FEDERAL COURT OF AUSTRALIA King v AG Australia Holdings Ltd [2002] FCAFC 230 SHANE ROBERT KING v AG AUSTRALIA HOLDINGS LTD & ORS N 955 of 1999 SACKVILLE, HELY & STONE JJ SYDNEY 12 AUGUST 2002 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 955 OF 1999 BETWEEN: SHANE ROBERT KING APPLICANT AND: AG AUSTRALIA HOLDINGS LTD FIRST RESPONDENT GRANT SAMUEL & ASSOCIATES PTY LIMITED SECOND RESPONDENT DAVID MORTIMER THIRD RESPONDENT BRUCE HOGAN FOURTH RESPONDENT STEWART STEFFEY FIFTH RESPONDENT RONALD ASHTON SIXTH RESPONDENT MARINA DARLING SEVENTH RESPONDENT ANDREW KALDOR EIGHTH RESPONDENT LLOYD LANGE NINTH RESPONDENT DAVID O'HALLORAN TENTH RESPONDENT IAN POLLARD ELEVENTH RESPONDENT JUDGES: SACKVILLE, HELY & STONE JJ DATE OF ORDER: 12 AUGUST 2002 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The application for leave to appeal from the judgment of 11 July 2002 be dismissed. 2. The first respondent pay the applicant's costs of the first respondent's application for leave to appeal. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 955 OF 1999 BETWEEN: SHANE ROBERT KING APPLICANT AND: AG AUSTRALIA HOLDINGS LTD FIRST RESPONDENT GRANT SAMUEL & ASSOCIATES PTY LIMITED SECOND RESPONDENT DAVID MORTIMER THIRD RESPONDENT BRUCE HOGAN FOURTH RESPONDENT STEWART STEFFEY FIFTH RESPONDENT RONALD ASHTON SIXTH RESPONDENT MARINA DARLING SEVENTH RESPONDENT ANDREW KALDOR EIGHTH RESPONDENT LLOYD LANGE NINTH RESPONDENT DAVID O'HALLORAN TENTH RESPONDENT IAN POLLARD ELEVENTH RESPONDENT JUDGES: SACKVILLE, HELY & STONE JJ DATE: 12 AUGUST 2002 PLACE: SYDNEY REASONS FOR JUDGMENT THE COURT: 1 This is an application for leave to appeal from an interlocutory judgment delivered by the primary Judge on 11 July 2002 ("the interlocutory judgment"). Leave to appeal from such a judgment is required by s 24(1A) of the Federal Court of Australia Act 1976 (Cth) ("Federal Court Act"). 2 The proceedings are representative proceedings commenced on 31 August 1999, pursuant to Part IVA of the Federal Court Act. The applicant seeks relief on behalf of himself and the represented group by reason of what is alleged to be misleading and deceptive conduct in the course of a take-over by AMP Insurance Holdings Ltd of GIO Australia Holdings Ltd ("GIO") in early 1999. GIO is now known as AG Australia Holdings Ltd. 3 The represented group is defined in the seventh further amended statement of claim as follows: "The group members to whom this proceeding relates ('the group members') are all persons who were registered as owners of shares in GIO continuously between 25 August 1998 and 4 January 1999 ('the relevant period') and who did not accept the takeover offers for those shares made by AMP Insurance Investment Holdings Pty Ltd ('AMP') on 25 August 1998 (and varied on 9 December 1998) by reason of the conduct alleged in this Seventh Further Amended Statement of Claim of all (or alternatively, any) of the Respondents and who suffered loss as a consequence, but the group members do not include: (a) Grant Samuel or any body corporate related to GIO or Grant Samuel (within the meaning of s 50 of the Corporations Law); (b) any related entity of GIO or Grant Samuel (within the meaning of s 9 of the Corporations Law); (c) any proprietary company of which any of the Directors is a director or shareholder, or the beneficiary of any trust of which any such Director or corporation is the trustee; and (d) AMP Ltd and any related body corporate of AMP Ltd (within the meaning of s 50 of the Corporations Law) or any director thereof." The first respondent to the proceedings is GIO. 4 In the interlocutory judgment, the primary Judge made a number of orders. These included the following: "2. The first respondent forward to [Maurice Blackburn Cashman, the solicitors for the applicant] a draft of any correspondence it proposes to send itself or by its solicitors to individuals in the representative group in connection with this proceeding at least ten days before the correspondence is to be sent. 3. Subject to further order, in relation to this proceeding, the first respondent shall only communicate itself or by its solicitors with individuals in the representative proceeding group in writing. 4. Subject to further order, no offer of settlement shall be sent to any group member by or on behalf of the first respondent without leave of the Court." 