FEDERAL COURT OF AUSTRALIA
Melbourne City Investments Pty Ltd (now called ACN 161 046 304 Pty Ltd) v Treasury Wine Estates Limited; In the Matter of Treasury Wine Estates Limited (No 4) [2019] FCA 804
ORDERS
DATE OF ORDER: |
THE COURT ORDERS THAT:
1. The plaintiff pay the defendant’s costs to date of and incidental to this proceeding including reserved costs, the costs to date of and incidental to the defendant’s Interlocutory Application filed on 21 November 2018 (TWE’s IA) and the costs of this proceeding in the Supreme Court of Victoria (SCI 2014 06831).
2. This proceeding and the balance of TWE’s IA be listed for further case management at 2.15 pm on 6 June 2019.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
FOSTER J:
1 On 5 July 2016, I published the following Reasons for Judgment: Melbourne City Investments Pty Ltd v Treasury Wine Estates Limited (2016) 243 FCR 474 (MCI No 1). For the purposes of this judgment, I propose to proceed upon the basis that a reader of this judgment will have read and considered MCI No 1.
2 On the same day, in order to give effect to MCI No 1, I ordered that:
1. This proceeding be permanently stayed as an abuse of the process of the Court.
2. The plaintiff pay the defendant’s costs of and incidental to the Interlocutory Application filed by the defendant in this proceeding on 31 March 2015.
3 By the Interlocutory Application referred to in the 5 July 2016 orders, the defendant (TWE) had sought an order that this proceeding be permanently stayed. It had also claimed other relief in the alternative as well as an order for costs. At that time, its claim for costs was confined to its costs of the Interlocutory Application which it had filed on 31 March 2015.
4 The costs order which I made on 5 July 2016 did not encompass the costs of this proceeding generally. The disposition of those costs remained open after 5 July 2016. In addition, after 5 July 2016, other applications were made in this proceeding and other steps were taken in this proceeding. The question of who should be liable to pay the costs of and incidental to those applications and steps also remains outstanding.
5 By an Interlocutory Application filed on 21 November 2018 (TWE’s IA), TWE claimed orders that:
1. The Applicant pay the Respondent’s costs of the proceeding, including the costs of this application and any reserved costs.
2. The Applicant pay the Respondent’s costs of this application on an indemnity basis.
3. Pursuant to rule 40.02(b) of the Federal Court Rules 2011 (Cth) the Applicant pay the Respondent’s costs of the proceeding, including any reserved costs, on a lump sum basis in lieu of taxation.
4. Pursuant to rule 40.05(b) of the Federal Court Rules 2011 (Cth) the Applicant pay the Respondent’s costs of Supreme Court of Victoria proceeding S Cl 2014 06831, including any reserved costs, on a lump sum basis in lieu of taxation.
6 After TWE’s IA had been filed and before the hearing of that IA, the parties agreed that I should determine first and separately from all other issues raised by TWE’s IA, the question of whether TWE is entitled to an order that the plaintiff (MCI) pay its costs of the proceeding generally, including the costs of the proceeding incurred prior to its transfer from the Supreme Court of Victoria to this Court and also including any reserved costs. The parties agreed to defer the hearing of the remaining questions raised by TWE in its IA, viz whether any costs order in favour of TWE in respect of TWE’s IA should be assessed and paid on an indemnity basis and whether or not TWE’s costs generally should be paid on a lump sum basis in lieu of being taxed.
7 In light of the parties’ agreement summarised at [6] above, I was content to proceed in the manner agreed between the parties. By these Reasons for Judgment, I determine the question of whether TWE is entitled to an order that MCI pay all of its costs of and incidental to this proceeding both in this Court and in the Supreme Court of Victoria.
8 The parties filed multiple sets of Written Submissions and also made oral submissions in support of their respective positions in relation to costs.
9 During the course of oral argument, it became apparent that MCI relied upon only one matter as disentitling TWE from obtaining the general order for costs which it now seeks. That is, were I to resolve that one matter in favour of TWE, MCI accepted that I should make the order for costs which TWE now seeks.
10 The one matter raised by MCI as a complete answer to TWE’s present claim for an order that MCI pay its costs of this proceeding generally may be explained in the following way:
(a) On 2 July 2014, Brian Jones commenced a proceeding in the New South Wales District Registry of the Court pursuant to Pt IVA of the Federal Court of Australia Act 1976 (Cth) (FCA Act) against TWE (Proceeding NSD 660 of 2014 (the Jones proceeding)).
(b) In the Jones proceeding, Mr Jones made substantially the same claims against TWE as had been made by MCI in the first MCI proceeding commenced in the Supreme Court of Victoria in 2013 and as were repeated in this proceeding. The chronology of the relevant events is explained at 476–478 [1]–[10] and at 479–480 [14]–[23] of MCI No 1. Mr Jones also relied upon essentially the same causes of action as were relied upon by MCI in the two sets of proceedings brought by it against TWE.
(c) At all relevant times, MCI was a group member in the Jones proceeding. At one point in time, MCI contended that, because it had applied to vary the opt out orders made by the Court in the Jones proceeding on 23 March 2017 and had notified its intention to opt out of that proceeding if its application to vary those opt out orders was unsuccessful, it had ceased to be a group member in the Jones proceeding. It argued that, by April 2017, it was no longer a group member in the Jones proceeding. That contention was ultimately abandoned. In the circumstances which I shall describe later in these Reasons, in late June 2018, MCI and TWE expressly agreed that MCI was, as at that date, a group member for the purposes of the Jones proceeding and was, for that reason, bound by the Settlement Deed referred to in subpar (d) below.
(d) On or around 12 September 2017, the parties to the Jones proceeding reached a settlement of that proceeding. On that day, a Deed of Settlement giving effect to that settlement was entered into (Settlement Deed). The parties to that Settlement Deed were Mr Jones, TWE, Maurice Blackburn Pty Ltd and IMF Bentham Limited. The group members in the Jones proceeding (other than Mr Jones) were not signatories to the Settlement Deed nor were they directly involved in the settlement negotiations which led to the settlement embodied in the Settlement Deed.
(e) On 10 November 2017, I made orders in the Jones proceeding approving the settlement and addressing certain other consequential matters. I shall refer to these orders as “the Approval Orders”.
(f) Upon the true construction of cl 6 of the Settlement Deed, which provided for the release of certain claims as between the parties to the Deed and their related parties and which created an entitlement in those parties and certain other specified persons and entities (including group members as defined in the Jones proceeding) to plead the Settlement Deed in bar to certain claims that might be brought by one or more parties to the Deed against other parties to the Deed and as a consequence of the making of the Approval Orders, TWE was precluded from maintaining its present claim for costs either because that claim was released by the operation of cl 6 of the Settlement Deed and/or because MCI was entitled to plead the Settlement Deed in bar to TWE’s present claim for costs.
11 The facts and matters referred to in subpars (a) to (e) of [10] above are not in dispute. The contention summarised in subpar (f) of [10] above is a matter of controversy as between MCI and TWE. Both parties accepted before me that the Court’s decision in relation to the question of construction articulated in subpar (f) of [10] above would be determinative of TWE’s present claim for costs.
The Relevant Background
12 MCI took steps to challenge the permanent stay of this proceeding which I had granted on 5 July 2016.
13 Initially, MCI applied for an order setting aside or revoking that order. I dismissed that application with costs on 1 May 2017.
14 Next, MCI filed two separate applications. The first was an application by which it sought leave to appeal from the orders which I had made on 1 May 2017 and the second was an application by which it sought an extension of time within which to appeal from the 5 July 2016 orders.
15 On or about 21 July 2017, MCI withdrew both of these applications. Under r 35.31(4) of the Federal Court Rules 2011, MCI was obliged to pay TWE’s costs of both of these applications. For all intents and purposes, this proceeding came to an end on or about 21 July 2017, although, of course, no order for dismissal has yet been made.
16 On 31 March 2017, MCI filed an application in the Jones proceeding by which it sought amendments to certain opt out orders which I had made on 23 March 2017 in that proceeding. On 5 April 2017, I dismissed that application with costs.
17 On 21 April 2017, MCI filed an application by which it sought leave to appeal from the orders which I had made on 5 April 2017 to which I have referred at [16] above. On 20 June 2017, the Full Court refused that application for leave to appeal. On 9 August 2017, the Full Court ordered MCI to pay TWE’s and Mr Jones’ costs of that application on an indemnity basis.
