David William Pallas & Julie Ann Pallas as trustees for the Pallas Family Superannuation Fund v Lendlease Corporation Ltd

Following an approach that has been employed in the past to determine questions of statutory construction which affect class action procedure (see, eg Brewster v BMW Australia Ltd [2019] NSWCA 35; (2019) 366 ALR 171), this matter comes before the Court of Appeal by way of removal from the Equity Division, pursuant to an order made by Ball J on 13 September 2023 in accordance with Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 1.21(1)(a).

Pursuant to UCPR r 28.2, Ball J also stated a separate question, at the request of both parties, for this Court to determine (the separate question):

As is implicit in the formulation of the separate question, there is a divergence between the decision of this Court in Wigmans v AMP Ltd (2020) 102 NSWLR 199; [2020] NSWCA 104 (Wigmans), and the decision of the Full Court of the Federal Court in Parkin v Boral Ltd (2022) 291 FCR 116; [2022] FCAFC 47 (Parkin), in which Wigmans was considered by Murphy, Beach and Lee JJ to be “plainly wrong”.

The defendants in the underlying proceeding (who it is convenient to refer to compendiously as Lendlease) and for whom Ms Collins SC appeared, contend that the answer to the separate question should be “Yes”.

The underlying proceeding is a ‘shareholder’ class action. The representative plaintiffs, and other members of the class, were stapled securityholders of shares in Lendlease Corporation Ltd, an ASX-listed property and infrastructure company, which were stapled to units in the Lendlease Trust. Lendlease Corporation Ltd, and the responsible entity of the Lendlease Trust, are the defendants in the class action and the applicants in this separate question. The plaintiffs allege that Lendlease breached its continuous disclosure obligations and engaged in misleading or deceptive conduct during the period from 17 October 2017 to 8 November 2018 during which period, approximately 445 million shares were traded. In particular, the proceeding concerns pre-tax provisions which it is alleged that Lendlease should have taken, and certain reductions in after-tax profits it is alleged that Lendlease should have made, with respect to three projects which it was undertaking.

The plaintiffs in the underlying proceeding and for whom Mr Edwards KC appeared did not take a different position on the question of the power of the Court to make a notation of the kind formulated in the separate question to that taken by Lendlease. They expressly reserved, however, their position on the question of discretion, that is to say whether the Court should exercise its discretion to issue a notice of the kind contemplated in the separate question if there was power to do so.

Both parties accepted that the decision in Wigmans would compel a negative answer to the separate question.

Although the plaintiffs’ carefully expressed position of non-opposition on the question of power falls short of positive support for the arguments advanced by Lendlease, it was both necessary and desirable that a contradictor be appointed in order to ensure that this Court had the benefit of full argument. The Court is grateful to Ms Morgan SC who, with Ms Hillman, appeared as contradictor.

One difficulty that emerged during the course of oral argument was that the notation referred to in the separate question was detached from any agreed form of proposed notice to group members. Lendlease had submitted a form of notice which became Exhibit A on the hearing of the separate question but there was no agreement between the parties as to the form of that notice. This led the Court to raise a serious concern at the end of the oral hearing about the artificiality and undesirability of answering a question divorced from the context of an agreed form of proposed notice to group members, therefore rendering any answer to the question vulnerable to the criticism of hypotheticality: cf Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334; [1999] HCA 9.

Following the hearing and with a view to curing the objection that any answer to the separate question may be hypothetical, the parties reached agreement on a form of notice which it was proposed would be sent to group members prior to any mediation, and forwarded it to the Court on 8 December 2023 (the Amended Notice). Supplementary written submissions were also filed by the Contradictor and Lendlease on 15 and 20 December 2023 in relation to the Amended Notice. The proposed agreed form of Amended Notice is reproduced in Appendix A to these reasons. The notation set out in the separate question was retained but was supplemented in important respects. It was as follows:

In the ordinary course, class action proceedings of the apparent magnitude of those in the current case would be referred to mediation and, if any mediation was unsuccessful, a trial date would be set. Prior to the matter going to trial and other than with the leave of the Court, an opt out notice must be sent to group members advising of their right to opt out of the group prior to the hearing of the representative proceedings: Civil Procedure Act 2005 (NSW) (CPA) ss 162(1), 162(4) and 175(1)(a). It is not uncommon that such a notice will also request that interested group members register with the law firm for the plaintiff. This is to aid in the distribution of proceeds of the litigation (whether by settlement or a judgment). It is common for many group members to have registered with the plaintiff’s law firm prior to the opt out notice having been sent. An opt out notice may be sent prior to any mediation and the form of the proposed notice in the present case is of this kind.

It is plain that there are at least two purposes that inform and underpin the proposed notation. First, and most explicitly, to encourage currently unregistered group members either to opt out of the group prior to any mediation or to opt in to avoid “the risk [of] missing out on the benefit of any settlement which might be agreed before final judgment”: see [10] above. The second, unstated, purpose of the notation is to arm Lendlease (and also the plaintiffs as the representative parties) with an argument to be made to any judge called upon to approve any settlement pursuant to s 173 of the CPA that non-registered group members should not be permitted to participate in the fruits of any settlement on the footing that they had been given the choice of opting out or opting in prior to the settlement and had not availed themselves of that opportunity.

From a commercial perspective, it is tolerably clear that Lendlease wishes to go into any mediation having an appreciation of the number of group members who would be bound by any settlement reached by reference to the universe of group members, and the value of their individual claims (a function of the number of securities held). That motivation lay behind the form of order which this Court held in Haselhurst v Toyota Motor Corporation Australia Ltd (t/as Toyota Australia) (2020) 101 NSWLR 890; [2020] NSWCA 66 (Haselhurst), applying BMW Australia Ltd v Brewster; Westpac Banking Corporation v Lenthall (2019) 269 CLR 574; [2019] HCA 45 (Brewster), was not authorised by s 183 of the CPA. The form of that proposed order was as follows:

Such an order is a species of what is commonly known as a “class closure order”, that is, an order by which the class or group in a representative proceeding is wholly or partially restricted, and the rights of certain group members (generally, those who are unregistered) are extinguished irrespective of the fact that they do not participate in the fruits of any settlement.

In Wigmans, a judgment of Macfarlan, Leeming and White JJA, an order of the kind foreshadowed in the proposed notation in the current proceedings was held not to be authorised by ss 175-176 of the CPA. As noted above, Lendlease, in its written submission in this Court, frankly concedes that the decision in Wigmans would compel a negative answer to the separate question in the current case.

Subsequent to the decision in Wigmans, the Full Court of the Federal Court in Parkin purported to distinguish Haselhurst and held that Wigmans was “plainly wrong” and should not be followed. Lendlease submits that Wigmans should be overruled and Parkin applied to yield the affirmative answer sought.

This is the background against which the separate question came to be stated.

Before turning to the key statutory provisions and statutory context in which the separate question falls to be determined, it is first necessary to note the principles which apply when an intermediate appellate court is asked to depart from a prior decision.

