Federal Court of Australia

King v Mulpha Norwest Pty Ltd [2026] FCA 1563

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to s 33V(1) of the Federal Court of Australia Act 1976 (Cth), the applicant has leave of the Court to discontinue the proceeding insofar as it is brought on behalf of group members who fall within the definition of "Stigma Only Group Members" as set out in Schedule A to these orders.

2.    Pursuant to ss 33K, 33V, and 33ZF the applicant has leave to amend the group member definition as set out in Schedule A to these orders by striking through paragraph 1(b) of the amended statement of claim filed on 5 June 2026.

3.    The applicant is to pay the respondents’ costs in respect of the "stigmatisation" claims (including claims previously advanced on behalf of the "Stigma Only Group Members" as defined in Schedule A to these orders).

4.    Pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth) (Act), the following information is to be kept confidential and not published or otherwise disclosed to any person other than to the Court, the applicant, and the solicitors and counsel engaged by the applicant for the purpose of the conduct of this proceeding, on the ground that this order is necessary to prevent prejudice to the proper administration of justice under s 37AG(1)(a) of the Act, for a period of ten years from the date of these orders:

(a)    the confidential affidavit of Andre Joseph Adams sworn 2 October 2026 (Adams Affidavit);

(b)    Exhibit AJA-1 to the Adams Affidavit being ‘Counsel’s Discontinuance Approval Advice’.

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

Schedule A

The Stigma Only Group Members are those persons falling within the ambit of paragraph 1(b) of the Amended Statement of Claim filed on 5 June 2026 which relevantly provides:

“1    The Applicant brings this proceeding, pursuant to Part IVA of the Federal Court of Australia Act 1976 (Cth), on his own behalf and on behalf of other persons who or which:

(a)     …; and

(b)     own or owned land located within the Mulgoa Rise Area, and who or which claim to have suffered economic loss as a result of a reasonable apprehension that some land within the Mulgoa Rise Area is Unsuitable for Building…”

REASONS FOR JUDGMENT

(Revised from the transcript)

HALLEY J:

A.    Introduction

1    By an interlocutory application filed on 2 October 2026, the applicant seeks orders granting leave under s 33V of the Federal Court of Australia Act 1976 (Cth) (FCA Act) to discontinue the part of the proceeding relating to group members who only have a pure economic loss claim, and, under ss 33K, 33V, and 33ZF, to make consequential amendments to the amended statement of claim. The pure economic loss claim is referred to in the amended statement of claim as the stigmatisation claim.

2    The applicant relies on affidavits of Andre Adams sworn on 2 October 2026 and 13 October 2026, together with a confidential affidavit sworn by Mr Adams on 2 October 2026 (Confidential Adams Affidavit). There is a confidential opinion from senior and junior counsel retained by the applicant in this proceeding, which is annexed to the Confidential Adams Affidavit (Confidential Opinion). The matters the subject of the confidential material have been disclosed to the Court for the purposes of enabling it to perform its function in determining whether the discontinuance should be allowed pursuant to s 33V of the FCA Act. For that reason, which weighs heavily in the interests of justice, immediately upon admitting the confidential material, I made an order under s 37AF of the FCA Act for the non-publication of that material.

3    I am satisfied that the discontinuance should be approved, because, for the following reasons, the discontinuance would not be unfair or unreasonable or adverse to the interests of group members.

B.    Legal principles

4    Section 33V(1) of the FCA Act provides that:

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

5    The relevant test for determining whether or not approval should be given to the discontinuance of representative proceedings has variously been described as:

(a)    whether the proposed discontinuance would be fair and reasonable in the circumstances, not only in the interests of the immediate parties but of the group members as a whole. See Mercedes Holdings Proprietary Limited v Waters (No 1) [2010] FCA 124; 77 ACSR 265 at [10], [24] (Perram J); and

(b)    whether the proposed discontinuance would be unfair or unreasonable or adverse to the interests of group members. See Babscay Propriety Limited v Pitcher Partners [2020] FCA 1610; 148 ACSR 551 at [26]-[28] (Anastassiou J) and Fisher v BT Funds Management Limited (No 2) [2024] FCA 1340 at [24]-[25] (O'Bryan J).

6    The distinction between these two competing tests is immaterial to this application and the preferred test was not the subject of argument. Nevertheless, in determining this application I have proceeded on the same basis as O’Bryan J in Fisher at [24]: that “the weight of the authorities supports the view that the task of the Court is to assess whether the discontinuance would be unfair or unreasonable or adverse to the interests of group members”.

C.    Background

7    The group members in this proceeding fall into two distinct cohorts. The first cohort comprises those persons who own or owned land located in the Mulgoa Rise Area (as defined in paragraph 16 of the amended statement of claim) and who or which claim to have suffered damage to their property or economic loss as a result of damage to residential buildings located on their land because the land was Unsuitable for Building (as that term is defined in paragraph 1 of the amended statement of claim). This cohort is concerned with loss arising from damage to property.