18 MCI took no further steps after 9 August 2017 in either the Jones proceeding or in this proceeding.
19 On 10 November 2017, I made the Approval Orders. Those Orders were in the following terms:
BY CONSENT, THE COURT:
1. ORDERS, pursuant to s 33V and s 33ZF of the Federal Court of Australia Act 1976 (Cth) (the Act), that the settlement of this proceeding be approved on the terms set out in:
(a) The Deed of Settlement dated 12 September 2017 exhibited at pages 8–34 of the exhibit marked “Confidential Exhibit BJS4” to the affidavit of Ben Slade affirmed on 27 October 2017 (Settlement Deed); and
(b) The Settlement Distribution Scheme exhibited at pages 1–20 of the exhibit marked “Exhibit BJS5” to the affidavit of Ben Slade affirmed on 1 November 2017 together with pages 1–7 of the exhibit marked “Confidential Exhibit BJS4” to the affidavit of Ben Slade affirmed on 27 October 2017 (Scheme).
2. NOTES that, subject to cl 5.5 of the Settlement Deed, the approval of the settlement will enliven the releases provided in cl 6.1 of the Settlement Deed and the plea bar provision in cl 6.2 of the Settlement Deed.
3. ORDERS pursuant to s 33ZF of the Act that the plaintiff be authorised, nunc pro tunc, to enter into and give effect to the Settlement Deed (and all transactions contemplated by it) for and on behalf of all group members (being those persons who meet the definition of group members in the Third Further Amended Statement of Claim and who did not file an opt out notice within time, that is to say, by 26 May 2017) (Group Members).
4. ORDERS pursuant to s 33ZB of the Act that the persons affected and bound by the settlement are the plaintiff, the defendant, the Group Members, IMF Bentham Limited (IMF) and Maurice Blackburn Pty Limited (Maurice Blackburn).
5. ORDERS pursuant to s 33ZF of the Act that Maurice Blackburn be appointed as the administrator of the Scheme and act in accordance with the rules of the Scheme, subject to any direction of the Court.
6. ORDERS pursuant to s 33V(2) and s 33ZF of the Act that the following amounts be approved as part of the settlement:
(a) An amount of $23,000 for the Plaintiff’s Reimbursement Payment as defined in the Scheme;
(b) An amount of $11,511,520.80 (inclusive of GST) for the Plaintiff’s Costs as defined in the Scheme;
(c) An amount of up to $308,728.62 (inclusive of GST) as the Administration Costs as defined in the Scheme.
7. GRANTS leave to Maurice Blackburn to apply to the Court for approval of any Administration Costs in addition to the amount referred to in Order 6(c) above.
8. ORDERS that with effect from the date of the completion of the administration of the Scheme, being the date on which the final distribution from the Settlement Distribution Fund is confirmed by Maurice Blackburn (Effective Date), the proceeding be dismissed with no orders as to costs and on the basis that all previous orders for costs be vacated.
9. ORDERS pursuant to s 33ZF of the Act that the releases and plea bar in the Settlement Deed operate without prejudice to:
(a) The right of any party to the Deed to make an application to enforce the Settlement Deed in a new proceeding;
(b) The right of any Registered Group Member to make an application to the Court in accordance with the terms of the Scheme; or
(c) The right of Maurice Blackburn to refer any issues relating to the Scheme to the Court for direction or determination in accordance with the terms of the Scheme.
10. DIRECTS Maurice Blackburn to notify the Court and the defendant when the Effective Date has occurred.
11. ORDERS pursuant to s 33AF and s 37AG(1)(a) of the Act, until further order, in order to prevent prejudice to the proper administration of justice, that the contents of the exhibit marked “Confidential Exhibit BJS4” to the affidavit of Ben Slade affirmed on 27 October 2017, not be disclosed to any person or entity except to the docket Judge, his personal staff, any officer of the Court authorised by the docket Judge, the plaintiff, his legal representatives and IMF, such permitted disclosures to be upon terms that none of those parties or persons disclose that material or any part thereof to any person or entity.
12. GRANTS Maurice Blackburn liberty to apply for directions in relation to any matter arising from or under the Scheme and the parties liberty to apply generally.
20 On 23 March 2018, MCI commenced a proceeding against TWE in the County Court of Victoria (CI-18-01215) (the County Court proceeding). The Writ and Statement of Claim filed in that Court were served on TWE on 28 March 2018. MCI did not give to TWE any prior notice of its intention to commence the County Court proceeding.
21 In the County Court proceeding, MCI made substantially the same allegations against TWE as it had made against TWE in the first MCI proceeding instituted in the Supreme Court of Victoria in 2013 and in this proceeding. It will be remembered that this proceeding was commenced in the Supreme Court of Victoria on 22 December 2014. It was transferred to this Court on 3 March 2015.
22 The allegations made by MCI in the proceedings to which I have referred at [21] above were also substantially the same as the allegations made by Mr Jones in the Jones proceeding.
23 On 9 July 2018, MCI discontinued the County Court proceeding upon the basis that each party bear its own costs of that proceeding. The County Court Consent Orders made on that day also recorded the following additional matters:
The Plaintiff [referring to MCI] acknowledges and the Defendant [referring to TWE] agrees that the Plaintiff is a group member bound by the deed of settlement approved by the Federal Court of Australia in proceeding NSD660/2014 [referring to the Jones proceeding] and that the Plaintiff’s claims are thereby subject to a plea bar.
24 Under cover of a letter dated 20 April 2018, Herbert Smith Freehills (HSF), the solicitors for TWE, provided a copy of the Deed of Settlement and of the Approval Orders to the solicitors then acting for MCI, Portfolio Law.
25 On 4 October 2018, HSF sent a letter to Elliott Legal, the solicitors then acting for MCI. That letter was in the following terms (omitting formal parts):
Treasury Wine Estates Ltd ats Melbourne City Investments Pty Ltd
Federal Court of Australia proceeding NSD 216 of 2015
We refer to the above proceeding (the second MCI proceeding), which was permanently stayed as an abuse of process by Foster J on 5 July 2016.
Enclosed is a draft application seeking orders in the second MCI proceeding that:
1. MCI pay TWE’s costs of the second MCI proceeding, including the costs of the application and any reserved costs;
2. pursuant to rule 40.02(b) of the Federal Court Rules 2011 (Cth), MCI pay TWE’s costs of the second MCI proceeding on a lump sum basis in lieu of taxation; and
3. pursuant to rule 40.05(b) of the Federal Court Rules 2011 (Cth), MCI pay TWE’s costs of Supreme Court of Victoria proceeding S CI 2014 06831, including any reserved costs, on a lump sum basis in lieu of taxation.
TWE is entitled to receive its costs of the second MCI proceeding, including prior to its transfer from the Supreme Court of Victoria (proceeding S CI 2014 06831). We note in particular that:
(a) on 5 July 2016, Foster J permanently stayed the second MCI proceeding as an abuse of process and ordered that MCI pay TWE’s costs of TWE’s stay application;
(b) on 1 May 2017, Foster J dismissed MCI’s application to set aside or revoke the permanent stay order and ordered that MCI pay TWE’s costs of that application;
(c) on 13 May 2017, MCI sought leave to appeal Foster J’s 1 May 2017 decision, and an extension of time to seek leave to appeal Foster J’s 5 July 2016 decision out of time;
(d) on 20 July 2017, MCI withdrew its 13 May 2017 applications for leave to appeal, and an extension of time to seek leave to appeal, entitling TWE to receive its costs of those applications;
(e) on 23 March 2018, MCI commenced a third proceeding against TWE in the County Court of Victoria which involved the same or similar allegations to those which MCI has previously made against TWE in proceedings in the Supreme Court of Victoria and in the Federal Court of Australia;
(f) on or around 29 June 2018, the County Court made orders by consent which discontinued MCI’s County Court proceeding against TWE, which orders record:
‘[MCI] acknowledges and [TWE] agrees that [MCI] is a group member bound by the deed of settlement approved by the Federal Court of Australia in proceeding NSD660/2014 and that [MCI’s] claims are thereby subject to a plea bar.’
(g) in view of the 29 June 2018 orders made by consent in the County Court proceeding, including the acknowledgement that MCI’s claims are subject to a plea bar, there is no prospect of MCI enlivening its claims made in the second MCI proceeding; and
(h) in any event, even absent the County Court consent orders, there is no basis for MCI to set aside the permanent stay, having regard to the Federal Court’s finding that the proceeding was an abuse of process.
We also note that when the Victorian Court of Appeal made orders permanently staying Supreme Court proceeding S CI 2013 5731 (the first MCI proceeding), on the ground that it was an abuse of process. The Court of Appeal ordered that MCI pay TWE’s costs of both the first MCI proceeding and of the appeal.
