Federal Court of Australia

Wruck v Telstra Limited [2023] FCA 932

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) (FCA). The Applicant has leave to discontinue the proceeding by filing a notice of discontinuance, forthwith.

2.    Pursuant to ss 33V and 33ZF of the FCA 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 a date 60 days after the making of this order.

3.    There be no order as to costs of the interlocutory application for approval of the discontinuance.

4.    Other than Order 4 of the orders dated 16 June 2023, there be no order as to costs in the proceeding.

5.    Within three days of these orders, a copy of these orders be published on each of the following websites for not less than three months:

(a)    The website of the Applicants’ solicitors, accessible at: www.alaw.com.au; and

(b)    The Current Class Actions page of the Federal Court of Australia website, accessible at: https://www.fedcourt.gov.au/law-and-practice/class-actions/class-actions, at the entry for this class action in the Queensland Registry.

AND THE COURT DECLARES THAT:

6.    Order 1 does not affect any rights of the Applicant or any group member in the proceeding to pursue the claims that are the subject of this proceeding in another proceeding, subject to any applicable limitation period.

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

REASONS FOR JUDGMENT

MURPHY J

1    By an interlocutory application filed 14 April 2023 the applicants, Jodi Faylene Wruck and Irwin Davis, seek Court approval under s 33V(1) of the Federal Court of Australia Act 1976 (Cth) (the Act) to discontinue the class action they brought against the respondent Telstra Limited. The applicants brought the class action on their own behalf and on behalf of all persons (group members) who are, or were, covered by the Telstra Enterprise Agreement 2019-2021 (Enterprise Agreement); who were issued by Telstra with a direction under its policy, introduced on or about 20 September 2021, regarding COVID-19 vaccination; and who did not comply with that direction. The policy provided that employees in Telstra roles who are in regular contact with customers, the public or other employees must be vaccinated against COVID-19, or face termination of their employment (COVID-19 Vaccination Policy). Under the policy, Telstra employees working in such roles were required to have their first vaccination by October 2021 and their second vaccination by November 2021. The employment of the first applicant was terminated because she refused a direction to be vaccinated.

2    For the reasons I explain, I have made orders approving discontinuance of the proceeding.

The proceeding

3    The Statement of Claim alleges that, by proposing and then implementing the COVID-19 Vaccination Policy, Telstra:

(a)    breached the Enterprise Agreement, and s 48 of the Work Health and Safety Act 2011 (Qld) (WHS Act) (and analogous provisions in similar legislation in other States and Territories) in September 2021 by not providing a bona fide opportunity for the applicants and group members to consult with and influence Telstra in relation to the (then) proposed COVID-19 Vaccination Policy. Broadly, it is alleged that Telstra only provided employees with a one week consultation period, and that Telstra refused to disclose the risk assessment it had undertaken to develop and decide in respect of which employee roles and locations the proposed mandatory COVID-19 Vaccination Policy would apply;

(b)    breached its statutory duty to the applicant and group members under s 19 of the WHS Act (and analogous provisions in similar legislation in other States and Territories). Broadly, it is alleged that under those provisions Telstra was required to ensure as far as reasonably practicable the health and safety of the applicant and group members, including to provide and maintain a work environment without risks, and to provide any information that was necessary to protect them from risk to their health and safety arising from work carried out as part of Telstra’s business. Telstra is alleged to have breached that alleged duty by directing mandatory COVID-19 vaccinations which were said to expose the applicant and group members to a possible risk of adverse health including serious illness and death;

(c)    breached ss 7-11 and 15 of the Anti-Discrimination Act 1991 (Qld) (and analogous provisions in similar legislation in other States and Territories). Broadly, it is alleged that Telstra discriminated against the applicants and group members by dismissing them or treating them unfavourably in connection with their work on the basis of their political beliefs or activities. In relation to the first applicant, it is alleged that she held the political belief that she has freedom of choice as to what to put into a body and that everyone has a right to choose whether or not to be vaccinated;

(d)    breached s 351 of the Fair Work Act 2009 (Cth) by taking adverse action against the applicants and group members because of their political opinions or beliefs; and

(e)    gave unlawful or unreasonable directions to its employees because of the above matters; and unlawfully and unreasonably terminated the employment of the first applicant and some group members.

The applicants and group members claim loss and damage suffered by reason of the above matters.

