Federal Court of Australia

Sanda v PTTEP Australasia (Ashmore Cartier) Pty Limited (Opt Out Obligations) [2022] FCA 1409

ORDERS

THE COURT ORDERS THAT:

Section 33ZB Order

1.    Leave is granted, nunc pro tunc, for the hearing of this proceeding to have commenced earlier than the date before which a group member may opt out of the proceeding.

2.    Pursuant to s 23 of the Federal Court of Australia Act 1976 (Cth) (‘the Act’), s 33ZF of the Act and/or r 39.05 of the Federal Court Rules 2011, and with the consent of the parties, order 2 of the orders of Yates J dated 15 November 2021 be set aside.

Confidentiality

3.    Pursuant to s 37AI of the Act, on an interim basis and until the settlement approval hearing in order 4 or further order, pages 105 to 171 to Exhibit RG-3 of the confidential affidavit of Rebecca Gilsenan dated 18 November 2022 (‘Gilsenan Affidavit’) shall not be published or disclosed other than to:

(a)    the Court;

(b)    the Applicant;

(c)    the Applicant’s legal representatives in this proceeding;

(d)    the Respondent;

(e)    the Respondent’s legal representatives in this proceeding;

(f)    Harbour Fund II, L.P (‘Harbour’) and its legal representatives; and

(g)    counsel appointed to act as contradictor in accordance with order 28 (‘the Contradictor’).

Settlement Approval

4.    By 2 December 2022, the Applicant is to file and serve an interlocutory application seeking settlement approval (and associated orders) pursuant to s 33V of the Act (‘the Settlement Approval Application’).

5.    Harbour is granted leave to appear and be heard on the Settlement Approval Application.

6.    Materials to be served for the purposes of the Settlement Approval Application shall be served on the parties, the Contradictor and Harbour.

7.    By 6 February 2023, Harbour is to file and serve any evidence on which it intends to rely on the Settlement Approval Application.

8.    By 10 February 2023, the Applicant is to file and serve any evidence on which he intends to rely on the Settlement Approval Application.

9.    By 17 February 2023, the Respondent is to file and serve any evidence on which it intends to rely on the Settlement Approval Application.

10.    By 17 February, the Contradictor is to file any evidence on which they intend to rely on the Settlement Approval Application.

11.    By 22 February 2023, the parties and Harbour are to file and serve any evidence in reply on which they intend to rely on the Settlement Approval Application.

12.    By 27 February 2023, the parties, Harbour and the Contradictor are to file and serve any outline of submissions on which they intend to rely in relation to the Settlement Approval Application.

Settlement Notice and Objections

13.    Pursuant to ss 33X(4) and 33Y(2) of the Act, the Court approves the notice of settlement at pages 161 to 167 to Exhibit RG-3 of the Gilsenan Affidavit (‘English Notice’).

14.    By 22 November 2022, Maurice Blackburn will cause the English Notice to be translated to Bahasa Indonesia by a NAATI qualified translator to produce a Bahasa Indonesia version of the notice (‘Bahasa Notice’).

15.    Pursuant to ss 33X and 33Y(3) of the Act, the Bahasa Notice is to be published and distributed in accordance with the following procedure:

(a)    By 9 December 2022, Maurice Blackburn and Maurice Blackburn’s agents will arrange group meetings between Maurice Blackburn’s agents and one or more of the following village officials, for each of the villages specified in Schedule 1 to the Further Amended Statement of Claim dated 31 July 2017:

(i)    the head of village (kepala desa);

(ii)    the village secretary (sekretaris);

(iii)    a person temporarily acting in the positions described in (i) to (ii); or

(iv)    in the event that the persons described in (i) to (iii) are unavailable, another village official ascertained, by Maurice Blackburn or its agents acting reasonably, as being of suitable seniority to participate on behalf of the village in the group meeting.

(b)    Maurice Blackburn’s agents will arrange the meetings referred to above in groups of up to 10 villages at a time.

(c)    At the meetings referred to above, Maurice Blackburn’s agents will:

(i)    cause the Bahasa Notice to be read out in Bahasa Indonesia to the village officials in attendance; and

(ii)    provide copies of the Bahasa Notice to the village officials in attendance for those village officials to take back to their village and make available in a public place in their village.

