The Court’s authority to make ‘common fund’ orders continues to be questioned

A cross-summons seeks declaration that the Court has no power to make common fund orders at settlement

This is one of several class actions relating to allegedly defective Takata airbags.

This decision concerned a cross-summons filed by the defendant seeking a declaration by the New South Wales Court of Appeal that s 173 of the Civil Procedure Act 2005 (NSW) (CPA) does not authorise the Supreme Court of New South Wales to make a common fund order at the conclusion of a proceeding.

The issue that confronted Sackar J was whether there was a real controversy between the parties which would be sufficient to enliven an application for declaratory relief, and whether his Honour should grant leave for the bringing of the cross-summons.

His Honour granted leave and referred the question of whether the Court has power to make a common fund order under s 173 of the CPA to be determined by the Court of Appeal. In doing so, his Honour said that “[t]here is no doubt in my mind that any defendant in any class action, given the High Court's decision in BMW Australis Ltd v Brewster [2019] HCA 45; (2019) 94 ALJR 51, has a real interest in the question of whether there is in fact jurisdiction to make a common fund order” (at [12]). His Honour acknowledged that evidence from the plaintiff’s solicitors to the effect that they had not come to a view as to whether the making of a common fund order would be a precondition to settlement or if they would seek the defendant’s consent to such an order pointed away from there being a real controversy that could found declaratory relief. However, his Honour held that “just by way of fine balance” that evidence “does not sufficiently in my mind take the issue off the table so as to remove in a practical sense a controversy between the parties” (at [13]).

In referring the question to the Court of Appeal, his Honour said that he would seek to ensure the matter will receive sufficient expedition given the fact that mediation is set to take place in March of 2021.

Brewster v BMW Australia Ltd [2020] NSWSC 1261

Supreme Court of New South Wales,

Sackar J, 16 September 2020

Plaintiff’s Solicitors: Quinn Emanuel Urquhart & Sullivan;          

Defendant’s Solicitors: Ashurst Australia;

Plaintiff’s Funder: Regency Funding Pty Ltd 

Austlii link: http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/nsw/NSWSC/2020/1261.html?context=1;query=Brewster%20v%20BMW%20Australia%20;mask_path

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