The Discontinuance application

4    Evidently, the parties’ solicitors did not understand that, pursuant to s 33V(1) of the Act, discontinuance of a representative proceeding requires Court approval. On 13 March 2023 Alexander Law, the solicitors for the applicants, filed a notice of discontinuance, co-signed by a solicitor for Telstra, in the Queensland registry of the Court. The registry (wrongly) accepted the notice for filing. Once my chambers were notified of that fact I directed that the notice of discontinuance be removed from the Court’s file; the proceeding be reinstated; the parties be informed that discontinuance requires Court approval; and that the proceeding be brought on for a case management hearing, which was listed on 20 April 2023.

5    On 14 April 2023, the applicants filed an interlocutory application seeking Court approval of the proposed discontinuance, supported by an affidavit of Sameh Iskander, the Principal of Alexander Law made 14 April 2023. Mr Iskander deposed that:

(a)    the litigation funder of the proceeding (the Funder), being a private individual, had entered into a written agreement to fund the proceeding on or about 4 January 2022, a condition of which was that the Funder could cease to fund the proceeding upon notice to the applicants;

(b)    Alexander Law had entered into a client services agreement with the applicants on or about 22 February 2022, which also provided that the Funder could cease to fund the proceeding upon notice to the applicants;

(c)    on 21 December 2022, the Funder instructed Alexander Law that it ceased to fund the proceeding;

(d)    on the same day, Alexander Law notified the applicants and some class members of the Funder’s decision;

(e)    on 22 February 2023, Alexander Law and Senior Counsel for the applicants held meetings with a cross-section of group members to traverse funding options that would permit the proceeding to go forward;

(f)    on 5 March 2023, the applicants instructed that they were unable to source funding to continue the proceeding and instructed Alexander Law to discontinue it; and

(g)    upon receipt of those instructions Alexander Law wrote to Telstra seeking their consent to discontinue the proceeding, and on 10 March 2023 Telstra provided such consent.

6    Unfortunately, the application for approval to discontinue the proceeding was deficient in two ways.

7    First, the reason Mr Iskander gave for the application to discontinue the proceeding was that the Funder had decided to cease funding pursuant to a clause in the funding agreement that permitted the Funder to do so on notice to the applicants. Alexander Law had not, however, provided the Court with a copy of the funding agreement or the retainer between it and the applicants as required pursuant to [6.1] of the Class Actions Practice Note (GPN-CA), and had not filed and served a copy of the funding agreement in accordance with [6.4] of the Practice Note. The Court was therefore not in a position to determine whether the funding agreement, in fact, permitted the Funder to discontinue the proceeding on notice only to the applicants without appropriately notifying the group members. Nor was the Court in a position to determine whether the Alexander Law’s retainer permitted it o cease acting for the applicants, and/or any group members who had retained the firm, on the basis that funding for the applicants had been withdrawn.

8    To address that concern, in the case management hearing on 20 April 2023 I directed Alexander Law to provide a copy of the funding agreement and any retainer or costs agreement to my chambers. On 20 April 2023, Alexander Law provided a copy of the funding agreement to chambers, which identified Mr Clive Palmer as the Funder, together with a copy of the retainer and costs agreement, called a client services agreements.

9    In the email attaching the funding agreement Mr Iskander said that the Funder requested that the funding agreement be treated as confidential. I had no difficulty with treating the monetary ‘funding limit’ in the funding agreement as confidential, as doing so would reveal the applicants’ war chest to Telstra (or at least would have done so if funding had not been withdrawn) and might be said to give a Telstra a tactical advantage in the litigation if discontinuance was not approved: see [6.4] of the Practice Note. But I did not consider it appropriate to treat the Funder’s identity as confidential.

10    My chambers so informed Mr Iskander by email on 21 April 2023. By email later that day Mr Iskander made further submissions directed at the Funder’s identity being treated as confidential. Mr Iskander submitted that:

[The Funder’s] wealth is well-publicised in the media and his name is synonymous with great wealth and other political ideologies throughout the country. By revealing the name of the funder, it ultimately invokes a mindset of an endless pecuniary “war chest” and other types of conspiracies, connotations and prejudices, which may be prejudicial for the applicants’ cause of action should it continue.

Should one or a group of the class members seek to continue the action through other funding means; the mere fact of the respondent being privy to such information about the former funder will then surely give them a tactical advantage if the case were to progress and knowing that this particular funder is no longer funding the matter. By revealing the name of the former funder, he could actually cause detriment to the applicants should they continue as the respondent can use certain tactical legal measures having known such information and knowing that this funder is no longer in the picture.

