FEDERAL COURT OF AUSTRALIA King v AG Australia Holdings Limited (formerly GIO Australia Holdings Limited) [2002] FCA 364 PRACTICE AND PROCEDURE – representative proceedings – withdrawal of opt out notice – where twelve people sought to withdraw opt out notices earlier lodged with the Court – where letter seeking withdrawal of notice sent shortly after opt-out notice lodged. Federal Court of Australia Act 1976 (Cth) s 33ZF(1) SHANE ROBERT KING v AG AUSTRALIA HOLDINGS LIMITED (FORMERLY GIO AUSTRALIA HOLDINGS LTD) (ACN 054 573 401), GRANT SAMUEL & ASSOCIATES PTY LTD (ACN 050 036 372), DAVID MORTIMER, BRUCE HOGAN, STEWART STEFFEY, RONALD ASHTON, MARINA DARLING, ANDREW KALDOR, LLOYD LANCE, DAVID O'HALLORAN AND IAN POLLARD N 955 OF 1999 MOORE J 28 MARCH 2002 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N955 OF 1999 BETWEEN: SHANE ROBERT KING APPLICANT AND: AG AUSTRALIA HOLDINGS LIMITED (formerly GIO AUSTRALIA HOLDINGS LIMITED) RESPONDENT GRANT SAMUEL & ASSOCIATES PTY LTD 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 PRICEWATERHOUSECOOPERS SECURITIES LIMITED CROSS-RESPONDENT TO CROSS-CLAIMS 1A AND 2C MACQUARIE BANK LIMITED CROSS-RESPONDENT TO CROSS-CLAIM 1C GIO INSURANCE LTD CROSS-RESPONDENT TO CROSS-CLAIM 2A TRELSS RICHARD ADAM AND ORS [PRICEWATERHOUSECOOPERS] CROSS-RESPONDENTS TO CROSS-CLAIMS 1A AND 2C PRICEWATERHOUSECOOPERS ACTUARIAL PTY LIMITED CROSS-RESPONDENT TO CROSS-CLAIM 2C JUDGE: MOORE J DATE: 28 MARCH 2002 PLACE: SYDNEY REASONS FOR JUDGMENT 1 A directions hearing in this matter took place on 20 March 2002. On 25 March 2002, I made orders reflecting, in large measure, directions the parties had agreed to before or during the directions hearing. One order I made which was opposed by at least the first respondent was: "7. Opt out notices 7.1. The persons named in the schedule hereto be reinstated as group members (within the meaning of s 33A of the Federal Court of Australia Act 1976 (Cth)) in this proceeding." Set out in the schedule were the names of twelve people who had written to the Court seeking to withdraw their opt out notice. 2 This order was made against the following background. Pursuant to orders made by reference to s 33X the Federal Court of Australia Act 1976 (Cth) ("Federal Court Act") on 30 March 2001, a letter was sent (on or before 11 May 2001) to all group members in this proceeding (approximately 60,000 people) advising them that if they wanted to opt out of the proceeding they must do so on or before 15 June 2001. They were sent an opt out notice to complete, if they wished. Approximately 20,000 opt out notices were subsequently received by the Registry of this Court. Twelve people who had lodged an opt out notice later wrote to the Court seeking to withdraw that notice and remain in the proceeding as group members. Those letters were received between 8 May 2001 and 11 July 2001. Order 7.1 above relates to those twelve people. 3 On 13 December 2001, the applicant's solicitors filed a notice of motion seeking the reinstatement as group members of twenty six of their clients who had opted out of the proceeding apparently in error or by mistake. None of the twelve people, referred to earlier, who had written to the Court were included in the list of twenty six people named in the motion. After inspection of the opt out notices, it emerged that only seventeen of the twenty six people named in the motion were clients of the applicant's solicitors. In respect of those seventeen persons I made an order on 25 February 2002 in substantially the same terms as the order set out in [1] above. The position of the twelve people to whom order 7.1 relates, was raised by me in this matter of my own motion. 4 In a letter of 26 March 2002, the solicitors for the first respondent requested reasons for the making of order 7.1 above. These are my reasons. 5 Some of the reasons are apparent from the following transcript of the direction hearing of 20 March 2002: "HIS HONOUR: In terms of the opt out notices and I am now looking at item 7, is there any opposition to an order the effect of which would be to allow those people - and this is not intended to be a concluded view – who may have expressed a desire to withdraw their opt out notice being permitted to do so? MR JACKMAN: Yes, your Honour. Can I hand up a schedule that my instructing solicitors have prepared which paraphrases the reasons given by various people for wanting to change their minds and your Honour will recall from last time this issue came before your Honour that our position was that as a matter of principle your Honour would not allow people simply to change their minds but on cause shown decisions initially made as to whether or not to opt out might be change. So that if, for example, somebody proves a mistake or error in the original decision then provided that the application is made within a reasonable time that would be sufficient cause for your Honour to permit a change of decision but a simple change of heart or change of mind would not be enough as a matter of principle because there must be some certainty about who is in and who is out of the litigation. HIS HONOUR: Can I interrupt. In a sense you want to have me consider a question of principle about what should happen by reference to some or all of these