justice Factor);
(b) the efficient use of the judicial and administrative resources available for the purposes of the Court, and the efficient disposal of the Court’s overall caseload (ss 37M(2)(b)-(c)) (Efficiency Factor);
(c) the disposal of the proceedings in a timely manner (s 37M(2)(d) (Timeliness Factor); and
(d) the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute (s 37M(2)(e)) (Cost-effectiveness Factor).
58 As can be seen, these four factors reflect what might be described as both party-centric and the macro considerations in relation to the administration of justice, to which I have already made reference. They are not, however, exclusive considerations and the considerations in s 37M(2) should not be treated as ‘tick box’; a wider evaluative process is to be undertaken: see Irwin v Irwin [2016] FCA 1565 at [37] per Charlesworth J.
59 Before leaving the applicable provisions and the principled approach to their application, I should say something about some matters raised in Linke v T T Builders Pty Ltd [2014] FCA 672. In that proceeding, an issue arose as to the appointment of a referee in circumstances of a number of claims for damages and compensation, including a misleading and deceptive conduct claim under the Australia Consumer Law, arising out of a building dispute. In forming the conclusion that referral to a referee was not appropriate, White J observed (at [37]-[44]) that: first, there were some difficulties in defining discrete issues to be referred to a referee and it was “not practical” to refer certain claims to a referee; secondly, there was a prospect of the Court having to determine matters which may have caused an overlap in the determination of matters to be determined by the referee; thirdly, significant weight was given to the attitude of the parties, being described as “important”; fourthly, one party contemplated that “the referee may enlist the assistance of further experts”, but in his Honour’s view, “the engagement of others in this way does not seem to be contemplated by the terms of s 54A”; fifthly, that issues that commonly arise when a Court is asked to adopt a report of a referee and, in this regard, his Honour referred to the decision of the Supreme Court of South Australia in Built Environs Pty Ltd v Saunders International Ltd [2012] SASC 111, as an example of the kinds of difficulties which can arise on adoption.
60 The appointment of a referee is quintessentially a case management decision, which is necessarily dependent upon a multifactorial assessment, informed by the circumstances of the case and, in particular, the overarching purpose provisions. Without, in any way, commenting on the particular circumstances of another case, it is useful to say something briefly about the five topics discussed by White J in Linke.
61 First, it is obviously necessary that there be precision at to what is referred to a referee although, in appropriate circumstances, this does not require only granular questions to be referred; indeed s 54A(1)(a) of the FCAA expressly contemplates an entire proceeding being referred to a referee. Secondly, an overlap in the matters to be determined by the Court and by the referee can be avoided by careful calibration of the orders for reference. Thirdly, although the attitude of the parties may be a relevant consideration, the notion that the parties’ views can rise to the level of being some form of veto or barrier has now been rejected (see [46] above). Fourthly, there is nothing either textually or contextually which would suggest that a referee is necessarily fettered, in appropriate cases, from enlisting the “assistance of further experts”; the involvement of additional experts in the reference depends on the order for reference and the nature of the reference. Indeed, pursuant to orthodox orders very regularly made, as specified in the Supreme Court of New South Wales by adoption of annexure 2 of Practice Note No. SC Eq 3 Supreme Court Equity Division - Commercial List and Technology and Construction List, references very commonly provide for a referee, in conducting proceedings under the reference in a manner as will, without undue formality or delay, enable a just determination, to communicate and engage with experts retained on behalf of the parties.
62 Fifthly, his Honour referred to issues that commonly arise when a Court is asked to adopt a report of a referee. Of course, the seminal judgment as to adoption of a report of a referee is that of Gleeson CJ in SJP Formwork. In that case, the Chief Justice made plain (at 563-564) that in deciding whether to adopt, vary or reject a report, what is involved is a judicial discretion to be exercised consistently with both the object and purpose of the Rules of Court and the wider setting in which they take their place. The very purpose of the reference procedure is to provide, where the interests of justice dictate, “a form of partial resolution of disputes alternative to orthodox litigation, and it would frustrate that purpose to allow the reference to be treated as some kind of warm-up for the real contest”. Of course, if the referee’s report reveals some error of principle, excess of jurisdiction, patent misapprehension of the evidence, or perversity or manifest unreasonableness in fact-finding, it will ordinarily be rejected but, critically, the “right to be heard does not involve the right to be heard twice”: see also McDougall J’s distillation of these principles (with additions) in Chocolate Factory Apartments Ltd v Westpoint Finance Pty Ltd [2005] NSWSC 784 at [7], which has been applied and approved by intermediate appellate courts in New South Wales and Victoria, and by this Court: see Cordon Investments Pty Ltd v Lesdor Properties Pty Ltd [2012] NSWCA 184; (2013) 29 BCL 329; Illawarra Hotel Company Pty Ltd v Walton Construction Pty Ltd [2013] NSWCA 6; (2013) 84 NSWLR 410 at 412-414 [15] per Barrett JA (Meagher and Ward JJA agreeing); Wenco Industrial Pty Ltd v WW Industries Pty Ltd [2009] VSCA 191; (2009) 25 VR 119; Shannon (in his capacity as receiver and manager of North East Wiradjuri Co Limited) v North East Wiradjuri Co Limited (No 3) [2012] FCA 106 (Jacobson J). Of course, it is to be expected that in some cases problems will arise if a reference is conducted maladroitly or a report has deficiencies, but that is not a reason to eschew a reference that would, consistently with the mandates of the overarching purpose, otherwise be appropriate.
