First Plaintiff v Defendant

2 In the circumstances of this approval application, the matters I need to consider are:

(a) Whether the amount group members will receive under the proposed settlement is fair and reasonable having regard to:

(i) A reasonable estimate of the value of their claims;

(ii) The risks in the proceeding; and

(iii) The benefits of certainty and payment earlier than proceeding to judgment;

(b) Whether the releases provided by the group members are appropriate;

(c) Whether the proposed Settlement Distribution Scheme is fair and reasonable;

(d) Whether Michel Margalit of Margalit Injury Lawyers should be appointed Administrator of the Settlement Distribution Scheme;

(e) Whether proposed deductions from the settlement sum for a payment to the plaintiffs, legal costs and settlement administration costs are appropriate; and

(f) Whether a number of group members who failed to register in accordance with court orders and who now seek to be included as registered group members ('late registrants') should be permitted to participate in the settlement.

3 For the reasons which follow, the answers to the above questions are:

(a) Yes.

(b) Yes.

(c) Yes.

(d) Yes.

(e) I would approve:

(i) payments to the plaintiffs in the following sums:

(A) Ms Bopping $35,000; and

(B) Ms Pedersen $35,000;

(ii) the Plaintiffs' legal costs in the sum of $10,608,800.04;

and defer any assessment of reasonable administration costs at this stage.

(f) I will separately consider the late registration applications.

4 The evidence before me comprises the following material filed on behalf of the plaintiffs:

(a) Four affidavits of Janine McIlwraith dated 24 September 2024, 1 October 2024, 14 October 2024 and 17 December 2024. Three of those affidavits are filed on a confidential basis;

(b) Five affidavits of Michel Margalit - two dated 1 November 2024; two dated 9 December 2024 and one dated 10 December 2024. Three of those affidavits are filed on a confidential basis; and

(c) Two affidavits of Elizabeth Harris - one dated 28 October 2024 and another dated 11 December 2024.

5 There are four objections to the settlement and 171 applications filed by persons seeking late registration to participate in the settlement. One of the four objections was in truth an application for late registration and I treat it that way. The other three objections I deal with below. A number of the later registration applications were accompanied by affidavits, they are too numerous to list.

6 In the particular circumstances of this approval application, I am able to approve the settlement and the Settlement Distribution Scheme and make orders regarding the plaintiffs' costs and reimbursement payments in advance of my determination of the late registration applications. I discuss below why this is so. In adopting that course I have taken into account the interests of the group members in having the settlement administration process commence as soon as possible

7 The plaintiffs, Ms Danielle Bopping and Ms Michelle Pedersen, bring a group proceeding ('the class action') under Part 4A of the Supreme Court Act 1986 (Vic) against the defendants.

8 The first, second and fourth to eighth defendants all provide in vitro fertilisation (IVF) treatment and related medical services. The third defendant, Monash IVF Group Ltd owns a share of the seventh defendant and is the parent company for each of the other defendants, except the seventh. For ease of reference and despite its inaccuracy in relation to the seventh defendant, I will refer to the defendants collectively as 'Monash IVF'.

9 The group members in the class action are all persons who:

(a) were patients of any of the defendants between May 2019 and October 2020 (inclusive); and who:

(i) received IVF treatment provided by any of the defendants; and/or

(ii) were provided the service of cell-free non-invasive pre-implantation genetic testing of their live embryos (fertilized eggs) for aneuploidy (niPGT-A) undertaken by or on behalf of any of the defendants; and

(iii) had embryos classified by or on behalf of any of the defendants as abnormal (aneuploid) as a result of niPGT-A testing; and

(iv) had embryos destroyed, alternatively discarded, or did not proceed to embryo transfer (implanting into the uterus for the purpose of, inter alia, achieving live pregnancy) (transfer) as a result of the niPGT-A testing indicating embryos were positive for aneuploidy; and

(v) received written or oral notification from any of the defendants that the niPGT-A testing of embryos by or on behalf of any of the defendants has been suspended;

(b) were a spouse, or domestic partner of persons in (a);

(c) suffered loss and/or damage by way of:

1. psychiatric injury (as defined below) or physical inconvenience as a result of:

(i) receipt of the notification in (a)(v) above; and/or

(ii) the destruction of, and/or the failure to transfer, an embryo classified as aneuploidy as a result of the niPGT-A testing;

(iii) (including without limitation, any psychiatric injury suffered as a result of the increased likelihood of the needless destruction of, or failure to transfer, an embryo incorrectly classified as aneuploidy as a result of the niPGT-A testing),

where "psychiatric injury" in this group means nervous shock or another psychiatric or psychological injury, disturbance, disorder or condition which has been diagnosed as such in a diagnosis given to the person by a medical practitioner prior to 31 December 2021; and/or

(i) the niPGT-A testing; and/or

(ii) receipt of the notification in (a)(v) above; and/or

(iii) the destruction of, and/or the failure to transfer, an embryo classified as aneuploidy as a result of the niPGT-A testing;

(d) are the legal personal representatives of the estates of any deceased persons who came within paragraphs (a) to (c) above; and

(e) who have not opted out of the proceeding.

10 Any approval of the proposed settlement will bind the plaintiffs, Monash IVF and the group members.

11 As is evident from the group member definition, these proceedings concern a niPGT-A test administered by Monash IVF between May 2019 and October 2020. The test was designed to detect chromosomal abnormalities in embryos (aneuploidy). In October 2020 Monash IVF suspended use of the test and advised patients who had received the test that preliminary investigations showed that the proportion of embryos it classified as aneuploid appeared to be higher than what was observed at clinical trial.

