Federal Court of Australia

Alford v AMP Superannuation Limited [2024] FCA 332

ORDERS

THE COURT ORDERS THAT:

1.    The discontinuance of this proceeding as against the Fourth Respondent is approved pursuant to s 33V(1) of the Federal Court Act 1976 (Cth) (the Act) and r 26.12(4) of the Federal Court Rules 2011 (Cth).

2.    The discontinuance of this proceeding insofar as it relates to claims in respect of amounts invested in Platform Funds (as that term is defined in paragraph 3.2 of the Amended Consolidated Statement of Claim dated 2 November 2020) and Mature Products (as that term is defined in the affidavit of Rebecca Gilsenan affirmed on 17 November 2023), is approved.

3.    Leave is granted to the Applicants to discontinue the proceeding as against the Fourth Respondent by filing a notice of discontinuance.

4.    Leave is granted to the Applicants to discontinue their claims as against the First to Third and Fifth and Sixth Respondents insofar as they relate to amounts invested in the Platform Fund Products and Mature Products.

5.    Pursuant to s 37AF(1)(b) and s 37AG(1)(a) of the Act, the Court orders that paragraphs 10, 23 to 28, 33, 41 to 44 and annexure RG-42 (being the written opinion of the applicants’ counsel team) of the Affidavit of Rebecca Gilsenan affirmed 8 March 2024 be treated as confidential and subject to the restrictions in r 2.32(1)(b) and r 2.32(3)(a) of the Federal Court Rules 2011 (Cth).

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

REASONS FOR JUDGMENT

ANDERSON J:

INTRODUCTION

1    The Applicants, by interlocutory application, dated 17 November 2023, (as varied by the proposed orders accompanying the Applicants’ submissions dated 8 March 2024, and the Applicants’ further proposed orders provided to the Court on 22 March 2024), apply for orders seeking:

(a)    the discontinuance of this proceeding as against the Fourth Respondent be approved pursuant to s 33V of the Federal Court of Australia Act 1976 (Cth) (the Act) and leave be granted to discontinue the proceeding as against the Fourth Respondent by filing a notice of discontinuance pursuant to r 26.12(4) of the Federal Court Rules 2011 (Cth) (the Rules);

(b)    the discontinuance of this proceeding insofar as it relates to claims in respect of amounts invested in Platform Funds (as that term is defined in paragraph 3.2 of the Amended Consolidated Statement of Claim dated 2 November 2020) and Mature Products (as that term is defined in the affidavit of Rebecca Gilsenan affirmed on 17 November 2023) be approved, and leave be granted to discontinue such claims as against the First to Third and Fifth and Sixth Respondents; and

(c)    confidentiality orders under s 37AF(1)(b) and s 37AG(1)(a) of the Act in relation to identified sections of the affidavit of Rebecca Gilsenan affirmed 8 March 2024.

2    The Applicants rely on the following affidavits:

(a)    affidavit of Rebecca Gilsenan, affirmed 17 October 2023 (Fifth Gilsenan Affidavit);

(b)    affidavit of Rebecca Gilsenan, affirmed 17 November 2023 (Sixth Gilsenan Affidavit); and

(c)    affidavit of Rebecca Gilsenan, affirmed 8 March 2024 (Seventh Gilsenan Affidavit).

3    The claims originally the subject of the proceedings were first collectively set out in a Consolidated Statement of Claim (CSOC) dated 24 September 2019 which was later amended by an Amended Consolidated Statement of Claim dated 2 November 2020 (ACSOC).

4    The ACSOC sought relief on behalf of members of a number of superannuation funds, the trustees of which were subsidiaries of AMP Life Limited (Third Respondent) and AMP Services Limited (Fifth Respondent). Relevantly, the claims pleaded in the ACSOC related to all members of the relevant superannuation funds over particular periods of time, regardless of the products in which their money was invested. The relevant claims pleaded in the ACSOC were broadly that the trustees allowed fees charged to members to be set by other entities within the AMP Group (ACSOC at [11]) and that the fees referrable to administrative services (also provided by entities within the AMP Group) were high compared to those charged by third parties for comparable services in respect of other superannuation funds. The Applicants claimed that this amounted to contraventions of the trustees’ statutory duties and general law obligations. In relation to the non-trustee respondents, the Applicants allege that the entities were knowingly concerned in, or party to, the trustees’ breaches.

5    The ACSOC broadly alleged that a trustee acting prudently would not have permitted the arrangements whereby certain fees were set by other AMP Group entities to continue, but would have instead negotiated lower fees or would have terminated existing arrangements and procured certain services from a third-party provider. The identity of the third-party providers from whom such services would have been procured and the prices at which the services would have been provided was not specified in the ACSOC.

6    In light of the claims pleaded in the ACSOC, the Applicants’ expert evidence focused on identifying, by reference to the specific products and the specific funds, alternative third-party providers who could have provided administrative services and the price at which those services would have been provided (by way of comparison to the fees charged for those services as set by the relevant AMP entities).

7    In the course of discovery review and the preparation of expert evidence, it became clear to the Applicants’ legal advisors that:

(a)    Due to the complexity and nature of the Platform Funds, evidence could not be obtained to support a case that a prudent trustee of the Platform Funds would have obtained administrative services from a third-party provider or would have negotiated lower fees using the possibility of obtaining such services from a third-party provider as leverage in such negotiations.

(b)    Mature Products (being either closed products or rollover products) had complex fee structures which did not lend themselves to the pleaded counterfactual case, and due to the complexity and differentiated nature of the Mature Products, evidence could not be obtained to support a case that the relevant administrative services could be obtained from third-party providers or that the fees charged for the Mature Products were high relative to competitors.