In Totaan v R (2022) 108 NSWLR 17; [2022] NSWCCA 75 (Totaan), I summarised the approach to be followed when intermediate appellate courts are asked to depart from the authority of courts of co-ordinate jurisdiction as well as their own previous decisions, a subject that had previously been considered at some length by this Court in Gett v Tabet (2009) 109 NSWLR 1; [2009] NSWCA 76 (Gett). In Totaan, I said (in observations with which Gleeson JA and Harrison, Adamson and Dhanji JJ agreed):

The parties proceeded on the basis that these principles were applicable to the present case and the separate question removed for determination by this Court was argued on the basis that intermediate appellate courts should only depart from decisions of courts of co-ordinate jurisdiction if the decision was “plainly wrong” and there were “compelling reasons” to depart from the earlier decision. That stance was reflected in Lendlease’s written submissions in chief at [16], without demur from the plaintiffs who chose not to engage with this aspect (or most aspects) of the debate. The stance was positively embraced by the contradictor (written submissions, [9]). In oral submissions, Lendlease confirmed the position, with Ms Collins SC adding:

Lendlease was correct to note that in Parkin, the Full Court focussed only on the issue of whether it considered Wigmans to be “plainly wrong”, and did not separately or independently address whether there were “compelling reasons” to depart from it (at [97] and [109]).

Subsequent to Totaan, the High Court said in Hill v Zuda Pty Ltd (2022) 275 CLR 24; [2022] HCA 21 at [25] that:

This judgment does not treat considerations of whether an earlier decision was “plainly wrong” and whether there are “compelling reasons” to depart from it as separate limbs of a test, as opposed to two sides of the same coin. To that extent, the statement of principles summarised in Totaan at [72] should be qualified insofar as it suggested two independent limbs would need to be satisfied before any such departure could occur. If a decision is “plainly wrong” in the sense identified by this Court in Gett (namely, that there is a strong conviction that the earlier judgment was erroneous, as opposed to being a choice of approach which was open and the nature of the error can be demonstrated with a degree of clarity by the correct legal analysis), then there will often be compelling reasons to depart from the earlier decision. Conversely, one compelling reason to depart from an earlier decision is that the judgment is clearly demonstrated to be erroneous. One matter left unresolved on the authorities concerns what a Court is to do in circumstances where neither of two competing interpretations can be said to meet the onerous threshold of being “plainly wrong”. Where one of those decisions is that of the same Court which has previously expressed a view on the matter, that Court should adhere to its previously expressed view.

One very important point to emerge from the majority decision of the High Court in Brewster was the danger and indeed illegitimacy of looking at one statutory provision in isolation from others, especially in circumstances where the statutory provision in question forms part of a body of statutory provisions on a particular topic or, in that case as in the present case, part of a statutory regime for the hearing and determination of class action or representative proceedings.

In New South Wales, that statutory regime is contained in Pt 10 of the CPA entitled “Representative proceedings in the Supreme Court”. That Part was enacted by the Courts and Crimes Legislation Further Amendment Act 2010 (NSW), the second reading speech for which made clear that Pt 10 was “substantially modelled” on Pt IVA of the Federal Court of Australia Act 1976 (Cth) (the FCA Act): New South Wales Legislative Council, Parliamentary Debates (Hansard), 24 November 2010 at p 28066. The relevant sections of Pt 10, extracted below, contain reference to their cognate provisions in the FCA Act. It was not in dispute that the CPA and FCA Act cannot be meaningfully distinguished in order to resolve the separate question.

Whereas the particular statutory provision upon which attention was focussed in Brewster was s 183 of the CPA (cf s 33ZF of the FCA Act), the particular statutory provision which falls for consideration in the present case is s 175(5) of the CPA (cf s 33X(5) of the FCA Act). However, to repeat, particular statutory provisions must be construed in the context of the Act in which they appear as a whole: Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 at [69]; Independent Commission Against Corruption v Cunneen (2015) 256 CLR 1; [2015] HCA 14 at [31]. As will be seen, various arguments advanced in the present case unduly focus on s 175(5) without proper regard to the overall statutory context, the very technique of interpretation deprecated by the majority in Brewster.

Turning to key provisions in Pt 10 of the CPA, s 159 provides that “the consent of a person to be a group member is not required” (other than in limited circumstances, where “group member” is defined by s 155 of the CPA to mean “a member of a group of persons on whose behalf representative proceedings have been commenced”).

In this respect, s 162 of the CPA provides for the right of a “group member” to opt out of proceedings:

Another provision germane to the argument is s 173 of the CPA which provides that:

Although the separate question refers to ss 175(1), 175(5) and 176(1) of the CPA, the principal provision upon which argument centred was s 175(5). Section 175 provides:

Section 176(1) simply provides that the form and content of a notice under s 175 must be approved by the Court.

Viewed in isolation, s 175(5) of the CPA is a provision of great apparent breadth but so, too, was s 183 which was considered by the High Court in Brewster. Section 175(5) is informed by s 175(6) in at least two respects. First, it must be related to an “event” and that “event” is one that must have occurred prior to the giving of the notice. So much was initially accepted by Ms Collins SC who also eschewed any suggestion that the relevant event was the commencement of the proceedings in 2019.

It is also necessary to note s 183 of the CPA, sometimes called the “gap-filling power”, and equally necessary to note that the separate question does not, by Lendlease’s admission, turn upon it:

The order approving the notice in this case must be seen against prior authority concerning “class closure” orders, as well as other decisions concerning class action procedure. The following cases were the principal authorities referred to by the parties.

In Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd (2017) 252 FCR 1; [2017] FCAFC 98 (Melbourne City), the Full Court of the Federal Court considered s 33ZF(1) of the FCA Act, the cognate provision to s 183 of the CPA. In that case, an order was sought at first instance requiring all class members either to register or opt out prior to mediation commencing; the order sought would also have barred any class member who failed to register or opt out from sharing in the proceeds of any settlement or any judgment sum.

The primary judge in that case (Foster J) made an order requiring class members to register or opt out, but limited the consequence of non-registration to non-participation in any settlement, as opposed to judgment: see Jones v Treasury Wine Estates Ltd (No 2) [2017] FCA 296. Melbourne City Investments Pty Ltd (MCI), which had been the representative plaintiff in a competing class action, appealed, arguing that the class closure order was misleading in its terms. MCI had initially contended that the primary judge’s decision to make a class closure order prior to settlement or judgment, and before the terms and consequences of settlement were known, operated improperly to exclude class members, but subsequently withdrew that contention. As such, the decision did not squarely address the point raised in the present case. However, the Full Court (comprising Jagot, Yates and Murphy JJ) remarked in an obiter passage generally supportive of the commercial rationale underlying class closure orders prior to mediation:

It should be noted that such an order as approved in Melbourne City would now be prohibited by the decision of this Court in Haselhurst which concluded that those passages were inconsistent with the High Court’s decision in Brewster: see below at [41] ff.

In Takata Air Bag – Class closure and registration [2019] NSWSC 1493 (Takata), Sackar J made a similar order to that in Melbourne City, pursuant to ss 163 and 183 of the CPA. This order was termed a “soft” class closure, namely that the class be “closed” such that only group members who had registered with the solicitors for the representative plaintiff eight weeks prior to mediation could be permitted to share in the fruits of any settlement (which, if approved by the Court, would extinguish any claim they might otherwise have had unless they had already opted-out of the representative proceeding) subject to further order of the Court, and, if settlement was not reached by a given date, the class would “re-open”, such that unregistered group members would be able to share in the fruits of any judgment given by the Court: see Takata at [11], [52]. The relevant order, entered on 3 February 2020, was as follows:

Pausing there, the use of terminology such as “hard” and “soft” class “closure” has been justifiably deprecated: see, eg, Haselhurst at [2], [45]; Parkin at [8]. For completeness, “hard” class closure is similar to the above, but without the “re-opening” of the class in the event that mediation fails to achieve a settlement. Generally, in cases of “hard” class closure, those group members who fail to register by the appointed date have their cause of action extinguished for no monetary (or other) benefit.

Takata was overturned by Haselhurst, but it is necessary to be aware of it in order to understand the nature of the decision in Haselhurst.