16.    The English Notice and Bahasa Notice may be amended by Maurice Blackburn before distribution in accordance with order 15 to correct any non-substantive or typographical error.

17.    By 4.00 pm on 13 January 2023, any group member who wishes to oppose any aspect of the proposed settlement of the proceeding shall do so by:

(a)    contacting Maurice Blackburn’s agent as identified in the Bahasa Notice and Maurice Blackburn’s agent is to take a file note of the objection; or

(b)    email to Maurice Blackburn at montara@mauriceblackburn.com.au; or

(c)    mail to Maurice Blackburn at the following address:

Maurice Blackburn Lawyers Level 32, 201 Elizabeth Street Sydney NSW 2000 Australia

18.    Maurice Blackburn will:

(a)    arrange for translation of any objections received in Bahasa Indonesia into English and provide, in English, any objections received to the Federal Court of Australia and the Respondent; and

(b)    file an affidavit exhibiting any file notes of objections and written objections;

by no later than 27 January 2023.

Opt Out

19.    Pursuant to s 33J(1) of the Act, 4.00 pm on 13 January 2023 is fixed as the date and time before which a group member may apply to opt out of the proceeding.

20.    Pursuant to ss 33Y(2) and 33ZF(1) of the Act, the opt out notice at page 6 of the English Notice (‘Opt Out Notice’) is approved as the notice under s 33J(2) of the Act.

21.    Pursuant to s 33Y(3) of the Act, by 9 December 2022, the Opt Out Notice is to be distributed along with the Bahasa Notice by the method set out in order 15.

22.    A group member will be taken to have applied to opt out of the proceeding by causing a completed Opt Out Notice to be sent to Maurice Blackburn by the date in order 19 by either:

(a)    contacting Maurice Blackburn’s agent as identified in the Bahasa Notice and arranging for that agent to send the completed Opt Out Notice to Maurice Blackburn; or

(b)    email to Maurice Blackburn at montara@mauriceblackburn.com.au; or

(c)    mail to Maurice Blackburn at the following address:

Maurice Blackburn Lawyers Level 32, 201 Elizabeth Street Sydney NSW 2000 Australia

23.    Maurice Blackburn will arrange for the translation of any returned Opt Out Notices received in Bahasa Indonesia into English, and file and serve on the Respondent an interlocutory application with the Court for approval of all Opt Out Notices received, translated into English where necessary, by no later than 27 January 2023.

24.    Pursuant to s 33ZF(1) of the Act, until further order of the Court, group members that return an Opt Out Notice will not have opted out of the proceeding.

25.    The interlocutory application referred to in paragraph 23 shall be listed for hearing on 23 February 2023 at 10.15 am.

Costs and Independent Referee

26.    Pursuant to s 54A and/or s 33ZF(1) of the Act, Kerrie Rosati (‘Costs Assessor’) is appointed as an independent costs assessor for the purpose of conducting an inquiry and making a report in writing to the parties and the Court stating, with reasons, the Cost Assessor’s opinion on the reasonableness of:

(a)    the Applicant’s costs for work done up to the date of the report; and

(b)    the Applicant’s costs and the costs of administering the settlement anticipated but yet to be incurred as at the date of the report.

Contradictor

27.    Elizabeth Collins SC be appointed amicus curiae to perform the role of contradictor in these proceedings in relation to any proposed deductions to be made from the settlement sum (‘Contradictor’).

28.    By 2 December 2022, the Applicant provide a brief of material to the Contradictor comprising copies of:

(a)    Sanda v PTTEP Australasia (Ashmore Cartier) Pty Ltd (No 7) [2021] FCA 237;

(b)    Sanda v PTTEP Australasia (Ashmore Cartier) Pty Ltd (No 8) [2021] FCA 1291;

(c)    any executed settlement deed;

(d)    any proposed settlement distribution scheme;

(e)    any legal costs agreement entered into by the Applicant;

(f)    any other form of agreement entered into by the Applicant in relation to legal costs;

(g)    any funding agreement entered into by the Applicant;

(h)    the template funding agreement entered into by group members; and

(i)    any settlement notice.

29.    As soon as practicable following completion of the Costs Assessor’s report referred to in order 26, the Applicant will provide a copy of the report to Contradictor.

Costs

30.    Harbour is to pay the costs of the Contradictor up to a maximum of three days at the Contradictor’s daily rate, with any further work performed by the Contradictor to be paid in accordance with order 31.

