Mitchell v Roads and Maritime Services (now known as Transport for NSW) (No 2)

These representative proceedings have been brought by the plaintiffs, Darren and Rosaline Mitchell, on their own behalf and on behalf of all the persons who have had land compulsorily acquired by the defendant, Roads and Maritime Services (now known as Transport for NSW) (TfNSW), for the WestConnex M4–M5 Link Project. The land was acquired from group members for the construction of tunnels forming part of the Project. It was acquired from them without their consent and without compensation. The plaintiffs’ claim is founded on s 179(1) of the Roads Act 1993 (NSW), which proscribes land being acquired by compulsorily process by TfNSW without the owner’s approval for the purposes of resale.

In summary, the plaintiffs claim that by acquiring the land without consent, and then granting a long-term lease over that land to privately owned entities for substantial consideration, TfNSW contravened s 179(1) of the Roads Act.

In the proceedings, the plaintiffs are represented by solicitors, Ironbridge Legal.

The present application by the plaintiffs is primarily two-fold: first, for an order pursuant to r 6.24(1) of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) to join Litigation Fund WCX Pty Ltd (Funder) as a defendant to the proceedings; and second, for an order pursuant to s 183 of the Civil Procedure Act 2005 (NSW) (CPA) that the funds held by Ironbridge deposited in its trust account by the Funder are held for the benefit of the plaintiffs to be applied towards their legal costs incurred as lead plaintiffs in these proceedings.

During the hearing, the Funder made an oral application to stay the plaintiffs’ application on the basis of a dispute resolution clause which it says engages s 8 of the Commercial Arbitration Act 2010 (NSW) (CAA).

TfNSW does not oppose the joinder of the Funder to the proceedings and did not wish to be heard in relation to the issue of the funds held in the Ironbridge trust account.

For the reasons set out below, I have determined that there should be no stay of the application, that the Funder should be joined as a defendant to the proceedings and that s 183 of the CPA does provide the power for the making of an order that the funds held by Ironbridge are held for the benefit of the plaintiffs to be applied towards their legal costs incurred as lead plaintiffs in these proceedings.

On 30 March 2021, the proceedings were commenced by the plaintiffs. Since that date, there have been amendments to the pleadings, interlocutory judgments and changes to the legal representatives of the plaintiffs. The pleadings are now closed, and orders have been made for agreed common questions to be determined along with the plaintiffs’ individual claims at an initial trial. The next matters to be completed in advance of the initial trial are the service of lay affidavits, expert reports and tender lists and the issuance of opt-out notices. This matter has not yet been set down for the initial trial.

The plaintiffs have had multiple changes of solicitors on the record for them, with notices of change of solicitor being filed on 14 July 2021, 6 December 2021, 13 February 2023 and 31 October 2023. Since 31 October 2023, Ironbridge have been the solicitors on the record for the plaintiffs in the proceedings, being the fifth set of solicitors to represent them in the proceedings.

The plaintiffs have been funded by the Funder since the proceedings were commenced. The plaintiffs have insufficient means themselves to meet the legal costs necessary to progress or bring the proceedings to a conclusion, by a substantive application for court approval or otherwise.

On 13 August 2021, Hammerschlag J (as the CJ in Eq then was) ordered that the plaintiffs provide TfNSW and the court with a redacted copy of the litigation funding agreement with the Funder. On 20 August 2021, the redacted copy was provided. The redactions included the name of the Funder.

TfNSW then applied for security for its costs from the plaintiffs, which application was heard on 26 April 2022 by Ball J. On 28 April 2022, Ball J ordered that the plaintiffs give security for the defendant’s costs in the amount of $415,000, the form of which was to be agreed, failing which it was to be paid into court: Mitchell v Roads and Maritime Services (now known as Transport for NSW) [2022] NSWSC 500. After unsuccessful applications for leave to appeal against the order for security to the Court of Appeal of this court (Mitchell v Transport for NSW [2022] NSWCA 141) and then to the High Court of Australia (Mitchell v Transport for NSW [2022] HCASL 214), the Funder paid the security.

The Master Funding Agreement dated September 2019 between the Funder and the plaintiffs (who are defined as the “Clients” in the Funding Agreement) includes the following relevant terms (leaving all typographical and grammatical errors in place):

The definitions contained in cl 1.1 of the Funding Agreement include the following:

The Funding Agreement is an unhappily drafted document, with numerous errors, grammatical mistakes and oddities in it, such as:

The sole director, secretary and shareholder of the Funder is Robert Coshott. Michael Coshott, the son of Robert Coshott, is also involved in the business of the Funder. Where I refer to the “Funder” being involved in communications such as letters and emails, I mean either or both of Robert Coshott and Michael Coshott acting on behalf of the Funder.

Since 27 February 2023, Ironbridge had been acting for the Funder in other proceedings it had brought in this court against Rosario Aversa and Antonia Aversa (Aversa Proceedings). On this application, the Funder provided to the court a significant number of emails in which Ironbridge and the Funder communicated about issues concerning the Aversa Proceedings and then, in May 2023, began communicating about Ironbridge potentially becoming the solicitors for the plaintiffs in these proceedings. I have determined that none of those emails are relevant to any of the issues I have to decide on this application, other than to establish that Mr Withane (the principal of Ironbridge) and Robert Coshott knew each other from their interactions in relation to the Aversa Proceedings.

On 14 September 2023 at 4:11PM, the Funder sent an email to Trevor Withane (the principal of Ironbridge) and asked him if he was interested in taking over conduct of these proceedings on behalf of the plaintiffs. In response, Mr Withane indicated that Ironbridge was willing to act.

On 14 October 2023 at 11:01AM, the Funder sent an email to Mr Withane stating that he had sent by express post a USB containing all the documents relevant to the question of liability and proposing a teleconference on the following Monday to discuss a number of matters, including the signing of the Ironbridge retainer agreement by the plaintiffs and the Funder, following which a video conference with the plaintiffs should be arranged for them to sign the retainer.

On 15 October 2023 at 9:03PM, Mr Withane sent an email to the Funder stating that he was in Hong Kong for business all of the following week with a very tight schedule. He asked for the plaintiffs to send their identification documents and for a teleconference and video conference with the plaintiffs to be arranged.

On 16 October 2023 at 6:03PM, Thomas Goring of Ironbridge sent an email to the Funder which attached the engagement letter dated 16 October 2023 from Ironbridge (Ironbridge engagement letter) and a trust direction to be sent to, and signed by, the plaintiffs. The Ironbridge engagement letter was addressed to the plaintiffs, copied to the Funder and contained the following relevant provisions:

The important matters which arise from the Ironbridge engagement letter are:

On 23 October 2023 at 1:51PM, Mr Goring sent an email to the Funder stating:

Attached to this email was the trust direction dated 23 October 2023 addressed to the plaintiffs and copied to the Funder, the relevant parts of which were in the following form:

On 24 October 2023 at 8:39PM, Mr Withane sent an email to the plaintiffs which relevantly stated:

Attached to the email was a copy of the Ironbridge engagement letter which was dated 16 October 2023 and signed on each page and on the execution page by Robert Coshott on behalf of the Funder on 21 October 2023. This constituted the acceptance of the Ironbridge engagement letter by the Funder.

On 25 October 2023 at 6:51PM, the Funder sent an email to Mr Withane saying he had just spoken to Mr Mitchell who was concerned that Mr Withane had told Mr Mitchell on the phone “the hearing in this case is a long way off”. The Funder asked Mr Withane whether Mr Mitchell had misunderstood Mr Withane.

On 27 October 2023 at 3:52PM, Mr Withane sent an email to the Funder, copied to the plaintiffs, which referred to a call Mr Withane had with Mr Mitchell on 24 October 2023 in which he asked him to provide identity documents and sign the Ironbridge engagement letter, and stated that Mr Withane was still waiting for these. The relevant parts of the remainder of the email are as follows (removing obvious formatting errors):

The email concluded by Mr Withane saying that Ironbridge needed the plaintiffs to provide their identity documents and sign and return the Ironbridge engagement letter.

On 30 October 2023 at 9:28AM, Mrs Mitchell sent an email to the Funder to which was attached copies of the plaintiffs’ driver licences and the signature page of the Ironbridge engagement letter which was dated 30 October 2023 and signed by each of the plaintiffs. This constituted the acceptance of the Ironbridge engagement letter by the plaintiffs. In the email, Mrs Mitchell said she had been asked by Mr Mitchell to send the documents to the Funder “for the new solicitors”.

