Clarke v Sandhurst Trustees Limited

A Introduction 1 This is an application pursuant to s 33V of the Federal Court of Australia Act 1976 (Cth) (Act) that the Court approves a proposed settlement. It is made on behalf of the plaintiffs, Mr and Mrs Clarke. The plaintiffs commenced this proceeding in 2015 against Sandhurst Trustees Limited (Sandhurst) as trustee of an unsecured note scheme operated by Wickham Securities Limited (Inc) (Wickham) under Chapter 2L of the Corporations Act 2001 (Cth), seeking compensation for breaches by Sandhurst of the terms of a trust deed and also for conduct said to be in breach of s 283DA(b)(ii) of the Corporations Act. 2 For reasons that will become evident, the proposed settlement raises some vexed issues. The plaintiffs, through their senior counsel, submit that the proposed settlement sum of $16.85 million (Settlement Sum), which has been conditionally agreed subject to the Court's approval, falls within a range of fair and reasonable outcomes, having regard to all known facts and circumstances. This is against the background that the starting point for the 'best case' recovery for the plaintiffs and group members, according to the plaintiffs, appears to be in the vicinity of $29.8 million. The matter of principle arises because out of the Settlement Sum, very significant amounts are proposed to be paid in respect of legal costs and funding fees, leaving a relatively modest return to group members. 3 As to legal costs, the affidavit evidence, which was updated by an affidavit sworn by the solicitor for the plaintiffs sworn on the second day of the hearing of the approval application, deposes that total costs, incurred up to 28 December 2017, are in the amount of $4,909,024.49 and that additional costs, since 29 December 2017 and up to the conclusion of the administration of the proposed settlement distribution scheme, are estimated in the amount of $260,000. As to the funding fees, a funding agreement was entered into which provided, that in consideration for the usual covenants by the funder to pay legal costs and provide an indemnity against adverse costs, a sliding scale funding fee percentage would become payable to the funder which, if the funding agreement was enforced according to its terms, presently would require payment of 40 per cent of the Settlement Sum. Additionally, the funding agreement specifies the payment of a management fee of $5,500 per month, inclusive of GST. Notwithstanding the terms of the bargain between the funder and group members, the funder has informed the Court that it is content with the proposed settlement distribution scheme which, if approved, would provide that the total amount payable to it, inclusive of the funding commission and all other entitlements, is to be limited to the total amount of 30 per cent, being the sum of $5.055 million. 4 It follows that out of the Settlement Sum, an amount approaching $10 million is proposed to be diverted to pay solicitors and the funder, rather than being paid to group members as compensation for their alleged losses. When the approval application first came on for hearing, I expressed concern as to the disparity between the Settlement Sum and the amount that would ultimately be distributed to group members. I agreed to an adjournment of the approval application for a period and, when the matter returned before me on 11 April 2018, I granted leave for the funder to appear and hence made orders that JustKapital Litigation Pty Ltd and JustKapital Portfolio Pty Ltd, both of which are wholly owned subsidiaries of JustKapital Ltd, intervene on the approval application to make any submissions they wished to make in relation to the application. 5 The funder supported the approval application. It read the affidavit of Ms Diane Jones, Chief Executive Officer of the funder, affirmed 11 April 2018. This affidavit deposed, among other things, to the amounts that had been paid by the funder during the course of the proceeding ($2,073,933.69) and the estimated potential adverse costs liability ($3.36 million). It was said to follow that if the litigation is unsuccessful, the funder would have an obligation not only to pay the adverse costs amount, but also stood to lose the approximately $2.07 million it invested in fees and disbursements. To defray this risk, the funder took out an ATE ('After the Event') policy. As is often the case with a funding arrangement supported by an ATE policy, the funder agreed to pay the ATE policy premium cost out of the amount that would otherwise be payable to it. The evidence discloses that the ATE policy premium is between $293,945 and $403,418. Accordingly, the funder seeks a payment out of the Settlement Sum of $5.055 million, in circumstances where it paid a policy premium, together with only a proportion of the legal costs incurred by the plaintiffs. 6 This proceeding brings into focus a problem which bedevils representative proceedings of a certain type. The type to which I refer are those class actions which are commenced to recover what, in absolute terms, might be thought a considerable sum, but, when judged against the relative costs of litigation and the amount required to be paid to a funder in order to allow the proceeding to go forward, is not large. In these circumstances, questions arise as to how such proceedings can be resolved at a significant discount, relatively close to an initial trial, when very significant costs have already been incurred so that the ultimate amount recovered by group members is modest. 7 Put in blunt terms, given that the Court has a protective and supervisory role in relation to group members, it has a duty to consider whether or not, when viewed from the perspective of group members, it is better to allow such litigation to continue to an initial trial in circumstances where, if the plaintiffs are successful following a contested hearing, group members are likely to recover the full amount of their claims together with an amount of costs, ultimately resulting in a significantly better recovery. In these types of cases, it is necessary to be alive to the prospect that the settlement may be in the interests of the funders and sometimes the solicitors, but not in the interests of group members.