31.    All of the Applicant’s costs arising from these orders (including the costs borne by the Applicant of the work specified in orders 15, 20 to 25, and 26 to 29) will be dealt with by the Court as part of the costs of the proceeding and, subject to consideration of the Cost Assessor’s opinion and any further affidavit material filed by the Applicant, may be deducted from the settlement sum.

32.    The matter be stood over for the hearing of all applications, apart from the application referred to in paragraph 23, to 28 March 2023 at 10.15 am.

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

REASONS FOR JUDGMENT

PERRAM J:

1    A question has arisen as to whether the Court has the power to make an order pursuant to s 33ZF of the Federal Court of Australia Act 1976 (Cth) (‘the Act’) dispensing with the need to send a notice to group members informing them of their entitlement to opt out of the proceeding. There is authority that the power in s 33ZF extends to dispensing with the need to send an opt out notice: Vernon v Village Life Ltd [2009] FCA 516 at [57]-[64] per Jacobson J (‘Vernon’). There is authority that the relevantly identical power in the Civil Procedure Act 2005 (NSW) does not so extend: TW McConnell Pty Ltd as trustee for the McConnell Superannuation Fund v SurfStitch Group Ltd (subject to deed of company arrangement) (No 3) [2018] NSWSC 1749; 133 ACSR 98 at [19]-[53] per Stevenson J (‘TW McConnell’). In the course of his reasons for judgment, Stevenson J concluded that Vernon was wrongly decided.

2    Section 33J of the Act provides:

33J    Right of group member to opt out

(1)    The Court must fix a date before which a group member may opt out of a representative proceeding.

(2)    A group member may opt out of the representative proceeding by written notice given under the Rules of Court before the date so fixed.

(3)    The Court, on the application of a group member, the representative party or the respondent in the proceeding, may fix another date so as to extend the period during which a group member may opt out of the representative proceeding.

(4)    Except with the leave of the Court, the hearing of a representative proceeding must not commence earlier than the date before which a group member may opt out of the proceeding.

3    Section 33J does not in terms require that group members be notified of the opt out date which s 33J(1) requires the Court to fix. Instead, the obligation to notify is situated in s 33X of the Act which, relevantly, provides:

33X    Notice to be given of certain matters

(1)    Notice must be given to group members of the following matters in relation to a representative proceeding:

(a)    the commencement of the proceeding and the right of the group members to opt out of the proceeding before a specified date, being the date fixed under subsection 33J(1);

(b)    an application by the respondent in the proceeding for the dismissal of the proceeding on the ground of want of prosecution;

(c)    an application by a representative party seeking leave to withdraw under section 33W as representative party.

(2)    The Court may dispense with compliance with any or all of the requirements of subsection (1) where the relief sought in a proceeding does not include any claim for damages.

4    The scheme of these provisions is:

    a mandatory obligation on the Court to fix an opt out date (s 33J(1)) with no corresponding dispensing power;

    a mandatory obligation to notify group members of the opt out date with a dispensing power where damages are not sought (ss 33X(1)–(2));

    a power to extend the opt out date (s 33J(3)); and

    a mandatory obligation not to commence the trial of a representative proceeding earlier than the opt out date coupled with a dispensing power (s 33J(4)). It would appear that this means that where a representative proceeding is listed for trial, the opt out date can be no later than the first day of the trial.

5    It will be observed that the provisions contain explicit dispensing provisions but only in relation to two matters. The Court may dispense with notification of the opt out date if damages are not claimed, and it may dispense with the requirement that the trial not commence before the opt out date. By contrast, there is no dispensing power conferred in relation to the obligation of the Court to fix the opt out date or the obligation to notify the group members of that date where damages are claimed.

6    This leads to a curious result. Where damages are not claimed, the Court is nevertheless required to fix an opt out date by s 33J(1) but it may dispense with the need for that date to be notified to group members under s 33X(2). Further, in that circumstance, even though the group members have not been notified of the opt out date, the Court remains subject to an obligation (which can be dispensed with) not to commence the hearing of the action until that date: s 33J(4). It is not self-evident what purpose this serves.