In Brewster, the High Court considered s 183 of the CPA (and s 33ZF of the FCA Act), and whether it empowered the Supreme Court to make a “common fund order” at an early stage of the proceeding. A “common fund order” is an order that 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 recovered.

In their joint judgment at [3], Kiefel CJ, Bell and Keane JJ (in a majority which included Nettle J and Gordon J with Gageler J and Edelman J dissenting) began by noting the purposes of s 183 and its cognate provision, s 33ZF, in the FCA Act):

A key element of their Honours’ reasoning, under the heading “Textual considerations”, was that the commercial viability of the proceeding, from the perspective of a litigation funder, was not a matter that supported the making of an order under s 183 of the CPA. Their Honours said:

Their Honours then relevantly considered the role of the gap-filling power at [70], omitting footnotes:

Their Honours continued before considering the importance of the opt out nature of the regime created by Pt 10 of the CPA (at [73]):

In the contradictor’s submission, this Court should place great weight on these remarks of the High Court, and in particular the emphasised text. Nettle J made similar observations at [125]. The contradictor also emphasised the observations of Gageler J (as the Chief Justice then was) at [108] as to the role of a representative plaintiff and the nature of group proceedings more generally:

It should be noted that the Court in Brewster considered only the making of an order pursuant to s 183 of the CPA, and in that respect Lendlease emphasised the distinction between s 183 and the order in this case which is sought to be sustained in the present case by s 175(5) of the CPA. The contradictor’s response to this was to emphasise the view of Nettle J at [125] to the effect that the limits of a particular power under the CPA “must be determined by the text of the Act read as a whole”: see also the authorities cited above at [26].

In Haselhurst, this Court considered a “soft class closure” order, which purported to have been made pursuant to s 183 of the CPA. The text of the order itself has been set out at [38] above.

Under the order that was sought, unregistered group members’ claims were, contingently on settlement, barred, but if settlement was not reached, unregistered group members were entitled to participate in any judgment. Separate judgments in that proceeding were given by Payne JA and me with Macfarlan and Leeming JJA and Emmett AJA agreeing with both judgments.

Payne JA relevantly noted at [44], in a statement that is equally applicable in this case:

Payne JA pointed out, again relevantly for the present case, that “closure” of a class was not necessary in order to achieve settlement “as a matter of demonstrable historical fact” (at [63]). His Honour also noted the alternative approach to “closing” the class, being of altering the class, at [71]:

Key to Payne JA’s reasoning, however, was that the order sought in Haselhurst was inconsistent with the reasoning of the High Court in Brewster at [70] (see above at [44]), namely that, in Payne JA’s words (at [106]), “s 183 was not a source of power to do work beyond that done by the specific provisions which the text and structure of the legislation show the section was intended to supplement”. That “incongruity” (as his Honour termed it at [105] and [108]) was said to be fatal to the argument in that case that the order was within the Court’s power pursuant to s 183 of the CPA. As his Honour put the matter at [105]:

The ultimate thrust of his Honour’s judgment was as follows:

Payne JA’s view that a class closure order would occasion an “insoluble conflict of interest” should also be noted, as it was a point subsequently elaborated on by the Court in Wigmans. In his Honour’s view (at [120]), a closure order would have:

In the same case, I agreed with Payne JA’s leading judgment and added the following observations:

I further noted that a successful mediation was far from an inevitable outcome in the proceedings, and that parties cannot be forced to settle. The thrust of that point was the observation at [15] that:

In particular, I noted at [10] the risk of “illegitimate glossing” of s 33ZF of the FCA Act (the cognate to s 183 of the CPA) when the analysis is undertaken from the standpoint of what is “necessary”, as was the position taken by the Full Court of the Federal Court in Money Max Int Pty Ltd v QBE Insurance Group Ltd (2016) 245 FCR 191; [2016] FCAFC 148 at [165] (Money Max).

While Lendlease was understandably desirous of confining Haselhurst to considerations of power pursuant to s 183 of the CPA, the contradictor emphasised this Court’s unanimous holdings in Haselhurst as to the nature of Pt 10 of the CPA and its operation. Lendlease did not challenge the correctness of Haselhurst.

In Wigmans, this Court (comprising Macfarlan, Leeming and White JJA) considered an appeal from an order made by Ward CJ in Eq (as the President then was) which noted the following:

That notification in terms was set out at [32] of Wigmans:

Ward CJ in Eq had held that a notice containing the foregoing could be approved pursuant to s 176(1) of the CPA conformably with Haselhurst: Komlotex Pty Ltd v AMP Ltd [2020] NSWSC 504 at [206]-[208] (Komlotex). It is worth noting that the appeal by Ms Wigmans came about as Ms Wigmans was the representative plaintiff of a competing class action, which had been permanently stayed, and had successfully sought special leave to appeal in relation to that order at the time of her appeal, although the appeal had not yet been heard: Wigmans at [11].

In any case, the basis for Ward CJ in Eq’s orders was set out after a detailed consideration of Haselhurst. Her Honour identified the ratio of the decision in Haselhurst as “ly[ing] in the barring effect of the impugned order”: Komlotex at [200]. Her Honour then noted that the order sought in Komlotex raised a different issue, and in her Honour’s view, was not “inconsistent with the statutory regime under which a group member is able to take the benefit of judgment or settlement even without taking any positive step in the proceeding”: Komlotex at [206].

Further, her Honour held that the “insoluble conflict of interest” which Payne JA noted in Haselhurst would not necessarily arise in Komlotex, holding at [208]:

Her Honour further noted the risk that an opt out notice lacking the proposed notation would be misleading (at [210]) and suggested that the appropriate time for the consideration of issues of conflict of interest was if a settlement was reached at mediation, thereby making the objection to the notice somewhat premature (at [211]):

Finally, her Honour noted that she considered that not making an order of the impugned kind would be inconsistent with the overriding mandate for the just, quick and cheap resolution of the real issues in dispute: Komlotex at [212]; CPA s 56(1).

On appeal, the Court (writing jointly and allowing the appeal) held that the proposed order was beyond power. The Court noted at [77] that:

The Court in Wigmans noted at [79] that what was proposed was “prima facie contrary to a fundamental precept of Pt 10, as confirmed by the joint judgments in Mobil Oil and Brewster, and inherent in the legislative choice of an opt-out regime.” The Court continued at [79]:

Their Honours then considered Haselhurst in some detail, noting at [102] that although s 183 of the CPA was not in issue in Wigmans, Pt 10 was still central to the analysis:

The Court accepted at [86] that “if all that had occurred were orders and notices concerning an opt out date and exhorting registration, what occurred would have been within power.” Their Honours continued, however, by observing (at [86]) that:

The Court also accepted as sound the submission that the power to issue notices must “conform with the basic precepts of the scheme established by Pt 10”: at [102].

Their Honours also observed that, although the orders sought did not, in form, contingently extinguish any rights, there was a need to consider the “practical effect” of the orders: at [104].

In the context of the orders sought being necessary to facilitate settlement, the observation was fairly made that the representative plaintiff and its advisers had “chosen to draft an enormous class, in respect of which they freely and very properly accept they are unable presently to have any meaningful idea of the number of group members or the value of their claims”: at [108]. It was in this context that the Court dealt with and rejected the submission that the orders sought were necessary to achieve settlement:

Their Honours also took issue with Ward CJ in Eq’s suggestion that the “insoluble conflict” (as it was put by Payne JA in Haselhurst) did not necessarily arise: see [63] above. This conflict of interest lay in the fact that, under the regime suggested by the proposed order, the representative plaintiff would be, practically speaking, bargaining away the claims of unregistered group members in order to give AMP the necessary reassurance to settle the proceeding, for the benefit solely of the registered group members. Their Honours said in this regard:

Their Honours also rejected the submission that the objection to the order was premature, in this context emphasising the practical impact of receipt of the proposed notice by an unregistered group member: “in a matter of days, hundreds of thousands of group members are to be asked to make a choice based on notices sent pursuant to orders which proceed on the basis that their rights to participate in any settlement may be extinguished if they do not register”: at [126].

