Federal Court of Australia

Brett Cattle Company Pty Ltd v Minister for Agriculture (No 3) [2020] FCA 1628

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to s 33X(5) of the Act, the form and content of the notice attached as Appendix A to these orders (the Notice) be approved for distribution to Group Members.

2.    On or before 29 October 2020, the Applicant through its solicitors cause the Notice to be sent by email or prepaid post to persons who are on the mailing lists maintained by the following organisations:

(i)    National Farmers' Federation (NFF);

(ii)    The Northern Territory Cattlemen's Association (NTCA); and

(iii)    Australian Livestock Exporters Council (ALEC).

3.    On or before 29 October 2020, the Applicant through its solicitors cause the Notice to be advertised in:

(i)    The NT News;

(ii)    The Courier Mail;

(iii)    The Queensland Country Life;

(iv)    The West Australian;

(v)    The Australian;

(vi)    The Land;

(vii)    Farm Weekly; and

(viii)    Beef Central.

4.    On or before 29 October 2020, the Applicant through its solicitors request that the Notice be published on each of the following websites:

(i)    the Federal Court of Australia website (https://www.fedcourt.gov.au/);

(ii)    the NFF website (www.nff.org.au/);

(iii)    the NTCA website (www.ntca.org.au/); and    

(iv)    the ALEC website (http://auslivestockexport.com/).

5.    The parties confer and provide a brief written report to the Judge’s associate every 5 weeks updating his Honour on the steps undertaken and the general progression of the matter with the first report to be provided on or before 13 November 2020.

6.    The matter be listed for a case management hearing on 11 December 2020.

7.    The parties have liberty to apply.

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

APPENDIX A

FEDERAL COURT OF AUSTRALIA

NOTICE TO GROUP MEMBERS

Live Cattle Trade Ban Class Action

Brett Cattle Company Pty Ltd v Minister for Agriculture & Anor

NSD 1102 of 2014

1.    Why is this notice important?

On 2 June 2020, the Federal Court of Australia found in favour of the Lead Applicant, Brett Cattle Company Pty Limited in representative proceedings (also known as a 'class action') before the Federal Court brought against the former Minister for Agriculture, Forestry and Fisheries Senator Joe Ludwig and the Commonwealth of Australia (the Respondents).

In the judgment, the Court found that Brett Cattle suffered loss due to the former Minister’s invalid decision to temporarily suspend the trade of live cattle to the Republic of Indonesia on 7 June 2011 (the live cattle trade ban). In that judgment the Court also answered several questions which are likely to be common to all claims brought by members of the class who were affected adversely by the live cattle trade ban. The Court found that the former Minister committed the tort of misfeasance in public office. It also found that if the former Minister had acted as he should have, at least an additional 88,000 head of live cattle would have been exported to Indonesia in 2011. This notice explains which persons may be members of the class and the nature of the claims they might make.

The action was brought by Brett Cattle on its own behalf and on behalf of members of the class.

The Court has ordered this notice be published for the information of persons who might be members of the class and who may now be able to apply to receive compensation in this class action. You should read this notice carefully. Any questions you have concerning the matters contained in this notice should not be directed to the Court. If there is anything in it that you do not understand, you should seek legal advice.

2.    Class action judgment

A class action is a Court proceeding that is brought by one person (the Applicant) on his or her or its own behalf and on behalf of a group of people (Group Members) against other persons (the Respondents) where the Applicant and the Group Members have similar claims against the Respondents.

The Applicant in a class action does not need to seek the consent of Group Members to commence a class action on their behalf or to identify a specific Group Member. Group Members are bound by the judgment of the class action unless they have opted out of the proceeding. The opt out period closed on 1 April 2016.

This means that Group Members who have not opted out of the proceedings may be eligible for a share of the Court-awarded damages which are yet to be determined. This Notice provides important information about what you need to do if you wish to participate in the class action and seek to have your claim for damages determined by the Court.

3.    Are you a Group Member?

You have received this notice because you may be a Group Member in the Live Cattle Trade Ban class action against the Respondents.