It is clear from the Federal Court’s guidance (Costs Practice Note GPN-Costs) and case law, that it is the Federal Court’s preference to make lump-sum costs orders where it is practicable and appropriate to do so. In TWE’s view, lump-sum costs orders are clearly appropriate in the present circumstances as they will enable the parties to avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation, and with a view to achieving early finality (Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119; Paciocco v Australia and New Zealand Banking Group Ltd (No 2) [2017] FCAFC 146).
Please confirm by close of business on Wednesday, 10 October 2018 whether MCI will consent to the making of the enclosed draft orders. If we have not received MCI’s consent by then, we will proceed without further notice to file the enclosed application on behalf of TWE. In that event, TWE will also seek its costs of making that application on an indemnity basis, and this letter will be produced to the Court on the question of costs. We will request that TWE’s application be determined on the papers.
26 In the draft Interlocutory Application which accompanied that letter, TWE sought orders substantially in the terms of Orders 1, 3 and 4 which it now seeks (as to which, see [5] above).
27 By letter dated 10 October 2018, Elliott Legal Pty Ltd responded to HSF’s 4 October 2018 letter. This letter was in the following terms (omitting formal parts):
ACN 161 046 304 Pty Ltd v Treasury Wine Estates Ltd NSD 216 of 2015 (“Federal Court proceeding”)
We refer to your letter of 4 October 2018 concerning orders proposed in the Federal Court proceeding.
Our client does not consent to the making of the proposed orders.
Following the making of orders by consent for the dismissal of County Court of Victoria proceeding CI-18-01215, our client understood that any remaining dispute with your client had been resolved.
Our client does not consider that it is appropriate for your client to take any farther step in either the Federal Court proceeding or Supreme Court proceeding S CI 2013 5731.
Should your client proceed to file the proposed application or take any other step either in the Federal Court proceeding or the Supreme Court proceeding to recover its costs, our client will seek its costs of its defence on an indemnity basis.
This letter will be produced to the Court on the question of costs.
The Relevant Terms of the Settlement Deed
28 The Settlement Deed was in a form commonly used to document the settlement of representative proceedings under Pt IVA of the FCA Act involving issues of the kind raised by MCI in the present case.
29 The Recitals in the Settlement Deed were in the following terms:
RECITALS
A. Jones, represented by Maurice Blackburn, commenced proceedings against TWE in the Federal Court of Australia, proceeding no. NSD 660 of 2014 (the Proceeding), being a representative proceeding under Part IVA of the Act.
B. In the Proceeding, Jones, on his own behalf and for and on behalf of the Group Members, claims loss and damage from TWE in respect of alleged causes of action as pleaded in the Third Further Amended Statement of Claim dated 19 July 2017.
C. TWE, represented by Herbert Smith Freehills, denies the claims made in the Proceeding and has raised a number of defences to the claims.
D. Jones (on his own behalf and on behalf of the Group Members) and TWE have agreed to seek approval of a settlement of the Proceeding from the Federal Court of Australia under section 33V of the Act on the terms set out in this Deed and without any admission of liability by TWE.
E. This Deed has been entered into by Jones for himself and on behalf of Group Members as the representative of Group Members pursuant to Part IVA of the Act.
F. IMF Bentham has provided litigation funding to Jones and certain of the Group Members for the conduct of the Proceeding.
30 Clause 1 is the first clause in that part of the Settlement Deed which is headed “OPERATIVE PROVISIONS”. Clause 1 is headed “Interpretation”. Clause 1.1 contained a number of definitions to which I will return shortly. Clause 1.2 provided as follows:
1.2 In this Deed, unless the contrary intention appears:
(a) the singular includes the plural and vice versa;
(b) headings are for convenience only and do not affect the interpretation of this Deed;
(c) where the day on or by which any thing is to be done is not a Business Day, that thing must be done on or by the next Business Day;
(d) a reference to a document includes any variation, replacement or novation of it;
(e) the meaning of general words is not limited by specific examples introduced by the word “including”;
(f) a reference to a person includes the person’s executors, administrators, successors, substitutes and assigns;
(g) a reference to a group of persons is a reference to any 2 or more of them and each of them individually; and
(h) an agreement, representation or warranty in favour of (or from) 2 or more persons is for the benefit of (or from) them jointly and each of them individually.
31 Clause 2.1 of the Settlement Deed was in the following terms:
2 Settlement Payment
2.1 Subject to the Approval Orders being made and not overturned on appeal, the Parties agree to settle the Proceeding on the following basis:
(a) TWE will pay the Settlement Sum in accordance with clause 3.2; and
(b) the Parties will provide the releases set out in clause 6.
32 The Settlement Sum was defined in cl 1.1. It is a substantial sum. The amount thereof is confidential. The definition of the Settlement Sum expressly includes interest, costs, GST and a relatively small amount payable to Mr Jones as reimbursement for his time and expenses in prosecuting the Jones proceeding. The intention of the parties to the Settlement Deed was that the Settlement Sum should cover all claims made by Mr Jones in the Jones proceeding including his claims for the costs thereof.
33 A Settlement Scheme (as defined in cl 1.1) was required to be established under the Settlement Deed in order to enable the distribution of the Settlement Sum to those entitled (cl 4). There was to be a provision in the Settlement Scheme contemplated by cl 4 of the Settlement Deed which would provide for the payment of Mr Jones’ legal costs and disbursements (including GST) out of the Settlement Sum.
34 The settlement reflected in the Settlement Deed was subject to the approval of the Court (cl 5).
35 Clause 5.1 provided that Mr Jones must apply to the Court for orders approving the form and content of a notice to be given to Registered Group Members (as defined in the Settlement Deed) by which they were to be notified of the settlement and its essential terms. These orders were defined in the Settlement Deed as the “First Orders”.
36 Clauses 5.2, 5.3 and 5.4 provided:
5.2 As soon as practicable after the making of the orders referred to in clause 5.1, Jones shall apply to the Court for the following orders (Approval Orders):
(a) an order pursuant to s 33V of the Act approving the settlement of the Proceeding on the terms set out in this Deed including clause 4.1 above;
(b) an order authorising Jones, nunc pro tunc, to enter into this Deed on behalf of each of the Group Members, pursuant to s 33ZF of the Act;
(c) orders:
(i) dismissing the Proceeding with no order as to costs and vacating all outstanding costs orders made in the Proceeding, subject to that order being stayed until the administration of the Settlement Scheme is complete;
(ii) alternatively, providing that the Proceeding shall be dismissed with no order as to costs and the vacation of all outstanding costs orders made in the Proceeding on the completion of the administration of the Settlement Scheme;
(d) an order appointing Maurice Blackburn as administrator of the Settlement Scheme (Settlement Administrator); and
(e) such other orders as are considered by Jones to be appropriate and necessary to facilitate the fair distribution of the Settlement Sum to Jones and the Registered Group Members (but which have no impact upon the payment by TWE of the Settlement Sum), such as an order for a common fund or for the application of a funding equalisation factor.
5.3 Jones is responsible for tendering such evidence to the Court as may reasonably be required to facilitate the making of the orders referred to in clause 5.2.
5.4 TWE will instruct its legal representatives to do all things that are reasonably necessary and consistent with their professional obligations to enable Jones to obtain the orders referred to in clause 5.2 above.
37 By cl 5.2(c) of the Settlement Deed, the parties agreed that Mr Jones should apply to the Court for an order dismissing the Jones proceeding upon the basis that there be no orders as to the costs thereof and upon the additional basis that all outstanding orders for costs previously made in that proceeding be vacated. Ultimately, this was done and, on 16 August 2018, I ordered that, to the extent necessary:
(a) Mr Jones’ Application be dismissed;
(b) All previous orders for costs be vacated; and
(c) There be no orders as to the costs of the Jones proceeding.
38 Clause 5.2 and the orders which I made on 16 August 2018 reflected the agreement of the parties to the Settlement Deed to the effect that Mr Jones’ costs of the Jones proceeding were to be addressed by cl 4.1(b) and that TWE was to pay its own costs of that proceeding. The Court was asked not to make any orders as to the costs of that proceeding. The Court was content to comply with that request.
