Federal Court of Australia

McLean-Phillips v Carnival plc t/as P&O Cruises Australia (No 2) [2023] FCA 627

ORDERS

THE COURT ORDERS THAT:

1.    By 16 June 2023, the applicant is to produce to the respondent’s solicitors:

(a)    copies of any retainers and costs agreements between the applicant and her solicitors in relation to these proceedings; and

(b)    copies of any document comprising or recording an agreement or promise by any person, including the applicant’s solicitors, to provide funding, backing, commitment or indemnity to the applicant to cover, pay, or to reimburse her for paying any costs order that may be made against her in these proceedings,

subject to any redaction of information over which a claim for legal professional privilege is made.

2.    The costs of the application for Order 1 be costs in the cause.

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

REASONS FOR JUDGMENT

JACKMAN J

1    The respondent in the proceedings (Carnival) seeks an order in the following terms:

By 16 June 2023, the applicant is to produce to the respondent’s solicitors:

a)    copies of any retainers and costs agreements between the applicant and her solicitors in relation to these proceedings; and

b)    copies of any document comprising or recording an agreement or promise by any person, including the applicant’s solicitors, to provide funding, backing, commitment or indemnity to the applicant to cover, pay, or to reimburse her for paying any costs order that may be made against her in these proceedings,

subject to any redaction of information over which a claim for legal professional privilege is made.

2    Each of the parties has filed written submissions in relation to that application, together with an affidavit in support of their respective positions. The application is made against the background of a foreshadowed application for security for costs, which was the subject of correspondence from the solicitors for Carnival on 12 May 2023 and has been provided for in the orders which I made on 19 May 2023 for the future case management of the proceedings. Carnival seeks the documents which are the subject of its present application in order to consider whether to apply to the Court for security for costs. It should be borne in mind that all that I am dealing with at present is whether the documents sought by Carnival should be ordered to be produced by the applicant, not whether a security for costs application would ultimately succeed.

3    The solicitors for the applicant, Shine Lawyers, responded to the letter of 12 May 2023 on 18 May 2023. In that letter, Shine Lawyers stated that they are engaged by the applicant on a “no-win, no-fee” basis. Shine Lawyers also stated that “there is no third party who stands behind the applicant and who will also benefit from the litigation if it is successful, that is providing any funding, backing, commitment, or indemnity such as to enliven ordinary security for costs principles against those parties”. Carnival submits that it is ambiguous as to whether the applicant’s own solicitors are covered by the latter statement, and whether some other person who does not strictly stand behind the applicant or directly benefit from the litigation has agreed to protect her in some way in the event of an adverse costs order.

4    The application is opposed on two bases.

5    First, the applicant submits that Carnival has not identified that the Court has the power to make the orders, pointing out that the orders have been sought in lieu of issuing the applicant with a notice to produce. The applicant submits that if a notice to produce had been served pursuant to r 30.28 of the Federal Court Rules 2011 (Cth) it would be set aside as not disclosing any legitimate forensic purpose. The applicant submits that the documents and information sought are not relevant to any pleaded issue in the proceeding nor any pending hearing. It is submitted that the purpose identified by Carnival is solely investigative and speculative with respect to a possible application which may be made in the future.

6    Carnival submits that its conduct in seeking the present orders in lieu of issuing a notice to produce is consistent with the overarching purpose in s 37M of the Federal Court of Australia Act 1976 (Cth) (the FCA Act), namely that the overarching purpose of the civil practice and procedure provisions is to facilitate the just resolution of disputes according to law, and as quickly, inexpensively and efficiently as possible. Carnival submits that the overarching purpose favours access being given to Carnival to this material before any hearing on its foreshadowed application for security for costs. Carnival submits that, being in lieu of a notice to produce, the appropriate standard of relevance is the same, namely whether, viewed realistically, the documents sought have a bearing on an issue which is not unreal, fanciful or speculative, or that the material sought is reasonably likely to add in some way to the relevant evidence in the case, or that it be “on the cards” that the documents sought will materially assist the party at whose request they are sought: FUD18 v Minister for Home Affairs [2019] FCA 1858 at [34] (Thawley J); Wong v Sklavos [2014] FCAFC 120; (2014) 319 ALR 378 at [12] (Jacobson, White and Gleeson JJ). The applicant submits that s 37M is not a source of power pursuant to which the Court can order production of documents.

