Consideration of the proposed discontinuance
44 Section 33V of the Federal Court of Australia Act provides:
33V Settlement and discontinuance - representative proceeding
(1) A representative proceeding may not be settled or discontinued without the approval of the Court.
(2) If the Court gives such an 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.
45 The principles applicable to a discontinuance, as distinct from a settlement, of a representative proceeding were discussed Rares J in Wotton v State of Queensland (2009) 109 ALD 534 at [37]-[40]:
[37] Under s 33V(1), a representative proceeding cannot be settled or discontinued without the approval of the court. The decided cases on s 33V(1) all appear to have been concerned with settlements, rather than discontinuances. The considerations affecting a settlement are not always the same as a discontinuance. It is important that any order that is made has regard to the interests not only of the present parties but of group members who may be affected by the terms of any grant of leave to discontinue.
[38] … it is important to ensure that any order by which these proceedings are brought to an end (by discontinuance or dismissal) not have a substantive impact on group members or affect their rights. The court must be careful to guard against any injustice that could be done to persons who are not represented in these proceedings and whose rights may be adversely affected by their outcome. This responsibility is reflected in the scheme of Pt IVA itself, especially in ss 33V(1) and 33ZF(1).
…
[40] The court has an important responsibility of safeguarding the interest of group members as a whole under s 33V(1). There is a danger that when a settlement is reached or a discontinuance is agreed, the interests of the actual parties to the proceedings may receive their paramount consideration while the impact on group members may not be fully or properly addressed. That is why in exercising the power under s 33V(1) to approve a settlement or discontinuance the court must scrutinise with great care the way in which any order is formulated. In the decided cases the courts have approached settlements with a keen eye to ensuring that the interests of group members are vouched safe: …
46 In Mercedes Holdings Pty Ltd v Waters (No 1) (2010) 77 ACSR 265 (Mercedes Holdings), Perram J stated at [9]-[10]:
[9] … Ordinarily, the question of leave arises in the context of determining whether leave should be granted to settle rather than discontinue a proceeding. Usually settlement of class actions will extinguish forever one set of rights in the class - put simply, their choses in action - and replace them with another, namely, rights under the proposed settlement arrangement. This is, of course, a significant step to take. The parties before the court are the representative parties and their advisors. Human experience teaches that those individuals - leaving aside issues such as minority and capacity - can be expected to reach views on any proposed settlement which the court need not second guess. However, as has often enough been pointed out, the opt-out nature of class actions in this court gives rise to the possibility not only of class members who are disengaged from the litigation but perhaps ignorant of it altogether. More importantly, since the representative parties and their lawyers are at the coalface of the suit where time, stress and money are being consumed in the furnace of litigation, it is natural that their inclination towards settlement may be affected by a just appreciation of their own positions. Those positions, and the allied interests accompanying them, may not wholly coincide with those of the members of the class. It is to superintend that inherent tension that s 33V erects a requirement for court approval of settlements and discontinuances.
[10] The course of authority confirms that the task of the approving court is to assess whether the compromise or discontinuance "is a fair and reasonable" one (Lopez v Star World Enterprises Pty Ltd (1999) ATPR 41-678 at 42,670; [1999] FCA 104 per Finkelstein J) which requires one to be satisfied that the settlement or discontinuance "has been undertaken in the interests of the group members as a whole, and not just in the interests of the applicant and the respondent": Australian Competition and Consumer Commission v Chats House Investments Pty Ltd (1996) 71 FCR 250 at 258; 142 ALR 177 at 184-5; 22 ACSR 539 at 546-7 per Branson J. Consequently, common sense suggests, and authority confirms, that the applicant for leave bears the onus of showing that the settlement or discontinuance is in the interests of all class members. …
47 In the particular circumstances of Mercedes Holdings, Perram J refused leave to discontinue. However, the circumstances of that case were quite different from those of the present case, as the relevant time period arguably was an element of the cause of action rather than merely (as in the present case) a procedural bar. In the present case, there is no reason to think that the covenant not to rely on the limitation period if an ANZ claim is brought before the expiry of the Covenant Period applicable to the relevant cause of action would not be effective.
48 In support of the applications for approval of the discontinuance of the claims against ANZ, the applicants rely on a confidential opinion prepared by counsel for the applicants, Dr KP Hanscombe QC and Mr D Meyerowitz-Katz, dated 28 July 2020. After a considered analysis of all relevant considerations, counsel express the opinion that the proposed discontinuance is fair and reasonable, and in the interests of the group members.
49 Having regard to the matters set out in the applicants' outline of submissions, and the matters set out in the confidential opinion, I am satisfied that the proposed discontinuance is fair and reasonable and in the interests of the group members. I note the following matters.