On 30 October 2023 at 10:04AM, the Funder sent an email to Mr Withane forwarding on the email he had received from Mrs Mitchell with the attached driver licences and completed signature page from the Ironbridge engagement letter.

On 30 October 2023 at 6:02PM, Mr Withane sent an email to the plaintiffs, copied to the Funder, in which he said that they were nearly there on completing the engagement process, asked for a video call to be arranged that night or the following morning and requested that the plaintiffs provide a full copy of the Ironbridge engagement letter with all pages preferably initialled at the bottom by each of the plaintiffs.

On 30 October 2023 between about 7:10PM and 7:30PM, Mr Withane had a video conference with the plaintiffs for the purposes of them confirming their identities and that they had each read, understood and signed the Ironbridge engagement letter.

On 30 October 2023 at 7:28PM, Mr Goring sent an email to the plaintiffs thanking them for engaging Ironbridge and for their time that evening allowing them to confirm their identities and that they each read, understood and signed the Ironbridge engagement letter. Mr Goring requested that the plaintiff send Ironbridge a full copy of the Ironbridge engagement letter with their signatures attached.

On 13 November 2023 at 3:25PM, Emily Belling (the practice manager of Ironbridge at that time) sent an email to the Funder which attached an Ironbridge invoice dated 13 November 2023 addressed to the plaintiffs for the period from 20 October 2023 to 31 October 2023. The email also stated that:

The invoice included a page headed “Important Information”, one section of which was titled “Proposed Withdrawal of Trust Money” which stated:

Mr Withane gave evidence that the email and invoice of 13 November 2023 were sent when Ms Belling was not provided with instructions on how the matter was to be invoiced. That said, the email addressed to “Robert Coshott” and the attached invoice addressed to the plaintiffs appeared to be in keeping with the provisions of the Ironbridge engagement letter which made it plain that the plaintiffs were the clients of Ironbridge and that Robert Coshott representing the Funder was the primary contact for Ironbridge, and was authorised to receive, review and manage all invoices.

On 13 November 2023 at 3:42PM, the Funder sent an email to Ms Belling authorising the payment of the invoice dated 13 November 2023.

On 15 November 2023 at 5:43PM, Ms Belling sent an email to the Funder stating that the trust account balance for the WestConnex resumption class action was $100,000.

In around early December 2023, Ironbridge outsourced its invoicing related tasks to an offshore company called SBA, which effectively became Ironbridge’s accounts team and sent invoices and trust directions directly to clients.

On 19 December 2023 at 9:14PM, SBA sent an email on behalf of Ironbridge to the Funder which attached an invoice and trust direction. The email relevantly stated (emphasis in original, with grammatical errors left in place):

On 25 January 2024 at 10:02PM, SBA sent an email on behalf of Ironbridge to the Funder which attached an invoice and trust direction. The email relevantly stated (emphasis in original, with grammatical errors left in place):

On 9 February 2024 at 5:30PM, SBA sent an email to the Funder which attached a receipt for the payment of invoice 202783, relevantly stating (emphasis in original, with grammatical errors left in place):

On 12 February 2024 at 6:40PM, SBA sent an email to the Funder which attached a receipt for the payment of invoice 202812. The email was otherwise in precisely the same form as the email of 9 February 2024.

On 20 February 2024 at 4:17PM, SBA sent an email to the Funder which attached invoice 202854 in the amount of $57,684.60 and a trust direction. The email relevantly stated (emphasis in original, with grammatical errors left in place):

On 6 March 2024 at 4:41PM, SBA sent an email to the Funder which attached a receipt for the payment of invoice 202854. The email was otherwise in precisely the same form as the emails of 9 and 12 February 2024.

On 12 March 2024 at 5:34PM, SBA sent an email to the Funder which attached invoice 202858 in the amount of $50,114.70 and a trust direction, relevantly stating (emphasis in original):

Mr Withane gave evidence that after he became aware of SBA’s emails to the Funder enclosing invoices and making statements to the effect that Ironbridge held “monies in trust on your behalf”, he instructed SBA to send such emails to the plaintiffs as opposed to the Funder.

On 21 March 2024 at 1:44PM, SBA sent an email to the plaintiffs, copied to the Funder, which relevantly stated (emphasis in original):

On 25 March 2024 at 5:14PM, SBA sent an email to the Funder which attached a receipt for the payment of invoice 202858. The email was otherwise in precisely the same form as the emails of 9 and 12 February 2024 and 6 March 2024.

Mr Withane gave evidence that it has always been Ironbridge’s practice in these proceedings to obtain the plaintiffs’ approval to use funds held in its trust account before dispersing any funds from that account.

On 11 March 2024, Ball J made orders in the proceedings, including that particular common questions be determined at the initial trial, any questions of the quantum of compensation or damages be determined separately and after the initial trial, and listed the matter for directions on 22 March 2024.

On 22 March 2024 and 5 April 2024, the matter was listed for a directions hearing, however, on both occasions, the directions hearing was vacated and adjourned by consent.

On 19 April 2024, Ball J adjourned the proceedings for three weeks to 10 May 2024 to enable the parties to ascertain the nature of the dispute between the Funder and the lead plaintiffs.

Since 10 May 2024, further time in these proceedings has been spent on the preparation, hearing and determination of this application.

In April 2024, the Funder and Ironbridge fell into significant dispute over the further conduct of the proceedings, including the Funder’s desire to terminate the retainer of senior counsel, the Funder’s objection to the use of particular experts and the Funder’s statement of the directions to be sought at the directions hearing on 19 April 2024.

On 18 April 2024 at 4:08PM, Mr Withane sent a letter by email to the Funder detailing the issues in the dispute which had arisen between Ironbridge and the Funder over the conduct of the proceedings. The letter relevantly stated:

The letter then detailed what was said to be the achievement of significant milestones, but referred to a lack of progress of expert evidence due to the interference of the Funder expressed in these terms:

The letter then catalogued the concerns of Ironbridge as to the Funder’s conduct and the class action which can be summarised as follows:

The letter concluded with an outline of matters concerning the funding arrangements which Ironbridge considered needed to be clarified, together with an offer to attend an in-person meeting with the Funder and the plaintiffs to resolve the serious issues set out in the letter.

On 18 April 2024 at 7:23PM, the Funder sent an email to Mr Withane, copied to Mr Mitchell, in response to the letter sent earlier that day. The Funder’s email relevantly stated:

On 19 April 2024 at 12:56PM, the Funder sent an email to Mr Withane terminating the Ironbridge engagement letter as far as it applies to the Funder and demanding the return of all monies in the Ironbridge trust account deposited by the Funder by close of business that day.

On 20 April 2024 at 8:38AM, the Funder sent an email to the plaintiffs purporting to exercise its rights under cl 8.2(d) of the Funding Agreement by requesting that the plaintiffs instruct their solicitors to make available to the Funder the file in the class action for inspection by it.

On 20 April 2024 at 2:45PM, Mr Withane sent an email to the plaintiffs saying that Ironbridge would not be returning the funds until they had worked through the issues.

On 21 April 2024 at 7:57AM, the Funder sent an email to SBA stating that the Funder does not authorise and objects to deduction/payment out of the funds deposited into Ironbridge’s trust account by the Funder , save for the payment out to the Funder of those monies requested by it. The email concluded by stating that the Funder trusted that it would not need to seek the intervention of the Law Society of New South Wales to ensure this payment is received forthwith.

On 23 April 2024, Mr Withane sent a letter by email to the Funder in response to the Funder’s emails of 18 April 2024, referring to alleged threats made by the Funder to Mr Mitchell and relevantly stating:

On 23 April 2024 at 2:20PM, the Funder sent an email to Mr Withane suggesting that he reconsider the assertion that Ironbridge do not hold trust monies on the Funder’s behalf, referencing 12 written confirmations from Ironbridge that it holds the monies in trust on behalf of the Funder and stating that if the trust monies are not received into the Funder’s bank account by 5PM the following day, a complaint would be lodged with the Law Society of New South Wales.

On 10 May 2024, the Funder sent a notice of breach of Funding Agreement to the plaintiffs, asserting that they are in breach of cl 8 of the Funding Agreement and requiring them to rectify those breaches within 14 days. In the notice, the particulars of the breaches are stated to be the following:

On 13 May 2024, the Funder sent a notice of breach of Funding Agreement to the plaintiffs, asserting that they are in breach of cl 13 of the Funding Agreement. In the notice, the particulars of the breach are stated to be the filing and service of an affidavit in the proceedings which disclose the terms of the Funding Agreement to persons other than the plaintiffs’ legal and financial advisors.