B.1 Relevant Principles in the Consideration of Settlement Approval 8 I do not propose to canvass in any detail the relevant principles in approaching approval applications. They have been repeated time and again in approval applications and it suffices for present purposes for me to refer to the principles summarised by Moshinsky J in Camilleri v The Trust Company (Nominees) Limited [2015] FCA 1468 at [5] and [40]-[51], and in my judgment in Lifeplan Australia Friendly Society Limited v S&P Global Inc (Formerly McGraw-Hill Financial, Inc) (A Company Incorporated in New York) [2018] FCA 379 at [12]-[15]. In short, I am required to form a view as to whether the proposed settlement is fair and reasonable in the interests of group members. 9 Section 33V of the Act, as is well known, provides that a representative proceeding may not be settled or discontinued without approval of the Court, and that if the Court does give its approval, it may make such orders as "are just" with respect to the distribution of any money paid under a settlement or paid into the Court. 10 The other provision of Part IVA often called in aid in approval applications, and referred to in prayer 1 of the approval application, is s 33ZF of the Act, which provides that the Court may "make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding". 11 In circumstances where I have a concern as to the amount to be distributed to group members, the question arises as to whether or not it is open to me to make orders which interfere with the funding agreements entered into by the funder and the group members so as to augment the amount to be recovered by the group members and thereby, necessarily, reducing the amount payable to the funder. In this proceeding the issue does not arise as starkly as it may in other cases. This is because the funder has already abandoned the intention to enforce the funding agreements according to their terms, and has reduced the amount recoverable from the contractual 40 per cent plus GST to 30 per cent, and waived recovery of the management fee.

B.2 Observations on Power of the Court to Vary Funding Agreements 12 Having made the above observations, a question still arises whether, on an application under s 33V, the Court can, in the absence of the consent of the funder, make orders which upset the bargain struck between the funder and group members. This is a question which has not been definitively decided (and may never be definitively decided in the event of statutory reform or if common fund orders replace funding agreements as the principal mechanism by which litigation is funded in this Court). I addressed this issue extra-curially in an article entitled "Varying Funding Agreements and Freedom of Contract: Some Observations" (available at http://www.fedcourt.gov.au/digital-law-library/judges-speeches/justice-lee/lee-j-20170601). 13 There are a number of decisions of the Court where, in the exercise of the protective and supervisory role of the Court, observations have been made about whether the Court possesses the power to consider and then vary the funding commission paid pursuant to funding agreements: see Murphy J in Earglow Pty Ltd v Newcrest Mining Limited [2016] FCA 1433, Beach J in Blairgowrie Trading Ltd v Allco Finance Group Ltd (res & mgrs appt) (in liq) (No 3) [2017] FCA 330; (2017) 343 ALR 476, and Middleton J in Mitic v OZ Minerals Limited (No 2) [2017] FCA 409. 14 In these cases, a number of observations were made not only about the source of power, but also the circumstances in which the power should be exercised. In Earglow, the following was said: [148] Earglow did not argue that if the Court considered the legal costs charged to be excessive the Court only had power to refuse to approve the settlement, and it accepted that the Court has power to approve the proposed settlement but reduce the legal costs to be deducted. Earglow's acceptance of the Court's power in that regard is discordant with its contention that the Court has no power to approve settlement but reduce the funding commission to be deducted. [149] If a proposed settlement is fair and reasonable except that the Court considers the claimed legal costs to be excessive, it is difficult to see why it would be appropriate (or fair and reasonable in the interest of class members) for the Court to make orders refusing settlement approval… … [150] The same can be said where a proposed settlement is fair and reasonable in the interests of class members except that the Court considers the funding commission to be excessive. In such circumstances it is quicker, cheaper and more efficient (and just and appropriate in the interests of class members) to approve the settlement and reduce the funding commission. There are, of course, specific legislative provisions which empower Court supervision of the reasonableness of legal costs (e.g. the Legal Profession Uniform Law) but there is no reason in principle for treating litigation funding costs incurred to achieve a settlement differently from legal costs incurred to achieve the settlement": Money Max (at [71]). [151] I can see little merit in Earglow's contention that the scope of the Court's power under ss 33ZF(1) and 33Z is confined to making orders in respect of the matters in issue between the parties to the proceeding… … [155] Earglow's contention that, even if the Court considered that a funding agreement is misleading or unlawful, that that would be a controversy falling outside the scope of ensuring that justice is done "in the proceeding", is impossible to accept. If class members were misled as to the requirement to pay a funding commission I would have no difficulty in concluding that a settlement that proposed the deduction of that commission from class members' settlement amounts was not fair or reasonable in their interests. [156] I do not accept Earglow's submissions as to the "element of necessity" required for an order under s 33ZF. The requirement that an order to disallow or to reduce the funding commission can only be made if the Court thinks it "appropriate or necessary to ensure that justice is done in the proceeding" does not mean that the Court must consider that justice is certain (in the sense of "ensured") if the proposed order is made or