Finally, their Honours returned to the issue of necessity:

The Court’s conclusion was expressed as follows at [132]:

In Parkin, the Full Court of the Federal Court (Murphy and Lee JJ, Beach J agreeing) considered the same question as in Wigmans by way of a separate question and stated case: see FCA Act s 25(6); Federal Court Rules 2011 (Cth) r 30.01. Their Honours reached the opposite conclusion to this Court in Wigmans, holding that Wigmans was “plainly wrong”: see [109]-[110].

Parkin was run along similar lines to Wigmans (and, indeed, to this case): a contradictor was appointed, evidence was given by experienced solicitors to the effect that the proposed order would facilitate settlement of the matter by quantifying the number of group members and providing finality for the defendant, and the cognate provisions in the FCA Act (to ss 175-176 of the CPA) were said to be engaged. However, in Parkin, Murphy and Lee JJ emphasised the following:

Their Honours analysed Haselhurst in some detail, in particular the holding in that case that s 183 of the CPA did not provide a power to make a soft class closure order, on the authority of Brewster. Their Honours described this as “depart[ing] from” a “widely accepted understanding” as to the ambit of s 33ZF, the cognate provision of s 183: Parkin at [45]. It should be noted that in the present case, senior counsel for Lendlease expressly accepted the correctness of Haselhurst.

Considering Wigmans, their Honours adopted the reasoning of Beach J in Wetdal Pty Ltd as Trustee for the BlueCo Two Superannuation Fund v Estia Health Limited [2021] FCA 475 (Wetdal) at [82]-[94], in which his Honour took issue with Wigmans. Murphy and Lee JJ in Parkin noted at [55] that the Full Court of the Federal Court in BHP Group Limited v Impiombato (2021) 286 FCR 625; [2021] FCAFC 93 at [95] (Middleton, McKerracher and Lee JJ) had said that there was “much to be said for Beach J’s observations”.

After setting out lengthy submissions from the contradictor, their Honours turned to the consideration of the matter. They first noted that the correctness of Haselhurst did not arise for consideration as it could be distinguished from the orders sought in Parkin (at [105]). By contrast, their Honours accepted that the orders rejected in Wigmans were materially indistinguishable from those relevantly sought by Boral in Parkin. Their Honours expressed the view that the reasoning in Wigmans was “plainly wrong”, for the following reasons:

Having set out many of the above authorities, Lendlease emphasised the following three points.

First, that the text of s 175(5) conferred an unconfined power on the Court, which was very broadly expressed, in light of the use of the phrases “any matter” and “any stage”. Lendlease drew the Court’s attention to the observations of the High Court in Owners of the Ship “Shin Kobe Maru” v Empire Shipping Co Inc (1994) 181 CLR 404 at 421; [1994] HCA 54 (Shin Kobe Maru) to the effect that the Court should not construe legislative provisions which confer jurisdiction or powers on a court “by making implications or imposing limitations which are not found in the express words.” Such dicta has been applied to representative proceedings involving Pt IVA: see BHP Group Limited v Impiombato [2022] HCA 33; (2022) 96 ALJR 956 at [15]; Wong v Silkfield Pty Ltd (1999) 199 CLR 255; [1999] HCA 48 at [11]. In that respect, Lendlease submitted that Parliament must be taken to have comprehended the need for courts to develop their own procedures, and thus legislated Pt 10 of the CPA in a broadly worded way, which can take into account commercial reality.

Second, Lendlease submitted that the “fundamental precept” identified in Wigmans, formulated by Lendlease as “that group members may do nothing prior to settlement and still reap its benefits” was an a priori assumption about legislative purpose, and that Mobil Oil was not intended to be a statement of legislative intent, and that even so, it did not, on its own terms, support such a broad conception of a “fundamental precept”. Lendlease also argued that the acceptance of Mobil Oil in Brewster was qualified, to the effect that the opt out model was designed to allow representative proceedings to continue even if group members were unaware of the proceeding.

Third, Lendlease argued that Wigmans incorrectly considered the potential for conflicts between registered and unregistered group members as relevant to determining the ambit of the Court’s power to approve notices under s 175(5) of the CPA. The Court was taken to several mechanisms to obviate and mitigate such conflicts, including that all settlements must be approved by the Court.

By contrast, the contradictor embraced this Court’s decision in Wigmans. In particular, the contradictor emphasised that the occasion for excluding group members from the benefits of a settlement or a judgment “is its successful completion”, picking up the observation in Brewster at [73] quoted at [45] above.

The contradictor also emphasised the risk-shifting nature of the proposed form of notation, from the representative party or the defendant to unregistered group members, and further argued that such an order as proposed would give rise to a “real, immediate and direct” conflict, including on the part of the legal representatives for the representative plaintiff. The representative plaintiff, after agreeing to the form of order, would know that it would be negotiating henceforth on the basis that the non-registered group members would not be intended to benefit from any ultimate settlement.

The contradictor further noted that the absence of class closure orders (of any kind) does not prevent settlement, a matter that was ultimately accepted by Lendlease in the course of argument. It was conceded by Lendlease that there were other ways of structuring a settlement which can take into account variance in the class.

The contradictor also emphasised the nature of Pt 10 of the CPA as a whole, including its many controls and protections for the benefit of group members in representative proceedings, including duties on the representative plaintiff, the power to replace the representative plaintiff, powers to stay or “de-class” the proceeding and supervision of a settlement fund. The contradictor, in light of the nature of Pt 10, argued that s 175(5) could not be seen as an unconfined power. The contradictor put this in terms of risk, arguing that unregistered group members cannot be saddled with the risk of being excluded from the settlement before one is actually achieved:

The contradictor further supported the Court’s analysis in Wigmans that a group member could, as an integer in the scheme of Pt 10, do nothing and still reap the benefits of the proceeding, as well as agreeing with the Court’s analysis in Wigmans as to the conflict of interest, both for the representative plaintiff and its legal representatives.

In the course of oral argument, on 29 November 2023, the following relevant exchange occurred:

In supplementary submissions, the contradictor adopted an argument that had been raised in the course of oral hearing, namely that s 175(5) was constrained or to be read by reference to the language of s 175(6), with the consequence that the notice had to relate to an “event”, and one that had happened prior to the issuing of any notice.

The starting point of the analysis is not whether s 175(5) of the CPA confers power on this Court to include a notification of the kind sought to be included in the opt out and registration notice that the parties seek to be issued in the present case. It is whether this Court’s recent unanimous decision in Wigmans (which both parties accepted compelled a negative answer to that question) is “plainly wrong” and should not be followed.

I do not consider that it is plainly wrong although it may be accepted that the question is one upon which opinions might differ (as illustrated by the decision at first instance in Wigmans and the decision of the Full Court of the Federal Court in Parkin). Having said that, and as will be explained, I do not find aspects of the reasoning in Parkin persuasive and certainly not sufficiently persuasive as to justify a conclusion that Wigmans was “plainly wrong”.

Wigmans was a decision which built carefully on earlier authority, especially the decision of a five-judge bench in Haselhurst, a decision which was accepted by Lendlease to have been correctly decided. The Court in Wigmans was conscious, of course, of the then very recent decision of the High Court in Brewster which, as observed above at [24]-[26], emphasised, on the one hand, the danger of looking at a single provision of a statutory scheme in isolation, and, on the other hand, the importance of statutory context.

