FEDERAL COURT OF AUSTRALIA

Haswell v Commonwealth of Australia (No 2) [2023] FCA 34

ORDERS

THE COURT ORDERS THAT:

1.    The parties provide short minutes of order reflecting these reasons within seven days.

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:

A    INTRODUCTION AND BACKGROUND

1    This class action is brought by the applicants on behalf of group members who owned land in or around seven Royal Australian Air Force bases throughout the Commonwealth and allege their land was contaminated as a result of the Commonwealth’s use of Aqueous Film Forming Foam (AFFF) at those bases (Haswell Proceeding): see Haswell v Commonwealth of Australia [2020] FCA 915 (at [1]).

2    It is related to three earlier class actions involving similar allegations, which were the subject of settlement approval by the Court, and also, most importantly, proceeding NSD 70 of 2021, Wreck Bay Aboriginal Community Council & Anor v Commonwealth of Australia (Wreck Bay Proceeding). The Wreck Bay Proceeding concerns persons who suffered loss by reason of contamination caused by the use of AFFF in the Jervis Bay Territory.

3    The Wreck Bay and Haswell Proceedings are being case managed and will be heard together at an initial trial scheduled to commence on 1 May 2023.

4    On any view, this litigation is of enormous proportions. In effect, it involves eight quite large actions being heard together, each of which raises complex issues of liability and damage.

5    Reflecting this complexity, an amount in excess of $12 million has already been charged to the Commonwealth in relation to legal costs in the Haswell Proceeding. Although the cases are large, this figure, at first blush, strikes one as very large. It is more understandable when one appreciates that two members of the inner bar and five junior barristers have been briefed, instructed by a very large firm of commercial solicitors, King & Wood Mallesons. For reasons that are unnecessary to enquire into (let alone comment upon for the purposes of this application), the Commonwealth has instructed separate solicitors in the Wreck Bay Proceeding, being the Australian Government Solicitor. A further two silks and three juniors hold briefs to advise and appear in that case. More modestly, the applicants in the Haswell and Wreck Bay Proceedings have common solicitors, Shine Lawyers (Shine), and have briefed the same senior counsel and four juniors.

6    A distinction between the Haswell Proceeding and the Wreck Bay Proceeding warrants mentioning at the outset: the former is being funded by a commercial litigation funder, Litigation Capital Management, and the latter is being conducted by Shine on a speculative basis. No security has been provided, nor has it been sought, in the Wreck Bay Proceeding.

B    THE APPLICATION

7    Both the Haswell and Wreck Bay Proceedings were listed for case management today. Among the material filed in the days preceding this case management hearing was an interlocutory application in the Haswell Proceeding, by which the Commonwealth seeks a further amount of security in the amount of $5.8 million for its costs until the end of the initial trial.

8    By way of relevant background, on 23 July 2020, the Court ordered the applicants in the Haswell Proceeding to provide security for the costs incurred by the Commonwealth up until 30 June 2021 in the amount of $5 million. On 20 August 2021, I set the dates for the initial trial and made orders requiring the parties to confer in an attempt to agree upon the provision of a further tranche of security by 30 September 2021. On 13 December 2021, further security in the sum of $3 million was provided. Since November 2022, the parties have been engaged in correspondence concerning a final tranche to take the security provided for the Commonwealth’s costs up until the conclusion of the initial trial.

9    I informed the parties that the most efficient course, consistent with the overarching purpose in Pt VB of the Federal Court of Australia Act 1976 (Cth), was to deal with all issues (including security for costs) immediately, rather than deferring the matter for a further interlocutory hearing. This has become the common way in which security for costs applications are dealt with in large class actions. Needless to say, it is a characteristic of the judicial process that it seeks to be fair and allows parties to put before the Court the necessary evidence in order to resolve all issues, including interlocutory issues, on a just basis. Notwithstanding this, where the Court is faced with a complex class action, one is primarily dealing with an issue as to quantum. In such a case, the Court is often just as well placed as the parties to have an idea of what is fair in the circumstances. What is neither essential, nor consistent with the overarching purpose, is for scarce judicial time to be taken up with lengthy programmed interlocutory disputation as to security (and a judge experienced in class actions receiving detailed evidence, generally based on highly contestable assumptions). The balance to be struck between deployment of judicial time and the requirements of fair hearing of interlocutory disputes in inter partes litigation is not necessarily the balance to be struck in a complex class action.