5 GIO contends that the primary Judge erred in making orders 2 and 4. Mr Bathurst QC, who appeared with Mr Jackman and Mr Tyson for GIO, submitted that the Court has no power to make orders in this form, whether pursuant to Part IVA of the Federal Court Act or otherwise. Mr Bathurst further submitted that if Part IVA, in particular s 33ZF of the Federal Court Act, authorises the Court to make order 4, the legislation, to that extent, is invalid as inconsistent with Chapter III of the Constitution. 6 In support of these submissions, Mr Bathurst put forward a number of arguments that bear on the extent to which the Federal Court has power to supervise the making of communications between the respondents in representative proceedings and those group members who have not engaged the applicant's solicitors to act on their behalf in connection with the proceedings. The arguments advanced by Mr Bathurst cannot be dismissed as being without any foundation. 7 It is, however, necessary to remember that his Honour's judgment relates to a matter of practice and procedure. While some of the issues raised by Mr Bathurst involve important issues of principle, in our view it is not appropriate that they should be determined in the abstract. The reasoning of the primary Judge leaves it open to GIO to apply for modification or limitation of the orders made on 11 July 2002. The judgment contemplates (at [44]) that such an application may "entail a submission that, as a matter of principle and not by reference to the particular terms of the communication, GIO should, in particular circumstances and for identified reasons, be able to communicate with group members or particular sub-groups." 8 In our view, the issues identified by Mr Bathurst should be dealt with, if at all, in the context of particular proposals put by GIO to the primary Judge. It may be that, when such proposals are put, his Honour will take the view that the outcome is determined by the reasoning in the interlocutory judgment. On the other hand, his Honour may consider that the orders made in that judgment should be modified or limited in some way. Until that point is reached, in our view the issues are unlikely to be sufficiently defined for the purposes of an appeal. Moreover, as Mr Bathurst acknowledged, GIO would not suffer any irremediable prejudice if leave to appeal were not granted at this point in the litigation. 9 Accordingly, in our view, it is not appropriate to grant leave to appeal at this time. Depending upon the outcome of any application to the primary Judge, it may then be appropriate for a further application for leave to be made to agitate the issues of principle identified by Mr Bathurst. 10 GIO also sought leave to appeal from the primary Judge's refusal to grant it leave to issue a subpoena seeking the following: "all documents held or created by Maurice Blackburn Cashman recording instructions by former shareholders of the First Respondent as to whether and in what way(s) they were misled by representations made by the First Respondent as referred to [in a particular affidavit]." His Honour refused leave, on the ground that the issue of the subpoena would be futile, since the documents sought would inevitably be covered by client legal privilege. 11 Mr Jackman argued that his Honour had erred in rejecting GIO's submission that the applicant's solicitors had effectively waived privilege on behalf of those shareholders who had given instructions that they had been misled by representations made by GIO. It suffices to say that we are not persuaded that the primary Judge's decision, on a point of practice and procedure, is attended by sufficient doubt to warrant reconsideration by this Court. 12 The application for leave to appeal from the interlocutory judgment must be dismissed, with costs. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Sackville, Hely & Stone. Associate: Dated: 12 August 2002 Counsel for the Applicant: Dr K Hanscombe with Mr J Clarke Solicitor for the Applicant: Maurice Blackman Cashman Counsel for the First Respondent: Mr T Bathurst QC with Mr I Jackman and Mr M Tyson Solicitor for the First Respondent: Ebsworth & Ebsworth Date of Hearing: 12 August 2002 Date of Judgment: 12 August 2002