The majority of the High Court in Brewster must be taken to have accepted the appellant’s submission in that case, namely that the principle of construction identified in Shin Kobe Maru (which Lendlease relies on in the present case, as did the Court in Parkin), cannot be deployed to construe provisions of the respective class action regimes established in the FCA Act and Pt 10 of the CPA more liberally than their text and context permit: Brewster at [36]. Apparently general words in a statute may need to be read down or at least in a way that conforms with other provisions of the statute or with the purpose of the Act: Ross v The Queen (1979) 141 CLR 432 at 440; [1979] HCA 29. Moreover, notwithstanding that it is true that there is a general principle of statutory construction associated with Shin Kobe Maru which militates against reading implied limitations into a conferral of power on a superior court, some powers will contain inherent limitations which may be derived from statutory purpose or a detailed statutory scheme (see, eg, Aussie Skips Recycling Pty Ltd v Strathfield Municipal Council (2020) 103 NSWLR 834; [2020] NSWCA 292 at [48]-[52] and, of course, Brewster itself) or by reference to an inferred legislative intent that the power would not be used in a way which authorises, for example, a misleading or deceptive notification.

When this Court in Wigmans was referring to the “fundamental precept” of Pt 10 of the CPA at [79], it was referring to nothing more and nothing less than that statutory context which was considered in detail in Haselhurst in passages picked up and quoted extensively in Wigmans. It was that equivalent scheme of provisions that was being referred to by Gaudron, Gummow and Hayne JJ in Mobil Oil in the passage picked up with approval by Kiefel CJ, Bell and Keane JJ in Brewster. The key aspect of the passage in Mobil Oil which renders the conclusion that Wigmans was “plainly wrong” a surprisingly ambitious one was that “[g]roup members, however, need take no positive step in the prosecution of the proceeding to judgment to gain whatever benefit its prosecution may bring” (at [40]).

The Parkin Court’s attack at [115] on the use of the language of “fundamental precept” in Wigmans and its attempt to read down the critical passage in Mobil Oil by what was said by the Victorian Court of Appeal in Regent Holdings is, with respect, unconvincing. First, as a shorthand way of describing the architecture of the statutory scheme, the use of the language “fundamental precept” was entirely consistent with the need to construe the statute as a whole. Second, reference to this “fundamental precept” was precisely what Gaudron, Gummow and Hayne JJ were doing in Mobil Oil. Third, as Leeming JA has illustrated at [151]-[155] below, the language of “fundamental precept” is entirely orthodox, and regularly employed by the High Court in a range of different contexts. Fourth, the discussion in Regent Holdings was by reference to an entirely different kind of class or group when compared to the vast open class or group in the present case and in Parkin. In Regent Holdings, in the context of considering the central observation in Mobil Oil, the Court observed at [14] that:

There is a world of difference between what is already a closed class and an open class of the kind with which the High Court in Mobil Oil was dealing. Where a class has closed in the way the class was closed in Regent Holdings, no question of members of the class being required or strongly incentivised to “opt into” the class or group arises. The Court in Regent Holding noted the importance of reading the observations in Mobil Oil “in context, and […] against the background of the case with which the High Court was concerned”: at [12].

Interestingly, almost all of the cases relied upon by Beach J in Earglow, as picked up by his Honour in Wetdal and by Murphy and Lee JJ in Parkin at [124], and relied upon to undermine what was identified in Wigmans as the fundamental precept and the centrality of the observation of Gaudron, Gummow and Hayne JJ in Mobil Oil, were also cases where the class or group had already been closed. They all also pre-dated Brewster which was significant because the orders made in some of those cases relied upon s 33ZF of the FCA Act, held in Brewster not to have the amplitude previously assumed: see, eg, P Dawson Nominees; Powercor.

Unregistered class or group members were not in fact required to do anything proactive in any of the cases relied upon in Earglow and Wetdal. Orders were directed either to the applicant in respect of existing group members (see, eg, Overton and Williams) or to group members who had already opted in by entering into retainers and funding agreements (see Meaden; Regent Holdings), or who agreed to act as sample group members and who had provided evidence for a forthcoming trial: see Jarra Creek. None of those cases, on my review, required any unregistered group member to take any proactive step prior to a settlement or judgment. Another decision relied upon in Earglow, namely Weimann, does not, with respect, appear to stand for the proposition for which it is cited.

In one of the cases relied upon, P Dawson Nominees, Finkelstein J referred to the essentially passive role of non-representative group members at [17], having observed at [16] that:

As the contradictor submitted in supplementary submissions, the structure and consequences of the Options presented in, and the language of, the Amended Notice indicate that a purpose of the notice is to pass the risk that the parties otherwise would bear onto Group Members who do not select Option A or B. The contradictor also submitted that that conclusion could also be inferred from the prioritisation of registration (Option A), the repeated statement that “there may or may not be another opportunity to register” (Amended Notice p 1 at [3], Section 2 p 9 at [4], Section 2 p 10 at [5], Section 2, p 11 at [11]-[12]) and the emphasised advice that group members who do not wish to opt out are instead “strongly encouraged” to register “so as not to risk missing out on the benefit of any settlement”: Amended Notice p 11 at [13].

Looked at in substance, the proposed notification places non-registered group members in a position that would be contrary to the opt out legislative scheme enshrined in Pt 10 of the CPA and its analogue in the FCA Act. One would not readily construe a provision such as s 175(5) of the CPA as authorising the issuing of a notice which turned the statutory scheme on its head by, in practical terms at least, requiring group members to opt in to the group prior to any settlement or judgment based on any such settlement.

I agree with the contradictor’s submission that, properly construed, the statements in the Amended Notice referred to in [103] above are intended to provide Lendlease, and possibly the representative plaintiffs, with the forensic benefit of being able to argue – on an application to bind unregistered group members to a settlement in which they receive no compensation – that the unregistered group members should be treated as “forewarned” of the risk of an outcome that is wholly unfavourable to them. While the proposed notification warns non-registered group members of a risk they face if they do not register, the notification is in fact silent in terms of articulating the argument that it would be expected Lendlease and potentially the representative group member would make at the time of seeking approval of any settlement, namely that non-registered group members should not be permitted to participate in any settlement because they had previously been given the chance to opt in and had not taken it.

Next, in considering the force or otherwise of the criticism of Wigmans in Parkin, it is necessary to consider how the Parkin Court responded to the observation made in Wigmans, building upon what Payne JA had held in Haselhurst, about the conflict of interest that would be created by the giving of the notification contemplated in the Amended Notice. The relevant passages in Haselhurst and Wigmans are those set out at [54] and [73] above respectively, and the Parkin response is set out at [81(4) and (6)] above.

In short, the Parkin Court viewed the matter as one going to discretion and not power but, just as Ms Collins SC accepted that one would not construe s 175(5) as authorising the giving of a notice that was misleading or deceptive, it is scarcely heterodox to interpret a power to issue a notice to group members for their benefit as not extending to the giving of a notice that was apt to give apparent judicial blessing to a representative plaintiff engaging in what would inevitably be a conflict of interest. Nor was or is it correct to say that conflicts are inevitable – no conflict on the part of a representative party would arise where a class is closed. A defendant may engage in settlement negotiations in this context without the representative plaintiff being placed in a conflict of interest.