39 Clause 5.5(a) and cl 5.5(b) provided:
5.5 Subject to clauses 5.6 and 5.7, after the expiration of the Appeal Period (but not before that time):
(a) clause 6.1 will become operative;
(b) the plea in bar provided in clause 6.2 will become operative;
…
40 Clause 5.5(c), cl 5.5(d) and cll 5.6 to 5.8 are not presently relevant. Clauses 5.6 to 5.8 addressed what was to happen if an appeal against the Approval Orders was filed and if, as a result, those Orders were set aside. In fact, no appeal against the Approval Orders was filed.
41 Clause 6 was in the following terms:
6 Releases and Plea in Bar
6.1 Subject to clause 5.5, upon the making of the Approval Orders and the payment of the Settlement Sum into the TWE Settlement Distribution Account:
(a) the Proceeding, including Jones’ and the Group Members’ claims for damages, compensation, interest and legal and administrative costs and disbursements (present and future) in the Proceeding are fully and finally settled;
(b) Jones, on his own behalf and on behalf of all Group Members, releases and discharges TWE and its Related Parties jointly and severally from:
(i) the claims made by Jones or any Group Member in the Proceeding;
(ii) any claim in relation to the matters which are as at the date of this Deed or were at any time the subject of the Proceeding or any part of the Proceeding or which are raised in the Proceeding; and
(iii) any claim, action, demand, suit or proceeding for damages, debt, restitution, equitable compensation, account, interest, injunction, specific performance or any other remedy that Jones or any Group Member has or may have against TWE and/or any of its Related Parties in relation to the matters the subject of the Proceeding or any part of the Proceeding or which are raised in the Proceeding, whether arising at common law, in equity, or under statute or otherwise;
(c) TWE releases Jones and the Group Members jointly and severally from:
(i) any claim in relation to the matters which are as at the date of this Deed or were at any time the subject of the Proceeding or any part of the Proceeding or which are raised in the Proceeding; and
(ii) any claim, action, demand, suit or proceeding for damages, debt, restitution, equitable compensation, account, interest, injunction, specific performance or any other remedy that TWE and/or any of its Related Parties has or may have against them in relation to the matters the subject of the Proceeding or any part of the Proceeding or which are raised in the Proceeding, whether arising at common law, in equity, or under statute or otherwise;
(d) IMF Bentham:
(i) releases and discharges TWE and its Related Parties jointly and severally from any claim, action, demand, suit or proceeding for damages, debt, restitution, equitable compensation, account, interest, injunction, specific performance or any other remedy that IMF Bentham and/or any of its Related Parties has or may have against them in relation to the matters the subject of the Proceeding, any part of the Proceeding or which are raised in the Proceeding, whether arising at common law, in equity, or under statute or otherwise; and
(ii) agrees not to provide directly or indirectly litigation funding for, or encourage any person to bring, any claim or proceeding against TWE and/or any of its Related Parties arising out of any matters which are or were at any time the subject of the Proceeding, or any part of the Proceeding, or which relates in any way to conduct (including any omission) of TWE at any time in the period from 17 August 2012 to 15 July 2013 (inclusive), except to the extent necessary to give effect to any Funding Agreement; and
(e) TWE releases and discharges IMF Bentham and each of its Related Parties from any claim, action, demand, suit or proceeding for damages, debt, restitution, equitable compensation, account, interest, injunction, specific performance or any other remedy that TWE and/or any of its Related Parties has or may have against them in relation to the matters the subject of the Proceeding, any part of the Proceeding or which are raised in the Proceeding, whether arising at common law, in equity, or under statute or otherwise, and under any deed poll given by IMF Bentham in favour of TWE in relation to or in connection with adverse costs orders in the Proceeding.
6.2 Subject to clause 5.5, the Parties, Group Members and any Related Parties of TWE, may plead this Deed in bar to any claim or proceeding by any other Party bound by this Deed in respect of any claim arising out of or related in any way to the matters which are as at the date of this Deed or were at any time the subject of the Proceeding.
42 A number of expressions used in cl 6 or relevant to a proper understanding of cl 6 were defined in cl 1.1. Each of those expressions and its respective definition is set out below:
Approval Orders means an order or orders of the Court approving the settlement of the Proceeding pursuant to s 33V of the Act on the terms set out in this Deed as set out in clause 5.2.
First Orders has the meaning set out in clause 5.1.
Group Member has the meaning set out in paragraph 1(b) of the 3FASOC other than those persons who have opted out of the Proceeding pursuant to s 33J of the Act and includes, for the avoidance of doubt, those persons, funds or trusts in respect of which the respective Group Member’s acquisition of shares in TWE is the subject of a claim to which the Proceeding relates.
Party means a party to this Deed and, in respect of Jones, both in his own capacity and in his capacity as representative of Group Members pursuant to Part IVA of the Act and for and on behalf of the Group Members.
Registered Group Members means the persons (each of whom is a Group Member) who or which had provided to IMF Bentham the details required by the Class Closure and Claim Preclusion Orders in paragraphs [10] to [13] of the judgment in Jones v Treasury Wine Estates Limited [2017] FCA 296, which details were conveyed to the legal representatives for TWE on or before 7 June 2017.
Related Body Corporate has the meaning given in the Corporations Act 2001 (Cth).
Related Parties means, in respect of a Party, the Related Bodies Corporate of that Party and the present and former directors and officers of that Party.
Settlement Approval Date is the date on which the Court makes the Approval Orders.
43 In the Settlement Deed, “Proceeding” has the meaning given to it in the Recitals. In substance, it is defined as the Jones proceeding.
44 As between Mr Jones and the group members, on the one hand, and TWE, on the other hand, the releases provided in the Settlement Deed are mutual. The text of cl 6.1(b)(ii) and (iii) mirrors the text of cl 6.1(c)(i) and (ii). Of course, given that Mr Jones was the plaintiff in the Jones proceeding, the release which he provided in favour of TWE also covered the claims described in cl 6.1(b)(i). These claims were the claims actually made by Mr Jones in the Jones proceeding. Those claims were distinguished from the broader classes of claims described in subcl (ii) and subcl (iii) of cl 6.1(b). TWE, of course, made no claims in the Jones proceeding. That is why cl 6.1(c) did not contain a clause which mirrored cl 6.1(b)(i).
45 Clause 6.1(a) made clear that the Jones proceeding was “fully and finally settled” upon the terms of the Settlement Deed.
46 The Settlement Deed also addressed other matters designed to facilitate the effectuation of the settlement recorded therein.
47 Clause 11.1 provided:
11 Obligations of the Parties
11.1 The Parties agree to execute all documents, refrain from performing any act incompatible with and to do all acts reasonably necessary to comply with the terms of this Deed, including but not limited to applying for or consenting to the First Orders and the Approval Orders.
48 Clause 13.1 provided:
13 Entire agreement and legal effect
13.1 This Deed is legally binding on the Parties and constitutes the entire agreement of the Parties in relation to the matters the subject of this Deed.
49 Clause 17 was in the following terms:
17 Warranty as to capacity, representations and legal advice
17.1 Each Party warrants that they:
(a) have the legal capacity and power to enter into this Deed and have obtained all necessary consents and approvals to do so; and
(b) have not entered into this Deed in reliance upon any representations by or on behalf of any other Party which are not set out in this Deed.
17.2 Jones warrants that he has authority to enter into this Deed for and on behalf of Group Members as a representative of the Group Members pursuant to Part IVA of the Act.
50 The Settlement Deed is governed by the law of New South Wales (cl 20.1). Each party to the Deed agreed to submit to the jurisdiction of the courts of the State of New South Wales (cl 20.2).
51 That submission to jurisdiction was not exclusive.
The True Construction of Clause 6 of the Settlement Deed
MCI’s Contentions
52 In support of its opposition to the orders which TWE seeks, MCI made the following submissions:
(a) The settlement of the Jones proceeding embodied in the Settlement Deed was approved by the Court on 10 November 2017 by the making of the Approval Orders (see Orders 1, 3 and 4 made on 10 November 2017).
(b) The effect of the orders referred to at subpar (a) above was to make the settlement of the Jones proceeding binding on both MCI (inter alios) and TWE.
(c) Specifically, at par 2 of the Approval Orders, the Court noted that, subject to cl 5.5 of the Settlement Deed, the approval of the settlement would enliven the releases provided for in cl 6.1 of the Settlement Deed and the plea in bar provision set out in cl 6.2 of that Deed.
(d) The claims brought by MCI in each of the proceedings which it instituted against TWE fell squarely within cl 6.1(b)(ii) and cl 6.1(b)(iii) as well as cl 6.2 of the Settlement Deed. In addition, the present claim for costs made by TWE in this proceeding was the subject of releases given by TWE in cl 6.1(c) of the Settlement Deed and was also the subject of the plea in bar provision in cl 6.2 of that Deed.