people? MR JACKMAN: Yes, that is so. I can indicate how that principle, as I have submitted, the principle would operate in the present case. No.1 on the list, Mr Dan would not be permitted to change his mind. No.2 would be permitted to change her mind. Nos. 3 and 4 would not be permitted to do so; 5 would; 6 and 7 would not; 8, 9, 10 would be permitted to; 121 and 12 would not be permitted to and in the category of additional people seeking to opt out they would be entitled to opt out. So these 13 people, groups of people provide in a way the two sides of the principle: those who simply have changed their mind and we would say your Honour would not permit that; and on the other hand those who have shown cause for why they wish to revoke the initial decision. HIS HONOUR: Is there any real prejudice to your client if all of these people, notwithstanding what you have just said, were allowed to withdraw or effectively withdraw their opt out notice? We are talking about, in relation to these people, just a handful of people and, as I said on the last occasion, when you raised quite legitimately, this question of principle, I said that one of the things that actuated me to do what I did was the fact that all this happened fairly shortly after the time at which they had to opt out which is a feature of these as well, as I recall, is it not? MR JACKMAN: Yes. HIS HONOUR: Quite frankly, it is just a question of judicial resources. Should I be spending time considering an issue of principle which may involve some considered judgment on a question that is affecting only probably, 3, 4, 5 or 6 people? MR JACKMAN: In the scheme of things 13, they do not seem by their identity as disclosed here to be particularly large shareholders so the financial impact on my client might be thought to be relatively insignificant in the total scheme of the case which is why I put it on the basis of the question of principle. HIS HONOUR: I dare say what I am inviting you to consider is whether it is necessary in relation to these limited number of people to raise for consideration the principle. You have put the principle and it is a matter of public record what you have said about it. I must say my inclination is to take a somewhat practical approach to it, namely, to make an order of the type I made in relation to the earlier people who were broadly in the same class on the footing that I am not resolving any question of principle and I am acting at least in part on the fact that the desire to withdraw the opt out notice was made fairly shortly after the time at which they had to opt out to start off with. In other words, I would not be determining any principle that may impact upon, if it ever transpires, a significant number who might at some stage in the future seek to do the same thing. MR JACKMAN: I have made the submissions that I have made to your Honour and we are sympathetic to the many demands that there are on the court's resources. There is, perhaps, just thinking on my feet an intermediate position whereby an officer of the court, I am not suggesting your Honour personally do this, write to the people that I have identified as not having provided sufficient information, to ask them whether they wish to provide anything further by way of showing cause as to why they wish to change their decision. There is a possibility that on further probing they will enter into some detail about some reason that affects or vitiates their initial decision which would enable the court to deal with it in a very practical way because the question of principle then may not arise but at some stage in some case it is a question of principle that will have to be decided and I regret, if it be the case, that your Honour has to do so in respect of a relatively insignificant group of people but, nonetheless, the question of principle is an important one. HIS HONOUR: I note what you say. I daresay one of three things may happen. Firstly, I simply may make the order for the reasons I have explained in outline; I may take the step you have suggested, or I may at some stage invite, if further submissions are to be put, further submissions on the question. MR JACKMAN: If it please the court." 6 I ultimately decided to follow the first course alluded to in the penultimate passage in this extract. Several factors, in combination, justify, in my opinion, that approach. The number of people involved is very small, there is no material prejudice to the first respondent and each person endeavoured to withdraw their opt out notice shortly after it was lodged, whether it was lodged by mistake or not. While no issue was raised about the Court's power to make the order, plainly, in my opinion, the power arises under s 33ZF(1) of the Federal Court Act which enables orders to be made which the Court thinks appropriate or necessary to ensure that justice is done in the proceeding. I certify that the preceding six (6) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore. Associate: Dated: 28 March 2002 Counsel for the applicant: Dr K Hanscombe Solicitor for the applicant: Maurice Blackburn Cashman Counsel for the first respondent: Mr I M Jackman Solicitor for the first respondent Ebsworth & Ebsworth Date of Hearing: 20 March 2002 Date of Judgment: 25 March 2002