50 First, the terms of the discontinuance have been crafted in order to preserve the group members' rights. The parties have provided for the limitation period to continue to be suspended while the proceedings against 7-Eleven continue, notwithstanding that the proceedings against ANZ will have ended.
51 Secondly, these are very complex proceedings. ANZ and 7-Eleven are large and well-resourced respondents, and the litigation to date has been hard-fought. The evidence before Middleton J in a recent security for costs application was that 7-Eleven had incurred $10,327,917.40 in actual fees to 31 March 2020, and anticipated that it would incur another $4,343,417.50 before the commencement of the trial: Davaria Pty Limited v 7-Eleven Stores Pty Ltd (No 5) [2020] FCA 953 at [20]-[23].
52 The initial trial of the applicants' claims against 7-Eleven and the questions common to those claims and the claims of the group members is presently listed for a hearing of six weeks commencing on 9 August 2021. If ANZ remains a respondent then it is likely that even more hearing time would be required, assuming that the parties are able to prepare for the ANZ claims to be heard within the same timeframe.
53 One of the main benefits to the applicants and class members of discontinuing the claims against ANZ is that it permits the applicants to devote all of their resources to the claim against 7-Eleven. The discontinuance will also have some more limited cost-saving benefit to 7-Eleven, which otherwise would inevitably incur some costs by reason of ANZ's presence as a co-respondent.
54 In those circumstances, the complexity and likely duration of the proceedings weighs in favour of the discontinuance being granted.
55 Thirdly, the class has been notified of the nature of the proceedings and also of the proposal to discontinue against ANZ. There has been one objection to the discontinuance, which has been lodged by Jasesh Bhatt, Bindu Bhatt, and Akshardeep Pty Ltd (deregistered). These objectors did not appear at the hearing today. It appears from the material before the Court that Mr and Mrs Bhatt do not have claims against ANZ in the class actions, because their ANZ loan was made outside the relevant period.
56 Mr Bhatt has told the applicants' solicitors that the objection is because he has suffered as a result of his ANZ loan and he does not want ANZ to be released from the proceedings. This does not provide a substantive basis not to approve the proposed discontinuance. In any event, to the extent that he has a claim against ANZ in the class action and proposes to bring a claim against ANZ he will be able to do so if the class actions are discontinued, as his rights are preserved and so is the suspension of the limitation period. Accordingly, notwithstanding his objection, Mr Bhatt is not prejudiced by the proposed discontinuance.
57 Fourthly, the agreement to discontinue the claims against ANZ was reached just after the close of pleadings. Despite the period of time which has elapsed since then, the discontinuance is proposed at a relatively early procedural stage of the proceeding insofar as it concerns ANZ.
58 Fifthly, the claims against 7-Eleven have continued to run since the agreement to discontinue the ANZ claims, and are now fairly advanced, with a significant amount of discovery having been provided and an initial trial having been set down. If the discontinuance against ANZ is not approved then the hearing date for the 7-Eleven claims may be in jeopardy.
59 In addition to the above, I have had regard to the matters discussed in the confidential opinion.
60 For these reasons, I consider it appropriate to approve the discontinuance of the claims against ANZ in each proceeding. I will make orders substantially in the terms proposed by the applicants, subject to some adjustments discussed during the course of the hearing. In the 180 Proceeding, I will make orders to the following effect:
(a) Pursuant to s 33V of the Federal Court of Australia Act, the discontinuance of the claims against ANZ pursuant to the deed of settlement between Davaria and ANZ dated 9 May 2019, as varied by the deed of variation of deed of settlement dated 5 August 2020, be approved.
(b) Pursuant to s 33ZF, Davaria is authorised nunc pro tunc to enter into and give effect to the deed of settlement and the deed of variation, for and on behalf of the "Settling Group Members" (as defined in the deed of settlement).
(c) On the expiry of the period in s 33ZC(6), the applicants have leave pursuant to s 33V and r 26.12 of the Federal Court Rules 2011 to file a notice of discontinuance in relation to the claims against ANZ, such a notice stating that the parties bear their own costs in relation to the discontinuance.
(d) After a notice of discontinuance is filed by the applicants in accordance with (c) above:
(i) the security for ANZ's costs and any interest thereon held in the Federal Court trust account, be paid to the applicants;
(ii) any outstanding costs orders as between Davaria and ANZ are vacated; and
(iii) there be no other order as to costs as between Davaria and ANZ.
61 I will make comparable orders in the 182 Proceeding.
62 I also consider it appropriate in the circumstances to make the confidentiality order sought by the applicants. This relates largely to the confidential opinion of counsel.