(e) The construction of cl 6 of the Settlement Deed advanced by MCI is consistent with a settled view concerning the intended breadth of releases granted upon the settlement of group proceedings under Pt IVA of the FCA Act (see Harrison v Sandhurst Trustees Ltd [2011] FCA 541 at [26] per Gordon J; and Caason Investments Pty Ltd v Cao (No 2) [2018] FCA 527 at [19] per Murphy J).
(f) The releases provided in the Settlement Deed are broad and reciprocal. Had TWE wished to preserve any entitlement to recover the costs of this proceeding from MCI, it could have and should have done so through express words in the Deed of Settlement. It did not do so.
(g) In addition, had TWE wished to preserve its entitlement to costs in this proceeding, it could have agreed with MCI in early 2018 that MCI was not a group member in the Jones proceeding. At that time, and at all times thereafter, it argued the contrary proposition.
(h) The Court ought not construe the Settlement Deed without considering the terms and effect of the Approval Orders.
(i) Paragraph 9(a) of the Approval Orders was effective to modify the terms of cl 6 of the Settlement Deed. There is nothing absurd or uncommercial about this.
(j) Paragraph 9(a) of the Approval Orders excepts from the scope of the releases specified in cl 6.1 of the Settlement Deed and the plea in bar provision in cl 6.2 of that Deed any action by any party to the Deed to enforce the provisions of the Deed. That Order was made pursuant to s 33ZF of the FCA Act. As a result, if TWE had sought the costs of the County Court proceeding, it could have done so because the County Court proceeding was a “new” proceeding within the meaning of Order 9(a) and an application for the costs of the County Court proceeding would have fallen within the exceptions specified in Order 9(a) because it would have been an application to enforce the Settlement Deed in that “new” proceeding. I interpolate here to note that this argument was advanced by MCI in order to meet TWE’s contention that MCI’s construction of the Settlement Deed was absurd and uncommercial. Unfortunately, this argument led to further submissions being made by TWE. I do not consider that this argument has any merit. An application by TWE for an order for costs in the County Court proceeding would not have been an application to enforce the Settlement Deed within the meaning of Order 9(a). For this reason, I reject this argument advanced by MCI and do not propose to address it further.
(k) The subject matter of the release provided by TWE in cl 6.1(c) (which was also the subject of the plea in bar provision in cl 6.2) included existing claims and potential claims that might exist which had never been articulated. TWE had never made any substantive claim in the Jones proceeding or in this proceeding so that the most obvious candidate intended to be covered by those provisions was any potential claim which TWE might have for its costs of the Jones proceeding and the costs of this proceeding. This position was confirmed by TWE’s decision not to seek its costs in respect of the County Court proceeding. The Court should infer that, when it settled the County Court proceeding upon the basis that there be no orders as to the costs of that proceeding, TWE recognised that the plea in bar, in particular, operated to prevent TWE from seeking the costs of that proceeding.
(l) The plea in bar provision in cl 6.2 of the Settlement Deed is wider and broader than the release contained in cl 6.1(c) of that Deed. The words “any claim or proceeding … in respect of any claim arising out of or related in any way to the matters which are as at the date of this Deed or were at any time the subject of the Proceeding” are different from and plainly wider than the language used to describe the subject matter of the releases specified in cl 6.1(c). There is no reference to cl 6.1 in cl 6.2. Clause 6.2 constitutes a different and separate answer to TWE’s present claim for costs.
TWE’s Contentions
53 TWE responded to MCI’s submissions as follows:
(a) MCI’s contention that TWE’s present claim for costs is precluded by cl 6.1(c) and cl 6.2 of the Settlement Deed depends upon the Court’s holding that that claim for costs is either:
(i) A claim in relation to “… the matters which [were] as at the date of [the Settlement Deed] or were at any time the subject of [the Jones proceeding] or [the subject of] any part of [the Jones proceeding] or which are raised in [the Jones proceeding]” (cl 6.1(c)(i)); or
(ii) “[A] claim, action, demand, suit or proceeding for … [another] remedy that TWE and/or any of its Related Parties [had as at the date of the Settlement Deed] or [might have had as at that date] against [Jones and/or the Group Members] in relation to the matters the subject of [the Jones proceeding] or any part of [the Jones proceeding] or which [were] raised in [the Jones proceeding]” (cl 6.1(c)(ii)); or
(iii) “[A] claim or proceeding … in respect of any claim arising out of or related in any way to the matters which [were] as at the date of [the Settlement Deed] or were at any time the subject of [the Jones proceeding]” (cl 6.2).
(b) TWE’s present claim for costs does not fall within any of the three types of claim referred to in subpar (a) above because:
(i) That claim for costs relates to, or follows from, TWE’s successful application for an order in this proceeding that this proceeding be permanently stayed. Before that order was made, TWE did not have a basis for seeking its costs of this proceeding. TWE never made a claim in the Jones proceeding that MCI should pay its costs of this proceeding and could not sensibly have done so. The costs of this proceeding always fell to be dealt with by orders to be made in this proceeding.
(ii) This proceeding was permanently stayed because it was an abuse of process in that it was brought for an illegitimate or collateral purpose.
(iii) The reasons for my conclusion that this proceeding constituted an abuse of process are set out in MCI No 1, esp. at 512–514 [156]–[158]. None of the matters constituting those reasons can be said to be matters which were the subject of the Jones proceeding or which were raised in the Jones proceeding.
(iv) Put another way, TWE’s present claim for costs arises from the fact that a permanent stay was ordered by me. That is the “event” which has spawned and is the foundation of TWE’s present claim for costs. TWE’s application for a permanent stay of this proceeding was not a claim which was the subject of the Jones proceeding or which was raised in any way in the Jones proceeding.
(v) MCI’s arguments based upon cl 6.1(c) and cl 6.2 of the Settlement Deed ought to be rejected because TWE’s present claim for costs is not a claim which has a sufficient connection to the matters which were the subject of the various claims made by Mr Jones in the Jones proceeding and thus is not a claim which is precluded by the releases specified in cl 6.1(c) or the plea in bar provision in cl 6.2. Just because the substantive claims made by Mr Jones in the Jones proceeding were the same as those made by MCI in this proceeding does not mean that a claim for costs in this proceeding is a claim made in relation to the subject matter of the Jones proceeding.
(c) In any event, MCI’s arguments lead to an absurd and uncommercial outcome. For example, on the one hand, MCI seeks its costs of the present application before the Court. On the other hand, if its arguments in resisting TWE’s present claim for costs are correct, it would not be entitled to an order for costs in relation to the present application because such a claim would be covered by cll 6.1(a), 6.1(b) and 6.2.
(d) The authorities relied upon by MCI in support of its submission that there is a settled view concerning the intended breadth of releases granted upon the settlement of group proceedings (Harrison v Sandhurst Trustees Ltd and Caason Investments Pty Ltd v Cao (No 2)) do not support that proposition.
Consideration
54 I mention some preliminary matters.
55 MCI relies only upon cl 6.1(c) and cl 6.2 in support of its ultimate proposition to the effect that TWE is precluded from making its present claim for costs. Clauses 6.1(a), 6.1(b) and 6.1(d) are not directly relevant to the present application. Those clauses do, however, form part of the context in which cl 6.1(c) and cl 6.2 are to be construed.
56 MCI did not place any specific reliance upon the terms of cl 11.1 of the Settlement Deed.
57 Although the parties to the Settlement Deed executed that Deed prior to the date when I made the Approval Orders, the principal clauses in the Settlement Deed did not become operative until the Court had approved the settlement as reflected in the Settlement Deed under s 33V of the FCA Act and the time for appealing those Orders had expired or, alternatively, any appeal from those Orders had been ultimately unsuccessful. The obligation imposed upon TWE pursuant to cl 2.1(a) of the Settlement Deed to pay the Settlement Sum was subject to the Approval Orders being made and not being overturned on appeal. The coming into effect of the releases set out in cl 6 was also subject to the Approval Orders being made and not being overturned on appeal (see cll 2.1(b), 5.5(a) and 5.5(b)).
58 No-one interested in the Jones proceeding and/or the two sets of MCI proceedings has ever suggested that I did not have power to make the Approval Orders which, according to their terms, noted that, subject to cl 5.5 of the Settlement Deed, the approval of the settlement would enliven the releases provided in cl 6.1 of the Settlement Deed and the plea in bar provision provided in cl 6.2 of the Settlement Deed and that the persons affected and bound by the settlement were MCI, TWE, the group members, IMF Bentham Limited and Maurice Blackburn Pty Ltd (see par 2 and par 4 of the Approval Orders). Nor has anyone ever suggested that Mr Jones did not have authority to enter into the Settlement Deed on behalf of himself and on behalf of group members in the Jones proceeding.