8    The inability to obtain expert evidence which supported these aspects of the Applicants’ case resulted in counsel retained on behalf of the Applicants expressing the view that the claims in respect of the Platform Funds and Mature Products lacked reasonable prospects of success and should be withdrawn. For that reason, those claims were not included in the Further Amended Consolidated Statement of Claim (FACSOC) filed on 6 February 2024.

9    The amendments in the FACSOC relating to the Platform Funds involved withdrawing allegations in relation to the Platform Funds altogether. The Applicants have also removed the Fourth Respondent, NMMT Limited (NMMT) as a respondent to the proceeding in the FACSOC as it was only a party to the proceeding due to its involvement in Platform Fund claims.

10    The amendments in the FACSOC relating to the Mature Products involved confining the group member definition to exclude Mature Products in respect of the allegations which are otherwise maintained.

Legal principles

11    Section 33V of the Act provides:

33V    Settlement and discontinuance—representative proceeding

(1)    A representative proceeding may not be settled or discontinued without the approval of the Court.

…

12    The approval of the Court under s 33V of the Act is required, both for the discontinuance of the proceedings against NMMT and for the narrowing of the allegations against other respondents in respect of the Mature Products: Ridge v Hays Specialist Recruitment (Australia) Pty Limited [2022] FCA 1613 at [10] (Murphy J) citing Bray v Hoffman-La Roche Ltd [2003] FCA 1505 at [22]-[24] (Merkel J); Matthews v SPI Electricity Pty Ltd (Ruling No 16) [2013] VSC 74 at [23]-[24] (John Dixon J); Re Banksia Securities Ltd (recs and mgrs apptd) [2017] VSC 148 at [45] (Robson J).

13    In this Court the relevant test to apply in determining whether to approve a unilateral discontinuance of claims is whether it is not “unfair, unreasonable, or adverse” to the interests of group members as a whole: Watson v Maximus Holdings (NSW) Pty Ltd [2021] FCA 87 at [49] (Wigney J); Wruck v Telstra Limited [2023] FCA 932 at [36] (Murphy J); Mutch v ISG Management Pty Ltd (No 3) [2023] FCA 648 at [18] (Bromberg J).

Application of principles to proposed discontinuance

14    The discontinuance of the claims in respect of the Platform Funds and Mature Products is expected to affect a total of around 420,000 people, comprised of groups (with some overlap) of approximately:

(a)    200,000 people invested in Platform Funds;

(b)    220,000 people invested in Mature Products.

15    I have read and considered the Seventh Gilsenan Affidavit and counsel’s opinion annexed to that affidavit. I agree with the opinion of counsel expressed in their written opinion that it cannot be considered “unfair, unreasonable or adverse” to the interests of group members as a whole for the claims in respect of the Platform Funds and Mature Products to be discontinued in circumstances where the claims lack reasonable prospects of success. For these reasons, I will:

(a)    approve the discontinuance of this proceeding against NMMT pursuant to s 33V(1) of the Act and grant leave to the Applicants to discontinue the proceeding as against NMMT by filing a notice of discontinuance pursuant to r 26.12(4) of the Rules; and

(b)    approve the discontinuance of this proceeding insofar as it relates to claims in respect of the Platform Funds and Mature Products, and grant leave to the Applicants to discontinue their claims against the First to Third and Fifth and Sixth Respondents in this respect.

Confidentiality orders

16    On 16 February 2024, Murphy J ordered that pursuant to s 37AI of the Act, any affidavit, annexure, exhibit or submissions filed in the discontinuance application in respect of which a confidentiality order was sought would be suppressed upon filing on an interim basis until further order.

17    The Applicants seek orders under s 37AF(1)(b) and s 37AG(1)(a) of the Act that paragraphs 10, 23 to 28, 33, 41 to 44 of the Seventh Gilsenan Affidavit, and the counsel opinion at annexure RG-42, be suppressed, and treated as confidential and subject to the restrictions in r 2.32(1)(b) and r 2.32(3)(a) of the Rules.

18    The authorities establish that a confidentiality order is warranted to protect the confidentiality of counsel’s opinion tendered in support of settlement or discontinuance approval. Such orders promote the interests of justice by:

(a)    preserving the applicants’ privilege in the opinion, which is not waived by the filing or tender of a solicitor affidavit or counsel opinion in support of a discontinuance application: Wingecarribee Shire Council v Lehman Brothers Australia Ltd (in liq) (No 9) (2013) 97 ACSR 227; [2013] FCA 1350 at [105] (Jacobson J);

(b)    enabling counsel to be candid in disclosing their opinions to their clients knowing they will be relied on by the Court: Batey-Smith v Vasco Trustees Limited [2022] FCA 1203 at [96] and [104] (O’Callaghan J) in the context of a settlement, citing Cantor v Audi Australia Pty Ltd (No 5) [2020] FCA 637 at [275]-[278].

19    That principle applies not only in a settlement context, but also in the context of a discontinuance and, a fortiori, in the context of a partial discontinuance where related claims remain on foot, as is the case here: DBE17 (by his litigation guardian Marie Theresa Arthur) v Commonwealth of Australia (No 3) [2021] FCA 1584 at [23] (Mortimer J).

20    I am satisfied that it is appropriate to make the confidentiality orders sought by the Applicants as such orders promote the interests of justice in this case, and have been narrowed only to those parts which are necessary to suppress.

costs

21    At a case management hearing on 16 February 2024, Murphy J indicated to the parties that he intended to deal with any remaining issue of costs after the resolution of the discontinuance application. Accordingly, I will leave the issue of costs to Murphy J.

Disposition

22    I will make the orders sought by the Applicants.

Associate:    

Dated:    4 April 2024

SCHEDULE OF PARTIES