7    In any event, the point for present purposes is that ss 33J and 33X are a detailed scheme dealing with the fixing and notification of the opt out date accompanied by limited powers of dispensation. It is then necessary to turn to the general provisions contained in s 33ZF. It provides:

33ZF    General power of Court to make orders

(1)    In any proceeding (including an appeal) conducted under this Part, the Court may, of its own motion or on application by a party or a group member, make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding.

(2)    Subsection (1) does not limit the operation of section 22.

8    Making the assumption that s 33ZF can be used to dispense with some of the requirements of Pt IVA, I do not think that it can be used to dispense with the obligation in s 33J(1) to fix an opt out date or the obligation to notify members of that date in s 33X(1). The general power in s 33ZF cannot be used to outflank the limitations of the particular scheme in ss 33J and 33X. In an oft-applied passage in Anthony Hordern and Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia (1932) 47 CLR 1 at 7 (‘Anthony Hordern’), Gavan Duffy CJ and Dixon J said:

When the Legislature explicitly gives a power by a particular provision which prescribes the mode in which it shall be exercised and the conditions and restrictions which must be observed, it excludes the operation of general expressions in the same instrument which might otherwise have been relied upon for the same power.

9    Consequently, assuming that s 33ZF is in fact a dispensing provision (about which I make no comment one way or the other), it is not available to overcome the specific provisions of ss 33J and 33X. In reaching this conclusion, I do not mean to suggest that other sets of provisions in Pt IVA do (or do not) attract the principle in Anthony Hordern. Each such set of provisions must be examined on their own terms. For example, it has been held on the topic of declassing that s 33N is not a provision which constitutes a ‘code’ in the Anthony Hordern sense, which would exclude the operation of a general power such as s 33ZF: Perera v GetSwift Limited [2018] FCA 732; 263 FCR 1 at [139]-[143] per Lee J (‘Perera’). On the other hand, in Perera v GetSwift Limited (No 2) [2018] FCA 909 at [27], Lee J concluded that s 33ZF could not be used to outflank the prohibition in s 43(1A) on awarding costs against group members.

10    Dealing then with the authorities which have discussed this issue, it will follow that I agree with the conclusion at which Stevenson J arrived in TW McConnell although I would prefer to anchor this in the application of Anthony Hordern. As for Vernon, whilst I would only most hesitantly depart from anything Jacobson J has to say about the operation of Pt IVA, his Honour was dealing with a matter where the orders sought were not opposed, where in consequence, his Honour did not have the benefit of a contradictor and where the relevance of Anthony Hordern appears not to have been canvassed.

11    In that circumstance, I conclude that s 33ZF may not be used to dispense with the obligation to fix an opt out date under s 33J(1) or to send an opt out notice under s 33X(1). This conclusion is consistent with the centrality of opting out to the scheme embodied in Pt IVA. It empowers the representative applicant to commence a proceeding which will ultimately bind those persons represented through the operation of s 33ZB. But it permits this interference in the rights of the group members without their consent first being obtained. The quid pro quo for this interference is that Pt IVA permits the group members to opt out of the action. An essential element in the exercise of that right is that the group members must be notified of its existence. So viewed, opting out is not an ancillary aspect of Pt IVA. It is one of the scheme’s fundamental architectural features: Perera at [368] per Lee J.

12    Whilst no doubt in closed class actions the practical need for an opting out procedure retreats, the concept of a closed class action exists outside of Pt IVA. When all is said and done, those who commence closed class actions do so on a framework of provisions which require that the group members be given the opportunity to opt out.

13    In this case the proceeding is a closed class action and 15,482 group members have executed funding agreements. Whilst one can be sympathetic to the practicalities which have led to the opt out date not ever being fixed and no opt out notices ever having been sent, the fact is that Pt IVA requires this to be done.

14    At this point, further problems loom into view. This matter has been tried and judgment delivered. Further, an appeal was filed which was listed for hearing in the current Full Court sittings although vacated when an in principle accommodation was reached between the parties. The matter came before me as duty judge to set in train the hearing of an application for Court approval of the settlement under s 33V. It was during the setting of those procedural steps that the fact that no opt out date has ever been fixed came to light.

15    Since no opt out date has been fixed, it is an open question, engaging perhaps to persons with a particular outlook on life, whether the requirement in s 33J(4) that the trial not commence earlier than the opt out date has been complied with. However, now that it is clear that an opt out date must be fixed, that problem, at least, may be surmounted by fixing an opt out date and then granting leave nunc pro tunc under s 33J(4) to commence the trial at the time at which the trial was in fact commenced.