59 In Farey v National Australia Bank Ltd [2016] FCA 340 (Farey), at [45], Beach J held that the Court has clear statutory power to make an order approving the provision of (inter alia) releases given in favour of a defendant and its related entities in a proceeding instituted under Pt IVA of the FCA Act even if those releases might be perceived to be broader than the claims actually made in the proceeding itself. His Honour relied upon s 33ZF and s 33Z(1)(g) of the FCA Act as the source of such power. His Honour also held that, pursuant to s 33ZB of that Act, any order made under s 33Z(1)(g) would bind accordingly.
60 In the same case, at [46]–[49], his Honour held that, in order to achieve the primary aim of achieving a settlement of the litigation, an applicant in a representative capacity in a proceeding instituted by that applicant under Pt IVA of the FCA Act has implied statutory authority to negotiate and agree to a settlement of that proceeding subject to Court approval and also has such authority to negotiate and agree to ancillary and reasonably tailored and proportionate terms and conditions as part of such a settlement, including broad releases.
61 The reasoning adopted by Beach J in Farey would support such an applicant having authority to agree to broad mutual releases as part of a settlement of a Pt IVA proceeding. Of course, the respondent in such a case would, as was the case with TWE here, usually have full capacity to negotiate and agree a settlement which included broad mutual releases. A respondent would have no need to seek the approval of the Court to its entering into such a settlement.
62 I agree with the opinions of Beach J to which I have referred at [59] and [60] above and propose to follow them in the present case.
63 Here, the parties to the Settlement Deed agreed to provide mutual releases in the terms of cl 6.1 and to authorise expressly each of them (and others) to plead in bar the terms of those releases to any claim or proceeding by any other party bound by the Deed in respect of the specified subject matter.
64 In those circumstances, I have no doubt that, once the Approval Orders were made, the releases in the terms of cl 6.1(b) provided by Mr Jones, purportedly on his own behalf and on behalf of all group members in the Jones proceeding, became operative. For similar reasons, I think that the releases provided by TWE in favour of Mr Jones and all group members in the Jones proceeding jointly and severally in the terms of cl 6.1(c) of the Settlement Deed also became operative once the Approval Orders were made.
65 In the present case, TWE did not submit that the group members (as defined in the Jones proceeding) did not have the benefit of the release provided for in cl 6.1(c) of the Settlement Deed nor did it submit that group members did not have standing to plead the Settlement Deed as an answer to a claim or proceeding falling within cl 6.2 of that Deed. Its case was that, upon the true construction of those clauses, MCI was not released and discharged from TWE’s present claim for costs.
66 Ultimately, the only issue between the parties to the present application was the issue of construction which I identified at [10(f)] above.
67 I shall now turn to consider that question of construction.
68 I have set out cl 6 at [41] above and the Approval Orders at [19] above.
69 There are two separate releases in cl 6.1(c). The first is provided for in cl 6.1(c)(i) and the second is found in cl 6.1(c)(ii). There may be some overlap between the scope of each of those releases.
70 That which is released pursuant to cl 6.1(c)(i) is “any claim” of the kind more particularly described in the balance of that subclause. That which is released pursuant to cl 6.1(c)(ii) is “any claim, action, demand, suit or proceeding” of the kind more particularly described in the balance of that subclause. That which is the subject of the plea in bar provision in cl 6.2 is “any claim or proceeding” by a party to the Settlement Deed of the kind more particularly described in the balance of that clause.
71 Thus, the first requirement of all three clauses is the making of a claim (cl 6.1(c)(i)) or a claim or something akin to a claim (cl 6.1(c)(ii) and cl 6.2).
72 Subject to satisfying the requirements of cll 6.1(c)(i), 6.1(c)(ii) and 6.2 as to the type of claim that was to be released, TWE’s present claim for costs would qualify as a “claim” within the meaning of each of cll 6.1(c)(i), 6.1(c)(ii) and 6.2.
73 The type of claim with which cl 6.1(c)(i) is concerned is a claim “in relation to [certain] matters”. Those “matters” are matters which “are as at the date of [the Settlement Deed] [12 September 2017] or were at any time the subject of [the Jones proceeding] or … which are raised in [the Jones proceeding]”.
74 The type of claim with which cl 6.1(c)(ii) is concerned is a claim “that TWE and/or any of its Related Parties has or may have against [Mr Jones and the Group Members] in relation to the matters the subject of [the Jones proceeding] … or which are raised in [the Jones proceeding] …” howsoever arising.
75 Clause 6.2 authorises a plea in bar to “… any claim … by any other Party bound by this Deed [including, for example, TWE] in respect of any claim arising out of or related in any way to the matters which are as at the date of [the Settlement Deed] [12 September 2017] or were at any time the subject of the [Jones proceeding]”.
76 A concept common to all three clauses is that which is captured by the language “… matters which are the subject of [the Jones proceeding] or which are raised in that proceeding”.
77 In WDR Delaware Corporation v Hydrox Holdings Pty Ltd (2016) 245 FCR 452 (WDR), when considering the meaning of “matter” in s 7(2)(b) of the International Arbitration Act 1974 (Cth), I said (at 470–472 [102]–[112]):
In order to ascertain whether the Court is obliged to grant a stay pursuant to s 7(2)(b) of the IAA, it is incumbent upon the Court first to decide whether the Court proceeding involves the determination of a matter that, in pursuance of the [arbitration] agreement, is capable of settlement by arbitration.
A similar enquiry is required by Art 8 of the Model Law. The language is different but the substance of the enquiry is the same.
How then does the Court identify the matter or matters the subject of the Court proceeding in order to then go on to determine whether some or all of those matters are arbitrable?
The word “matter” in s 7(2)(b) of the IAA is not used in the constitutional sense (Tanning Research Laboratories Inc v O’Brien (1990) 169 CLR 332 (Tanning) at 351 per Deane and Gaudron JJ and Comandate at 105–106 [235] per Allsop J).
Ordinarily, the nature and extent of the “matters” involved in a Court proceeding are to be ascertained from the pleadings and from the underlying subject matter upon which the pleadings, including any defence, are based (Robotunits at 311–312 [19]). As Deane and Gaudron JJ said in Tanning (at 352), the enquiry is to ascertain the substance of the controversy between the parties in the court proceeding or, as was submitted by Woolworths, the substantive questions in dispute. These may not necessarily be the same as the ultimate questions for determination in the proceeding (Recyclers of Australia Pty Ltd v Hettinga Equipment Inc (2000) 100 FCR 420 at 426 [18] per Merkel J).
The matters to be determined in any given proceeding are distinct from the proceeding itself and multiple matters may exist within the one legal proceeding. As Woolworths submitted, this important aspect is recognised by the terms of s 7(2) itself.
In the present case, the Court must look to the Originating Process, the Concise Statement and Mr O’Neale’s first affidavit in order to ascertain the matter or matters the subject of the proceeding.
In Tanning, Deane and Gaudron JJ said (at 351–352):
Even if some issue in addition to the amount of enforceable indebtedness must be determined before the proof of debt proceedings can be finally decided, that would not oust the operation of s. 7(2) of the Act. By requiring that the proceedings or so much of the proceedings as involves the determination of a matter capable of settlement by arbitration be stayed, s. 7(2) clearly contemplates that the proceedings may encompass issues additional to those constituting “a matter ... capable of settlement by arbitration”. See Flakt Australia Ltd. v. Wilkins & Davies Co. Construction Ltd. [[1979] 2 N.S.W.L.R. 243]); Allergan Pharmaceuticals Inc. v. Bausch & Lomb Inc. [(1985) 7 A.T.P.R. 40-636]. The word “matter” is not defined in the Act. In the quite different context of Ch. III of the Constitution, it has been held that the word “matter” means “the whole matter” and encompasses “all claims made within the scope of the controversy”: Fencott v. Muller [(1983) 152 C,.L.R. 570, at p. 603]. See also Philip Morris Inc. v. Adam P. Brown Male Fashions Pty. Ltd. [(1981) 148 C.L.R. 457, at p. 475]. However, in any context, “matter” is a word of wide import. In the context of s. 7(2), the expression “matter ... capable of settlement by arbitration” may, but does not necessarily, mean the whole matter in controversy in the court proceedings. So too, it may, but does not necessarily encompass all the claims within the scope of the controversy in the court proceedings. Even so, the expression “matter ... capable of settlement by arbitration” indicates something more than a mere issue which might fall for decision in the court proceedings or might fall for decision in arbitral proceedings if they were instituted. See Flakt [1979] 2 N.S.W.L.R., at p. 250]. It requires that there be some subject matter, some right or liability in controversy which, if not co-extensive with the subject matter in controversy in the court proceedings, is at least susceptible of settlement as a discrete controversy. The words “capable of settlement by arbitration” indicate that the controversy must be one falling within the scope of the arbitration agreement and, perhaps, one relating to rights which are not required to be determined exclusively by the exercise of judicial power. See Mustill and Boyd, Law and Practice of Commercial Arbitration in England, 2nd ed. (1989), pp. 149-150, where it is noted that “English law has never arrived at a general theory for distinguishing those disputes which may be settled by arbitration from those which may not” but that the powers of an arbitrator “are limited by considerations of public policy and by the fact that he is appointed by the parties and not by the state”.