You are a Group Member if:

(a)    on or around 7 June 2011, you derived financial benefit from:

(i)    producing cattle in Australia which were sold for live export to the Republic of Indonesia ('Producers');

(ii)    exporting cattle from Australia to the Republic of Indonesia ('Exporters'); or

(iii)    providing transport services, mustering services, feed, agistment and/or other incidental services to Producers and/or Exporters ('Service Providers');

(b)    you suffered loss and or financial harm or damage as a result of the Export Control (Export of Live-stock to the Republic of Indonesia) Order 2011; and

(c)    you did not opt out of the proceedings.

If you are unsure whether or not you are a Group Member, you should contact Mr Andrew Gill on (02) 6225 3347 or email livetradeclassaction@minterellison.com and/or seek your own legal advice without delay.

4.    Funding arrangements

Brett Cattle entered into an arrangement with the Australian Farmers' Fighting Fund (AFFF) for the AFFF to fund Brett Cattle’s legal costs and disbursements in the proceedings. Pursuant to those arrangements, the AFFF has paid the Brett Cattle’s legal costs and out of pocket expenses (disbursements) of the class action. Brett Cattle’s lawyers were MinterEllison.

Some Group Members (Funded Group Members) have entered into litigation funding arrangements with the AFFF, to fund the costs of the claims brought on their behalf in the proceedings, in return for the payment of a commission of 10 per cent of whatever they ultimately recover through these proceedings either by way of settlement or judgment.

5.    Individual Claims for compensation

In its judgment of 2 June 2020, the Court has answered several questions on issues that are likely to apply to all claims that Group Members may have. Individual Group Members can now elect to have their individual claims for damages determined. Individual damages claims may be 'settled' through negotiation and agreement with the Respondents or, if no settlement is reached, they may be the subject of determination by the Court.

If you are a Group Member and you wish to bring forward your individual claim for damages, you will need to supply to the Respondents evidence of your losses. There are two ways you can proceed.

Option A

You can retain MinterEllison to assist you with the preparation of your evidence and to advance your individual loss claims. If you elect to proceed to have your claims determined and retain MinterEllison to assist you with the preparation of your individual loss claims, the AFFF is prepared to pay the legal costs incurred on your behalf in presenting your individual claims provided you enter into a litigation funding agreement with the AFFF. Those arrangements will provide for the AFFF to pay MinterEllison’s legal costs and disbursements incurred in preparing your evidence and acting as your lawyers. In return, you must agree to pay to the AFFF 10 per cent of any judgment or settlement of your claim and, if your claim for damages is successful, any legal costs that you might otherwise have to pay (as explained in Section 6 below). If your claim for damages is not successful you will not have to pay any legal costs.

Entry by Group Members into litigation funding arrangements with the AFFF would not be the subject of the Australian Financial Services Licence and managed investment scheme regulations that now apply to litigation funding schemes entered into on or after 22 August 2020 (pursuant to the Corporations Amendment (Litigation Funding) Regulations 2020 (Cth)).

Option B

Alternatively, you can prepare and advance your individual damages claim yourself, and may choose to retain a lawyer of your choice in order to assist and represent you in the preparation and advancement of that claim.

For those Group Members who chose Option B (as described further in Section 6 below), the AFFF intends to seek orders that those Group Members contribute from any recovery they obtain through settlement or a judgment:

•    their proportionate share (on a pro rata basis) of the costs incurred by Brett Cattle in the proceedings so far, which have to date been paid by the AFFF; and

•    10 per cent of any recovery to which they become entitled.

6.    Intention to seek a Cost Equalisation Order and Common Fund Order

Regardless of whether you choose to retain MinterEllison in respect of your individual loss claims, or whether you choose to advance your individual loss claims yourself, Brett Cattle intends to seek a cost equalisation order from the Court. Such an order operates by calculating the dollar-value of the portion of the costs of the trial of the class action which the Respondents are not required to pay that the AFFF incurred and would have to come out of the damages payable to Group Members who have entered into funding arrangements with the AFFF. The calculation then pro rates that sum over the entire class of Group Members (including those who have not signed a funding agreement), so that the legal costs reasonably incurred up to (and including) the trial thus far would be shared equally among all Group Members who recover compensation from the class action.