11    I did not accept that submission. In my view: (a) the notoriety of the Funder’s great wealth had little significance when the funding limit was relatively modest, and any political ideologies he holds are irrelevant; (b) the Funder had withdrawn funding and whatever connotations the Funder’s involvement in the proceeding may have earlier carried, it no longer did so; and (c) I did not accept that any tactical advantage would be conferred upon Telstra by knowing the identity of the former funder. The significant matter was that the applicants no longer had funding to bring the proceeding, not the identity of the former funder. In my view, treating the identity of the funder as confidential would be inconsistent with the Practice Note.

12    More fundamentally, the great majority of class actions in this Court are funded by a litigation funder, and they are not like ‘ordinary’ litigation where the persons affected by the litigation are all present. Class actions often involve very large claims, impact broad classes of people, and (as in this case) relate to questions of significant public interest. In such cases the need for transparency and open justice is heightened.

13    It is relevant too that litigation funders are in the unique position whereby, despite not being the applicant, they are entitled to give directions to the applicant’s solicitor concerning the conduct of the proceeding and they can have a role in settlement negotiations. Indeed, sometimes a funder may have too much say in such negotiations: see Perera v GetSwift Limited [2018] FCA 732; 263 FCR 1 at [32]; Court v Spotless Group Holdings Limited [2020] FCA 1730 at [46]-[54].

14    Further, litigation funders typically have a contractual relationship with the representative applicant who enters into a funding agreement, but may not have any relationship with the group members. Unlike the lawyers for the applicant and group members, litigation funders are not officers of the Court; they do not owe ethical obligations to the Court or to the applicant and group members; and they do not owe fiduciary obligations to the applicant and group members. Any conflicts of interest that arise may not be adequately addressed by the regulatory mechanisms. As noted in the Australian Law Reform Commission report, Integrity, Fairness and Efficiency - An Inquiry into Class Action Proceedings and Third-Party Litigation Funders, (December 2018 at 6.1):

Litigation funding can be said to improve access to justice. There is empirical evidence the number of successful class actions would not have run absent the funding provided by litigation funders. Notwithstanding this contribution to justice, there are inherent risks associated with litigation funders: failure to meet their obligations under funding agreements; using the Federal Court of Australia for improper purposes; and exercising influence over the conduct of proceedings to the detriment of plaintiffs.

(Footnotes omitted.)

15    It will usually be contrary to the requirement for open justice for litigation funding of a class action to occur with the identity of the funder being treated as confidential.

16    Second, Mr Iskander sought approval to discontinue the proceeding without group members being given notice of the application.

17    Given the nature of the claims in the proceeding, and the existence of disparate and strongly held views in the community about the fairness and lawfulness of an employer mandating that employees be vaccinated against COVID-19 under threat of termination of employment, I considered it likely that Telstra employees who declined to be vaccinated and were threatened with termination of employment, or whose employment was terminated, were likely to be aware of the proceeding.

18    Section 33X(4) of the Act provides that an application for approval of a settlement under s 33V must not be determined unless notice has been given to group members, but there is nothing which provides that an application for approval of discontinuance under s 33V must not be determined unless group members are given notice. Section 33X(5), however, provides that the Court may require that group members be given notice of any matter at any stage.

19    Telstra accepted that an order to approve the discontinuance of the proceeding will not affect any rights of the applicants or group members to pursue the claims that are the subject of the class action in another proceeding, subject to any applicable limitation periods. In such circumstances it has sometimes been argued (although not in this case) that there is no need to give group members notice of an application to discontinue a class action.

20    I take a different view. Like this case, Turner v TESA Mining (NSW) Pty Ltd (No 2) [2022] FCA 435 concerned an application for approval to discontinue a class action in circumstances where upon discontinuance group members would be returned to the same position they were in before the class action was commenced. That is, they would be able to pursue the claims that were the subject of the class action in another proceeding, subject to any applicable limitation periods, and would have had the benefit of the suspension of such limitation periods by operation of s 33ZE while the class action was on foot.

21    I said the following in Turner (at [35]), in remarks which are equally apposite here:

In circumstances where it is likely that many group members are aware of the proceeding, I consider it to be plainly inappropriate to grant leave to discontinue the proceeding without giving notice to group members. The principal purpose of a notice under ss 33X and 33Y of the Act is to ensure that group members can make informed decisions concerning their rights or interests: Melbourne City Investments Pty Ltd v Treasury Wine Estates Limited [2017] FCAFC 98; 252 FCR 1 at [88] (Jagot, Yates and Murphy JJ). Unless group members are given notice of the proposed discontinuance and the terms upon which that is proposed to occur, they may not know: (a) that their claims are no longer being pursued in the proceeding and that they may lose their rights to bring their own claim by operation of the applicable limitation period; (b) that the proposed discontinuance is on terms that they remain able to bring any individual claim …; (c) the reasons for the proposed discontinuance and therefore whether they should object to it; and (d) that they may seek to be substituted as the representative party on the basis that the applicant is no longer adequately representing his or her interests (s 33T).