that injustice is certain if the order is not made. It requires only that the proposed order be reasonably adapted to the purpose of seeking or obtaining justice in the proceeding: Money Max at [165]. [157] I conclude that, if in a settlement approval application the Court considers the proposed settlement is fair and reasonable except that the funding commission is excessive or exorbitant, the Court has power to approve the settlement and reduce the funding commission to be deducted pursuant to the terms of the settlement. Having regard to ss 33V, 33ZF(1), 33Z(1)(g) and 23 I do not accept that the Court's powers are limited to a binary choice between approving or rejecting the proposed settlement. In such circumstances it may be "just", "appropriate", or "appropriate or necessary to ensure that justice is done in the proceeding" that the Court make orders approving the settlement but reducing the funding commission to be deducted under the settlement. 15 In Blairgowrie, Beach J noted at [101]: I consider that as part of any approval order under s 33V, I have power in effect to modify any contractual bargain dealing with the funding commission payable out of any settlement proceeds. It may not be a power to expressly vary a funding agreement as such. Rather, it is an exercise of power under s 33V(2); for present purposes it is not necessary to invoke s 33ZF. I am empowered to make "such orders as are just with respect to the distribution of any money paid under a settlement". If I make an order that out of monies paid by a respondent, a lesser percentage than that set out in a funding agreement is to be paid to a funder, that is an exercise of statutory power which overrides the otherwise contractual entitlement. That is not an unusual scenario in many and varying contexts. It might also be said that the funding agreement itself contains an implied term reflecting this override in any event; the parties would be contracting in the known setting that the funder's percentage commission entitlement would only operate on a settlement sum if the necessary condition of Court approval had first been given. 16 Finally, Middleton J, agreeing with Beach J's observation, said in Oz Minerals: [27] However, I make one observation as to the power of the Court to effectively vary the commission paid to a litigation funder. [28] Sections 33Z and 33ZF(1) of the Act, whilst expressed in broad terms, as is s 23, are not specifically directed to settlement approvals, but relate generally to the power of the Court in representative proceedings and proceedings generally. Once the Court is dealing with a settlement approval application, the focus is upon s 33V. A power to effectively vary the contractual rights of a litigation funder in the course of a settlement approval is to be found in s 33V, specifically subs (2). I would not readily adopt the view that the very general broad powers found in ss 23, 33Z(1)(g) and 33ZF(1), which are not specifically directed to settlement approvals, would provide the power to vary or effectively vary the funding agreement, or otherwise interfere with the contractual rights and obligations of a litigation funder and class members. [29] Nevertheless, by having recourse to the power of the Court under s 33V(2) of the Act, the Court may still take into account the fee or commission of a litigation funder and make orders accordingly. Oversight by the Court of litigation funding fees or commissions so as to protect class members' interests is required. Of course, s 33V(2) refers to orders that are "just" - this includes taking into account the fact that litigation funders assume the substantial costs and risks of a representative proceeding and should be allowed a commercially realistic return. 17 For reasons that I will come to, it is unnecessary for me to form a view on the issue of power discussed in these cases. Nor is it necessary for me to set out in any detailed way the circumstances in which it would be a principled exercise of such a power to intervene with promises given by funded group members as part of the pooling of contributions and the provision of their individual promises for the purpose of an integrated scheme for the benefit of scheme members and, ultimately, for the funder's benefit: see Brookfield Multiplex Ltd v International Litigation Funding Partners Pte Ltd [2009] FCAFC 147; (2009) 180 FCR 11. 18 Mr Hutley SC, who appeared on behalf of the funder, submitted that the commentary in the cases as to the existence of such a power, to the extent those observations can be characterised as considered dicta, ought not to be followed, and that the relevant power does not exist. Both the plaintiffs and the defendant submitted that the power exists, but that the circumstances for its exercise do not arise in this proceeding. Given the view that I have formed as to the disposition of the approval application, as noted above, it is unnecessary for me to comment further upon this issue. This is because, in the circumstances of this proceeding, the approval application is best resolved by forming a view as to what ultimately is in the interests of group members and making a determination as to whether or not I should grant or refuse approval, rather than me tinkering with funding terms.

C The Proposed Settlement 19 This proceeding is sufficiently connected to two other representative proceedings currently before the Court for it to be set down for the hearing and determination of common issues related to all three proceedings. Given that the common issues in this case, in some respects, transcend this proceeding, it would be inappropriate for me to canvass (let alone provide preliminary observations as to merit of) the principal contested issues of liability and causally related loss. In addition to the fact that it may indicate some form of prejudgment of the issues, the discussion of the underlying merits would be necessarily premature as all evidence has not been filed in relation to the proceeding, nor have I reviewed what has been filed in any detail, nor have I received argument of any substance in relation to any of the substantive issues, some of which, it is common ground, raise issues which have not previously been the subject of judicial determination.