63 Having identified the applicable provisions and explained the principled approach to their application, I now turn to the objections raised by the Janlok applicants to the ordering of a reference.
F The objections of the Janlok applicants
64 The express objections of the Janlok applicants can be broadly placed into five categories, as follows:
(a) that “there are few people that will speak against the [Indian] government, which is SEBI” and so “it’s going to be difficult to get someone who will act fairly against the government”;
(b) the fact that a large number of proposed senior practitioners and judges who would be appropriate referees are likely to have conflicts in acting against SEBI which is, given its statutory role, an important regulatory authority in India;
(c) the cost of obtaining expert assistance in India;
(d) delay occasioned by the inability to have matters resolved at the present hearing; and
(e) that the question of SEBI’s ‘standing’ can be resolved in a way which is fatal to SEBI even if their contentions as to the position under Indian domestic law were correct.
65 Before coming back to the factors I have identified in [57], I will deal briefly with each of these matters in turn.
66 As to the first objection, when it was first raised in the course of submissions, I indicated to Ms Kenny that if such a submission was to be maintained, there must be some proper evidentiary basis for it. As a consequence, Ms Kenny called Mr McArdle to give evidence. Mr McArdle’s evidence, which I accept (insofar as it went), was that a very large amount of money had been paid already on the provision of the Patnaik report. Further, an additional, very large sum was estimated as likely to be charged in the event that cross-examination proceeded. Mr McArdle also gave evidence about the way the Indian legal system worked in obtaining access to an expert of the calibre of a former justice of the Supreme Court of India. Given the absence of large transnational law firms in India, it was necessary, in order to obtain the assistance of an appropriate expert, to retain a local firm of lawyers, which additionally contributed to costs.
67 Mr McArdle also gave evidence about the fact that numerous senior practitioners were approached and were conflicted (advising Mr McArdle that they had an “ongoing relationship” with SEBI). What is critical, however, is that no evidence was adduced to suggest that there was a reasonable basis for the contention made that it will be “extremely difficult” in the circumstances of this case to obtain a referee that will “act fairly against the government”. Despite this, during the course of submissions, Ms Kenny returned to this contention and called in aid two matters upon which it was submitted I should find that the Court should have a legitimate concern that it would be extremely difficult to have a referee in India conduct the proposed reference fairly (or at least in such a way as to avoid a reasonable apprehension of a lack of objectivity).
68 The first matter related to the terms of an order made by the Supreme Court of India which provided that the chairman of a committee (Lodha committee), the former Chief Justice of India, Justice R M Lodha, was entitled to fix his own remuneration (T 83). The second matter was the absence of evidence adduced on this application that monies had been distributed to any Indian investor pursuant to the activities of the Lodha committee (T 84-5).
69 It was said that based on the matters referred to in the previous paragraph, I should draw an “inference” or that, alternatively, I should take “judicial notice” of the fact that the Indian legal system operating differently from that in Australia, meaning that a reference conducted in India could not be completed appropriately (T 81). As I noted to Ms Kenny, apart from the fact that this submission as to “judicial notice” is unable to be reconciled with the terms of s 144 of the Evidence Act, when an opportunity was given to lead any evidence which would provide a basis of such a submission, such evidence was not adduced in chief; indeed, if inferences were relevant to the determination of this question, the only inference would be one adverse to the Janlok applicants: see Commercial Union Insurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418E (per Handley JA).