22    On 16 June 2023, I made orders which had the effect of:

(a)    approving a Notice of Proposed Discontinuance (Notice) to be sent to group members;

(b)    directing Telstra to prepare a list of all persons who meet or appear to meet the definition of a group member (list of potential group members), and to provide that list to an external mail house on a confidential basis; and

(c)    directing Telstra to have the mail house send the Notice to group members by 30 June 2023 by email, and if no email address was held, by post.

23    The Notice informed group members that:

(a)    the applicants sought leave to discontinue the class action because COVID-19 vaccination policies in many workplaces were being retracted and because the Funder had withdrawn funding for the proceeding;

(b)    the proceeding will come to an end if leave to discontinue it is granted, but they would still be able to bring their own court case to make the same claims, either individually or on behalf of other persons, if they wished, subject to the applicable limitation periods for bringing such claims;

(c)    they had three options:

(i)    do nothing, in which case the proceeding was likely to be discontinued;

(ii)    propose themselves or another group member to be substituted as the representative applicants and thereby to take over the conduct of the case. The proposed new representative applicant would though have to be willing to conduct the case on his or her own behalf and on behalf of group members, to appoint lawyers to act in the case and to meet, or to make arrangements to meet, any legal costs; or

(iii)    object to the proposed discontinuance of the proceeding.

(d)    If a group member wished to take up either option (i) or (ii) above they were told that they must so inform Alexander Law by email by close of business on 14 July 2023, who would then inform the Court in that regard.

24    The parties also relied upon affidavits by Mr Iskander made 1 August 2023 and Justine Giuliani, a Partner of Seyfarth, Shaw Australia, the solicitors for Telstra, made 4 August 2023, which show that the parties complied with the 16 June 2023orders. They also show that:

(a)    four group members objected to the proposed discontinuance (objectors). No objector had, however, indicated a preparedness to be substituted as representative plaintiff nor to appoint lawyers to act in the case or to meet, or to make arrangements to meet, any legal costs;

(b)    Mr Iskander had then informed each of the objectors by email of their right to be heard at the hearing on 7 August 2023 at 11:00 am AEST, and that they should contact Alexander Law or the Court to confirm whether the hearing would proceed in person at the Court or by video link; and

(c)    two objectors had provided statements setting out their strong views as to the unfairness and unlawfulness of the COVID-19 Vaccination Policy and opposing discontinuance of the proceeding, which statements were placed before the Court. However, no objector, nor any other group member, indicated that they wished to be heard at the hearing.

25    The hearing on 7 August 2023 took place by video-link and no objector, nor any other group member had contacted the Court seeking to understand whether the hearing would proceed in person or by video-link, and none sought to obtain from the Court or from Alexander Law the requisite link to attend the hearing. No objector or group member sought to be heard in the application.

Lifting the suspension of applicable limitation periods?

26    Section 33ZE(1) of the Act provides that upon the commencement of a representative proceeding the running of any limitation period applicable to the claim of a group member is suspended. Subsection (2) provides that the limitation period will not begin to run again until either the group member opts out of the proceeding, or the proceeding and any appeals arising out of the proceeding, are determined “without finally disposing of the group member’s claim”.

27    In Turner (at [11]-[19]) I discussed the uncertainty in the authorities in relation to whether an order to discontinue a representative proceeding constitutes a “determination” for the purposes of s 33ZE(2). I concluded (at [20]-[22]) that any limitation periods applicable to group members’ claims do not begin to run again following discontinuance of a representative proceeding because an order approving discontinuance does not finally dispose of group members’ claims. But as I said (at [23]), that construction of s 33ZE(2) can cause real unfairness to the respondent in a class action. It means that, upon discontinuance, the respondent would be left in the position that the limitation periods applicable to group members’ claims (which are suspended by operation of s 33ZE(1)) would remain suspended and the respondent would be forever exposed to the risk of claims by group members. It is unlikely that the legislature intended such a result.

28    Here, the parties jointly applied for an order that the limitation periods applicable to group members’ claims begin to run again 60 days from the date of the orders for discontinuance. For the reasons I explained in Turner (at [26]-[31]), I consider such an order is within the power in s 33V(1) and s 33ZF and is appropriate here.