The notification proposed to be included in the Amended Notice to group members was evidently framed by reference to the acceptance in Haselhurst at [120]-[122] that one reason why order 16 in that case was beyond power was that it gave rise to “an insoluble conflict of interest” in any mediation or settlement discussion. That was because the order itself had the effect that group members who neither opted out nor registered before the “Class Deadline” would be “barred” from participating in any settlement. It was not necessary to address what precisely was the legal nature of the “barring” effected by that order (see Haselhurst at [52]-[59]), because, whatever it meant, the consequence was that the interests of registered group members would be to achieve a settlement, and the interests of unregistered group members would be to oppose any settlement.

The goal to which the proposed notification is directed is the same: a settlement in which registered group members will share in an amount of compensation, while unregistered group members will not obtain any benefit and will be prevented from suing the defendant. The proposed notification seeks to avoid the conflict in three ways. The first is that, rather than an order being made of which notification is then given to group members, instead the notice comes first and advises of an intention to seek an order in the event that a settlement is achieved. The second is that the notice advises that “the parties, alternatively, the defendant” will seek an order. The third is that what is sought is the qualified exclusion of unregistered group members from participating in any compensation, because the prohibition is “without leave of the Court”.

The second and third points of distinction are readily addressed. They are mere matters of form, and were rightly relegated to subordinate status in submissions to this Court. If the representative plaintiff and defendant are jointly seeking an order which results in registered group members obtaining compensation, and unregistered group members receiving nothing and being barred from receiving any compensation, the same insoluble conflict is present. How can the representative plaintiff be adequately representing the interests of all group members at that time? And the position is identical if the application is being made solely by the defendant, and not opposed by the representative plaintiff. The representative plaintiff acting in the interests of unregistered group members would properly oppose the orders sought by Lendlease, and acting in the interests of registered group members would support the same orders. Another way of putting this is that the representative plaintiff cannot resolve the conflict merely by failing to oppose orders sought by the defendant which will extinguish rights of all unregistered group members but yield compensation to registered group members.

The third point adds nothing. The orders are interlocutory, no different from those considered in Haselhurst. They may be varied or set aside by subsequent application in a proper case. The fact that the notice states this expressly is neither here nor there.

The first point tends to highlight why what is proposed subverts the scheme. The point of notification is to advise group members of events in the litigation, so that they may exercise their rights in an informed way. The proposed notification is not of any event. It is of a present intention on the part of Lendlease and perhaps the representative plaintiff to participate in settlement negotiations in a particular way.

Those considerations confirm that what is really happening is an attempt in the interests of the defendant and a subset of group members (namely, those who register prior to any in principle settlement being reached) to secure a settlement one element of which is the claims of remaining group members (namely, those who have not registered) are extinguished. Whether or not there is a conflict is determined as a matter of substance, not form. Ms Collins SC, with characteristic and appropriate candour, acknowledged the benefit to her clients of avoiding “tail risk”. As observed at [13] above, it is entirely rational that a defendant would seek to achieve that outcome. But a representative plaintiff who has chosen to act on behalf of all members cannot adequately represent all when it is in that party’s own interest, and those of registered members, to achieve a settlement, which result is diametrically opposed to the interests of unregistered members.

Submissions were made concerning the ever present possibility of conflicts within a class. Of course, some group members may have stronger claims than others. Some may face limitation defences to which other class members are not exposed. Some may have claims for actual physical loss while other have only claims for economic loss. There are many other ways in which those acting for group members may assess that group members’ claims are of different strengths. The conflicts arising in such circumstances are familiar. They arise in all civil litigation where a legal practitioner acts for more than one party. Indeed, the Act recognises that in some cases it may be desirable for subgroups to be identified.

But it is important to bear steadily in mind that the conflict which was addressed in Haselhurst and Wigmans and which is a conflict driven by the desire to avoid or minimise “tail risk” is a conflict which is created by the orders being sought. There is nothing inherent in the underlying claims of group members, or in the structure of the legislation, that involves a group members’ registration status as affecting the outcome, thereby dividing the group members into two classes with divergent interests.

In reality, what is sought to be achieved is a form of “opt in” mechanism, whereby only those group members who agree to registration will participate in a settlement, coupled with the extinction of claims of all other group members. There are examples of opt in mechanisms in other legal systems, which the Australian Law Reform Commission (ALRC) rejected, as pointed out by the High Court in Mobil Oil at [83] and by Payne JA in Haselhurst at [94], [119]: Australian Law Reform Commission, Grouped Proceedings in the Federal Court (Report No 46, December 1988). But opt in mechanisms of the kind referred to in the ALRC report do not carry with them the consequence that persons otherwise falling within the definition of the group or class who do not opt in by registering have their claims extinguished.

If there were an insoluble conflict in being able to address the difficulty that some group members had agreed to be represented by the law firm and funder and others had not, then the submissions about “management” of conflict would have greater force. But there is a ready solution to the difficulty. That is for an application to be made to alter the class definition, so that the representative plaintiff represents solely group members who have registered, leaving other group members unaffected by the outcome of the representative proceeding (save that the limitations periods had been stopped for the time they were group members). There are other mechanisms too, as explained in Haselhurst at [69]-[75].

There is one statement in Wigmans with which I respectfully do not agree, but the nature of that disagreement tends in support of the result in that case and against the position reached in Parkin. The statement in Wigmans is that which appears at [100] as follows:

Whilst their Honours were correct to contrast the language of s 175(5) and s 183 of the CPA which was the subject of consideration in Brewster, I would respectfully question the statement that “the power to issue notices under s 175(5) is unqualified”. As explained at [32] above, s 175(6) constrains s 175(5) in two respects: first, the notice must relate to an event, and, second, that is not a future event but rather, an event that has “happened”. So much follows from the language of s 175(6): “[n]otice under this section must be given as soon as practicable after the happening of the event to which it relates” (emphasis added). As observed at [112] above, the proposed notification the subject of the separate question is not of any event. This alone supplies a reason why the notification the subject of the separate question is not authorised by s 175(5), and also supplies an additional reason why, in my view, far from being “plainly wrong”, Wigmans is correct. Parkin does not explain why this textual analysis is not correct.

As noted above, the contradictor in its supplementary submissions unsurprisingly embraced this point of textual construction which had been raised in the course of the oral hearing. In response, Lendlease gave the following “threefold” response:

As to the first point, s 175(6) is stated in general terms: “[n]otice under this section must be given as soon as practicable after the happening of the event to which it relates”. It is not a provision confined to questions of timing (although it undoubtedly addresses that) but makes clear that the notice must relate to an “event” and one that has “happened”. The second point involves artificial reasoning and tends towards circularity.

The third response is more finely balanced. Fixing a date by which group members are to register arguably constitutes an “event” but the subject matter of the proposed notification is not the event at all. It is referring to something which has not happened and is simply a present intention.

Even if this analysis is not correct, it does not in my view undermine the correctness of Wigmans.

For the above reasons, I am not satisfied that this Court’s recent decision in Wigmans is plainly wrong, or that there are compelling reasons to depart from it.

I would not grant leave, to the extent that leave is necessary, to overrule Wigmans.

Accepting the correctness of that decision, the answer to the separate question must be in the negative.

WARD P: I have had the advantage of considering the draft reasons of Bell CJ in this matter. I agree with the orders that his Honour has proposed. I should make clear that the reason I agree with the orders is that I do not consider that the decision of the Court of Appeal in Wigmans v AMP Ltd (2020) 102 NSWLR 199; [2020] NSWCA 104 (Wigmans) is “plainly wrong”. Had I been so persuaded, then I would have concluded that there was compelling reason (namely, for uniformity in this area) to depart from that decision, having regard to the different conclusion reached by the Full Court of the Federal Court in Parkin v Boral Ltd (2022) 291 FCR 116; [2022] FCAFC 47 (Parkin), which I am also not prepared to say is plainly wrong. I accept that my conclusion that neither of the two intermediate appellate court decisions meets the threshold of being plainly wrong would, of course, give rise to the dilemma identified by Bell CJ (at [23]); and in those circumstances I would agree with the view expressed by his Honour in the last sentence of [23].