70 In any event, not only do I reject the submission, but I also consider it lacked and lacks any reasonable evidentiary foundation. The Indian legal system has a common heritage with ours. It would be quite wrong, in my view, for any assumption to be made that a referee appointed pursuant to the orders of this Court to conduct a reference in India would not diligently and impartially discharge his or her obligations as a referee. There is no substance to objection (a) identified at [64] above).
71 The second objection is the difficulty, as referred to by Mr McArdle, of obtaining a non-conflicted referee. Although there may be some delay occasioned by the fact that it is necessary to make extensive enquiries in order to find someone suitable, and it may be that any reference orders may need to be revisited in the event (which, I presently consider unlikely) that it is impossible to obtain a suitable un-conflicted referee, I do not think this potential or speculative difficulty is a particularly important factor militating against the course proposed. Accordingly, I reject objection (b) identified at [64] above.
72 The third objection is the cost of the proposed reference. It is troubling that the provision of expert evidence in relation to Indian domestic law appears to have cost so much. I was informed from the Bar table that the costs associated with obtaining the Radhakrishnan report by SEBI have not reached anything like the amount paid by the Janlok applicants. Disparity in costs between experts is, however, hardly an unusual factor and this is somewhat beside the point. What is relevant is that it became evident, during the course of submissions, that in the event that I was not disposed to order a reference, the position of the Janlok applicants was that orders should be made facilitating the service of additional expert reports directed more precisely to the questions that need to be addressed with regard to the Relevant Issue. Once this is appreciated, not only are there no costs savings in not ordering a reference, but the opposite is highly likely to be true.
73 Moreover, consistently with the submissions made on behalf of SEBI, I would be reluctant to make a determination on a matter such as Indian domestic law without the considered views of the experts that have been briefed. Leaving aside the questions that have been addressed (to which I will return), there has been no intellectual engagement with the contrary views expressed by the other expert. The experts are not to be criticised for this in the least. It is a consequence of the instructions they have received, and timing.
74 On any complex expert question, the accumulated experience of the Court is that joint reports and some exchange between the experts is important in assisting the Court. It follows that a conclave of some type would have been desirable in any event, and I do not consider that the costs associated with the course that I propose are likely to exceed a supervised conclave process. I would be disposed to make orders, in due course, ‘capping’ the costs of the reference in any event, to provide some protection for the parties. It follows that I reject the third objection identified at (c) at [64] above.
75 The fourth objection is in relation to the prejudice occasioned to the Janlok applicants in delaying resolution of the Relevant Issue, when such delay has been largely caused by SEBI’s dilatory service of the Radhakrishnan report. There is some substance to this contention. I do not regard the tardy provision of the Radhakrishnan report, particularly after the last case management hearing, as being satisfactory. If that report had been served immediately after the case management hearing, it may have been that the issues (which first arose following the service SEBI’s submissions on 8 September 2017) would have been evident much earlier, and the parties may well have been in a position to approach the Court and obtain orders, in advance of the current hearing, for proper expert assistance to be obtained. Despite this, we are where we are – with unsatisfactory opinion evidence and no exchange between the experts. The real question is what, in these circumstances, is the best remedial response? Although there has been delay, there will now be further delay irrespective of a reference being ordered; accordingly, although there is substance in the complaint of the Janlok applicants, it is not a valid objection to the course proposed. It follows that I reject the fourth objection identified at (d) at [64] above.
76 Finally, the fifth objection is that the Janlok applicants submitted that the Relevant Issue could be resolved, even if the contentions of SEBI as to Indian domestic law were correct. In this regard, the focus of the Janlok applicants’ submissions was directed to the question of whether there was a “justiciable controversy” between SEBI and MiiResorts and it was contended that SEBI cannot satisfy that requirement. This was said to be separate from the issue of ‘standing’.
77 The submission that these issues are separate should be accepted; it is plainly correct. As the High Court explained in Bateman’s Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund Pty Ltd [1998] HCA 49; (1998) 194 CLR 247 at 264 [43] per Gaudron, Gummow and Kirby JJ:
In private law there is, in general, no separation of standing from the elements in a cause of action. Further, the requirement of a legal right determines the availability of injunctive relief and there is no separate requirement which determines entitlement to approach a court of equity.