On 15 May 2024, the Funder sent a notice of dispute to the plaintiffs stating that disputes had arisen between the plaintiffs and the Funder under the Funding Agreement and giving notice pursuant to cl 14 of the Funding Agreement of these disputes. The particulars of dispute are stated to be the following:

On 17 May 2024, the Funder sent a notice of dispute to the plaintiffs stating that a further dispute had arisen between the plaintiffs and the Funder under the Funding Agreement and giving notice pursuant to cl 14 of the Funding Agreement of this dispute. The particulars of dispute are stated to be the following:

On 23 May 2024, Radith Khan of Ironbridge sent a letter by email to the Funder referring to the three notices of dispute. The letter asked that the Funder provide Ironbridge with details of how and when the plaintiffs failed to:

The letter also asked for details of the information that the Funder reasonably required and how that information was not provided.

The letter also noted that a copy of the Funding Agreement was provided to TfNSW on 20 August 2021 and was disclosed to the court on 15 February 2022. Mr Khan asked that the Funder provide Ironbridge with details of how any further disclosure of the Funding Agreement amounts to a breach of cl 13 of the Funding Agreement.

In relation to the dispute resolution provisions in the Funding Agreement, the letter concluded as follows:

On 24 May 2024 at 2:34PM, the Funder sent an email to Mr Khan stating that the seven days provided for in cl 14 of the Funding Agreement for the parties to meet expired before Mr Khan’s email was sent/received. In the letter, the Funder said that cl 14 of the Funding Agreement provides that the next step is for the disputes to go for expert determination administered by the Australian Commercial Disputes Centre (ACDC) and that “[t]his process has been commenced by the Funder”. The Funder also said that, under the rules and guidelines of the ACDC, the parties are to share the experts and the ACDC’s fees and expenses of the expert determination equally, which will be very substantial. The Funder questioned whether the plaintiffs are able to put up their half of the fees and expenses and asked that they provide evidence before the Funder incurs costs and expenses.

The Funder also questioned where in cl 14 the Funder is obliged to provide any “better particulars”.

The Funder admitted at the hearing before me that beyond the service of the notices of dispute, no steps have been taken by the parties in adherence to cl 14 of the Funding Agreement to meet and have any expert determination take place under the auspices of the ACDC (T14.34–15.37).

Ironbridge currently holds $135,180.55 in its trust account.

There is an amount of around $100,000.00 owing in respect of outstanding invoices and unbilled work in progress from Ironbridge and the plaintiffs’ barristers. Of that amount, $40,545.00 (excluding GST) relates to work carried out by Ironbridge prior to the Funder’s purported termination of the Ironbridge retainer on 19 April 2024. Since 19 April 2024, Ironbridge has accrued work-in-progress of approximately $27,925.00 directly referable to the work carried out in respect of and incidental to this application.

The plaintiffs only intend to seek recourse to the trust funds to the extent necessary to meet the legal expenses in their role as lead plaintiffs in the proceedings, which does not include the costs of this application. Mr Withane considers that any surplus funds in the trust account of about $35,000 would then revert to the benefit of the Funder and be returned to it. Mr Withane also believes that if the Funder is unwilling to provide further funding and if an alternative funder cannot be arranged, the plaintiffs will need to consider whether they should make an application under s 173 of the CPA for approval to discontinue the proceedings.

Section 8 of the CAA provides:

The definition of “arbitration agreement” is to be found in s 7(1) of the CAA which states:

The threshold question of whether there is an “arbitration agreement” turns on whether there is an agreement between the parties to “submit to arbitration” their dispute. There is an important distinction between an expert determination and an arbitration which turns on the construction of the particular provisions of the contract. In Lepcanfin Pty Ltd v Lepfin Pty Ltd [2020] NSWCA 155, Bell P (as the CJ then was) (with whom Payne and McCallum JJA agreed) at [94] endorsed the following statement of principle by Hammerschlag J (as the CJ in Eq then was) in The Illawarra Community Housing Trust Limited v MP Park Lane Pty Ltd [2020] NSWSC 751 at [60]–[64]:

The fundamental differences between arbitration and expert determination were described in Northbuild Construction Pty Ltd v Discovery Beach Project Pty Ltd [2007] QSC 206 by Mullins J at [72]–[73] in the following way:

In considering the question of the difference between an arbitration and an expert determination in the context of the identical s 7(1) of the Commercial Arbitration Act 2011 (Vic), in Raskin v Mediterranean Olives Estate Ltd [2017] VSC 94, Hargrave J at [19]–[24] referred to Shoalhaven City Council v Firedom Civil Engineering Pty Ltd (2011) 244 CLR 305, in which French CJ, Crennan and Kiefel JJ at [25] cited two English decisions as explaining the distinction. In Raskin, Hargrave J said at [22]–[24] (citations included from footnotes):

In Shoalhaven, French CJ, Crennan and Kiefel JJ at [26] described the expert determination process in that case as “neither arbitral, nor judicial”.

Section 34(2) of the CCA sets out the circumstances in which an arbitral award may be set aside, which relevantly includes the following:

In Siemens Ltd v Origin Energy Uranquinty Power Pty Ltd (2011) 80 NSWLR 398 (a case involving an arbitration clause, not an expert determination), Ball J said at [36]–[38]:

The Funder says that cl 14 of the Funding Agreement contains a dispute resolution procedure which has been activated by the Funder serving the notices of dispute of 13, 15 and 17 May 2024 on the plaintiffs, the effect of which is that the plaintiffs cannot seek to have the question of “to whom does the money in the Ironbridge trust account belong” in these proceedings. The Funder says that issues in the plaintiffs’ application question must be referred to arbitration.

In support of this submission, the Funder referred to passages of the following cases, making the submissions indicated:

The Funder gave no further assistance in stating how the reasoning in any of those passages had any relevance to the present case.

The plaintiffs made the following submissions on the issue of the operation of the dispute resolution provision in cl 14 of the Funding Agreement.

I consider that there should be no stay of the plaintiffs’ application for a number of reasons.

First, I consider that cl 14 of the Funding Agreement is not an “arbitration agreement” within the meaning of that expression in s 7(1) of the CAA because the plaintiffs and the Funder do not, by that contractual provision, submit their disputes to arbitration. Instead, the parties have agreed to submit their disputes to expert determination. As stated in Illawarra Community Housing, Northbuild and Raskin, the key difference between the two dispute resolution procedures is that, in an arbitration, the dispute is resolved by the decision-maker acting judicially, whereas an expert does not have to (and, in fact, does not) act judicially at all. None of the rules and guidelines of the ACDC were placed in evidence before me so I am unable to make any determination as to whether I would have reached a different decision about this issue if they had been. The onus lies with the Funder to provide such evidence if it wished to rely on it to show that those rules and guidelines were more in keeping with an arbitration. But based on the use of the expression “expert determination” in cl 14, I conclude that what is contemplated by the parties is the submission of their dispute to expert determination, not arbitration.

Secondly, even if I had concluded that cl 14 of the Funding Agreement was an arbitration agreement within s 7(1) of the CAA, applying the test contained in Westfield I think that it would be contrary to public policy to allow the parties to contract out of the protective and supervisory jurisdiction that is provided by s 183 of the CPA in circumstances where the plaintiffs are not only representing their own interests but also the interests of all other members of the class, to whom they owe fiduciary duties. Applying s 34(2) of the CCA and the reasoning in Siemens at [38], I consider that it is apparent from the protective and supervisory nature of the statutory provisions in Part 10 of the CPA that it is appropriate for disputes over the funding of class actions to be determined by this court rather than by way of private agreement between the parties through arbitration. I have set out more reasoning on this aspect in more detail when dealing with Issue 3 below.

In the circumstances, it is not necessary for me to deal with the submissions made by the plaintiffs concerning an alleged waiver of the Funder’s rights under cl 14 of the Funding Agreement.

I was not assisted by any of the Funder’s submissions concerning the application of the principles in Construcciones, WCX M4-M5 Link or Watpac, none of which involved a stand-alone expert determination provision of the type I have considered in this case.

Accordingly, I refuse to stay the determination of the plaintiffs’ application before me.

Rule 6.24(1) of the UCPR states:

Where a party requests that a court make orders which directly affect the rights or liabilities of a non-party, the non-party is a necessary party and ought to be joined: John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19, French CJ, Gummow, Hayne, Heydon and Kiefel JJ at [131].