C.1 The Settlement Generally 20 In the circumstances set out above, I place very significant reliance on the plaintiffs' representatives who have placed material before the Court which sets out their opinion as to the proposed settlement. The solicitor for the plaintiffs, Ms Saddler, affirmed a detailed affidavit on 11 March 2018 which recounts, among other things, her experience as a national special counsel for class actions at Shine Lawyers; provides an overview of the pleadings and evidence; details (at a high level of abstraction) the settlement negotiations; and, importantly, provides the reasons for settlement and an overview of the proposed settlement. 21 Nine issues are identified which are said to weigh in favour of the proposed settlement: (a) first, it is said that an important consideration when settling a claim is that some compromise is always necessary; no matter how good one believes the client's liability case is, there is always a risk in litigation that one can lose. Ms Saddler provides evidence (which would be familiar to any experienced litigator) that she has experienced outcomes that were unexpected, including adverse outcomes in circumstances where she had been confident of success; (b) secondly, it is said that a successful determination at the trial of common issues may not produce a final or meaningful result for group members; this may be a more controversial proposition, as a successful outcome for group members at the initial trial will provide a substantial benefit in resolving common issues favourably; to the extent it would not produce a final or meaningful result for group members and their individual claims, that seems to be more a reflection of the fact that individual issues would always have to be determined, rather than a lack of utility in this matter proceeding to an initial trial and resolving at least those issues which are common; (c) thirdly, it is said the issues for determination, and in particular the defence advanced by the defendant that it was entitled to rely upon the work of the auditor in discharging its duty pursuant to s 283DA of the Corporations Act, has not been the subject of previous judicial determination; I agree that this lack of authoritative guidance from decided cases introduces a real element of uncertainty, but those acting for the plaintiffs have no doubt formed a view as to the strengths and weaknesses of the argument they propose to advance in this regard; (d) fourthly, the case theory involves the proving of a counterfactual, namely, establishing that had the defendant not been in breach of its obligations under the relevant provisions of the trust deed, and s 283DA of the Corporations Act, a receiver would have been appointed at a particular date. Ms Saddler makes the observation that proof of a counterfactual raises difficulties. Again, this is in the nature of the claim advanced and the prospects of considering whether the counterfactual will be proved is no doubt something which has been given close consideration by those acting on behalf of the plaintiffs. A further point, however, should be made in relation to this aspect of the reasoning. The date at which a hypothetical receiver would have been appointed is, I accept, critical to the damages claim of some group members. In one sense it is a matter that is relevant to all claims in that there are those persons who allege that they suffered loss prior to the date upon which the receiver should have been appointed in the counterfactual, and those who allege that they suffered loss by investments made after that date. For those in the latter category, that is 'no transaction group members', the date of appointment of a hypothetical receiver is important for the purposes of determining whether or not they are, in fact, a no transaction group member. But it does not appear critical, it seems to me, at least on the basis of the material that I have thus far seen, to the question of quantification of no transaction group members as the case is