10    It is fair to approach the resolution of this application not only with celerity but with a relatively broad brush. Pragmatically, the parties (to their credit) were prepared to proceed with argument as to security for costs on the basis of the material filed before the case management hearing.

C    CONSIDERATION

11    There is a compelling case for some amount of further security. The only difficulty I have is as to the time estimates provided as to work proposed to be undertaken by those acting for the Commonwealth until the conclusion of the initial trial.

12    I preface any discussion by noting that any concern as to the accuracy of the estimates is not a reflection upon the genuineness of the material put before the Court by the solicitors. That evidence, in particular, the affidavit of Peta Carter Stevenson affirmed on 25 January 2023 (Stevenson Affidavit), at least in large part, amounts to an expression of opinion as to uncertain events and involves a degree of prognostication upon which minds may legitimately differ.

13    Nonetheless, having heard argument and adjourned the hearing for a short time in order to examine the figures closely in Chambers, I think some of the estimates made are excessive. This is illustrated by close attention being given to the table in Annexure A (Table).

14    It suffices to note that there are two aspects of the Table which immediately jar with my conception as to the likely efficient and proportional conduct of this litigation. The first is the very large amount of time proposed to be charged by the solicitors in preparing written submissions. The second relates to the involvement of the solicitors at the second mediation.

15    As to the first, while solicitors play a crucial role in preparing a case, including for final hearing, the preparation of written submissions in advance of the trial and at the final hearing is a task to be undertaken by counsel appearing. It is traditionally barristers’ work. It is the time when counsel, as a result of the discipline of writing outlines, will be in a position to give close consideration to the evidence that needs to be deployed and ways in which issues should be narrowed. This is especially true in this case, given there are two silks and five junior barristers involved, as well as the additional silks and barristers engaged in the Wreck Bay Proceeding (who will, in part, be working on issues which are common between both proceedings). In my view, it is unreasonable to seek an order for security which anticipates that partners will spend 200 hours on written submissions; that senior associates and junior lawyers will both also spend 200 hours; with a further 200 hours to be spent on the same task by non-solicitor employees (that is, paralegals).

16    As to the second, when it comes to mediation, the extent of estimated hours seems out of proportion to an amount I would regard as reasonable for the relevant work to be performed. This would be the case irrespective of whether detailed “position papers” were prepared and provided (which are generally of little utility in my experience). It is estimated that 397 hours are to be performed in relation to this work phase by partners; 87 hours by special counsel; 436 hours by senior associates; 180 hours by senior lawyers; 65 hours by junior lawyers; 30 hours by graduates; and 48 hours by paralegals. All I can say is after being involved in many mediations of large class actions, this estimate seems out of whack by a very considerable margin.

17    Although I do not doubt their genuineness, these estimates do tend to undermine my faith in the likely accuracy of the figures proposed for other aspects of the work. In the end, I need to work out what I consider to be fair in all the circumstances. I think an amount of approximately half of that sought (which was my intuitive response when first reading the Stevenson Affidavit) is an appropriate amount for security.

D    CONCLUSION AND ORDERS

18    Accordingly, I have determined that, having regard to all of the material before me, an additional amount of $3 million of security ought to be provided for the Commonwealth’s costs. $500,000 is to be provided prior to the second mediation, and the balance of $2.5 million is to be provided a fortnight before the commencement of the initial trial. The timing and form of security is uncontroversial.

Associate:

Dated: 31 January 2023

Annexure A