The principle derives from the rules of natural justice, which were summarised in State of Victoria v Sutton (1998) 195 CLR 291 at 316; [1998] HCA 56, at [77], by McHugh J as follows (footnotes omitted):

In Ross v Lane Cove Council (2014) 86 NSWLR 34; [2014] NSWCA 50, Leeming JA (with whom Meagher AJ and Tobias AJA agreed) at [51]–[54] and [57]–[58] set out the relevant principles in the following way (emphasis in original):

It is clear that the expression “all matters in dispute in any proceedings” in r 6.24(1) of the UCPR is not limited to matters arising on the existing pleadings: Qantas Airways Ltd v AF Little Pty Ltd (1981) 2 NSWLR 34, Glass JA (with whom Samuels JA agreed) at 39.

In the context of litigation funding for representative proceedings, the joining of a litigation funder as a party when orders are proposed that affect the rights and liabilities of the litigation funder is not uncommon. In Botsman v Bolitho (No 1) (2018) 57 VR 68; [2018] VSCA 278, Tate, Whelan and Niall JA at [23]–[25] made the following comments on the importance of joining a funder as a party to the proceedings when its interests are affected (footnote omitted):

The joinder of a litigation funder was held to be appropriate under r 9.05(1)(b)(ii) of the Federal Court Rules 2011 (Cth), which is the equivalent of r 6.24 of the UCPR, in Caason Investments Pty Ltd v International Litigation Partners No 3 Ltd (2018) 265 FCR 487; [2018] FCAFC 176, Allsop CJ, Middleton and Perram JJ at [63]–[64]. In that case, there was a dispute between the lead applicant in an investor class action and the litigation funder (ILP), and in the course of the hearing for the approval of a settlement, the primary judge resolved the disputes without the litigation funder being a party to the proceedings. The lead applicant sought to be reimbursed for various expenses and be paid for legal, accounting, and administrative work it had done pursuant to a contract with the litigation funder. The lead applicant sought these amounts pursuant to s 33ZF of the Federal Court Act 1976 (Cth) (FCA) which permits the court to make any order “the Court thinks appropriate or necessary to ensure that justice is done in the proceedings”.

On the issue of the joinder of the funder, at [64] the court said (emphasis in original):

The plaintiffs submitted that the Funder should be joined as a defendant pursuant to r 6.24(1) of the UCPR because it is a necessary party to determine the dispute between the plaintiffs and the Funder over the funds held in the Ironbridge trust account. The plaintiffs say that applying the settled principles expounded in John Alexander’s Clubs and Ross, the relief sought by the plaintiffs under s 183 of the CPA affects the rights of the Funder, being its asserted beneficial right to those funds. In short, the plaintiffs submit that the court could not properly resolve the substantive dispute over those funds without making the Funder a party.

The plaintiffs also say that by the Funder advancing active opposition to the plaintiffs’ application in its own name, the Funder tacitly acknowledged its personal interest in the relief. The plaintiffs submit that the only person who wishes to be heard against the relief sought by the plaintiffs is the Funder and, having taken advantage of the opportunity to be heard against that relief, it is necessary that the Funder be formally joined to ensure that it is bound by the court’s resolution of the application.

The plaintiffs say that the arguments which are raised by the Funder concern the substance of the court’s resolution of Issue 3 on this application, which is whether the court has the power under s 183 of the CPA to grant the relief sought.

The Funder submits that the plaintiffs seek to apply the power in r 6.24 of the UCPR to the dispute over the trust funds in a manner beyond its clear meaning without citing any authority for this widening. The Funder says that the reliance on Caason Investments and Botsman is misplaced because those cases involved different legislation. The Funder says that the question of to whom the funds in a solicitor’s trust account belongs is not something necessary to the determination of this representative action.

The Funder also submits that the plaintiffs’ submissions are contrary to the appellate authorities in New South Wales regarding the operation of Part 10 of the CPA, citing passages from David William Pallas & Julie Ann Pallas as trustees for the Pallas Family Superannuation Fund v Lendlease Corporation Ltd [2024] NSWCA 83 at [95]–[96] (Bell CJ) and [142] (Leeming JA) and Haselhurst v Toyota Motor Corp Australia Ltd t/as Toyota Australia (2020) 101 NSWLR 890; [2020] NSWCA 66 at [14] (Bell P), [106], [113], [119] (Payne JA) and [138] (Emmett JA). The Funder also relied on passages in Re Rosie (No 2) [2022] NSWSC 1750 at [128]–[129] and [138] (Meek J) and Re GRP [2019] NSWSC 710 at [53]–[56], [60] and [68].

The Funder recognises that Pallas, Haselhurst and Rosie do not relate to r 6.24(1) of the UCPR but argues that Part 10 of the CPA, including s 183, should not be construed in a manner contrary to the scheme established by that Part. The Funder says that Part 10 of the CPA establishes the scheme for representative proceedings, and representative proceedings should not be used as a vehicle to determine matters which are not in dispute in those proceedings. The Funder particularly relies on the operation of s 56 of the CPA, saying that the court must seek to give effect to an overriding purpose of facilitating the just, quick and cheap resolution of the real issues in the proceedings when it exercises any power given to it by the CPA and any rules of court, and that the issue of the money held in trust by Ironbridge is not a real issue in dispute in these representative proceedings. The Funder says that to whom the monies in a trust account belongs is not a matter that needs to be determined in order to resolve the matters in dispute in these representative proceedings. The Funder asserts that the ownership of the monies in the trust account is totally irrelevant to the determination of the representative proceedings.

In my opinion, applying the principles stated in John Alexander's Clubs as confirmed in Ross on the application of r 6.24(1) of the UCPR, the Funder is a necessary party and ought to be joined as a defendant in these proceedings because the plaintiffs have requested that the court make orders which directly affect the rights of the Funder to the money currently held in the Ironbridge trust account. Determining that issue on this application should not be countenanced without hearing from the Funder and having the Funder bound by the orders of the court with respect to it.

My finding that the Funder is a necessary party is underlined by the fact that the Funder has actively opposed the substantive part of the plaintiffs’ application in relation to the money held in trust by appearing at the hearing, leading evidence, and making written and oral submissions.

As recognised in Qantas, there is flexibility and width in what the court should consider as falling within the “determination of all matters in dispute in any proceedings” as used in r 6.24(1) of the UCPR. Frequently in proceedings in this court, it is necessary for the court to consider matters which fall outside the issues directly raised by the parties which affect the rights and liabilities of non-parties to the proceedings. The court should be conscious of not causing additional time and expense to be incurred by parties and non-parties by requiring that such issues be determined in separate proceedings. This consideration should be particularly acute in the Commercial List of this court, where the procedures are tailored for the court to avoid formality, operate flexibly and achieve the just, quick and cheap resolution of the real issues between the parties.

Part 10 of the CPA is titled “Representative Proceedings in Supreme Court” and contains s 183, which is in the following terms:

The equivalent provision in near identical terms is contained in s 33ZF of the FCA, which resides within Part IVA of the FCA, the Federal equivalent of Part 10 of the CPA. In my view, the relevant authorities on the nature and the extent of s 33ZF within Part IVA of the FCA equally apply to s 183 within Part 10 of the CPA.

In McMullin v ICI Australia Operations Pty Ltd (No 6) (1998) 84 FCR 1 at 4; [1998] FCA 658, Wilcox J made the following observations about the operation of s 33ZF of the FCA:

The width of the power in s 33ZF of the FCA to deal with novel problems and the supervisory and protective nature of the court’s function within Part IVA of the FCA were explained by the Full Court in Money Max International Pty Ltd v QBE Insurance Group Ltd (2016) 245 FCR 191; [2016] FCAFC 148, where Murphy, Gleeson and Beach JJ said at [165] and [171]:

The following further observations about the general and wide nature of s 33ZF of the FCA were made in Perara v GetSwift Ltd (2018) 263 FCR 1; [2018] FCA 732, by Lee J at [142]:

Section 33ZF of the FCA was considered in Caason Investments (as explained above) in the context of a dispute between the lead applicant in representative proceedings and the litigation funder concerning the reimbursement of expenses from the settlement, in which the funder challenged the entitlement to the payments and the jurisdiction and power of the court to determine the issue. In Caason Investments, there was no dispute that the reimbursement of funds was within the power conferred by s 33ZF, with Allsop CJ, Middleton and Perram JJ indicating the potential of s 33ZF to create new rights and liabilities and not necessarily being limited to procedural matters, saying at [70] and [73]:

The High Court of Australia had cause to consider the operation of both s 33ZF of the FCA and s 183 of the CPA in BMW Australia Ltd v Brewster (2019) 269 CLR 574; [2019] HCA 45 in relation to whether those provisions gave power to the court to make a common fund order in representative proceedings (known as a CFO), which “provides for the quantum of a litigation funder's remuneration to be fixed as a proportion of any moneys ultimately recovered in the proceedings, for all group members to bear a proportionate share of that liability, and for that liability to be discharged as a first priority from any moneys so recovered” (Kiefel CJ, Bell and Keane JJ at [1]).