16    Another problem is less tractable. This is the question of what date the Court should fix as the opt out date. Mr Arnott SC for the Respondent drew my attention to s 33ZB which provides:

33ZB    Effect of judgment

A judgment given in a representative proceeding:

(a)    must describe or otherwise identify the group members who will be affected by it; and

(b)    binds all such persons other than any person who has opted out of the proceeding under section 33J.

17    Once an opt out date is set and the opt out notices are sent there remains the possibility that some group members may in fact opt out. In principle, this is unlikely in this case since all of the group members have already signed funding agreements and because under the settlement (which will also be notified) they are to receive money. However, the group members are a large number of Indonesian seaweed farmers who do not speak English and who are unfamiliar with court process, still less with the intricacies of Pt IVA. There is some possibility that the large quantity of paperwork soon to be conveyed to them for their attention may result in a few accidental decisions to opt out.

18    If any group members opt out then this will create a conundrum under s 33ZB(b).

19    This provision assumes that opting out will have occurred before judgment. If a person opts out after judgment, the binding effect of s 33ZB(b) will continue to apply. So viewed, the opting out has no consequence since the group member will remain bound by s 33ZB(b). This rather suggests that the right to opt out given to the group members will be an empty one, for what kind of right is it to be able to opt out of a proceeding where, even after one opts out, one remains bound by the outcome? I do not think that Pt IVA permits such an empty opt out right given the centrality of opting out to the scheme.

20    Consequently, I conclude that it is not possible to set an opt out date which post-dates the date of the s 33ZB judgment which has been given. In this case, the s 33ZB judgment was given on 15 November 2021. The first conclusion therefore is that the opt out date to be fixed under s 33J(1) cannot be after 15 November 2021.

21    On the other hand, s 33J(2) creates a right to opt out before the opt out date and s 33X(1)(a) refers to this as a right. To set the opt out date in the past frustrates this as it denies the group members a right which Pt IVA clearly contemplates they have. Consequently, I conclude that the opt out date cannot be fixed in the past but must be set in the future.

22    It follows that the language of the statute requires inconsistent outcomes. I must set the opt out date before 15 November 2021 and, at the same time, I must set the opt out date after the date of my orders fixing an opt out date. This is impossible to achieve. That the machinery of the statute results in this outcome is driven by the fact that the Court and the parties overlooked the necessity of fixing the opt out date prior to the s 33ZB judgment and preferably before the start of the trial.

23    Having identified the intractable nature of the problem, it is then necessary to consider the possible solutions. Once it became apparent that this problem existed I called the parties back to discuss it. Ms Hillman for the Applicant submitted that one solution would be for the Court to set aside the judgment to which s 33ZB applies, to fix an opt out date in the future and, at the time that the s 33V application is eventually heard, to make a fresh s 33ZB judgment. Mr Arnott SC for the Respondent agreed that this was the desirable course.

24    This solution solves the problem. The opt out date is fixed in the future, notices can be sent under s 33X(1) and a meaningful right to opt out is afforded to group members. At the same time, s 33ZB is not offended because no s 33ZB judgment is in place.

25    There are only two other options which appear to be available. The first is to make an order under s 33ZF. However, this seems to me potentially problematic. Having concluded that the opt out provisions are a code of provisions to which the Anthony Hordern principle applies, that path is foreclosed at the ss 33J(1) and 33X(1) level. It would therefore be necessary to use s 33ZF to neuter the implication arising from s 33ZB(b). This would be a risky undertaking as I am by no means sure that the power in s 33ZF may be used in that way, particularly in light of the High Court’s decision in BMW Australia Limited v Brewster [2019] HCA 45; 269 CLR 574.

26    The second option would be to declass the representative proceeding and to join all of the group members as applicants in what would then be an ordinary proceeding. An advantage of this procedure would be that s 33V approval would no longer be necessary. However, the practical difficulties involved in joining the 15,482 group members as applicants are formidable and make this inappropriate other than as an absolute last resort.

27    In those circumstances, it seems to me that the appropriate course is to vacate the s 33ZB(b) judgment. It was for that reason that on 21 November 2022 I made orders vacating that judgment and providing for the sending out of opt out notices.

Associate:

Dated:    24 November 2022