78 This is a different question as to whether there exists an extant justiciable controversy. Reference was made by the Janlok applicants to the observations of the High Court in CGU Insurance Ltd v Blakeley [2016] HCA 2; (2016) 90 ALJR 272. With respect, however, those submissions paid insufficient attention to what was actually in issue in Blakeley. The determinative issue in Blakeley was whether the relevant trial Court (the Supreme Court of Victoria) was exercising federal jurisdiction. Given the fact that the case involved, among other things, the application of the Insurance Contracts Act 1984 (Cth), it is plain that the Court was exercising federal jurisdiction. In those circumstances, the ability of the Court to grant declaratory relief was constrained by the requirement that the power to grant an injunction was a licit exercise of judicial power pursuant to Chapter III of the Constitution. The determination of the Court, in substance, was that the declaratory relief sought in that case was an appropriate subject for the exercise of federal judicial power by reason of the fact that there was a “real interest” involved.
79 This is a separate issue from what I understood to be the core submission of the Janlok applicants, that is, that SEBI did not have a sufficient interest such that, as a matter of power or discretion, the Court would refuse or decline to grant declaratory relief. This is a matter that arises quite separately from the question as to whether or not a court is exercising federal jurisdiction. Courts have long shown a great reluctance to grant declaratory relief unless there is a real controversy between the parties. This finds reflection in a number of ways, including the traditional reluctance of equity to grant declaratory relief in circumstances where there is no real contradictor or the proposed relief lacks utility because it serves no useful purpose (for a recent example of relief being refused on this basis, see Dillon v RBS Group (Australia) Pty Ltd [2017] FCA 896 at [38]-[39]).
80 Having set out this particular objection, the immediate difficulty will already be obvious. The point of departure for considering the question of whether or not there is sufficient ‘standing’ or a “real interest” requires a consideration and an assessment of the precise position of SEBI under Indian domestic law and the rights, if any, it has to agitate claims directly on behalf of investors or to seek declaratory relief in pursuance of its statutory obligations and orders of the Supreme Court of India. It seems to me practically impossible to separate consideration of the “real interest” of SEBI, from the question of its duties and rights under Indian domestic law.
81 I pause to note that I did raise with Ms Kenny whether it was possible to adopt a demurrer type procedure and determine the Relevant Issue upon identified facts, including the correctness of the contentions of SEBI as to its legal position under Indian domestic law, enabling the Court to declare whether or not those facts provide for the cause of action sought to be the agitated by SEBI on its pleading and in its originating application: see Bass v Permanent Trustee Co Ltd [1999] HCA 9; 198 CLR 334 at 357 [50] per Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ. For understandable reasons, Senior Counsel for SEBI was not disposed to adopt that course.
82 It follows that I reject the fifth objection identified as (e) at [64] above.
83 Having dealt with the explicit objections of the Janlok applicants, for the sake of completeness, I should also deal with an objection which was implicit. That is, that the expert material currently filed is sufficient to allow the Court to determine the issue in respect of the Relevant Issue.
84 Apart from the lack of intellectual engagement between the experts, what has occurred is that the Radhakrishnan report was obtained prior to the identification of the issue as to ‘standing’ framed by Murphy J, which it does not directly address. It will be recalled that question (9) set out at [13] above was directed to whether or not SEBI had ‘standing’ to seek the relief it sought in the separate proceeding. The question addressed to Justice Radhakrishnan was somewhat different, namely, his opinion was sought on whether or not, by reason of SEBI being a statutory body established to protect the interests of investors, and by reason of the orders of the Supreme Court of India, SEBI was a trustee for the investors and was entitled or empowered to represent the investors in any judicial forum, including in this Court. Although the letter of instruction was not in evidence, it appears from the Patnaik report, that Justice Patnaik was asked to address the following questions:
1. Considering the terms of the three Supreme Court of India orders, as properly interpreted as a matter of Indian Law, does SEBI have the right or power to bring proceedings (and if so, to do so in a jurisdiction outside of India) on behalf of Indian investors (without obtaining the consent of those investors) to recover damages?
2. Does the order of the Supreme Court of India requiring SEBI to constitute a committee to be headed by the former Chief Justice Lodha confer power on SEBI to bring proceedings to recover damages?
3. Whether under Indian law, PACL will be regarded as having been a trustee or fiduciary when it received investors’ funds in India for the purposes of using them to purchase land in India.
85 Contrary to the submission made by the Janlok applicants, the originating application filed by SEBI does not seek damages. Apart from an obligation to account (which is conceptually different), it is trite that there are two possible bases for an order for the payment of money to an aggrieved party in equity. The first arises from the traditional Chancery jurisdiction to make orders for monetary compensation as an appropriate means to address purely equitable wrongs such as breach of fiduciary duty. This, obviously enough, is usually known as equitable compensation. The second (not relevant here) is the ability conferred by statutes, starting with the Chancery Amendment Act 1858 (UK) (commonly known as Lord Cairns’ Act), for an order for damages to be substituted for, or added to, specific performance or injunction, when those remedies have been sought in respect of contracts, torts or any wrongful act (commonly known as equitable damages).