8    The second cohort comprises those persons who “own or owned land” within the Mulgoa Rise Area, and who or which claim to have suffered economic loss as a result of a reasonable apprehension that some land within the Mulgoa Rise Area is Unsuitable for Building. Group members in that cohort are alleged to have suffered only pure economic loss.

9    The applicant alleges in the amended statement of claim that, since approximately 10 June 2024, it has become public knowledge that parts of the Mulgoa Rise Area are unsuitable for building. The applicant then alleges that, as a consequence of it becoming public knowledge that parts of the Mulgoa Rise Area are Unsuitable for Building, all properties in the Mulgoa Rise Area, including those which have not been physically affected by subsidence, have become and are likely to remain injuriously affected in value.

10    It is clear from the above that the central issue for determination in the proceeding is whether lots in the Mulgoa Rise Area are Unsuitable for Building. Under the definition in paragraph 1 of the amended statement of claim, a residential lot is alleged to be Unsuitable for Building if the geotechnical conditions of the land are such that the land is not suitable for the construction of a residential house using a deemed to satisfy slab design prescribed under Section 3 of AS2870-2011 “Residential slabs and footings”, or where the land is not suitable for the construction of a residential house other than on a slab with piles extending to natural ground or bedrock. The process of piling into bedrock is alleged to add a cost to a home that would be out of proportion to the original cost of the house and the cost of the individual parcels of land.

11    The applicant alleges that the first respondent, Mulpha Norwest Pty Ltd, a property developer, and the second respondent, the Penrith City Council each breached an alleged duty of care owed to them by failing to take reasonable precaution against the pleaded risk of harm. The applicant alleges that, had Mulpha and the Council not breached their duties of care, the property values in the Mulgoa Rise Area would not have been injuriously affected by stigmatisation. Further, the applicant alleges that Mulpha engaged in misleading or deceptive conduct and contravened s 18 of the Australian Consumer Law (ACL) (being Sch 2 to the Competition and Consumer Act 2010 (Cth)) and also made false or misleading representations with respect to the characteristics of land in the Mulgoa Rise Area in contravention of s 30 of the ACL.

D.    Prospects for success of thE stigmatisation claims

12    The prospect of succeeding on the stigmatisation claims is a relevant and critical consideration for the proposed discontinuance. The prospects of the stigmatisation claims are addressed at paragraphs 13 to 25 of the Confidential Opinion. The evidence that might support the stigmatisation claims is referred to in the Confidential Adams Affidavit at paragraphs 6 to 9.

E.    The consequences of the proposed discontinuance

13    Unlike in circumstances where a settlement agreement has been reached which would be binding upon all group members who had not opted out of the representative proceeding pursuant to s 33J of the FCA Act, the group members who only advance stigmatisation claims (which number approximately 340) remain free to commence their own proceedings if they so wish. Section 33ZE of the FCA Act has otherwise suspended the applicable limitation period in respect of those claims on commencement of the representative proceeding.

F.    Notification to group members

14    On 14 September 2026, the Court approved the form and content of the notice to group members and approved the form and content of an abridged form of notice to be published in The Sydney Morning Herald. Mr Adams gives evidence that the notice was distributed to group members in accordance with the orders made by the Court on 14 September 2026 and that, on 17 September 2026, his firm published the notice on its website. He further gives evidence that on 17 September 2026, Omni Bridgeway Limited, on behalf of the funder, Omni Bridgeway (Fund 5) Australian Invt. Proprietary Limited, published the notice on its website.

15    Mr Adams gives evidence that, as at 2 October 2026, no objections had been received to the proposed discontinuance. Subsequently, however, on 8 October 2026, the solicitors for the applicant received an objection to the proposed discontinuance from one group member. The substance of the objection was to the effect that the potential stigma and impact on property values across the Mulgoa Rise Area may arise and “have the potential to affect the reputation, market perception, and value of properties throughout the broader estate, including properties that may not presently show physical building damage”.

16    The attitude of group members is relevant, but is not a determinative consideration: Williams v FAI Home Security Proprietary Limited (No 4) [2000] FCA 1925; 180 ALR 459 at [19] (although that was in the context of settlement approval applications rather than approval for a discontinuance).

G.    Disposition

17    In all the circumstances, I am satisfied, by reason of the matters contained in the Confidential Opinion and the fact that the affected group members retain the right to bring proceedings if they so choose, that the proposed discontinuance would not be unfair or unreasonable or adverse to the interests of group members. Orders will therefore be made substantially in the form sought by the applicant.

18    I note that counsel for the first and second respondents formally sought, in addition to an order for costs thrown away by reason of the discontinuance, that those costs be paid forthwith. I am not satisfied that it is a useful or productive exercise at this stage of the proceeding to seek to have a separate cost determination of those costs given the difficulty of isolating costs to specific matters raised by the stigmatisation claims. I will therefore make orders that the applicant pays the respondents’ costs in respect of the “stigmatisation” claims, but I am not satisfied that it is appropriate to orders that those costs be payable forthwith.

Associate:

Dated:    16 October 2026