currently advanced by the plaintiffs. In making this comment, I make no observation as to the strength or otherwise of the plaintiffs' contentions in this regard; (e) fifthly, Ms Saddler makes the point that the issue of damages is a matter of serious dispute between the parties and that the differences between the experts in relation to damages are considerable; again, I accept this as a general proposition, but it is another matter in the multifactorial analysis that has no doubt been undertaken by the legal representatives of the plaintiffs in forming a view as to overall prospects of success; (f) sixthly, assuming the plaintiffs succeed on liability, the question of the quantum of the total amount of noteholders' claims (assuming the appointment of a receiver at the time alleged by the plaintiffs) is somewhat complicated by the liquidator issuing dividends to those who held notes in Wickham as at 21 December 2012. But, despite such uncertainty, it is said that the highest amount likely to be recovered by the group members, assuming a favourable outcome in respect of all aspects of the case, is $29,845,996.95. As Ms Saddler then goes on to note, the proposed settlement is approximately 56.45 per cent of this amount, which she indicates falls within the range of a reasonable and fair settlement for cases of this type. I accept this evidence in that it does appear to me that a headline settlement figure of the type proposed falls within the range of settlements that could be characterised as being fair and reasonable; this is, in part, by reference to a general appreciation of the inherently risky nature of litigation, but also the matters to which Ms Saddler has pointed; (g) seventhly, in the event that the matter proceeds to judgment or receives a favourable outcome, Ms Saddler's view, on the basis of her experience, is that it is almost certain that Sandhurst will appeal the outcome with respect to both liability and quantum; (h) eighthly, if the parties had not agreed to settle the proceeding, Ms Saddler makes the point the plaintiffs would have needed to carry out a number of steps to prepare for the initial trial, including conferring as to the common questions to be determined; agreeing on valuation issues to be referred to a referee; issuing further subpoenas and preparing further expert evidence both to address what is said to be a new averment made on behalf of the defendant and also preparing material in reply. No doubt these additional costs would have been significant, albeit they would have been costs, at least in some respects, that were being incurred in relation to the related representative proceedings and perhaps would not be as large as would otherwise be the case if this was a 'standalone' proceeding; (i) ninthly, evidence is provided that the group members "are almost all retired and elderly"; many are said to be widowed and live alone, and there have been a number of communications between Ms Saddler and group members during the course of the proceeding where she has formed the view that the group members are relatively unsophisticated, working class people who have suffered a degree of financial and emotional loss. 22 The final point made by Ms Saddler is a matter of some significance for at least two reasons. First, it tends to demonstrate the limitation of the notice system mandated by Part IVA of the Act in providing considered responses from group members as to matters as complex as whether or not a settlement on the terms proposed would be the subject of objection by a group member. This tends to heighten the protective and supervisory role the Court. Secondly, it does support the notion that if this is a settlement at the margins, then perhaps settlement ought to be approved because the vexation of which Ms Saddler speaks will, at least for these group members, come to an end upon settlement. 23 Bearing in mind the matters set out above, it does seem to me that the proposed, 'headline' Settlement Sum is appropriate in the circumstances.