86 Although the detail does not matter for present purposes, there must be close attention to the precise questions that are being asked of the experts in circumstances where the issue of ‘standing’, as framed, is directed to the precise relief sought in the originating application.
G Why the orders should be made
87 As I have indicated, none of the objections raised by the Janlok applicants, properly analysed, have substance. I now turn, as I must, to the mandatory provisions reflected in s 37M to determine whether the relevant position under Indian domestic law should be the subject of a reference pursuant to s 54A of the FCAA (see [57] above). Given my earlier findings as to the objections, this can be done quite shortly.
88 As to the Justice Factor, I am unpersuaded that the reference will somehow inhibit the just determination of the proceedings. As to the Efficiency Factor, the adoption of a reference process in these circumstances amounts to a very efficient use of the judicial and administrative resources available for the purposes of the Court. Moreover, it facilitates the efficient disposal of the Court’s overall caseload.
89 As to the Timeliness Factor, obtaining a report from the referee will take no longer than the alternative, which is to allow (as suggested by the Janlok applicants) each party to file supplementary reports and for there to be (as the Court would require) a conclave, and (potentially) cross-examination of the experts at the hearing. Finally, as to the Cost-effectiveness Factor, given the counterfactual, and assuming the reference proceeds as planned, I suspect there are likely to be real costs savings or, at the very least, no additional costs than otherwise would be incurred.
90 More generally, the issue of fact to be determined as to the status and rights of SEBI under Indian domestic law is a matter of some difficulty which is not within the usual range of matters considered by the Court. As Cairns J remarked in Parakasho v Singh [1968] P 233 at 250, a question of foreign law is “a question of fact of a peculiar kind”. Although there is some controversy as to the comment, frequently made, that the application of foreign law to the particular facts and circumstances of the case is a question of law for the court (see McComish, J, "Pleading and Proving Foreign Law in Australia" (2007) 31(2) Melbourne University Law Review 400), there is no doubt that the content of the foreign law is to be treated as an issue of fact upon which evidence is receivable.
91 Unless the presumption of fact applied that in the absence of sufficient proof of foreign law the Court will apply local law to resolve the issues before it, the relevant issue of fact as to SEBI’s position under Indian domestic law would only be able to be determined by the Court by having regard to expert opinion evidence. In all the circumstances, this issue seems to me to be precisely the type which is amenable to a reference.
H SEBI’s POSITION and the overarching purpose
92 As these reasons indicate, a large amount of time has been spent in considering and analysing the arguments as to whether or not an order for a reference should be made in these proceedings. In some ways it might be thought that the Relevant Issue is a tempest in a teapot. Both when the matter was before the Court on 13 July 2017, and at an earlier time when it was before Murphy J for case management, the Court indicated to SEBI that the question of ‘standing’ may well be easily outflanked by a decision being made by SEBI to facilitate an investor, outside the closed class of group members on whose behalf the Janlok applicants have commenced the representative proceeding, to seek relief. Senior Counsel for SEBI, in response to an inquiry as to why this expedient has not been adopted, indicated that at least one concern held by SEBI was the possibility that it may be difficult to obtain a suitable applicant and that any such applicant, located outside Australia, might be amenable to some pressure in advancing his or her claim.
93 I express no view on whether such fears are in any way justified. If that is to be established, it should be the subject of evidence. Even assuming that it was the case, there are a range of procedural mechanisms by which any such concerns may be assuaged. I mention this because SEBI (particularly as a statutory authority) ought to give close consideration to how it best acts in order to facilitate the overarching purpose. There is not much point in having an arid debate if there is a simple, alternative way of protecting the interests that SEBI seeks to protect, by the commencement of a further representative proceeding of an open class nature.
94 I say nothing further about this aspect at present although, at some time later in the proceedings, it may have some relevance to the question of costs.