Where I respectfully differ from the Court in Wigmans is the proposition that notification to group members of an intention (or possible intention) at a later point in time to seek an order from the Court excluding unregistered group members from participation in a settlement reached at mediation gives rise to an insoluble conflict of interest at the time that the notice is issued. I pause here to note that the proposed notification in the present case, insofar as it appears to speak to a firm present intention of the plaintiff to seek an order of that kind (using the positive language “will seek”) may come closer to giving rise to a conflict of interest than a notification of the possibility that such an order might later be sought; though the fact that the proposed notification in the present case is drafted with the alternative that the application might only be made by the defendant might suggest that there is not yet such a firm intention at present on the part of the representative plaintiff.

I consider that the temporal aspect of the process is significant in this regard; and that a statement of intention to seek an order of that kind at a later time does not give rise to an insoluble conflict of interest at the time of notification. Thus, I do not accept that the making of the notification itself is what gives rise to the perceived conflict of interest. I accept that it might be suggested that there is a conflict of interest arising merely from the formation of the intention on the part of the parties but that would seem to be predicated on the parties being wedded to the stated intention (as opposed to it being something that might or might not later be pursued, depending on the negotiations at the mediation). From a practical view, it is hard to see the conflict of interest as insoluble at least until such time as an application for the order excluding unregistered class members is made. That is because there may be a variety of different interests of group members to be taken into account in a mediation and it cannot be beyond the ability of experienced lawyers to contemplate a range of potential settlement options in the course of mediation (taking into account the competing interests of registered and unregistered class members just as they might need to take into account the competing interests of class members with different strengths of claims or the like).

In Haselhurst v Toyota Motor Corporation Australia Ltd (t/as Toyota Australia) (2020) 101 NSWLR 890; [2020] NSWCA 66 (Haselhurst) at [120] Payne JA, with whom Bell P, as the Chief Justice then was, Macfarlan and Leeming JJA, and Emmett AJA agreed, considered that a bifurcation in the interests of class members in reaching a settlement at mediation gave rise to an insoluble conflict of interest. True it is, that if an order excluding unregistered class members from participation in a settlement were to be inevitable then registered class members would likely have an interest in minimising the class (to maximise their returns) and unregistered class members would likely have a competing interest in no settlement being reached so as to maintain a potential to share in a judgment for damages. But no such order could be said to be inevitable – the question ultimately being as to the fairness and reasonableness of the result; and even then that involves an assumption as to how any proposed settlement might be structured. For example, for all we know, the defendant might only be prepared to settle on the basis of an amount per member (irrespective of the size of the class) such that the registered class members would have no real interest in whether or not unregistered class members should be excluded from participation in the settlement.

It has been recognised that a settlement of representative proceedings may reflect conflicts of interests within the class group (see Kelly v Willmott Forests Ltd (in liq) (No 4) [2016] FCA 323; (2016) 335 ALR 439 (Kelly v Willmott (No 4)) at [126] per Murphy J). Indeed, in Parkin it was considered that the risk of a potential or actual conflict of interests is inevitable when looking at the very nature of representative proceedings (see Parkin at [126] per Murphy and Lee JJ, with whom Beach J agreed).

Thus, while, as between group members, the proposed notification may give rise to differences in the interests in the class group in reaching a settlement (i.e., the unregistered group members may be opposed to any settlement should they not be able to benefit therefrom, whereas the registered group members may be in favour of any favourable settlement), I do not accept that the existence of a possibility for a conflict of interest will necessarily result in the existence of an insoluble conflict of interest in reality.

Although the representative plaintiff has a fiduciary obligation to ensure that all the unheard class members’ interests are represented during the proceedings (see, for example, Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507; [2015] HCA 28 at [40] per French CJ, Bell, Gageler (as the Chief Justice then was) and Keane JJ; Wigmans v AMP Ltd (2021) 270 CLR 623; [2021] HCA 7 at [117] per Gageler, Gordon and Edelman JJ; see also, Legg M, “Entrepreneurs and Figureheads – Addressing Multiple Class Actions and Conflicts of Interest” (2009) 32 University of New South Wales Law Journal 909 at 919, as to the fiduciary duties imposed on the representative party), it has also been recognised that agreement as to a proposed settlement necessarily results in their interests merging (see Kelly v Willmott (No 4) at [126] per Murphy J), sometimes in lieu of satisfying the entire group’s interests. The Court’s role in safeguarding the group members’ interests illustrates the imperfect position that the representative may occupy in such proceedings (see, for example, P Dawson Nominees Pty Ltd v Brookfield Multiplex Ltd (No 4) [2010] FCA 1029 (P Dawson (No 4)) at [4] per Finkelstein J).

When considering whether a settlement should be approved, focus is on whether the proposed settlement is “fair and reasonable having regard to the interests of the class members who will be bound by it, including as between class members” (see Endeavour River Pty Ltd v MG Responsible Entity Ltd [2019] FCA 1719 at [9] per Murphy J).

The Federal Court’s rejection of a settlement proposal in Kelly v Willmott (No 4) and its subsequent approval of the settlement in Kelly v Willmott Forests Ltd (in liq) (No 5) [2017] FCA 689 illustrates how settlements which do reflect conflicts of interest between the representatives and class members can be addressed. Relevantly, one of the amendments that Murphy J considered as integral to assuage the concerns of potential conflict with the settlement was the inclusion of provision for unregistered class members to seek leave of the Court to opt out of the proceedings (“[t]he fact that unregistered class members could seek leave to opt out also mitigates [the] impact [of the fact that unregistered class members are bound in the settlement but are shut out from its benefits]”) (at [47]). The notification in the present case allows for the possibility of unregistered group members obtaining the benefit of the settlement with the leave of the Court, thereby contemplating that they may not be shut out from the settlement benefits. The stated intention is not an extinguishment of the unregistered class members rights at the making of the notification; thus, I do not accept that there is an insoluble conflict at that stage.

That said, it is clear that reasonable minds differ on this issue as to whether and when an insoluble conflict arises. Hence, my conclusion that Wigmans cannot be said to be plainly wrong.

Finally, as to Bell CJ’s conclusion that Wigmans was incorrect (at [100]) in referring to the power to issue notices under s 175(5) being unqualified, focussing on the import of the requirement in s 175(6) that notice under the section be given as soon as practicable after the happening of the event to which it relates, I have some concern that this is introducing a somewhat technical distinction between the happening of an event and the formation of an intention. I see no reason why the latter could not itself be an “event”; and I remain concerned that there is a risk that unregistered group members may have a legitimate grievance if not forewarned in advance of the possibility that an application might later be made to exclude them from participation in a settlement reached at a mediation before they had elected to opt in or out of the group. In that regard, I see force in the view expressed by Murphy and Lee JJ in Parkin at [134] that it may be preferable for such notification to be made to the group members, so they are given notice of any intention of their representatives’ interests which may be adversely affect their interests (as observed by Murphy and Lee JJ in Parkin at [134]). Hence, I prefer to rest my concurrence in the orders proposed by the Chief Justice on my conclusion that Wigmans is not plainly wrong.

GLEESON JA: I agree with the Chief Justice.

