Furniss v Blue Sky Alternative Investments Limited (Administrators Appointed) (Receivers and Managers Appointed) (in liq)

• Jurisdiction: Australia Federal only
• Court: Federal Court
• Judgment Date: 19 December 2022
• Neutral Citation: [2022] FCA 1546
• Date: 19 December 2022

Federal Court of Australia

Furniss v Blue Sky Alternative Investments Limited (Administrators Appointed) (Receivers and Managers Appointed) (in liq) [2022] FCA 1546

File number:	NSD 1062 of 2022
Judgment of:	MIDDLETON J
Date of judgment:	19 December 2022
Date of publication of reasons:	20 December 2022
Catchwords:	REPRESENTATIVE PROCEEDINGS – carriage dispute concerning two competing, open class securities class actions – where primary judge proposed consolidation of proceedings subject to cooperative regime – whether “discretionary decision” or “evaluative judgment” – whether case management issues involved ; PRACTICE AND PROCEDURE – application for leave to appeal – principles applicable where primary decision concerning practice and procedure – whether “discretionary decision” or “evaluative judgment” – whether case management issues involved – decision not attended with sufficient doubt and no substantial injustice established – application dismissed
Legislation:	Federal Court of Australia Act 1976 (Cth)
Cases cited:	Aldi Foods Pty Ltd v Moroccanoil Israel Ltd (2018) 261 FCR 301 Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424 House v The King (1936) 55 CLR 499 Klemweb Nominees v BHP (2019) 369 ALR 583 Money Max v QBE (2016) 245 FCR 191 Perera v Getswift Ltd (2018) 263 FCR 92 Roberts-Smith v Roberts [2022] FCA 524 Wigmans v AMP Limited (2021) 270 CLR 623
Division:	General Division
Registry:	New South Wales
National Practice Area:	Commercial and Corporations
Sub-area:	Corporations and Corporate Insolvency
Number of paragraphs:	33
Date of hearing:	19 December 2022
Counsel for the Applicant:	Mr J A Redwood SC with Mr B Yin
Solicitor for the Applicant:	Shine Lawyers
Counsel for the First Respondent:	The First Respondent did not appear
Counsel for the Second Respondent:	Mr T Bagley
Solicitor for the Second Respondent:	GRT Lawyers
Counsel for the Third Respondent:	The Third Respondent did not appear
Solicitor for the Third Respondent:	Arnold Bloch Leibler
Counsel for the Fourth Respondent:	Mr M Darke SC
Solicitor for the Fourth Respondent:	Corrs Chambers Westgarth
Counsel for the Fifth Respondent:	Mr T Bagley
Solicitor for the Fifth Respondent:	Banton Group

ORDERS

		NSD 1062 of 2022
BETWEEN:	DAVID FURNISS Applicant
AND:	BLUE SKY ALTERNATIVE INVESTMENTS LIMITED ACN 136 866 236 (ADMINISTRATORS APPOINTED) (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) First Respondent ; ROBERT WARNER SHAND Second Respondent ; JOHN BRUCE KAIN (and others named in the Schedule) Third Respondent

order made by:	MIDDLETON J
DATE OF ORDER:	19 December 2022

THE COURT ORDERS THAT:

1. The application for leave to appeal dated 7 December 2022 be dismissed.

2. The applicant pay the costs of the fifth respondent.

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

REASONS FOR JUDGMENT

MIDDLETON J:

INTRODUCTION

1. On 19 December 2022 I ordered in this application that:

1. The application for leave to appeal dated 7 December 2022 be dismissed.

2. The applicant pay the costs of the fifth respondent.

2. These are the reasons for those orders.

3. This is an application for leave to appeal from part of the judgment and orders of the primary judge given on 23 November 2022 in proceedings NSD665/2022 and NSD948/2022 (‘Orders’), namely paragraphs 9 to 11 of the Orders.

4. Paragraphs 9 to 11 of the Orders are limited to the following:

9. The proceedings be listed for case management and the final resolution of any issues relating to multiplicity at 9:30am on 21 December 2022.

10. Pursuant to s 37P(2) of the FCA Act, R&B Investments, the applicant in the Furniss Proceeding (Mr Furniss) and representatives of the funders and their solicitors confer with a view to settling upon a form of consolidated pleading and the terms of a litigation cooperation protocol.

11. By 5pm on 20 December 2022, the parties provide to the Associate to Justice Lee:

(a) agreed proposed orders; or

(b) in the event that there is no agreed position between the parties, an affidavit sworn by the solicitor for the applicant in each proceeding, which sets out with specificity the competing positions of the parties and why agreement has not been reached.

5. The grounds of appeal are as follows:

1. The primary judge erred in finding that consolidation of proceeding NSD948/2022 (Furniss Proceeding) and proceeding NSD665/2022 (R&B Proceeding) was in the best interests of group members (J [82] and [89]) in particular:

a. The primary judge erred in finding that given the intention of each of the applicant in the Furniss Proceeding and the applicant of the R&B Proceeding was to seek a settlement common fund order, the funding arrangements do not loom large in the exercise of the primary judge’s discretion: J [48].

b. The primary judge erred in finding that the benefit of Mr Furniss’ “no win, no fee” arrangement with his solicitors was somewhat offset by the fact that, upon a settlement being struck, Mr Furniss’ solicitors propose to charge a 25% "uplift” on its legal costs and that this had the effect of “levelling out” any difference between the Furniss Proceeding and R&B Proceeding as to costs: J [51]-[52].

c. The primary judge erred in finding that, having regard to, and/or attaching significance to the “important differences” in the pleadings in Furniss Proceeding and the R&B Proceeding: J [63]-[66], [84]-[85].

d. The primary erred in finding that the progress of the proceeding and the conduct of the representative applicants to date was a relatively neutral factor and in failing to have regard to the important differences between the two proceedings: J [67]-[68].

e. The primary judge erred in finding that, having regard to and/or attaching significance to the fact that 76 persons had signed funding agreements with ILP, the funder in the R&B Proceeding, who may seek to enforce a contractual claim against them: J [86].

2. The primary judge ought to have found that the R&B Proceeding should be stayed in circumstances where:

a. the funding model proposed by the applicant in the Furniss Proceeding was likely to result in a greater return to group members than the funding model proposed in the R&B Proceeding;

b. the lawyers in the Furniss Proceeding were at a distinct advantage in seeking to have the matter progressed expeditiously for the benefit of group members because:

i. the Furniss Proceeding has been pleaded with the benefit of extensive work and analysis of over 9,000 pages of documents produced by Blue Sky Alternative Investments Limited pursuant to s 274A of the Corporations Act 2011 (Cth) (s 247A Documents);

ii. the review and analysis of the s 247A Documents was undertaken with the assistance of...