Bogan v The Estate of Peter John Smedley (Deceased) [2025] HCA 7
On questions reserved for the Court of Appeal of the Supreme Court of Victoria and removed into the High Court, the High Court unanimously held that a group costs order under section 33ZDA of the Supreme Court Act 1986 (Vic) would not survive transfer to the Supreme Court of New South Wales under the Corporations Act 2001 (Cth), and a majority held that the order was relevant to transfer under section 1337H(2) and here weighed decisively against it, so that the proceeding should not be transferred.
What the court decided
Gageler CJ, Gordon, Gleeson, Jagot and Beech-Jones JJ gave joint reasons [1]. Edelman J gave the same answers separately [116]. Steward J agreed only on the second question and dissented on the first and third [121], [147].
The plaintiffs, Mr Bogan and Mr Walton, commenced a group proceeding in the Supreme Court of Victoria in August 2020 for persons who acquired interests in Arrium Ltd shares [25]. They sued KPMG, Arrium's auditor, and four director defendants, the first being the estate of a deceased director, alleging breaches of the Corporations Act and other Commonwealth laws [27]–[28]. The joint reasons inferred that the plaintiffs, their solicitors and their funder chose Victoria to seek a group costs order [32].
KPMG applied to move the proceeding to New South Wales, but in March 2021 Nichols J, a judge of the Supreme Court of Victoria, ordered that KPMG's application be determined after the plaintiffs' earlier application for a group costs order [33]. In May 2022 Dixon J, of the same Court, made an order fixing the solicitors' legal costs at 40% of any award or settlement [35]. The agreed facts included Dixon J's evaluative conclusions that without the order the funder would probably stop funding, and that an unfunded proceeding was likely to terminate without being decided or otherwise resolved on the merits [41].
No appeal lies from a decision in relation to the transfer of a proceeding [17]. The Court of Appeal concluded how the reserved questions should be answered but made no orders, so that removal could be sought [38]–[39]. Edelman J described the removal as a device to circumvent that bar, while leaving open whether that affected the High Court's authority [83], [87].
The High Court answered the questions as the Court of Appeal had proposed: the order was a relevant consideration, it would not remain in force after transfer and the proceeding should not be transferred [79]. The director defendants and KPMG were ordered to pay the plaintiffs' costs in the High Court, including the removal application [80].
On survival, the joint reasons decided that section 1337P(2) directs how a transferee court deals with a transferred proceeding and confers no power [54]. Its reference to similar steps limits the statutory fiction it creates: an order carries across if it is of a similar nature to one the transferee court could have made, but not otherwise [58]–[59]. KPMG and the Commonwealth Attorney-General argued that all steps carry across, but that reading did not account for the textual limit and could require the transferee court to enforce an order its own procedural law prohibits [60]–[63]. It was common ground that the Supreme Court of New South Wales cannot make a group costs order [45]. The Court of Appeal was therefore right that the order would have no legal effect there [66]. Edelman J agreed, because the scheme takes the transferee court as it finds it [85], [93], [96].
On relevance, the joint reasons held that the making of a group costs order bears on the exercise of the transfer power [3]. They rejected an argument built on the cross-vesting decision in BHP Billiton Ltd v Schultz (2004) 221 CLR 400 ('Schultz'), because section 1337H(2) cannot be equated with the provision that case considered [67]–[68]. The transfer provision confers a discretion, in which the interests of justice are a fundamental element but do not confine what may be considered [71]–[72]. Leaving the order aside, those interests were neutral or equivocal [74]. On the agreed facts the order could not be ignored, because the proceeding could continue in Victoria but was unlikely to continue after transfer [75]–[76]. The funding facts bore on access to justice and, as with security for costs, whether a transfer would stultify a proceeding is relevant [77]. The order therefore weighed decisively against transfer [78].
KPMG's argument that transfer should have been decided first was not open, because KPMG had not sought to appeal the 2021 sequencing order [44], a point Edelman J also made [110].
Edelman J treated the order, as a measure directed to access to justice, as the most important connecting factor here [85], [104]. He accepted that the factors relied on by KPMG and the director defendants might by themselves favour New South Wales, but held that they paled into insignificance [113]–[114]. Where the joint reasons rejected the comparison between the two provisions without examining Schultz in detail [68], his Honour considered its reasoning on the interests of justice criterion equally applicable to section 1337H(2), while accepting that differences between the provisions might matter in marginal cases [106]. He also said the "may" in that provision will almost always be a "must" [101]. He considered that KPMG had confused the even-handedness that Schultz required with access to justice [108]–[109].
Steward J agreed with the Court of Appeal that, but for the order, New South Wales was the more appropriate forum [122]. On his approach, an advantage offered to one party in only one forum is ordinarily set aside, since it may well be an equivalent disadvantage to the other side [127]. He noted that no one had contended that alternative funding was impossible in New South Wales [128]. In his view Schultz mandated that approach [130]. Accepting a clear risk that the proceeding may be stultified, he still considered that the order should have played no part in the Court of Appeal's reasoning [141]–[142]. He would have answered the first question "No" and remitted the third [147].
Why it matters
In a Victorian group proceeding on Corporations Act claims, an existing group costs order bears on a transfer application under section 1337H(2) [3]. In the joint reasons, its decisive weight here rested on an otherwise neutral balance and on the probability that the claims could not be funded without it [74], [77]–[78]. Edelman J reached the same result although he accepted that the other factors might by themselves have favoured New South Wales [113]–[114].
The joint reasons framed their construction of section 1337P(2) generally: an order carries across only if it is of a nature, or a similar nature, to one the transferee court could make [58]–[59], [64]. In my view, that test should be applied to any other order made under a power peculiar to Victorian procedure before transfer is sought or resisted. Readers should check the current text of section 33ZDA, which the joint reasons set out [22].
Numbers in square brackets are paragraph numbers of the judgment. This note summarises a decided case for education and is not legal advice. See how the notes are written.