LEEMING JA: I agree with the orders proposed by Bell CJ, and with his reasons. I write separately because I participated in the earlier decision of this Court in Wigmans v AMP Ltd (2020) 102 NSWLR 199; [2020] NSWCA 104 which a Full Court of the Federal Court considered to be “plainly wrong” in Parkin v Boral Ltd (2022) 291 FCR 116; [2022] FCAFC 47, and I wish to make three additional points. Most of the reasoning in both judgments is contained in the Chief Justice’s judgment, and I shall not reproduce it needlessly.

First, I reiterate what was said by Nettle JA in RJE v Secretary to the Department of Justice (2008) 21 VR 526; [2008] VSCA 265 at [104], by this Court in R v XY (2013) 84 NSWLR 363; [2013] NSWCCA 121 at [30] and Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609; [2014] NSWCA 266 at [102], by a Full Court of the Federal Court in Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd (2020) 279 FCR 631; [2020] FCAFC 122 at [126], and by many other courts, namely, that it is preferable to express the test applicable when one intermediate appellate court departs from a decision of another intermediate appellate court on federal or uniform legislation or common law which is materially unaffected by statute by asking whether there is a “compelling reason” to do so. I respectfully agree with Lee J’s statement in the last mentioned case that this is a “more constructive articulation of the principle enunciated by the High Court”. As Bell CJ notes, the equivalence of the formulations was endorsed by the High Court in Hill v Zuda Pty Ltd (2022) 275 CLR 24; [2022] HCA 21 at [25]. In many or most such cases, it will be better to speak to the quality and cogency of the case made out for departure from the earlier decision, rather than the egregiousness of the court’s error. One reason for that is that the court’s reasons will typically be a response to the parties’ submissions, and it is not unknown for the point which is now sought to be departed from not even to have been contested before the earlier court. I shall return to this.

Secondly, a deal of the reasoning in Parkin is directed to the passage in Wigmans at [77]-[79]:

The expression “fundamental precept” in that passage was echoed in the conclusion at [102]:

The term “fundamental precept” was deprecated in Wetdal Pty Ltd v Estia Health Ltd [2021] FCA 475 in an obiter passage at [89]-[90] which stated that aspects of Wigmans were problematic. The point sought to be made was that there are occasions when group members could, at an early stage in proceedings, be compelled to take a positive step, such as to respond to a subpoena or an order for particulars. Hence it was said to follow that “it is not a fundamental precept of representative proceedings that group members can never be required to take any positive step at an early stage in the proceeding”.

In Parkin, the joint judgment said at [115]-[116]:

At [125] the joint judgment reiterated:

I do not think that the reasoning in Parkin reproduced above concerning what was said in Wigmans about a “fundamental precept” accurately reflects what was said in Wigmans. That may be because submissions were made in the Federal Court to the effect that Wigmans had held that it was an “absolute rule” that group members could be passive until settlement and enjoy its fruits. A common enough rhetorical technique is to characterise the rule or principle for which a decision stands in a particular way, falsify that characterisation, and then contend that the decision should not be followed. The passages in Parkin also hold that the reference to a “fundamental precept” was “distracting”, and perhaps also that if a “fundamental precept” was something which fell short of an absolute rule, it was not clear what it was. In the circumstances, it seems desirable to be a little more elaborate, even at the price of lengthening this Court’s reasons.

The passages in Wigmans reflected submissions made to this Court. Orally, Gleeson SC said (transcript, 25 May 2020, p 9):

And later (transcript, 25 May 2020, p 16):

In reply, counsel said (transcript, 25 May 2020, p 62):

Counsel’s references in oral submissions to “the basic idea of the statute”, the “basic principle”, “contradicts the scheme” and “the premises of the scheme” were all to the same end, and were reflected in the references in the reasons of this Court to a “fundamental precept” or the “basic precepts” of the scheme.

It is not difficult to enumerate principles which may be described as “fundamental precepts” in many areas of the legal system. In Russo v Aiello (2003) 215 CLR 643; [2003] HCA 53 at [11], Gleeson CJ said, for the purpose of addressing submissions challenging the conclusion that the plaintiff had not given a full and satisfactory explanation for his late claim under the Motor Accidents Act 1988 (NSW), that:

A unanimous High Court said that “[a] fundamental precept of the criminal law is that a sentence should not be increased beyond that which is proportionate to the crime in order to extend the period of protection of the community”: Muldrock v The Queen (2011) 244 CLR 120; [2011] HCA 39 at [60]. That precept was invoked in order to review an increased non-parole period imposed by a court of criminal appeal following a Crown appeal.

Fundamental precepts also play a role in statutory construction. (One may refer to fundamental “principles” if one prefers, noting that in ICM Agriculture Pty Ltd v The Commonwealth (2009) 240 CLR 140; [2009] HCA 51 at [141], Hayne, Kiefel and Bell JJ explicitly used the terms “precept” and “principle” synonymously, speaking of the longstanding reticence to decide constitutional questions unnecessarily.) That was why Deane J commenced his dissenting reasons in Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 71 at 81; [1988] HCA 34 with the sentence:

That was a case where the High Court divided on the scope of the provisions in the Bankruptcy Act 1966 (Cth) (ss 41(5), 41(6) and 306(1)) which validated bankruptcy notices containing defects. The legal meaning of the statutory text was informed by that precept.

In Wilde v The Queen (1988) 164 CLR 365; [1988] HCA 6, the High Court divided over the application of the common form proviso in criminal appeals. Gaudron J, one of the dissentients, concluded that the proviso was unavailable, and said at 383-384:

Examples could readily be multiplied. The expression “fundamental precept” in Wigmans was used in the same way. It was not deployed to connote an “absolute rule”. It was deployed to address a basic principle underlying the regime established by the statute. The point of doing so was to support a process of statutory construction to the effect that a construction that undercut such a basic principle was not lightly to be preferred.

Parkin criticised this Court’s observation in Wigmans that “group members may do nothing prior to a settlement and still reap its benefits” as “neither helpful nor wholly accurate”. Insofar as it was said not to be “helpful”, I do not agree. It is not disputed that an aspect of the scheme is that group members need as a general principle do nothing and nonetheless reap the benefit of a settlement. Whether or not a posited construction aligns with or contradicts such a principle is an orthodox aspect of statutory construction. Insofar as it was said to be not wholly “accurate”, that indicates that the expression was treated as connoting an absolute rule. It may be that that reflected a submission which had been made to the court, and perhaps even one which was not fully refuted. It may be accepted for present purposes that there is no absolute rule that a group member may do nothing prior to a settlement and still reap its benefits. But that was not what was said in Wigmans.

The gravamen of this aspect of the reasoning in Wigmans did not deal with relatively minor qualifications upon the general approach reflected in Pt 10 of the Civil Procedure Act 2005 (NSW) that group members need do nothing and gain the benefit of a settlement. What was involved was not some minor intrusion upon the general entitlement of group members to do nothing at early stages in the litigation, such as the provision of particulars or documents. What was involved was the sacrifice of the entirety of unregistered group members’ claims, as a foreseeable and foreseen aspect of a proposed settlement by which registered group members and their lawyers and funders would benefit from the price paid by a respondent for eliminating “tail risk”. This departure from a basic aspect of the Part bears upon the question of statutory construction.

Thirdly, I agree with what the Chief Justice has said at [118]-[119] concerning what was said of the differences between s 175(5) and s 183 of the Civil Procedure Act in Wigmans at [100], although I also think it is tolerably plain from reading the passage in context that the only point being made was a textual one about those two provisions, rather than a statement that the power was unqualified by any other consideration extraneous to the provision.

STERN JA: I agree with the Chief Justice.