There were five judgments delivered by the members of the High Court in Brewster. Kiefel CJ, Bell and Keane JJ wrote the principal majority judgment which held that s 33ZF of the FCA and s 183 of the CPA did not empower the making of a common fund order, each of Nettle and Gordon JJ wrote separately agreeing with the result arrived at by the majority and each of Gageler J (as the Chief Justice then was) and Edelman J wrote separately in dissent. The following general observations about the statutory provisions were made in the majority judgments (footnotes omitted):

Following Brewster, the Court of Appeal of this court considered the operation of s 183 of the CPA in Haselhurst v Toyota Motor Corp Australia Ltd t/as Toyota Australia (2020) 101 NSWLR 890; [2020] NSWCA 66. In Haselhurst, the issue was whether s 183 of CPA provided power for a “class closure” order in representative proceedings by which causes of action held by group members who had neither registered nor opted out within three months of advertisement would be extinguished by the order in the event of an “in principle” settlement before the commencement of the trial on the common issues. Payne JA wrote the primary judgment, with which Bell P (as the CJ then was), Macfarlan and Leeming JJA and Emmett AJA agreed, and Bell P also made some additional observations, all of which were agreed by the other judges.

After Payne JA considered the judgments of the plurality, Nettle and Gordon JJ in Brewster, his Honour concluded that s 183 of the CPA did not provide the power to make the order closing the class (at [114]). In relation to the construction of s 183 of the CPA, Payne JA observed at [106] and [113]:

Payne JA also referred to the secondary materials relating to Part 10 of the CPA, saying at [119]:

In relation to the additional observations made by Bell P, unanimously agreed by all other members of the court, his Honour considered that the power in s 183 of the CPA had limitations built into it, saying at [4]–[6]:

Importantly, Bell P at [10] specifically stated disagreement with a significant portion of what is Money Max at [165] (quoted above), saying:

It is also important in the context of Part 10 of the CPA to recognise that the lead plaintiff in representative proceedings has the conduct of the proceedings on behalf of the class members and owes fiduciary obligations to them: Wigmans v AMP Ltd (2021) 270 CLR 623; [2021] HCA 7 at [117], citing Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507; [2015] HCA 28, French CJ, Bell, Gageler and Keane JJ at [40] and Dyczynski v Gibson [2020] FCAFC 120, Murphy, Lee and Colvin JJ at [209].

It is also the case that lawyers acting for the lead plaintiffs in representative proceedings owe proscriptive duties to group members at the time of any settlement application for the group members claims generally and at the time of seeking to obtain a judgment for the benefit of a group member on an individual basis: R&B Investments Pty Ltd (Trustee) v Blue Sky (Reserved Question) [2024] FCAFC 89, Murphy, Beach and Lee JJ at [62]–[65].

The plaintiffs identify the source of the court’s power to grant the relief sought by them on this application as that which resides in s 183 of the CPA. The plaintiffs say that s 183 gives broad powers to the court which, since early on in the life of statutory representative proceedings in Australia, it and its Federal equivalents have been recognised as empowering the court to make orders necessary to resolve unforeseen difficulties (citing McMillan), to be used as a gap filling power (citing Perara) and deal with novel problems that might arise in the statutory procedure for representative proceedings (citing Money Max).

The plaintiffs submit that it is well within the supervisory function and protective jurisdiction of Part 10 of the CPA (as the Federal equivalent was described in Money Max) to resolve contests involving divergent interests between a commercial entity which seeks to use the processes of the court to make money (the Funder) and lead plaintiffs and group members. The plaintiffs say that if the court lacks the power to resolve such a dispute under Part 10 of the CPA, there would be a significant gap in the supervisory function and protective jurisdiction of the court.

The plaintiffs say that in the application they do not ask the court to make orders “creating rights or liabilities” that do not already exist (citing Money Max), but the orders sought are intended essentially to be declaratory of the position that already exists in equity. The plaintiffs say that if the court concludes that, properly analysed, the trust funds do belong wholly to the Funder such that they can be recalled by it, the plaintiffs do not ask the court to make any substantive alterations to that position through an exercise of power under s 183 of the CPA.

The plaintiffs point to the decision in Caason Investments as being an instance in which the court used the Federal equivalent of s 183 of the CPA to resolve disputes between a representative party and a litigation funder. The plaintiffs rely on the reasoning in Caason Investments to show that, even though the issue between the representative party and the litigation funder did not form part of the justiciable controversy between the lead applicant and the respondents in that case, it cannot be doubted that the mere fact that the orders affect the rights and obligations as between the plaintiffs and the Funder does not mean that the relief sought is not within s 183 of the CPA.

The plaintiffs submit that, in a practical sense, the current unresolved dispute as to the beneficial entitlement to the funds held on trust by Ironbridge is hampering the progress of the representative proceedings. They say that if the Funder’s assertion as to its absolute beneficial entitlement is right, there is a risk that the plaintiffs will incur substantial legal costs without any recourse to third-party funding. They reason that this would be apt to affect the instructions the plaintiffs may give and it would not be reasonable to expect or require the plaintiffs to give instructions as to the next steps in the proceedings until the dispute is resolved and the position made clear.

The plaintiffs say that this dispute is peculiar to representative proceedings under Part 10 of the CPA (and equivalent regimes in other courts). They contend that the confluence of the position of lead plaintiffs with duties to group members in progressing proceedings, the presence of third-party litigation funders taking part in the proceedings for their own commercial benefit, and lead plaintiffs with an acknowledged inability to fund the proceedings themselves, creates the unique problem. The plaintiffs submit that none of these problems would ordinarily exist in traditional inter-partes proceedings and in that sense the circumstances are squarely within the kind of “unforeseen difficulties” with representative proceedings (citing McMullin), or part of the “peculiar difficulties encountered in representative proceedings” (citing Perara) for which it is said that the s 183 power was included in the statutory regime.

The plaintiffs also submit that the function to be performed by the court on this application is neither novel nor unfamiliar but is highly analogous to the functions exercised by courts of equity for centuries in respect of the administration of trusts. They highlight the inherent jurisdiction of the court to see that trusts are properly executed (citing as an example Crowle Foundation v NSW Trustee & Guardian [2010] NSWSC 647, Ball J at [29]) and the equitable and statutory jurisdiction to advise trustees (citing Reeves v Reeves (No 2) [2024] NSWSC 386, Meek J at [135]–[136]). The plaintiffs say that in the circumstances of this case, where there is doubt as to the power of the trustee (Ironbridge) to pay out trust funds to a person who claims to be entitled to them, it would likely be within the equitable or statutory power for the trustee to seek the court’s advice as to whether its proposed course was lawful.

The plaintiffs explicitly state that the inherent and statutory jurisdiction of the court is not the power or jurisdiction which is sought to be invoked on this application, but say that the fact that it likely could have been used underscores the conclusion that the exercise of judicial power under s 183 of the CPA is orthodox and likely not beyond the contemplation of Parliament. The plaintiffs submit that in the circumstances of this case, s 183 is a more appropriate source of power than the jurisdiction to advise trustees because it:

The Funder says that s 183 of the CPA is not a source of power to make the orders sought by the plaintiffs regarding the ownership of the funds held in trust by Ironbridge. The Funder asserts that the plaintiffs have overlooked the authorities in relation to s 183 of the CPA, being Hazelhurst at [106], [113], [119] (Payne JA) and [138] (Emmett AJA) and Pallas at [44] (Bell CJ).

The Funder says that these authorities are binding on this court without any explanation as to how these authorities are to be applied in the circumstances of this case.

The Funder submits if the separate questions in these proceedings are listed for hearing at the earliest date convenient to the court with a new representative plaintiff and new legal representatives, the Funder would provide the funds necessary for the separate questions to be determined under an agreement with the new lawyers and the new representative plaintiff. The Funder says that it understands that there is new legal representation willing to take over conduct of the representative proceedings and there is another group member ready to replace the plaintiffs as the representative plaintiff. The Funder says that the early determination of the separate questions is in everybody’s best interests; being those of the group members, TfNSW and the Funder.

