FEDERAL COURT OF AUSTRALIA

Calinoiu v QLD Law Group – A New Direction Pty Ltd [2019] FCA 2194

ORDERS

ON THE UNDERTAKING TO THE COURT by the respondent that it will not raise against any Group Member who makes a claim against the respondent to which the proceeding relates any assertion that such claim is the subject of a time limitation that is inconsistent with s 33ZE of the Federal Court of Australia Act 1976 continuing to have effect for the period from the commencement of the proceeding to the date of this order notwithstanding that the proceeding has been dismissed.

THE COURT ORDERS THAT:

1.    The interlocutory application filed by the respondent on 23 September 2019 be dismissed.

2.    The interlocutory application filed by Katherine O'Brien on 28 October 2019 be dismissed.

3.    The interlocutory application filed by the applicant on 4 November 2019 be dismissed.

4.    The proceeding be discontinued.

5.    All existing costs orders be discharged.

6.    There be no order as to costs.

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

Schedule

No: NSD1477/2018

Federal Court of Australia

District Registry: New South Wales

Division: General

First Third Party    JOHN DAVID O’BRIEN T/AS O’BRIEN LAWYERS

Second Third Party    JOHN DAVID O’BRIEN

Third Third Party    KATHERINE O'BRIEN

Fourth Third Party    GABRIEL BOGDAN CALINOIU

REASONS FOR JUDGMENT

(Revised from the Transcript)

LEE J:

1    Before the Court are three interlocutory applications filed in a class action. Since the commencement of the class action, there have been a number of applications either made or foreshadowed to either: (a) challenge the proper constitution of the proceeding as a class action; (b) strike out the proceeding; (c) “declass” the proceeding under s 33N of the Federal Court of Australia Act 1976 (Cth) (Act); or (d) dismiss the proceeding as constituting an abuse of process.

2    It is unnecessary for the purposes of these reasons to go into any of the detail of the current applications because the parties have reached an agreement to resolve their differences subject to the approval of the Court under s 33V of the Act. As is well known, s 33V provides that a representative proceeding may not be settled or discontinued without the approval of the Court. The present settlement is one which provides for a discontinuance of the proceeding and hence requires approval.

3    The criteria the Court considers relevant to settlement approval have been developed through the case law which has been repeated on numerous occasions. It would amount to surplusage for me, yet again, to rehearse the principles in any detail. One principle that needs to be borne steadily in mind is what Finkelstein J referred to in Lopez v Star World Enterprises Pty Ltd [1999] FCA 104; (1999) ATPR 41-678 as the “principal task” of the Court, which is to assess whether the compromise is a fair and reasonable compromise.

4    Both Finkelstein J’s remark (and most of the cases that have considered the approval of settlements) are concerned with assessing a compromise, which involves a distribution of a settlement sum to group members and assessing that sum against the perceived strength of group member claims. This is a different type of application because there is no part of the settlement agreement which seeks to deal with group member claims on a final basis; leaving those claims able to be agitated to the extent that they are worthwhile outside the context of a representative proceeding.

5    The nature of the proceeding, expressed very broadly, was that a personal injury law firm had entered into costs agreements contrary to the provisions of the Legal Profession Act 2007 (Qld) and hence were unenforceable. A variety of common questions were identified and relief was sought, which flowed from this central proposition. It is unnecessary for me to express any views about the ultimate merits or otherwise of such claims.

6    Recently, in Motlap v East Coast Lawyers Pty Ltd [2019] QSC 183, Henry J was faced with a not dissimilar proceeding under the cognate state class action regime (Pt 13A of the Civil Proceedings Act 2011 (Qld)). His Honour concluded that it was inappropriate that such claims continued as a representative proceeding. Obviously, the reasons for making an early declassing order in that case were entirely case dependent, as his Honour’s reasons make clear. In the circumstances of this case, at least initially, I was satisfied that it was appropriate that claims be pursued by way of a proceeding under Part IVA (largely because I thought there was a common question relating to the validity of a costs agreement which may be of some utility to determine prior to any declassing).

7    Despite this, there were important and complex questions that did arise as to the circumstances in which this proceeding was commenced and maintained, at least initially. Given the fact the parties have settled, it is unnecessary for me to detail these issues or express any views because, at the time the settlement occurred, the evidence had not yet concluded. It suffices for me to note that I consider the settlement struck between the parties as a sensible resolution of their claims inter se. That just leaves the position of the group members.

8    It is clear that any group member who wishes to agitate a claim similar to that previously advanced by the applicant, has a right to do so both in contract and also by reason of invoking the procedures set out in the Legal Profession Act 2007 (Qld) to maintain a dispute relating to the costs charged by their solicitors. The only prejudice that I can see flowing to group members from the settlement, is the fact that some may now have claims which have reached the very end of the applicable limitation period. The reason this operates an unfairness, is that the limitation periods with respect to those group members’ claims were suspended, pursuant to s 33ZE(1) of the Act, upon the commencement of the class action. Now upon the finalisation of the class proceedings, the limitation period will again commence to run (s 33ZE(2)). Hence the limitation protection enjoyed during the currency of the proceeding will be lost upon finalisation of the class action without notice, such that a claim which was able to be maintained in the class action, could not be maintained in a separate action unless it was to be commenced prior to the expiry of the recommenced limitation period.

9    Mr Looney QC who appears on behalf of the respondent has informed the Court that he has instructions to proffer an undertaking to the Court that the respondent will raise no issue concerning the expiry of a limitation period that would have occurred but for the tolling of the limitation period. That is, the period of currency of the class action, will notionally be “added on” to the applicable limitations period applying to any individual claim that may be made in the future (if such an eventuality was to occur). This seems to me to address any prejudice that may be occasioned to any group member by reason of the settlement.

10    In all the circumstances, I am satisfied that approval should be granted to the discontinuance of the proceeding and will make orders giving effect to the settlement agreement.

Associate:

Dated:    7 January 2020