The AFFF may also seek a 'common fund order' from the Court. A common fund order is one that requires all Group Members who have not signed a litigation funding agreement with the AFFF and who benefit from the outcome by advancing their individual loss claims, to pay to the AFFF an amount as a form of commission. That commission will be the amount that would have been payable to the AFFF by a Group Member if they had entered into a litigation funding agreement with the AFFF, or some lesser amount which the Court considers reasonable in the circumstances. You will be given further notice and an opportunity to object, if and when the AFFF decides to bring an application in the Court for a common fund order.

Please consider the above matters carefully. If there is anything of which you are unsure, you should contact Mr Andrew Gill on (02) 6225 3347 or email livetradeclassaction@minterellison.com. Please contact Andrew Gill by 17 November 2020. There will be no cost to you for contacting Mr Gill in order to make an initial inquiry of this kind. Alternatively you should seek your own legal advice. You should not delay in making your decision.

REASONS FOR JUDGMENT

RARES J:

1    On 8 October 2020 I made orders approving the form and content of a notice to group members pursuant to s 33X(5) of the Federal Court of Australia Act 1976 (Cth). The notice informed group members of:

    my principal findings on 2 June 2020 in Brett Cattle Company Pty Ltd v Minister for Agriculture [2020] FCA 732 in favour of the lead applicant, Brett Cattle Company Pty Ltd;

    the substance of the answers to the common questions that I answered in order 6 on 29 June 2020;

    their potential eligibility to make claims for their damages to be assessed;

    Brett Cattle’s having entered into an arrangement with the Australian Farmers Fighting Fund (AFFF) to fund its legal costs and disbursements in respect of the conduct of the litigation to date; and

    AFFF’s preparedness to enter into a funding agreement with individual group members on terms that it would pay their legal costs and disbursements of making a claim in return for a payment to it of a commission of 10% on any amount recovered.

2    As part of the notice, I approved the following statement:

Entry by Group Members into litigation funding arrangements with the AFFF would not be the subject of the Australian Financial Services Licence and managed investment scheme regulations that now apply to litigation funding schemes entered into on or after 22 August 2020 (pursuant to the Corporations Amendment (Litigation Funding) Regulations 2020 (Cth)).

3    These are my reasons for approving that statement.

4    Both Brett Cattle and the respondents, the Former Minister for Agriculture, Fisheries and Forestry and the Commonwealth, submitted that the above statement was correct. That was because AFFF had entered into funding agreements with over 50 group members on terms similar to those it had with Brett Cattle prior to 22 August 2020. Accordingly, they argued, by then AFFF had established what amounted to a litigation funding scheme that fell within the exception made in the transitional provisions in the Corporations Regulations 2001 (Cth) in reg 10.38.01(1).

The statutory scheme

5    On 24 July 2020 the Corporations Amendment (Litigation Funding) Regulations 2020 (Cth) came into force. Relevantly, the Regulations incorporating those amendments now provide:

7.1.04N  Specific things that are financial products—funding schemes and arrangements relating to insolvency and litigation

…

Litigation funding schemes

(3)      An interest in a scheme (a litigation funding scheme) that has all of the following features is declared to be a financial product:

(a)      the dominant purpose of the scheme is for each of its general members to seek remedies to which the general member may be legally entitled;

(b)     the possible entitlement of each of its general members to remedies arises out of:

(i)      the same, similar or related transactions or circumstances that give rise to a common issue of law or fact; or

(i)      different transactions or circumstances but the claims of the general members can be appropriately dealt with together;

(c)     the possible entitlement of each of its general members to remedies relates to transactions or circumstances that occurred before or after the first funding agreement (dealing with any issue of interests in the scheme) is finalised;

(d)     the steps taken to seek remedies for each of its general members include a lawyer providing services in relation to:

    (i)     making a demand for payment in relation to a claim; or

    (ii)      lodging a proof of debt; or

    (iii)      commencing or undertaking legal proceedings; or

    (iv)      investigating a potential or actual claim; or

    (v)      negotiating a settlement of a claim; or

(vi)      administering a deed of settlement or scheme of settlement relating to a claim;

(e)      a person (the funder) provides funds, indemnities or both under a funding agreement (including an agreement under which no fee is payable to the funder or lawyer if the scheme is not successful in seeking remedies) to enable the general members of the scheme to seek remedies;

(f)     the funder is not a lawyer or legal practice that provides a service for which some or all of the fees, disbursements or both are payable only on success.