Determination

29    It is appropriate to approve the proposed discontinuance.

30    First, under the terms of the funding agreement the Funder is contractually entitled to withdraw funding, without cause, on notice to the group members. The client services agreements between the applicants and Alexander Law also recognise that the Funder can withdraw funding on notice to the applicants. The Funder has withdrawn funding and Alexander Law, the applicants and some group members made efforts to find another way to fund the proceeding, but they were unable to do so. A large and complex case like this cannot proceed without substantial funding, whether that be by way of lawyers providing no win-no fee services, third-party litigation funding, a group costs order, or the applicants and group members agreeing to share the costs. There is no evidence that any group member is willing to meet the legal costs or to make arrangements to do so.

31    Second, if discontinuance is approved group members will be put back in the position they were in immediately before the class action was commenced. They will have not have lost their rights to bring another proceeding making the same claims, either in individual proceedings or in another class action, and any applicable limitation periods will not begin to run again until 60 days following the order for discontinuance.

32    The fact that group members will be put back in the position they were in immediately before the class action was commenced does not, however, mean that they will have suffered no detriment by reason of discontinuance. They will have lost the benefit of the existing proceeding which is a vehicle through which they may have been able to vindicate their (asserted) rights at no cost or risk to themselves. If the class action is discontinued they may not be able to afford to bring their own individual case against a large and determined respondent like Telstra, even less so afford to bring another class action. Another class action may not be commenced, or if one is commenced it may be on the basis that group members share the costs and risks of the litigation.

33    But group members have been given notice of the application for approval to discontinue the proceeding and of their right to object to discontinuance and/or to seek substitution as the representative applicant. Four group members objected to discontinuance, but none of them expressed a preparedness to be substituted as the applicant to conduct the case on his or her own behalf and on behalf of group members, to appoint lawyers to act in the case or to meet, or to make arrangements to meet, the costs of the proceeding. Two objectors provided written statements to the Court setting out their strong views as to the unfairness or unlawfulness of Telstra’s COVID-19 Vaccination Policy, but they did not say they were prepared to be substituted as the applicant, to appoint lawyers to act in the case, or to meet, or make arrangements to meet, the legal costs necessarily associated with vindicating their (asserted) rights. As I have said, a large and complex case like this cannot proceed without substantial funding.

34    Third, the test for approval of the discontinuance of a class action does not require that discontinuance be positively in group members’ interests. In relation to approval of a proposed settlement it is established that the Court must be satisfied that the proposed settlement is fair and reasonable in the interests of affected group members, including as between group members: Australian Securities and Investments Commission v Richards [2013] FCAFC 89 at [7] (Jacobson, Middleton and Gordon JJ); Kelly v Willmott Forests (No 4) [2016] FCA 323; 335 ALR 439 at [62]. There has been no change in this test over many years and, as has been said many times, the Court has an onerous role to protect the interests of group members who are not directly represented in the proceedings.

35    For many years the same test was applied in relation to approval of the discontinuance of a class action. That position, however, changed over time as I explained in Turner (at [6]-[10]). In Laine v Thiess Pty Ltd [2016] VSC 689 at [34] Dixon J proposed a less strict test in relation to a proposed discontinuance, being whether discontinuance would be unfair or unreasonable or adverse to the interests of group members. In Turner (at [10]) I said the following, which is equally apposite here:

I consider the test in Laine to be appropriate. It could be said that group members will always have an interest in the applicant being forced to press on with the litigation, even if the prospects of success are remote, because they will share the benefits of any success in the case without having any of the costs and risks. If that approach is taken, a proposed discontinuance may never be positively fair and reasonable in their interests. That would be an unworkable test and in the circumstances of the present case it is appropriate to decide whether to approve the proposed discontinuance through the prism of what would be positively unfair or unreasonable having regard to group members’ interests.

36    I am satisfied that the test in Laine is the appropriate test in the circumstances of this case. There has been no hearing or judicial determination in relation to the merits of group member’s claims, and no question of res judicata or issue estoppel arises and the discontinuance does not affect any rights of the applicants or group members to pursue the claims the subject of this proceeding in another proceeding, subject to any applicable limitation periods. While discontinuance will not be positively in group members’ interests, they will be put back in the position they were in immediately before the class action was commenced. In my view, discontinuance will not be unfair or unreasonable or adverse to the interests of group members.

37    Fourth, the orders provide group members with 60 days before any limitation periods applicable to group members’ claims commence to run again. Such an order is appropriate as it recognises the unfairness for Telstra if it was to remain forever at risk of being sued by group members for the alleged breaches when the proceeding has been discontinued. Such an order also protects group members’ interests by giving them 60 days to seek legal advice and commence their own proceeding if they wish, before any applicable limitation periods begin to run again.

38    For these reasons I made the attached orders.

Associate:    

Dated:        15 August 2023