I Orders and Conclusions
95 As I have referred to at [6] above, during the course of submissions, I indicated that if a reference did occur, it was likely the following orders would be made in order to facilitate the conduct of the reference without undue formality or delay, in order to enable a just, efficient, timely and cost effective resolution of the reference:
(1) An order pursuant to s 33ZF and/or s 37P(2) and/or s 54A of the [FCAA], and FCR 28, that:
(a) The questions set out in the annexure to this order (and relevant questions) be referred to a referee (referee) for the purposes of referee conducting an inquiry into the relevant questions (reference) and make a report in writing to the Court on the relevant questions referred to the referee stating, with reasons, the referee’s opinion on the relevant questions (report).
(b) The reference will commence by 26 September 2017 or on such other date as ordered by the referee.
(c) The referee is to consider and implement such manner of conducting the reference as will, without undue formality or delay, enable a just, efficient, timely and cost effective resolution of the reference to allow completion of the report including, if the referee thinks fit:
(i) the making of inquiries in person or by telephone or in writing;
(ii) direct communication (without intervention of lawyers) with [Justice Patnaik] and/or [Justice Radhakrishnan] (both former judges of the Supreme Court of India) (current experts) and/or any other person who the referee believes may have information relevant to the reference;
(iii) in order to facilitate the referee implementing the just, efficient, timely and cost effective resolution of the reference, the referee is to make such directions as the referee considers appropriate as to the conduct of the reference;
(iv) without limiting (i) and (ii), to the extent it is necessary for the referee to make any findings of fact in order to answer the relevant questions, any evidence other than the expert opinion before the referee shall, unless the referee otherwise directs, be by way of:
(A) any statement of agreed facts;
(B) a compendium of facts provided to the referee by a party in accordance with the directions made by the referee;
(C) without limiting (i) and (ii), to the extent the referee considers it is necessary or appropriate for the referee to obtain a submission from either SEBI or the Janlok applicants, the referee shall make any direction the referee considers appropriate in relation to such submissions, including that any submissions be limited in length and in topic;
(D) SEBI and the Janlok applicants are to participate in the reference without the involvement of legal representatives, except to the extent the referee wishes to obtain the assistance of any lawyer and the laws of evidence will not apply in relation to the reference;
(2) The solicitors for SEBI and the Janlok applicants communicate with the current experts in order to obtain from the current experts an agreed nomination of the appointment of a referee or, failing an agreement, a nomination from each of SEBI and the Janlok applicants of a proposed referee and provide to the associate of Lee J the names of an agreed referee and their nominee on or by 14 September 2017;
(3) The referee appointed is to be identified by the making of a consent order or other order of the Court on or by 18 September 2017.
(4) The referee submit the report to the Court in accordance with FCR 28.66 addressed to the District Registrar on or before [at a time to be ordered].
(5) Without affecting the powers of the Court as to costs, SEBI and the Janlok applicants are to be jointly and severally liable to the referee for the fees payable to him or her.
(6) The parties shall deliver to the referee forthwith a copy of this order, together with a copy of FCR 28, a copy of the pleadings and the expert reports of the current experts filed in the proceeding.
(7) Any amendments to the annexure, whether by agreement or on a contested basis, are to be the subject of an order made by the Court.
(8) If, for any reason, the referee is unable to comply with the order for delivery of the report to the Court by the date in this order, the referee is to provide to the District Registrar an interim report setting out the reasons for such inability and an application to extend the time within which to deliver the report to the Court to a date when the referee will be able to provide the report.
(9) The referee and the parties have liberty to seek directions with respect to any matter arising in the reference.
(10) The proceeding be adjourned for a case management hearing, including as to any directions for an application to adopt a report to a particular date.
96 These orders will need to be refined after hearing further argument. In broad terms, however, the proposed orders would involve direct communications between the referee and the two experts already retained by the Janlok applicants and SEBI. I am conscious of the former position of both Justices Patnaik and Radhakrishnan, and have proposed a regime to the parties where the experts, either jointly or individually, nominate an appropriate person they consider as an appropriate referee. The parties can, no doubt, communicate with the experts in order to facilitate this course.
97 In indicating that I would propose to orders for a reference, I propose to allow a short period of time to expire so that SEBI may consider the matters I have referred to in section H above, which may render the whole reference process otiose. Should that not come to pass, it will then be necessary to formally make the orders in respect of the reference (after hearing further from the parties as to their precise terms). I have determined that this should be the subject of consideration at the case management hearing listed for 10.15 am on 26 September 2017.
I certify that the preceding ninety-seven (97) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lee. |
Associate:
QUD 528 of 2016 QUD 147 of 2017 | |
NIRMAL SINGH BHANGOO | |
Fifth Respondent: | SUKHWINDER KAUR |
Sixth Respondent: | GURPARTAP SINGH |