10.38.01  Application of amendments relating to litigation funding

(1)    The amendments made by the Corporations Amendment (Litigation Funding) Regulations 2020 apply in relation to litigation funding schemes, insolvency litigation funding schemes and litigation funding arrangements entered into on or after 22 August 2020.

 (2)      In this regulation:

insolvency litigation funding scheme means an insolvency litigation funding scheme mentioned in regulation 5C.11.01 (as in force on 22 August 2020).

litigation funding arrangement means a litigation funding arrangement mentioned in regulation 5C.11.01 (as in force on 22 August 2020).

litigation funding scheme means a litigation funding scheme mentioned in subregulation 7.1.04N(3) (as in force on 22 August 2020).

(emphasis added)

Background

6    The definition of “group member” in this proceeding applies to persons or entities who:

(1)    on or around 7 June 2011, derived financial benefit from:

(a)    producing cattle in Australia which were sold for live export to the Republic of Indonesia (“Producers”);

(b)    exporting cattle from Australia to the Republic of Indonesia (“Exporters”); or

(c)    providing transport services, mustering services, feed, agistment and/or other incidental services to Producers and/or Exporters;

(2)    suffered loss and or financial harm or damage as a result of the Export Control (Export of Live-stock to the Republic of Indonesia) Order 2011 (Cth); and

(3)    did not opt out of the proceedings.

7    The independent chairman and trustee of AFFF, Hugh Nivison, said in his affidavit of 28 September 2020 that AFFF had been formed on 16 July 1986 to promote the interests of the Australian agricultural sector, encourage collective action and cooperation across the sector, provide governments with opportunities to confer with the sector, and distribute information about the sector. AFFF is a charity registered with the Australian Charities and Not-for-profit Commission. The National Farmers Federation, the peak industry body for Australian agriculture, provides the secretariat for AFFF.

8    Mr Nivison explained that the trustees consider numerous criteria before deciding whether to provide financial assistance for litigation and legal matters that affect the interests of the entire sector, including in rural and regional Australia. He said that, since its inception, AFFF had given financial backing to over 100 court cases that related to issues about decisions of governments, industrial disputes, animal activism, mining rights, and farm finance and debt issues.

9    Mr Nivison said that the present proceeding was the first class-action that AFFF had supported and that it had decided to do so in October 2014 when it entered into a funding agreement with Brett Cattle. He explained that by 2 June 2020 AFFF had entered into funding agreements with 51 group members. He said that, since I delivered my reasons on 2 June 2020, a further 71 group members had contacted it or MinterEllison, the solicitors acting for Brett Cattle, expressing an interest or enquiring about entering into a funding agreement for their individual claims for damages. Mr Nivison said that from his discussions with some of the members of the class, he believed that there might be in the order of about 300 more group members located across Australia. He said that AFFF wished to be able to fund the individual claims of group members who are presently unfunded and seek to have their claims determined as part of this proceeding.

10    He referred to the current funding agreement pursuant to which funded group members take advice from and instruct MinterEllison to act on their claims. He said that AFFF retained the primary liability for any legal costs incurred. He said that group members had the final decision on the day-to-day management, including settlement, of their individual claims for loss as part of the proceeding. The funding agreement provides that AFFF has the right to be informed of key decisions and can terminate ongoing funding in specific circumstances. The terms of the funding agreement require that the group member pay 10% as a commission out of any compensation that the member receives. Mr Nivison said that the purpose of the commission was to compensate AFFF for its efforts, agreement to incur liabilities in pursuing the class-action, the particular group member’s claims and to generate a return for AFFF that it would be able to deploy for its charitable purposes of supporting Australian farmers in the future.

11    AFFF is concerned about whether entry into a new litigation funding agreement with any group members on or after 22 August 2020 might fall outside the exemption in reg 10.38.01(1) if that were found to be entry into a new litigation funding scheme. Mr Nivison said that AFFF did not currently have an Australian financial services licence and did not intend to apply for one.