C.2 Legal Costs 24 In absolute terms, the costs incurred might be thought to be very large. Indeed, they are. Having said this, this is highly complex litigation and to those experienced in representative proceedings, the legal costs do not seem out of the ordinary. Indeed, as I indicated to senior counsel for the plaintiffs, I was persuaded to retreat from my initial, preliminary consideration of appointing a referee to inquire into and report on the quantum of the fees proposed to be deducted from the Settlement Sum, because it appeared to me that there was at least a substantial risk in this proceeding that the cost of the reference process would outweigh any benefit in the augmentation of the amounts paid to group members. 25 Accordingly, I consider that the quantum of the legal costs claimed is fair and reasonable.

C.3 The Funding Fee 26 In considering the proposed funding fee, I have had regard to Mr Hutley's submissions. At least at the present stage of the evolution of funded litigation in this Court, the funding agreement is not out of the ordinary. The amounts proposed to be charged by the funder are within what might be regarded as prevailing market parameters and, indeed, the 30 per cent figure now pressed (together with the abandonment of the management fee) could be regarded as within the range of comparable amounts charged in similar proceedings (expressed as a pure percentage). I stress the words as a pure percentage because pointing to a figure which is commercial does not address the issue that I have raised above about what I regard as the structural difficulty occasioned by litigation of this complexity and cost when the damages sought to be recovered, on a best case scenario, are relatively modest.

D Consideration 27 It follows from what I have set out above that I am faced with an unusual scenario where I have come to the conclusion that the 'headline' Settlement Sum is fair, the amount of legal fees being charged is fair, and the funding fee pressed on behalf of the funder is also fair. The question which arises is, when each of these elements of the proposed settlement are put in the balance, is the result in terms of the return to group members something which is fair and reasonable and in their interests? To use a word I have used in a different context in this judgment, this involves the consideration of a 'counterfactual' (given that I do not propose to interfere with the funding arrangements), which is the progression of this proceeding to an initial trial. In my view, when forming a view for s 33V purposes, this is the appropriate counterfactual, even though there is no doubt some prospect that if the approval application is refused, a different bargain may be struck between the parties, subject to Court approval. 28 I referred earlier to the evidence of Ms Jones who, in [40] of her affidavit, deposes to the following: In my experience, it is not unusual for group members to not receive 50% of the proceeds but the settlement is approved by the Court as fair and reasonable. Although it is desirable that group members receive at least 50% of the settlement, there are other factors which may mean that this is not possible, for example, the risks involved, the complexity of the case, the costs needed to prosecute the case and the possibility that but for the funding the case would not proceed. 29 I confess that this evidence does not accord with my experience. That is, I do not consider a settlement which provides for group members receiving less than half the proceeds of the settlement as, in any way, usual. Indeed, in my experience, applicants have been somewhat chary in putting forward settlements which would involve such an outcome. This is not to say that there have not been cases where such settlements have been approved and, indeed, I am aware of such cases, but they cannot be said to be 'not unusual'. There must be a good reason why a settlement could be considered fair from the perspective of group members, when the lawyers, experts and the funders get more out of it than the people who have allegedly suffered a wrong. Such cases arise, but it would not be a good reflection on how Part IVA of the Act operates if they could be described as 'not unusual'. 30 No doubt it is because such cases sometimes do arise that the amount ultimately paid to finance and conduct representative proceedings is the subject of some contemporary debate. 