The Funder said that it had nothing further to put in oral submissions (T39.41–.42).

At the outset, I note that the plaintiffs placed the whole of their argument for the power and jurisdiction they wish me to exercise on s 183 of the CPA. The plaintiffs do not ask me to exercise any inherent or other statutory power, which they acknowledge could only be done by commencing separate proceedings against the Funder to determine the interests of the plaintiffs and the Funder in the money held in trust by Ironbridge.

I am conscious that I must recognise the parameters within which s 183 of the CPA was interpreted by the High Court in Brewster, a decision which post-dates the decisions of the Full Court of the Federal Court of Australia in Money Max and Caason Investments and the decision of the Federal Court in Perara, and the observations made by the Court of Appeal of this court in Hazelhurst. While those decisions indicate the manner in which s 183 of the CPA (and its Federal equivalent) has been interpreted and applied, the essence of what I am required to do is to apply the words used in s 183, keeping in mind the guidance that has been given by the authorities.

Applying those words, I consider that it is both appropriate and necessary to ensure that justice is done in these proceedings for me to determine the dispute that has arisen between the plaintiffs and the Funder over the money which is held in the trust account of Ironbridge. I accept that this dispute is preventing these proceedings from progressing because the plaintiffs are unable to fund the proceedings themselves in circumstances in which they cannot just act in their own interests but owe wide fiduciary duties to all the other class members.

The presence of a funder is part of the fabric in which representative proceedings exist. Disputes between funders and lead plaintiffs will arise from time to time but not every such dispute will come within the power of s 183 for the court to resolve. But this dispute does come within s 183 because these proceedings will effectively stall unless and until it is resolved. The stalling of the proceedings will affect the justice that can be given to the plaintiffs, the other class members and TfNSW. I consider that justice cannot be done in these proceedings without the resolution of this dispute between the plaintiffs and the Funder.

There is absolutely no evidence before me that there is a new representative plaintiff and new lawyers willing to take over the conduct of these proceedings as the lead plaintiff in place of the plaintiffs, and as the legal representatives in place of Ironbridge. The Funder simply asserted that to be the case but did not provide any evidentiary support for that submission.

As Caason Investments illustrates by reference to the Federal equivalent, the breadth of the power in s 183 of the CPA extends to matters which do not necessarily form part of the issues to be resolved between the plaintiffs and TfNSW and even have the potential to create new rights and liabilities. But the nature of the relief which is sought by the plaintiffs in this case is not that extensive, because what is sought is merely declaratory of the existing rights to the trust money as between them and the Funder.

I consider that the dispute which has arisen between the plaintiffs and the Funder is in the nature of an unforeseen or peculiar difficulty which has arisen in these representative proceedings for which s 183 of the CPA was intended to be utilised, as recognised in McMullin and Perara respectively. The majority in Brewster specifically endorsed the observations which were made about the power in McMullin. I am acutely conscious of the observations in Brewster and Hazelhurst that I must recognise that the words of limitation in s 183 of the CPA only provide a power to make any order that I think is appropriate or necessary to ensure that justice is done in these proceedings.

I think that it would be antithetical to ensuring that justice is done in these proceedings for me not to exercise the discretion in s 183 of the CPA to resolve the dispute before me but instead require the plaintiffs to commence separate proceedings against the Funder to have this court resolve the dispute at some future and indeterminate time. Doing so would only further delay the determination of the dispute and create greater costs for all parties. I have all necessary parties before me, and they have led all the evidence they wish to lead and made all the submissions they wish to make to me to enable the dispute over the trust money to be determined. I am in substantially the same position as I would be in if the plaintiffs had commenced separate proceedings against the Funder to determine their dispute. In fact, I am in a better position to determine their dispute because I have also had the benefit of the confined submissions made by TfNSW during the hearing.

Approaching the issue by requiring separate proceedings to determine the dispute would not meet the overriding purpose of the CPA in its application to civil proceedings in this court, which is to facilitate the just, quick and cheap resolution of the real issues in the proceedings: s 56(1) of the CPA. I must seek to give effect to that overriding purpose when I exercise any power in the CPA: s 56(2) of the CPA. In seeking to give effect to the overriding purpose, I must have regard to the objects of the just determination of the proceedings, the efficient disposal of the business of the court, the efficient use of available judicial and administrative resources, and the timely disposal of the proceedings at a cost affordable by the respective parties: s 57(1) of the CPA.

All of those matters favour me exercising the power in s 183 of the CPA to determine the dispute between the plaintiffs and the Funder in these proceedings, to which I will now turn.

In Kauter v Hilton (1953) 90 CLR 86, Dixon CJ, Williams and Fullagar JJ at 97 made reference to the:

This principle was cited with approval in Legal Services Board v Gillespie-Jones (2013) 249 CLR 493; [2013] HCA 35, Bell, Gageler and Keane JJ at [116].

Whether a trust has been created turns on the question of whether there is an objective intention to create a trust, which may be express or inferred. In Raulfs v Fishy Bite Pty Ltd [2012] NSWCA 135, Campbell JA (with whom Meagher and Barrett JJA agreed) said at [48]:

The words in any document said to give rise to the trust are to be given their ordinary meaning and be construed in the context of the whole document: Montevento Holdings Pty Ltd v Scaffidi (2012) 246 CLR 325; [2012] HCA 48, French CJ, Hayne, Crennan, Bell and Gageler JJ at [25].

In Re BBY Limited (Receivers and Managers Appointed) (in liq) and BBY Holdings Pty Limited (Receivers and Managers Appointed) (in liq) [2022] NSWSC 29, Gleeson J at [48]–[49] expressed the governing principles in the following way:

The subject matter and context in the ascertaining of the requisite intention are also important and may be even more so than the language used: Alston v Cormack Foundation Pty Ltd (2018) 128 ACSR 33; at [2018] FCA 895, Beach J at [190].

In Legal Services Board, Bell, Gageler and Keane JJ considered the particular context of a lawyer receiving money from a client, saying at [113] (citations and footnotes omitted):

It is not only the outward manifestations of intention which have relevance in the inquiry to be undertaken in circumstances where the relationship is also governed by statute. In Legal Services Board, Bell, Gageler and Keane JJ said at [119] (citations and footnotes omitted):

In the present case, certain provisions in Part 4.2 of the Legal Profession Uniform Law 2014 (NSW) (LP Uniform Law) are relevant to the totality of the circumstances to which regard must be had.

Section 129(1) of the LP Uniform Law relevantly inclusively defines “trust money” in the following way:

Section 135 of the LP Uniform Law regulates the dealing with trust money, stating:

Section 136 of the LP Uniform Law provides that a law practice receiving trust money to which Part 4.2 of the LP Uniform Law applies must maintain a general trust account.

When it comes to the subject of holding, dispersing and accounting for trust money held in the general trust account of a law practice, s 138 of the LP Uniform Law states:

Seeking to determine whether or not a trust is a “Quistclose trust” (named after Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567) is apt to mislead the nature of the inquiry to be conducted by the court. The modern Australian position that there is no separate species known as a Quistclose trust has been authoritatively expressed in Raulfs by Campbell JA at [49]–[51] as follows:

The plaintiffs submit that the funds deposited by the Funder in Ironbridge’s trust account were held on an express trust under which the plaintiffs had a beneficial interest in the funds which enabled them to use them for the purpose of conducting these proceedings as lead plaintiffs. They say that for as long as that purpose remains incomplete, the Funder does not have the right to direct the funds be returned to it. The plaintiffs further say that the Funder retains a beneficial interest in the funds, but that beneficial interest is subject to that of the plaintiffs and may only be asserted once the purpose has been fully carried out and completed.

Applying the test of determining the objective intentions of the relevant parties, the plaintiffs say that I should consider the potentially relevant intentions of the Funder, Ironbridge, and the plaintiffs. Applying the principles gathered in BBY Limited and Alston, the plaintiffs submit that the parties have not been explicit in characterising their relationship or enumerating all of their obligations and that the relevant intention should be inferred from the other language used by them, the nature of the transaction and the circumstances attending their relationship, in other words, having particular regard to the subject matter and context.

The plaintiffs submit that regard for the context in the present case requires consideration of the statutory setting, the contractual setting and the mutually known intentions of the parties as manifested by their statements.

The plaintiffs say that two statutory regimes bear on the question to be determined.

