Federal Court of Australia

Lloyd v Belconnen Lakeview Pty Ltd (No 3) [2022] FCA 761

ORDERS

THE COURT ORDERS THAT:

1.    Discontinuance of the proceeding be approved pursuant to s 33V(1) of the Federal Court of Australia Act 1976 (Cth) (Act).

2.    The applicant be granted leave to discontinue the proceeding by filing a notice of discontinuance forthwith.

3.    Pursuant to ss 33V and 33ZF of the Act, any limitation period that applies to the claim of the applicant and any group member, to which the proceeding relates, shall begin to run again from the date which is 60 days after filing of a notice of discontinuance.

4.    The applicant to pay the respondent’s costs of and incidental to the application made by the applicant to discontinue the proceedings, including the case management hearings on 5 May 2022 and 9 June 2022.

5.    The costs referred to in Order 4 above be the subject of a lump sum costs assessment, to be conducted by a Registrar of the Court.

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

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to s 33V(1) of the Federal Court of Australia Act 1976 (Cth) (Act), the discontinuance of the proceeding be approved.

2.    The applicant be granted leave in accordance with rule 26.12(2)(c) of the Federal Court Rules 2011 (Cth) to discontinue the proceeding by filing a notice of discontinuance.

3.    Pursuant to s 33ZF of the Act, any limitation period that applies to the claim of the applicant and any group member, to which the proceeding relates, shall begin to run again from the date that is 60 days after the filing of the notice of discontinuance.

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

REASONS FOR JUDGMENT

(Delivered ex tempore, revised from the transcript)

LEE J:

1    This is an application made by representative applicants in two class actions pursuant to s 33V of the Federal Court of Australia Act 1976 (Cth) (Act). The two representative proceedings relate to the sale of new residential units in the Australian Capital Territory and will be referred to below as the Altitude proceeding (NSD 1417 of 2017) and the Manhattan on the Park proceeding (NSD 1192 of 2021).

2    The principled approach in considering an application for a proposed discontinuance has been the subject of recent discussion by Murphy J in Turner v TESA Mining (NSW) Pty Ltd (No 2) [2022] FCA 435 (at [6]–[10]). At that time, his Honour summarised two approaches to what is described as the “test” for determining such applications.

3    The first test requires the Court to determine whether discontinuance is fair and reasonable and has been undertaken in the interests of the group members as a whole: see Mercedes Holdings Pty Ltd v Waters (No 1) [2010] FCA 124; (2010) 77 ACSR 265 (at 267–268 [9]–[10] per Perram J). The second, supposedly slightly less strict approach, requires determination of whether discontinuance would be unfair or unreasonable or adverse to the interests of group members: see Laine v Thiess Pty Ltd [2016] VSC 689 (at [34] per Dixon J). In Turner (at [10]), Murphy J considered that, at least in the context of a proposed discontinuance where the practical effect will be to return group members to the position they were in before the commencement of the class action, the test in Laine was appropriate.

4    Of course, the well-known approach by the Court on a s 33V application, referred to in innumerable authorities, is whether the proposed resolution of the group-members’ claims occasioned by the settlement is fair and reasonable and in the interests of group members. Like some other aspects of Pt IVA proceedings, it seems to me that it might be thought that there is a certain over-complication that has arisen in relation to the issue of the “test”.

5    Ultimately, of course, the words “fair and reasonable” are words of indeterminate reference that take their colour and content from all of the surrounding circumstances. Similarly, what could be described as being in the interests of group members is a conception informed by all of the relevant circumstances. When the Court is considering a discontinuance, it seems to me that there is no real difference between considering whether the settlement is fair and reasonable (and, hence, whether the discontinuance is in the interests of group members in the particular circumstances), or whether discontinuance would be unfair or unreasonable or adverse to the interests of group members.

6    It seems to me a discontinuance that is not in the interests of group members takes on the meaning of one that has been done in such a way as to prejudice adversely the position of group members in some sort of unfair or unreasonable way. In any event, assuming there is a different test, I agree with Murphy J’s preference for its accurate expression, and the proposed discontinuance of each of the proceedings amply satisfies it.

7    I will deal first with the Altitude proceeding. There is no need for me to return to the circumstances of that case. It is sufficient to note that the applicant, Mrs Susan Lloyd, advanced restitutionary and statutory claims against the first respondent, Belconnen Lakeview Pty Limited (Belconnen). Before me, Mrs Lloyd was successful in establishing that Belconnen had engaged in misleading and deceptive conduct and that she was entitled to statutory compensation, but her restitutionary claim failed: see Lloyd v Belconnen Lakeview Pty Ltd [2019] FCA 2177.