The substance of the controversy between T.R.L. and the liquidator is the amount, if any, enforceable as a debt for goods sold and delivered to Hawaiian under the licence agreement. That controversy is susceptible of settlement as a discrete controversy. And, when stated in those terms, the controversy is readily seen as one arising out of or relating to the licence agreement and thus encompassed within the agreement to arbitrate contained in cl. 10. Moreover, the controversy is as to a matter of a kind which is frequently the subject of arbitration proceedings and which could not be said to require determination only by the exercise of judicial power.
A “matter” for the purpose of s 7 of the IAA may or may not comprise the whole subject matter of any given proceeding. A “matter” is something more than a mere issue or question that falls for decision (Tanning at 351 per Deane and Gaudron JJ; and Flakt Australia Ltd v Wilkins & Davies Construction Co Ltd [1979] 2 NSWLR 243 at 250 per McLelland J).
As submitted by the plaintiffs, the Court must first identify the “matter or matters” to be determined in the proceeding before asking whether those matters fall within the scope of the arbitration agreement and, if so, whether they are arbitrable.
The plaintiffs argued that, in the present case, there is, in substance, only one matter involved in the proceeding for the purpose of s 7 of the IAA, namely, whether Hydrox should be wound up on either of the statutory bases relied upon by the plaintiffs. The plaintiffs contended that difficulties arise if one attempts to parse the proceeding into separate, subsidiary matters. They went on to submit that the Court is being asked to exercise a power, a pre-condition to which is the formation of an opinion of the Court as to the appropriateness of the relief. Under s 233 of the Corps Act, the Court is directed to form such an opinion by the use of the word “considers” in the chapeau to s 233(1) and under s 461(1)(k) of the Corps Act the Court is required in direct terms to form an opinion that the company should be wound up.
78 I appreciate that, in WDR, I was considering the meaning of the word “matter” in a specific statutory context. Nonetheless, I consider that the reasoning which I employed in order to arrive at the correct meaning of that word in s 7(2)(b) of the International Arbitration Act 1974 (Cth) in that case is helpful in interpreting the phrases in cll 6.1(c)(i), 6.1(c)(ii) and 6.2 which I have highlighted at [73]–[76] above.
79 Accordingly, the enquiry required here by the use of the phrase “matters (etc)” is to identify the substance of the controversy between the parties in the Jones proceeding or the substantive questions in dispute in that proceeding. In this context, a “matter” is something more than a mere issue or question that falls for decision.
80 In order to identify the relevant matters which were the subject of the Jones proceeding or which were raised in that proceeding, the Court must look to the pleadings and to any particulars provided of the allegations made in those pleadings. In order to assist the Court in this regard, TWE tendered in support of its present application for costs the Third Further Amended Statement of Claim and the Second Further Amended Defence filed in the Jones proceeding. These pleadings were the most recently filed pleadings in the Jones proceeding prior to its settlement. TWE did not file any Counterclaim or Cross-Claim in the Jones proceeding. Nor did it ever file such a document in this proceeding.
81 Mr Jones’ Statement of Claim in the Jones proceeding was lengthy and complex. It is neither necessary nor desirable to traverse that pleading in detail. It is sufficient for present purposes to give a brief description of the case which Mr Jones sought to make in the Jones proceeding.
82 Mr Jones’ principal allegation in the Jones proceeding related to TWE’s Australian Securities Exchange Release dated 15 July 2013 in which it announced that it expected to make substantial provisions in its accounts for the Financial Year ended 30 June 2013. In that Release, TWE said that it expected to achieve lower earnings growth for the 2013–2014 Financial Year arising from actions which it had determined it would take in respect of wine inventory held by its US distributors. Mr Jones alleged that, until it issued the ASX Release of 15 July 2013, TWE had, for some time, persistently overvalued that inventory.
83 In particular, Mr Jones alleged that, in August 2012, TWE made a number of misleading statements as to the value of inventory held by its US distributors and thereafter made several additional misleading statements to the same effect. Mr Jones alleged that TWE should have disclosed in August 2012 (at the latest) the true position concerning the value of the wine inventory held by its US distributors. Mr Jones went on to allege that, by reason of TWE’s misleading and deceptive conduct and its unlawful failure to disclose the true position, the share price of shares in TWE in the period from 17 August 2012 to 15 July 2013 was greater than the true value of those shares in that period. In sum, Mr Jones alleged that he and the other group members suffered loss or damage as a result of TWE’s unlawful conduct being the difference between the price paid by him and the true value at the time of the relevant shares.
84 The substance of the dispute raised by MCI against TWE in this proceeding is virtually identical to the substance of the controversy raised by Mr Jones in the Jones proceeding. Furthermore, the definition of the relevant group in this proceeding is identical to the definition of the relevant group in the Jones proceeding. The group members were defined in both proceedings as those persons who obtained an interest in ordinary shares in TWE during the period from 17 August 2012 to 9.30 am on 15 July 2013 by the purchase of those shares on the financial market operated by Australian Securities Exchange Limited and who suffered loss and damage by reason of TWE’s allegedly unlawful actions.
85 There is no doubt that the matters the subject of the Jones proceeding or which were raised in that proceeding are essentially the same matters which are the subject of this proceeding or which are raised in this proceeding.
86 Returning to cl 6.1(c)(i) and cl 6.1(c)(ii), the next phrase which must be considered is the phrase “in relation to”. This phrase operates as the connecting mechanism between the “matters” referred to in each of those subclauses and the “claims” which are caught by those subclauses.
87 The expression “in relation to” is an expression of wide import designed to catch things which have a sufficient nexus to the subject matter under consideration. The sufficiency of the nexus is dependent upon the context. In the end, it is a question of degree. There must be some association which is both relevant and appropriate. Although the interpretation of the phrase “in relation to” which I have summarised in the last sentence is derived from cases dealing with the use of the phrase in a statutory context (in particular, see Travelex Ltd v Commissioner of Taxation of the Commonwealth of Australia (2010) 241 CLR 510 at 519–520 [25]–[27] per French CJ and Hayne JJ and at 533–534 [90]–[91] and at 537 [105] per Crennan and Bell JJ; and PMT Partners Pty Ltd (In Liq) v Australian National Parks and Wildlife Service (1995) 184 CLR 301 at 313 per Brennan CJ and Gaudron and McHugh JJ and at 330–331 per Toohey and Gummow JJ), the observations of the High Court to which I have referred are nonetheless apt in assisting me to determine the meaning of the expression in the present case.
88 The releases provided by TWE in favour of Mr Jones and the group members in the Jones proceeding (including, as I have said, MCI) are from claims which have a sufficient connection to the subject matter of the Jones proceeding.
89 If I look to that subject matter and to the context in which the releases by TWE were given in the Settlement Deed, is TWE’s present claim for costs in this proceeding a “claim in relation to the matters the subject of the Jones proceeding or raised in the Jones proceeding” and thus a claim which was released by TWE when it agreed to cl 6.1(c) and cl 6.2 of the Settlement Deed and consented to the making of the Approval Orders?