12    Mr Nivison said that he understood and believed that group members were interspersed throughout regional Australia and that many of them would need litigation funding from AFFF in order to be able to prosecute their individual claims for damages in this group proceeding. Mr Nivison said that he understood and believed that, were AFFF unable to enter into funding agreements with the balance of group members who had not done so prior to 22 August 2020, many of those persons would not be in a position to have their claims determined unless they could organise another form of funding in which it was possible that they might have to pay much higher commission than the 10% that AFFF required or they may not be able to organise any funding at all.

Consideration

13    The application of the transitional provisions to a litigation funding agreement entered into with AFFF after 22 August 2020 was, in the circumstances, uncertain. As I have noted, both parties made submissions on that topic that supported their joint argument that the wording in the notice set out at [2] above was correct.

14    The definition of a litigation funding scheme in reg 7.1.04N(3) requires that a scheme have six features. All of those features appear to cover typical scenarios of litigation funding for group proceedings or class actions, such as the present. Crucially, reg 10.38.01(1) provides that the amendments to the Regulations that introduced the new definition of a litigation funding scheme in reg 7.1.04N(3) apply “in relation to litigation funding schemes…entered into on or after 22 August 2020”. An interest in an existing litigation funding scheme, as defined in reg 7.1.04N(3) that has all of the features set out in that regulation, is a financial product for the purposes of s 764A(1)(m) of the Corporations Act 2001 (Cth).

15    In Australian Softwood Forests Pty Ltd v Attorney-General for the State of New South Wales; Ex relatione Corporate Affairs Commission (1981) 148 CLR 121 at 129, Mason J (with whom Gibbs CJ and Stephen J relevantly agreed) said that “the word ‘scheme’ requires that there should be some ‘program, or plan of action’”.

16    In October 2014, AFFF agreed to fund Brett Cattle as the lead applicant in the current proceeding and, as Mr Nivison explained 51 group members had entered into funding agreements with it by 2 June 2020. Accordingly, at that time, the basis on which AFFF was offering and providing litigation funding to anyone who was a group member in this proceeding was well-defined. In my opinion that basis amounted to a litigation funding scheme within the meaning of reg 7.1.04(3): Australian Softwood Forests 148 CLR at 129.

17    First, the dominant purpose of the scheme was for each group member to seek remedies to which the person may be legally entitled (reg 7.1.04N(3)(a)). Secondly, the entitlement arose out of similar or related circumstances, being loss or damage that each group member may have suffered as a consequence of the events the subject of the common questions (reg 7.1.04N(3)(b)). Thirdly, that entitlement related to circumstances that occurred in or after July 2011 and before Brett Cattle entered into its litigation funding agreement with AFFF in October 2014 (reg 7.1.04N(3)(c)). Fourthly, the steps taken to seek remedies for each of the group members included MinterEllison commencing and then acting in this proceeding (reg 7.1.04N(3)(d)). Fifthly, AFFF, as funder, provided funds to group members and an indemnity for any costs liability that Brett Cattle might incur to enable the group members to seek remedies in proceeding (reg 7.1.04N(3)(e)). Sixthly, AFFF is not a lawyer or legal practice (reg 7.1.04N(3)(f)).

18    Thus, from its inception in October 2014, the scheme that AFFF established had all of the six criteria in the definition of a litigation funding scheme in reg 7.1.04N(3) and, accordingly, fell within the exemption in reg 10.38.01(1). The scheme was a litigation funding scheme that was in existence before 22 August 2020.

19    Accordingly, I was satisfied that the grant of new interests (by AFFF entering into new litigation funding agreements on the pre-existing terms with group members) after 22 August 2020 would not amount to the entry by AFFF or those persons into a new litigation funding scheme. But for reg 10.38.01(1), any new funding agreement that AFFF entered into with a group member after 22 August 2020 would have created another interest, being a financial product, that AFFF will have issued. The issue of that interest will be in an existing litigation funding scheme to which each new entrant group member will become a party and will be exempt from the new regulations. The scheme is not one that will need to comply with the prospective operation of the amendments to the Regulations.

Conclusion

20    It was for these reasons that I made the orders on 8 October 2020 permitting the notice to be issued containing the statement set out above.

Associate:

Dated:    12 November 2020