LEE J:
1 Before the Court are two applications for settlement approval pursuant to s 33V of the Federal Court of Australia Act 1976 (Cth) (Act). The settlement relates to two proceedings: proceeding NSD 1983 of 2017 (Excel-Texel Proceeding) is a securities class action with a closed class that overlaps with a separate proceeding, NSD 862 of 2018 (Davis Proceeding), which is an open class action. There are differences in the claims made in the proceedings, but those differences are immaterial for present purposes and I do not propose to detail them in this judgment.
2 Nor do I intend to set out, yet again, the principles informing a settlement under s 33V of the Act. There is only one point of principle that should be canvassed; that is, is it appropriate to bifurcate the question of approval of the settlement to the distribution of the settlement moneys in the circumstances of this matter.
3 In these proceedings, there is a forthcoming mediation and the applicants in both proceedings have agreed to defer the question of how the settlement sum, being the remaining amount of insurance proceeds that respond to the claims, should be allocated between the two proceedings. It is beyond doubt that the Court has power under s 33V to approve the settlement with Quintis (the only respondent in respect of whom the current settlement relates) and a further question of the distribution of the settlement sum. This conclusion follows from the text and conditional permissive language of s 33V(2) of the Act.
4 As the Victorian Court of Appeal said in Botsman v Bolitho (No 1) [2018] VSCA 278; (2018) 57 VR 68 (at 111 [198]-[203] per Tate, Whelan and Niall JJA):
198. Although not explicitly set out, it is sufficiently clear that the settlement to which s 33V relates is the settlement of the claims that are brought by the group members against the defendant. The settlement will bring to an end those claims, usually in consideration of payment of money by the defendant.
199. Sub-section 33V(2) is premised on approval of the settlement having been given by the Court. It provides an ancillary power with respect to the distribution of any money paid under the settlement or paid into Court.
200. Sub-sections 33V(1) and (2) confer two distinct, but related, powers: first, to approve the settlement and, second, to approve the distribution of payments under it. It is important not to elide these two powers.
201. The general principles to be applied in considering an application for approval of a settlement under s 33V have been propounded in a number of cases and are well-established. Those principles guide, but do not control, the Court's exercise of the power in s 33V to approve, or not approve, a settlement.
202. The organising principle which underpins s 33V is whether the proposed settlement is fair and reasonable and in the interests of the group members bound by the settlement. Consideration of that question is informed by a number of matters.
203. It is an essential starting point to identify the settlement and its terms. It is commonplace that a deed of settlement may address more than the settlement of the claims against the defendant and will also deal with the distribution of settlement money, including to a litigation funder. The structure of sub-ss 33V(1) and (2) suggests that such payments may be distributions of money that has been paid under a settlement to which the Court has given approval under s 33V(1). Those distributions are the subject of separate Court approval under s 33V(2).
(Citations omitted).
5 A similar approach was taken recently by O'Callaghan J in Davaria Pty Limited v 7-Eleven Stores Pty Ltd (No 11) [2022] FCA 331 (at [19]-[20]):
19. The cases make it clear, and the parties and the contradictor (Mr JA Redwood SC) agreed, that the exercise of the power under s 33V(1) of the Federal Court Act need not occur contemporaneously with the exercise of power under s 33V(2). See Caason Investments Pty Limited v Cao (No 3) [2020] FCA 91 at [6]-[7], [12]; and Botsman v Bolitho (No 1) (2018) 57 VR 68 at 144-145 [389] and [391].
20. In this case, such a bifurcation of issues is also contemplated by the terms of the settlement deed. In particular, the settlement deed requires the administrator to hold the settlement sum in a trust account (including interest accruing on it) in accordance with the terms of the deed for the group members and Galactic, until the settlement is distributed pursuant to the settlement scheme.
6 There is no question in my mind that this settlement is fair and reasonable and in the interests of group members. As noted above, the settlement sum comprises a balance of an insurance policy held by Quintis, which is the only asset available to meet the claims against Quintis in both class actions.
7 The quantum of the in-principle settlement was struck some time ago. However, the question of the approval of the settlement was deferred following a contested rectification suit that involved the relevant insurance policies. Views differed concerning the question of rectification, but the Full Court recently determined that the amount of the settlement is the sum in respect of which the insurance policies responded to the claims: see Argo Managing Agency Ltd for and on behalf of the underwriting members of Lloyd's Syndicate 1200 v Quintis Ltd (subject to deed of company arrangement) [2022] FCAFC 86 (per Allsop CJ, Middleton and Yates JJ). The inevitable consequence of the Court not approving the settlement would be for the settlement sum available for group members in both proceedings to be eroded by further defence costs. In all the circumstances, I consider it appropriate to approve the settlement with Quintis in both proceedings.
I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Lee.