8    The proceeding then went to a Full Court. The Full Court held that the relevant draft contract made a “plainly misleading” representation of opinion and, hence, there was contravening conduct which, in appropriate circumstances, provided someone had suffered loss and damage by reason of that contravening conduct, could sound in a claim for statutory compensation. The Full Court held that Mrs Lloyd did not lose a valuable opportunity to renegotiate a plainly misleading contract after it had been entered into, finding that my conclusion to the contrary sat uncomfortably with my additional finding that if the purchaser had known the true position before signing the contract, it would have made no difference to her in entering into the contract: see Belconnen Lakeview Pty Ltd v Lloyd [2021] FCAFC 187.

9    Accordingly, what was left, following an unsuccessful application for special leave in relation to the Full Court’s decision, was a series of individual claims for statutory compensation that were all fact and evidence dependent. It may be that some group members would be entitled to statutory compensation, but others (like Mrs Lloyd on the findings of the Full Court) would not be. The difficulty is that such a miscellany of individual claims, where Belconnen appears to be intent on defending those claims, is not an economic proposition from the point of view of the funder of these proceedings.

10    In my view, the funder has done everything it could reasonably be expected to do to advance the claims of both the representative applicants and group members, and it is clearly open to it to take the commercial decision it has taken. However, this leaves the position of the group members who may wish to pursue their individual claims. On 16 May 2022, I made orders providing a notice to group members that was in the terms set out in Annexure A to these reasons.

11    As can be seen from the above, orders are sought by the applicant, and not opposed by the first respondent, proposing a condition on the approval of the discontinuance in the same terms as that which commended itself to Murphy J in Turner v TESA. I need to say no more concerning the sense of such a condition being imposed on the settlement other than noting that I agree with what Murphy J indicated in his Honour’s reasons (at [11]–[35]).

12    In all the circumstances, I consider the proposed discontinuance is fair and reasonable and in the interests of group members (in the sense that they have now received adequate notice of the discontinuance and it will be up to them to take any further steps to pursue any claim they have). Put another way, I do not consider the discontinuance will be unfair, or unreasonable or adverse to the interests of group members in all the circumstances.

13    I should not pass from this without noting the four principal reasons counsel for Mrs Lloyd, Mr Colquhoun, pointed to in his helpful written submissions as commending discontinuance. These were:

(1)    no objection or other proposal by group members has been provided;

(2)    the funder is unwilling to provide ongoing litigation funding;

(3)    the group-members’ claims are not highly individualised; and

(4)    the group members are still able to prosecute their individual claims if they so wish.

14    Essentially, the same process of reasoning informs my decision to approve the discontinuance in the Manhattan on the Park proceeding. Sensibly, the Manhattan on the Park proceeding was placed into a “holding pattern” pending the determination of the Altitude proceeding. Although it relates to a different development, the underlying facts are essentially the same. The reasons I have given in relation to the settlement of the Altitude proceeding apply mutatis mutandis in relation to that proceeding.

15    During the case management hearing, an issue arose concerning costs in the Altitude proceeding. I had, perhaps forlornly, hoped that the orders made today would see the completion of the Court having to deal with the Altitude proceeding. I am informed, however, by senior counsel for Belconnen that a consequence of the Full Court’s decision was that there are outstanding costs orders that are the subject of a lump-sum process, in the event the parties cannot agree on the costs consequences that flow from the previous orders as to costs. I had indicated my preliminary view would be to fix a rough-and-ready figure to account for the costs that had been incurred on behalf of Belconnen since the Full Court decision and indicated a figure of $5000 seemed to me to be reasonable.

16    But given a lump-sum-assessment process has already been ordered for those previous costs orders, it seems appropriate that the costs orders that I make in relation to this proceeding should form part of the same process and be conducted by the same Registrar.

Associate:

Dated:    1 July 2022

ANNEXURE A

Annexure A

NOTICE TO GROUP MEMBERS

PROPOSED DISCONTINUANCE OF CLASS ACTION

Susan Margaret Lloyd v Belconnen Lakeview Pty Ltd and others (NSD 1417/2017)

1    WHY AM I GETTING THIS NOTICE?

On 16 May 2022, the Federal Court of Australia ordered that this notice be sent to persons who might be members of a class action commenced in August 2017 by Susan Margaret Lloyd (the applicant) against Belconnen Lakeview Pty Ltd (Belconnen Lakeview) and its director and company secretary (the Class Action).