First, the provisions in Part 4.2 of the LP Uniform Law, specifically those in ss 129 (definition of trust money), 135 (dealing with trust money) and 138 (holding, dispersing and accounting for trust money), all of which are quoted above. The plaintiffs say that the parties expressly averted to the operation of s 138 of the LP Uniform Law in the form of the email on 23 October 2023 from Ironbridge to the Funder in which they stated that they had consulted the Law Society of New South Wales who had advised that they should only hold money in trust on behalf of the client by reason of s 138 of the LP Uniform Law. The plaintiffs contend that there is no doubt that the reference to “the client” in the email was intended to be a reference to the plaintiffs, not to the Funder, who did not demur. The plaintiffs say that this is important contextual evidence of the mutual understanding of the Funder and Ironbridge that the funds deposited by the Funder would be held “exclusively for the client” and could be disbursed “only in accordance with the direction” given by the client, in each case being the plaintiffs.

Secondly, the provisions in Part 10 of the CPA in relation to representative proceedings. The plaintiffs say that this statutory regime is critical for understanding the unique suite of rights and obligations between commercial litigation funders, legal representatives, lead plaintiffs and group members in representative proceedings. They point to the following passage in Perara in which Lee J said at [3] about the Federal equivalent regime:

The plaintiffs submit that, in depositing funds with Ironbridge for use in these representative proceedings, the Funder must be taken to have understood that it was being permitted to participate in the proceedings for its own commercial benefit, but in a known statutory context where it had the capacity to affect the interests of the lead plaintiffs (and thus the group members) and where those individuals are under the court’s supervisory and protective jurisdiction. The plaintiffs also submitted that the Funder must be taken to have understood that it was not free to act in a way that prejudiced the just, quick, cheap and efficient resolution of disputed claims, meaning that the Funder was not free to pursue its commercial interests to the exclusion of all others. The plaintiffs say that this means that the context is one in which the interests of the litigation funder may readily yield to countervailing rights and interests of the parties, group members and the court.

The plaintiffs submit that, in practice, this is relevant because the Funder’s assertion that it was free to immediately cease funding these proceedings and demand return of all deposited sums forthwith, would inevitably cause significant prejudice to lead plaintiffs and be apt to frustrate the proper and efficient conduct of the proceedings. The plaintiffs contend that otherwise it would enable litigation funders, without warning or cause, to leave lead plaintiffs without the financial means to carry out their high duties to group members (even if only for an application for discontinuance or substitution as lead plaintiffs, which are themselves significant and costly applications). The plaintiffs reason that, against this background, the mutual purpose of the parties in having funds deposited on trust should be taken to be to prevent such a power on the part of the funder and that by depositing the funds the funder should be taken to recognise that legal fees are incurred on a rolling basis, such that the tap cannot simply be turned on and off. The plaintiffs argue that the objective purpose of requiring the advanced deposit of funds for future legal expenses is to guard against precisely the set of circumstances that has arisen here and to ensure that the lead plaintiffs have the means available to them to carry out their duties to the court and to the group members effectively.

As for the contractual setting, the plaintiffs made the following submissions on the intentions of the parties which could be drawn from the provisions in the Funding Agreement and the Ironbridge engagement letter:

The plaintiffs say that the purported termination of the Funder’s agreement with Ironbridge as of 19 April 2024 does not affect the agreement as between Ironbridge and the plaintiffs. The plaintiffs also say that the purported termination post-dated the deposit of the trust funds by the Funder pursuant to the costs agreement, which is the time at which the court should focus its inquiry to identify the objective intentions of the parties.

The plaintiffs argue that, in accordance with the Ironbridge engagement letter, Ironbridge issued a trust direction on 23 October 2023 and the Funder was informed that the direction was to be specifically issued to the plaintiffs as the funds would be held for their benefit and subject to their directions under s 138 of the LP Uniform Law. The plaintiffs say that the trust direction was addressed specifically to the plaintiffs, copied to the Funder, asking them to transfer $200,000 into Ironbridge’s trust account, with the client specifically listed as the plaintiffs and the amount transferred specifically came from the Funder. The plaintiffs submit that the trust direction is highly probative in showing the mutual understanding and intention that by transferring the funds, the Funder was giving up its absolute beneficial ownership of them and placing them with a trustee (Ironbridge) who was holding them for the benefit of another (the plaintiffs) for the purpose of these proceedings.

The plaintiffs embrace the notion that the relevant inquiry is not whether there is a Quistclose trust. Instead, they say that the focus in each case is on the objective manifestation of intentions of the parties as to the terms on which the property is to be held, to determine whether there is an intention to create a trust and, if so, on what terms.

The plaintiffs say that this mutual understanding and intention was reinforced in the email of 27 October 2023 from Ironbridge to the Funder, copied to the plaintiffs, which stated that Ironbridge had agreed with the Funder that Ironbridge must have $200,000 in its trust account at all times, and if the amount is depleted, the Funder is responsible for promptly topping it up and that Ironbridge was entitled to have its unpaid invoices paid from the funds held in trust on direction from the plaintiffs. The plaintiffs say that the Funder did not demur from the statements to the effect that the funds, whilst deposited by the Funder, were for the benefit of and at the unilateral direction of the plaintiffs.

The plaintiffs’ principal submission is, in light of the statutory, contractual and evidentiary background submitted above, that the Funder’s assertion of an absolute beneficial entitlement to the funds held in trust by Ironbridge is unsustainable. The plaintiffs contend that, properly analysed, the trust funds are held for the benefit of the plaintiffs for the purpose of discharging their obligations as lead plaintiffs in the conduct of these proceedings. They further contend that when those obligations cease (such as through discontinuance of these proceedings or substitution of lead plaintiffs), any surplus funds remaining in the trust fund would revert back to the Funder. The plaintiffs say that for as long as the plaintiffs remain as the lead plaintiffs with duties to fulfil, the funds belong to them in equity for the limited purpose of meeting their legal costs to conduct these proceedings.

In the plaintiffs’ submission, it was mutually understood that substantial legal costs were going to be incurred on a rolling basis, and the objective purpose of the requirement to deposit $200,000 on trust in advance was to ensure that the plaintiffs had certainty as to having sufficient funds available to meet their obligations as lead plaintiffs. The plaintiffs say that this certainty would be illusory if the Funder’s position was accepted, such that it could unilaterally demand the return of the funds without the consent of the plaintiffs, leaving the plaintiffs without any financial means to fulfil their duties as lead plaintiffs.

According to the plaintiffs, the purpose which sustains the plaintiffs’ interest in the trust funds as lead plaintiffs, which is meeting their legal fees as lead plaintiffs, has not yet been exhausted and whilst they remain lead plaintiffs, they are going to require legal representation regardless of the next steps in these proceedings. As a result, the plaintiffs submit that they retain their beneficial interest in the trust funds and the Funder is not permitted unilaterally to direct the return of them.

The plaintiffs accept that if and when the purpose is exhausted, such as through discontinuance or substitution of lead plaintiffs, it is a term of the trust that any surplus funds should be returned to the Funder. The plaintiffs submit it could not possibly be suggested that such a surplus would belong to the plaintiffs or Ironbridge which means there is no other plausible contention than one that such a surplus would be returned to the Funder. The plaintiffs say that the court should infer that the parties actually intended that any surplus remaining in Ironbridge’s trust fund would be returned to the Funder because no other intention is plausible. They say that properly understood, the term requiring return of surplus funds to the Funder is simply an incident of the express trust pursuant to which Ironbridge holds the funds.

The Funder says that cl 4.1 of the Funding Agreement only obliges the Funder to pay the Costs up to the Maximum Amount, which is defined in cl 1.1 to be $500,000. The Funder says that the tax invoices which have been paid by the Funder in the course of these proceedings and the security for costs lodged by the Funder on behalf of the plaintiffs before Ironbridge was retained total in excess of $500,000. The Funder says that, as a result, the obligations of the Funder had been already performed totally before Ironbridge came into the picture.

The Funder submits that under the Ironbridge engagement letter the Funder is jointly and severally liable for the costs of Ironbridge from the date of it until it was terminated on 19 April 2024. The Funder says that it paid money into the Ironbridge trust account and authorised money to be taken out of that trust account to satisfy its liabilities. The Funder contends that this is evidenced by the demands and trust receipts issued by Ironbridge to the Funder which were addressed to the Funder, not to the plaintiffs. The Funder argues that the amount which it lodged in the Ironbridge trust account was not deposited on trust for the plaintiffs but was deposited to cover the liability for costs of the Funder under the Ironbridge engagement letter.