7    In my view, the Court has the power to make the order sought. Section 23 of the FCA Act provides relevantly that the Court has power to make interlocutory orders of such kinds as the Court thinks appropriate. That is a power to which s 37M attaches. The foreshadowed application for security for costs is more than a possibility, and appears to be a concrete plan on the part of Carnival in relation to the next stage of the litigation. A more conventional approach would be for the Court to require Carnival to file an application for security for costs before ordering the production of documents relevant to the issues that will arise in that application, however, in the circumstances of the present case that is potentially productive of wasted costs and time. It may well be the case that, having regard to the matters considered below, the production of the documents sought will lead Carnival to abandon its plan to seek security for costs, thereby saving the parties and the Court from the need to apply their resources to such an application. Alternatively, the documents sought may enable Carnival to identify with precision the basis on which a security for costs application is to be made. Accordingly, in my view the Court has the power to make the orders sought.

8    The second basis advanced by the applicant for resisting the order sought by Carnival is a submission that the documents sought have no relevance to any security for costs application. The applicant relies upon the reasoning of the Full Court in Madgwick v Kelly [2013] FCAFC 61; (2013) 212 FCR 1 in which it was held that a law firm acting in circumstances where it would only recover its professional fees and disbursements if the litigation were successful has no relevant commercial interest in the litigation such as to expose it to the need to provide security for costs, in contrast to the position of a litigation funder: [47] (Allsop CJ and Middleton J), [148]-[149] (Jessup J). The applicant submits that in light of that authority, the entire premise on which Carnival seeks the production of the applicant’s costs agreement with her solicitors is misconceived, as that agreement is not relevant to any potential application by Carnival for security for its costs.

9    Carnival submits that Madgwick v Kelly is not authority for the proposition that there are no circumstances in which a law firm acting on a “no-win, no-fee” basis could ever be expected to provide security for the costs of the other party to the litigation (a proposition which the applicant does not dispute), and nor is it authority that the terms on which a party’s solicitors have agreed to act will never be relevant to the exercise of the Court’s discretion to order security where the power to do so is enlivened. Carnival draws attention to the statement by Allsop CJ (with whom Perram and Beach JJ agreed) in Zoetis Australia Pty Ltd v Abbott [2019] FCAFC 153 at [5], to the effect that Allsop CJ and Middleton J in Madgwick v Kelly were “not laying down exhaustive general principles or particular principles as to how to approach security for costs applications in class actions”. It seems to me that Carnival’s reliance upon that statement is misplaced, as the statement was directed specifically to the reasoning of Allsop CJ and Middleton J expressed at [98]-[99] of their reasoning in Madgwick v Kelly, rather than to [47] of that reasoning. Carnival also points to the reasoning of Lee J in Abbott v Zoetis Australia Pty Ltd (No 2) [2019] FCA 462; (2019) 369 ALR 512 at [2] as to the dangers of speaking in definitive and broad terms about how principles of practice and procedure should generally be applied in relation to class actions in view of the heterogeneity of class actions.

10    The reasoning of the Full Court in Madgwick v Kelly appears to me to make an application for security for costs in the present proceedings difficult, but not necessarily hopeless. There may conceivably be a ground of distinction available to Carnival arising from the particular terms of the arrangements between the applicant and her solicitors or others, but whether that is so requires disclosure of those arrangements. In that way, the documents sought may well have a bearing on whether an order for security for costs is appropriate which is not unreal, fanciful or speculative. I do not think that the phrase “on the cards” is apt to describe the likelihood of such a basis for security for costs emerging from the production of documents sought by Carnival, but it is not necessary for the possibility to rise that high in order to satisfy the test for relevance. Alternatively, the bearing which they have on that issue may well be to confirm the applicability of the reasoning in Madgwick v Kelly, and thus obviate the need for the Court to deal further with any application for security for costs. Further, there is force in Carnival’s submission that the correspondence between the parties does not unequivocally rule out the possibility that there may be an agreement or promise by a party (whether or not aptly described as standing behind the applicant) to provide funding, backing, commitment or indemnity to the applicant to cover, pay or reimburse her for paying any adverse costs order.

11    Accordingly, in my view the order sought by Carnival should be made. The costs of the present application should be costs in the cause.

Associate:

Dated:    14 June 2023