31 At the end of the day, I have to do my best with the material I have seen to make a judgment call. In this proceeding I have had the considerable benefit of an opinion by Mr Martin SC, senior counsel for the plaintiffs. The opinion is comprehensive and seems to me the best guide I have, together with the evidence of Ms Saddler, as to whether or not I can characterise the outcome for group members as fair and reasonable in their interests. It would be inappropriate for me to detail that opinion in this judgment. As I indicated at the hearing on 28 March 2018, I consider I should proceed on the basis that the opinion of experienced senior counsel, which is informed by a detailed reasoning process, is accurate and, in circumstances where it is neither appropriate nor practical for me to descend into the detail of forming a view on the underlying substantive merits, I should proceed on the basis that the prospects of the case as to both liability and quantum are as indicated by senior counsel. Put another way, it is not for me, on the basis of the information that I have, to second guess that opinion. 32 It is for this reason that I do not think it is appropriate that I express views on the submissions made by Mr Hoffmann QC on what he submitted were the inherent difficulties in the liability and damages cases advanced by the plaintiffs. As noted above, I have already expressed a view, consistent with the opinion of Mr Martin, that the proposed Settlement Sum falls within the range of fair and reasonable outcomes, having regard to the particular complexity of the proceeding, the litigation risks to which he has referred and the likely outcomes and costs savings inherent in the compromise. More importantly, however, Mr Martin also expressed the opinion that the proposed settlement distribution scheme is fair and reasonable, which implicitly carried with it the notion that the sum to be distributed to group members, pursuant to that scheme, is also reasonable in the circumstances. To this I should add that following a confidential exchange with Mr Martin, he was content for me to indicate that the confidential opinion expressed the view that the plaintiffs enjoyed good prospects of success and that he regarded it as unlikely that the matters raised by the defendant in defence to the claim would be vindicated. 33 I must say I have found it somewhat difficult to reconcile the relatively 'bullish' nature of the opinion (as summarised above) with the ultimate amount to be paid to group members. If I was in the position of a group member and thought I had a claim of the type which enjoyed the prospects to which Mr Martin referred, I would have real questions as to whether I would regard the settlement as being in my interests. 34 For these reasons, this is a very borderline case. Having said this (and not without some misgivings), I am prepared to approve the proposed settlement because of the generalised and inherent risks in litigation of this type and the real possibility that group members may receive nothing if the settlement is refused. In this regard, a very important factor is the personal circumstances of the relevant group members and that, if settlement is refused, group members, many of whom are elderly and of modest financial circumstances, will be kept out of money - perhaps for a number of years. 35 I also had the benefit of an exchange with Mr Martin as to aspects of the proposed settlement distribution scheme that I regarded as operating unfairly or potentially unfairly, and also as to provisions I did not regard as appropriate. I do not propose to go into the detail save to note that one of the proposed terms was that the administrator of the proposed settlement distribution scheme be given the same indemnities as a judge of this Court in relation to the conduct of the administration of the scheme. It may be that this provision has been approved before, but it does not seem to me to have any justification whatsoever. Although an administrator will have duties to the Court, there is no reason why the administrator should be immune from action in the event that the administrator performs maladroitly. Aside from the matters to which I made reference during the course of my exchanges with senior counsel, there is nothing about the proposed settlement distribution scheme which now seems to me to operate unfairly and, accordingly, I am prepared to approve it. 36 In those circumstances, I will make the orders that have been proposed in the short minutes of order. I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lee.