The Funder submits that s 138 of the LP Uniform Law operates so that the trust money deposited in Ironbridge’s general trust account by the Funder is held exclusively for the person on whose behalf it is received, which is the Funder. The Funder says that the documents demonstrate that the money in the Ironbridge trust account was subject to the direction of the Funder, not the plaintiffs. The Funder contends that there is no evidence of any outstanding invoices owing to Ironbridge and, as a result, the amount remaining in the Ironbridge trust account should be returned to it now that Ironbridge’s retainer has been terminated on 19 April 2024 pursuant to cl 11 of the General Terms of Business which form part of the Ironbridge engagement letter.

The Funder submits that the Ironbridge engagement letter entirely constitutes the relationship between the plaintiffs, Ironbridge, and the Funder. The Funder says that there is no express trust as submitted by the plaintiffs and that this submission cannot be accepted as it contradicts the Ironbridge engagement letter. The Funder submits that the balance of monies paid by the Funder into Ironbridge’s trust account belong to the Funder and Ironbridge should have paid that money out to the Funder pursuant to its request in April 2024.

The Funder says that the only person who would benefit from the order sought is Ironbridge.

The Funder says that the documents sent by Ironbridge to the Funder regarding trust money should not be accepted as having been mistakenly sent to the Funder because they are consistent with the terms of the Ironbridge engagement letter. The Funder submits that it is clear from these documents that the money paid by the Funder to Ironbridge was paid pursuant to its liability for costs under the Ironbridge engagement letter.

I accept the submissions and analysis put forward by the plaintiffs on the form and terms of the trust pursuant to which Ironbridge holds money in its trust account. I reject the submissions made by the Funder which simply fail to grapple with the key components of the test that I am required to apply of determining the objective mutual intentions by reference to the outward manifestation of the intentions of the parties within the totality of the circumstances. The Funder only analyses the position by reference to its own position, without proper consideration to the totality of the circumstances.

The totality of the circumstances does require the statutory context to be considered in which Ironbridge operates a legal practice governed by the LP Uniform Law and these proceedings have been brought by the plaintiffs as lead plaintiffs which are governed by Part 10 of the CPA.

Ironbridge is holding “trust money” as defined in s 129 of the LP Uniform Law because it has money entrusted to it as a law practice in the course of or in connection with the provision of legal services by it. Acting in accordance with the requirements of s 138 of the LP Uniform Law, Ironbridge must hold that trust money in its trust account exclusively for the person on whose behalf it is received and disburse that trust money only in accordance with a direction given by the person.

The particular issue of the operation of s 138 of the LP Uniform Law in the circumstances in which Ironbridge was acting was drawn to the Funder’s attention in the email of 23 October 2023 by Ironbridge, which was after the Ironbridge engagement letter had been sent to the Funder on 16 October 2023 and before the Funder signed the Ironbridge engagement letter on 21 October 2023. In the email of 23 October 2023, Ironbridge stated that it had been told by the Law Society of New South Wales that Ironbridge should only hold money in trust on behalf of the “client”. The email of 23 October 2023 separately distinguishes between the “client” and the Funder. When that email is also read in light of the clear identification of the plaintiffs as the “clients” in the introductory parts and following of the Ironbridge engagement letter, it is obvious that Ironbridge had indicated to the Funder that the plaintiffs were those persons on whose behalf Ironbridge had received the trust money for the purposes of the operation of s 138 of the LP Uniform Law. The Funder did not contend otherwise in any communication with Ironbridge.

Part 10 of the CPA is also relevant statutory context, as is the existence of the fiduciary duties which the plaintiffs owe as lead plaintiffs to other members of the group. In relation to this context, I gratefully adopt the description of the overlapping interests of litigation funders, solicitors, lead plaintiffs and group members within which the court exercises a supervisory and protective role given in Perara by Lee J at [3] as quoted above.

The following advantages and disadvantages of representative proceedings under the legislative scheme in Part 10 of the CPA which were identified in Giles v Commonwealth of Australia [2014] NSWSC 83, by Garling J at [81]–[82] are also relevant:

These matters demonstrate that Part 10 is all about balancing the rights and interests between plaintiffs, group members and defendants to give access to justice on a cost-effective basis while recognising the need for the court to efficiently administer justice by the sensible and careful use of judicial resources. While Part 10 of the CPA makes no mention of litigation funders, it does provide the context into which the Funder stepped by providing funding to the plaintiffs as lead plaintiffs in these proceedings. It is a context in which the Funder must be taken to have understood that it is not free to pursue its own commercial interests when they run contrary to the rights and interests of the plaintiffs, the group members, TfNSW and the court.

While the Funding Agreement is a relevant contractual document, it is not the paramount one which requires consideration in this case. Only the Funder and the plaintiffs are parties to the Funding Agreement. Ironbridge is not bound by the Funding Agreement, a point which is explicitly made in the Ironbridge engagement letter. The Funding Agreement provides the background context in which Ironbridge, the plaintiffs and the Funder expressly agreed to be bound by the terms set out in the Ironbridge engagement letter by signing it – on 16 October 2023 in the case of Ironbridge, 21 October 2023 in the case of the Funder and 30 October 2023 in the case of the plaintiffs.

The fact that the Funder was only obliged to provide funding to the plaintiffs up to the Maximum Amount of $500,000 in accordance with cl 4.1 of the Funding Agreement is of no consequence to the proper characterisation of the basis on which Ironbridge holds money on trust. For reasons of its own concern, the Funder has decided to provide funding in excess of that Maximum Amount.

The terms of the Ironbridge engagement letter are then to be considered in this context. Relevantly:

In my opinion, these provisions make it clear that the money to be paid into Ironbridge’s trust account was for the purpose of paying the invoices issued by Ironbridge which stated the legal fees, disbursements and any other reasonable costs incurred by Ironbridge for the work done by them on behalf of the plaintiffs in these proceedings. While the plaintiffs and the Funder were jointly and severally liable for Ironbridge’s invoices, it was the Funder who was given the role of managing those invoices and the trust directions. This reflected that the basis for the engagement of Ironbridge rested on the fact that the Funder was providing litigation funding for the plaintiffs as lead plaintiffs in these proceedings. In other words, the mutual intention was that the funds to be placed in the Ironbridge trust account were to come from the Funder.

These matters are then confirmed in the form of the trust direction dated 23 October 2023 issued by Ironbridge and addressed to the plaintiffs (“Dear Darren and Rosaline”), copied to the Funder, which specifically identified the plaintiffs as the “Client”. This trust direction was attached to the email of 23 October 2023 from Ironbridge to the Funder which set out the requirements of s 138 of the LP Uniform Law and again identified the plaintiffs as the clients. When the email and the trust direction are read together, it is pellucidly clear that the trust money to be received by Ironbridge in accordance with the direction is held on behalf of the plaintiffs for the purpose of paying the invoices issued by Ironbridge, so is held for their benefit and at their direction.

The email of 27 October 2023 from Ironbridge to the Funder, copied to the plaintiffs, also reinforces the position. Once again, this email explicitly states that “our clients” are the plaintiffs, the plaintiffs and the Funder are jointly liable for Ironbridge’s invoices, it is the Funder who is responsible for promptly topping up the Ironbridge trust account to $200,000 at all times, and the unpaid invoices are to be paid from the funds held in trust on direction from the plaintiffs.

In my assessment, the outward manifestation of the intentions of the parties within the totality of the circumstances amply demonstrate that the Funder paid funds into the Ironbridge trust account to be held on trust for the benefit of the plaintiffs for the purpose of paying the legal fees, disbursements and any other reasonable costs incurred by Ironbridge for the work done by them on behalf of the plaintiffs in these proceedings.

I also hold that the Funder does not have an absolute beneficial entitlement to the funds held in the Ironbridge trust account. The beneficial entitlement of the Funder to the funds held in the trust account is to any surplus funds remaining in the trust account after the purpose for which those funds are held for the benefit of the plaintiffs has been completed. This will only occur when all legal fees, disbursements and costs incurred by Ironbridge are satisfied.

For completeness, I further hold that the purported termination of the Ironbridge engagement letter by the Funder on 19 April 2024 post-dates the deposit of the trust funds by the Funder in the Ironbridge trust account pursuant to the Ironbridge engagement letter. As a result, that purported termination is of no operative effect on the matters I have found above.

For the reasons set out above, I propose to make orders in favour of the plaintiffs, including by making a declaration with respect to the funds held in the Ironbridge trust account and ordering the Funder to pay the plaintiffs’ costs.

I direct that within seven days the parties consult with each other and provide to my Associate, by email, agreed short minutes giving effect to these reasons or, failing such agreement, their form of proposed short minutes giving effect to these reasons. I will then make orders in chambers.