90 In Grant v John Grant & Sons Pty Ltd (1954) 91 CLR 112 (Grant), the majority (Dixon CJ and Fullagar, Kitto and Taylor JJ) said (at 123–124):
The replication clearly enough depends upon a construction of the release which confines it to the subject matter of the disputes between the H.C. Grant and W.A. Grant families which the recital says they resolved to settle on the terms and conditions contained in the deed. The principle relied upon is that adopted by the common law long ago for the restriction of wide general words in a release of obligations, viz. that the general words of a release should be restrained by the particular occasion: Knight v. Cole [(1690) 3 Lev. 273 [83 E.R. 686]]. Thus the general words of a release are to be restrained by the particular recital: Payler v. Homersham [(1815) 4 M. & S. 423 [105 E.R. 890]]. As it is concisely expressed by Best J. in Lampon v. Corke [(1822) 5 B. & Ald. 606, at p. 611 [106 E.R. 1312, at p.1314]: “If there be introductory matter, that will qualify the general words of the release.”
The conclusion reached by the Supreme Court upon this replication means that even when the release clause in the deed is construed according to the foregoing principles the release is not necessarily confined to the disputes referred to in the particular recital. The correctness of this decision upon the first replication is brought before us by a cross-appeal on the part of the plaintiff.
The second replication is based upon a different conception of the circumstances which should provide the means of restricting the generality of the release. It depends upon the simple allegation that there never at any material time was any dispute between the plaintiff and the defendant concerning the moneys claimed in or the subject matter of the suit. The difference between the two replications lies in the difference between controlling the general words by reference to the express recital and controlling them by reference to the disputes which existed between the actual releasor (in this case the plaintiff) and the releasee (the defendant).
The principle which it is thus sought to apply was expressed by Lord Westbury in London & South Western Railway Co. v. Blackmore [(1870) L.R. 4 H.L. 610] as follows: “The general words in a release are limited always to that thing or those things which were specially in the contemplation of the parties at the time when the release was given” [(1870) L.R. 4 H.L., at p.623]. It was expressed by Taunton J. in Upton v. Upton [(1832) Dow. P.C. 400; 36 R.R. 817] in this way: “ … the general words of a release may be limited by the particular matter out of which the release springs and the particular intent of the parties by whom the release is executed [(1832) Dow. P.C., at p.406: 36 R.R., at p.821]”.
91 The majority in Grant went on (at 123–124) to observe that there is also an equitable principle which prevents the unconscientious reliance upon the general words of a release by restricting those general words “… to that thing or those things which were specially in the contemplation of the parties at the time when the release was given”. See also the observations of the majority at 129–130 where, amongst other things, their Honours said (at 130):
It may at once be conceded that there may be cases where the reasons for precluding the defendants from relying upon the release go to validity of the contract or where it would not be in accordance with the principles of equity to deny to the defendant his legal right under the release except as part of a rescission of the whole transaction. But they are cases depending on mistake, failure in a duty of disclosure, misrepresentation or other ground of avoidance. They are not cases depending on the equity to have the general words of a release confined to the true purpose of the transaction ascertained from the scope of the instrument and the external circumstances.
92 These notions have underpinned the law as to the interpretation of deeds of release for a long time. See, for example, Morrison RJA and Goolden HJ (eds), Norton RF: A Treatise on Deeds (2nd Ed, 1928 (Reprinted 1981)) at 208–210 of the 2nd Ed.
93 The parties to the Deed of Settlement specifically addressed the way in which the costs of the Jones proceeding were to be dealt with. All orders for costs which had been made in that proceeding prior to 12 September 2017 were to be vacated and the proceeding was ultimately to be dismissed upon the basis that there were to be no orders as to the costs thereof (cl 5.2(c)). The costs incurred by Mr Jones were to be compensated for as part of the Settlement Sum, that sum being a costs inclusive payment. See, in particular, the definition of “Jones’ Costs” in cl 1.1 and the terms of cl 4.1(b). In effect, Mr Jones and TWE were obliged to pay their own costs of the Jones proceeding.
94 The Recitals in the Settlement Deed confine the subject matter of that Deed to the settlement of the Jones proceeding.
95 In any event, although this proceeding was, for all intents and purposes, defunct by July 2017, at the date when the parties settled the Jones proceeding, TWE had not made nor foreshadowed a general claim for costs in this proceeding. That claim came much later—at the end of 2018. For all the parties to the Settlement Deed knew, such a claim might never be made.
96 Taking into account the matters to which I have referred at [87]–[95] above, I think that neither Mr Jones nor TWE had in contemplation as at 12 September 2017, when they executed the Settlement Deed, that the releases given by TWE in cl 6.1(c) should cover what was then, at best, a possible future claim against MCI for the costs of this proceeding. The text of cl 6.1(c)(ii) does not specifically mention costs and is appropriately confined to substantive claims for substantive remedies. While the text of cl 6.1(c)(i) might cover costs, as a category of claim caught by that clause, it must be remembered that the costs of the Jones proceeding were specifically dealt with elsewhere in the Settlement Deed. The terms of the Recitals in the Settlement Deed do not support the proposition that cl 6.1(c)(i) was intended, by its very general language, to encompass TWE’s present claim for costs in this proceeding.
97 Clause 6.1(c) was probably inserted in the Settlement Deed for more abundant caution in order to ensure that TWE could not make any substantive claims in the future against Mr Jones or the group members arising out of the matters raised in the Jones proceeding. Clause 6.1(c)(i) might cover a claim for costs by TWE against Mr Jones and the group members in the Jones proceeding, although that prospect is far from certain.
98 TWE’s present claim for costs does not have a sufficient connection to the subject matter of the Jones proceeding to bring it within the scope of the releases provided by TWE in cl 6.1(c) of the Settlement Deed. That claim has only been possible as a result of the permanent stay which I granted on 5 July 2016 and as a result of the other events which occurred thereafter in relation to MCI’s attempts to overturn my decision. TWE’s present claim for costs does not arise from any adjudication by the Court in relation to the substantive claims made by Mr Jones in the Jones proceeding or from any agreement made between the parties to that proceeding. Nor does it follow from any claim made by TWE in the Jones proceeding.
99 Clause 6.2 uses slightly different language to describe the scope of the plea in bar provided therein. The bar is to “… any claim … in respect of any claim arising out of or related in any way to the matters …” the subject of the Jones proceeding. A plea in bar is a pleading which may legitimately be propounded as a complete answer to a claim.
100 MCI submitted that, in the case of claims by TWE, cl 6.2 covered a wider set of matters than those covered by cl 6.1(c). It submitted that its right to rely upon cl 6.2 was not dependent upon the Court being satisfied that the cl 6.1(c) releases were operative in relation to any particular claim under consideration.
101 I do not accept MCI’s submissions to this effect. I think that the parties to the Settlement Deed intended that cl 6.2 would specifically authorise a plea in bar to those claims which had been released pursuant to the Settlement Deed, that is to say, those claims released pursuant to cl 6.1. The particular clause in the Settlement Deed which specified the terms of the releases to be given by the various parties to that Deed was cl 6.1. All that cl 6.2 was intended to do was to make clear that, in circumstances where the cl 6.1 releases had become operative, a party to the Settlement Deed (and certain others, including group members) could plead the releases in bar to such claims. That which was specifically authorised by cl 6.2 to be pleaded in bar was “… this Deed”. That which is contemplated as being the subject of that plea is the releases in cl 6.1. I do not agree with MCI that the scope of the plea in bar provision in cl 6.2 is different from and wider than the scope of the releases provided for in cl 6.1 nor do I agree that cl 6.2 itself constitutes a separate and broader release than the releases specified in cl 6.1.
102 I am not persuaded that MCI’s submissions based upon the existence of the County Court proceeding, the issues raised therein or the circumstances in which that proceeding was settled (as to which, see [52(k)] above) have any relevance to the present dispute between the parties.
103 Nor do I think that the authorities relied upon by MCI in support of the proposition that there is a settled view that releases provided as part of a settlement of class action proceedings should be construed broadly (Harrison v Sandhurst Trustees Ltd and Caason Investments Pty Ltd v Cao (No 2)), support such an unqualified proposition. Each release must be construed according to its terms in the circumstances in which it was given.
Conclusion
104 For the reasons which I have explained, I do not think that TWE is precluded by cl 6.1(c) or cl 6.2 of the Settlement Deed from making and prosecuting its present claim for costs.
105 As no other basis for resisting that claim was advanced by MCI, it follows that TWE is entitled to its costs as sought.
106 The issues that remain for consideration at a later date are:
(a) Whether MCI should pay TWE’s costs of TWE’s present application for costs on an indemnity basis; and
(b) Whether TWE’s costs should be paid on a lump basis in lieu of taxation.
107 The matter will be listed next week for further case management in order to address the resolution of those issues.
I certify that the preceding one hundred and seven (107) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster. |
Associate:
Dated: 30 May 2019