The Class Action is about the sale of residential apartments at 35-41 Chandler Street, Belconnen, ACT (the Altitude development) by Belconnen Lakeview. Records show that you purchased one or more of the units at the Altitude development and therefore you may be a class member in the Class Action. Schedule 1 of this notice helps explain whether you are a class member or not.

The applicant will be making an application in the Federal Court on 9 June 2022 to discontinue the Class Action. If the Class Action is discontinued, the Class Action will end. Section 4 of this notice explains what options are available to you if you do not want the Class Action to end.

2    WHAT HAS HAPPENED IN THE CLASS ACTION?

The applicant's allegations in the Class Action included that:

  (a)    Persons who purchased apartments in the Altitude development from Belconnen Lakeview paid an amount that was referrable to GST as part of their purchase price, and that this amount should be returned to them by Belconnen Lakeview under the law of restitution;

  (b)    Belconnen Lakeview engaged in misleading or deceptive conduct in breach of the Australian Consumer Law; and

  (c)    Belconnen Lakeview’s director and secretary were knowingly involved in the misleading or deceptive conduct in breach of the Australian Consumer Law.

Belconnen Lakeview together with its director and company secretary denied these allegations.

The Class Action was heard by the Federal Court (Lloyd v Belconnen Lakeview Pty Ltd [2019] FCA 2177; Lloyd v Belconnen Lakeview Pty Ltd (No 2) [2020] FCA 698) and by the Full Court of the Federal Court (Belconnen Lakeview Pty Ltd v Lloyd [2021] FCAFC 187), and was the subject of an application for special leave to the High Court on 12 April 2022.

The applicant’s claim in the Class Action has been dismissed with costs.

As a result of these decisions:

  (a)    The claim in restitution for return of the amount alleged to be referrable to GST failed and as such, purchasers are not entitled to the return of any money under the law of restitution;

  (b)    Belconnen Lakeview was found to have engaged in misleading conduct in its dealings with the applicant, but because the applicant did not suffer any loss as a result she was not entitled to be paid any damages;

  (c)    Various factual findings were made which apply to all class members, including the representations conveyed by Belconnen Lakeview to class members in relation to GST;

  (d)    The claim that Belconnen Lakeview’s director and company secretary were knowingly involved in any breach of the Australian Consumer Law was dismissed; and

  (e)    The applicant, who is funded by the litigation funder Omni Bridgeway Limited, has been ordered to pay the costs of Belconnen Lakeview and its director and company secretary in the various court proceedings to which they were parties.

3    REASONS FOR DISCONTINUANCE

The applicant is making an application to discontinue the Class Action because:

  (a)    the applicant’s individual claim has been dismissed;

  (b)    the claim for restitution has failed; and

  (c)    the litigation funder which has funded the legal costs of the Class Action to date is unwilling to provide ongoing funding for the Class Action.

Before deciding whether to permit the Class Action to be discontinued, the Court will listen to any arguments of class members who wish to be heard.

4    WHAT OPTIONS ARE AVAILABLE TO YOU?

There are three options available to you:

   1.    Do nothing, in which case the Court may order the Class Action be discontinued. In this event, you will still be able to bring any individual claim you may have connected to the Class Action, if you wish. The factual findings already made in the Class Action will apply to future litigation commenced by class members. However, there are deadlines which apply to making such claims and you may not be permitted to bring a claim once those deadlines expire;

   2.    Propose yourself or another class member to be substituted for Ms Lloyd as the lead applicant in the Class Action, and thereby take over the conduct of the case. Any proposed new lead applicant must be willing to conduct the case on his or her own behalf and on behalf of the class members, to appoint lawyers to act in the case and to meet the legal costs of the case; or

   3.    Object to or oppose the proposed discontinuance of the Class Action.

Class members are strongly recommended to obtain independent legal advice when considering these options.

If you are a class member and you wish to take up option (2) or (3) above, you must:

  (a)    send an email to the applicant’s solicitors (emily.brownlee@corrs.com.au) by 5 pm on 7 June 2022 notifying your wish to make an argument to oppose the discontinuance or substitute a new lead applicant; and

  (b)    send any documents you wish to rely on in support of your argument to emily.brownlee@corrs.com.au by 5 pm on 7 June 2022; and

  (c)    attend the hearing at the Federal Court in Sydney (Law Courts Building, Queens Square, 184 Phillip Street, Sydney) at 10.15 am on 9 June 2022 to make your argument.

SCHEDULE 1

ARE YOU A CLASS MEMBER?

You are a class member if all of the following criteria apply to you:

END OF NOTICE