12 The plaintiffs allege that the niPGT-A test should never have been offered to patients and was unsuitable for use as a diagnostic test to determine aneuploidy. In particular they allege that results of the niPGT-A test and those of more standard pre-implantation genetic screening tests were sufficiently different as to mean that the niPGT-A test should not have been clinically applied.

13 The plaintiffs and group members are all patients of Monash IVF (or their spouse or domestic partner) who had the niPGT-A test and who had an embryo classified as aneuploidy by the test.

14 The plaintiffs characterise Monash IVF's offering and administering the niPGT-A test as negligent, a breach of its contracts with the plaintiffs and group members and a breach of the Australian Consumer Law because of breaches of consumer guarantees under that law and because it is alleged Monash IVF's conduct was misleading and deceptive.

15 The plaintiffs and group members claim loss as a result of psychiatric injury, physical injury or financial losses arising from:

(a) notification that the niPGT-A test had been suspended; and/or

(b) from the destruction of, and/or the failure to transfer, an embryo classified as aneuploidy as a result of the niPGT-A testing.

16 They also claim financial losses arising from the cost of the niPGT-A testing.

17 In addition to compensatory damages, the plaintiffs and group members claim aggravated and exemplary damages.

18 Monash IVF denied the plaintiffs' and group members' claims.

19 The proposed settlement is documented in a Deed of Settlement executed on 27 September 2024 ('Deed').

20 Ms Bopping, Ms Pedersen and Monash IVF are parties to the Deed.

(a) The settlement is made without any admission of liability;

(b) Subject to the terms of the Deed, Monash IVF will pay a settlement sum of $40 million plus costs and disbursements in the sum of $16 million in full and final settlement of the plaintiffs' and group members' claims;

(c) The plaintiffs and group members will provide releases to Monash IVF; and

(d) Except as otherwise provided by the Deed, the parties release each other from any liability to pay costs.

(a) approving the Settlement Distribution Scheme;

(b) appointing Michel Margalit of Margalit Injury Lawyers as Settlement Distribution Scheme Administrator;

(c) approving:

(i) payment of $50,000 to each plaintiff as a 'Plaintiff's Reimbursement Payment';

(ii) payment of the plaintiffs' costs in the sum of $10,608,800.04; and

(iii) anticipated administration costs of $5,012,859.85.

23 Section 33V of the Act provides as follows:

(1) A group proceeding may not be settled or discontinued without the approval of the Court.

(2) If the Court gives such approval, it may make such orders as it thinks fit with respect to the distribution of any money, including interest, paid under a settlement or paid into court.

24 The principles applying in relation to an approval under s 33V are well established. The central question is whether the proposed settlement 'is fair and reasonable having regard to the claims of the group members who will be bound by it if approved'.[1]

25 The factors which may be taken into account in assessing that fairness and reasonableness have been extensively considered in other cases[2] and a number are listed in clause 16.6 of the Court's Practice Note SC GEN 10 Conduct of Group Proceedings (Class Actions) (second revision).

26 In forming a view as to the fairness and reasonableness of the settlement I may have regard to:

(a) the terms of any advice from counsel and/or experts; and

(b) the attitude of group members to the proposed settlement.

27 In this case I have had the benefit of a confidential opinion from counsel for the plaintiffs. I have taken the matters in that opinion into account and have found it helpful in forming my views as to the proposed settlement.

28 In considering the fairness and reasonableness of the quantum of the settlement sum, it is necessary to consider an estimate of the reasonably anticipated overall quantum of loss for the plaintiffs and group members should the proceeding be successful at trial and the risks which the plaintiffs and group members face in the litigation.

29 The plaintiffs' legal advisors have estimated the total value of the claims of group members who registered to participate in the settlement pursuant to court orders ('registered group members'), including an allowance for exemplary damages as being approximately $38.525 million. The estimate involved the application of relevant assessment principles by experienced legal practitioners across a sample of registered group members. The sampling was supervised by Professor Ian Gordon of the University of Melbourne's Statistical Consulting Centre. Professor Gordon then extrapolated the results of the sampling exercise to the population of registered group members. I accept the estimate is soundly based.

30 One of the objectors to the settlement, Mr Dean Grimshaw, in a written submission which was filed late, objected to the settlement. One of his two grounds is apparently that the settlement figure is too low and that a substantially greater amount of between $102 and $150 million should be a 'commencement point'. Mr Grimshaw's submission appears to derive those figures from public records as to dividend payments made to shareholders in Monash IVF and pays no regard to the principles which would guide the Court's assessment of damages for group members. In other words, Mr Grimshaw's objection to the settlement on this ground is wholly without merit.

31 All litigation has risks. All, or nearly all, class actions have a degree of uncertainty about the extent to which all members of the group will be able to prove their claims. In addition, as would be expected, there are specific risks in this case for the plaintiffs and group members in relation to liability, causation, loss and recovery.

32 Counsel's confidential opinion candidly assesses the overall prospects of success in the proceeding taking into account both general and specific risks.

33 Here, the global estimate assumes all registered group members would prove their claims but particularly in relation to causation and quantification of loss there are not insubstantial risks for group members. The plaintiffs also submitted that they had real concerns regarding Monash IVF's capacity to pay any greater settlement amount. It is a feature of the settlement which has been reached that Monash IVF is paying the settlement sum in four instalments over a period ending on 2 July 2025.

34 Having regard to the risks for the group members in the proceeding, a settlement outcome which potentially provides for more than 100% recovery must be regarded as fair and reasonable.

35 The Deed provides that the plaintiffs and group members will release Monash IVF and related parties from claims in the proceeding, the subject matter of the proceeding or arising out of, related to or connected in any way to the matter subject of the proceeding:

including, without limitation, any Claims relating to the storage, use or disposal of embryos created using gametes provided by or to the Plaintiffs or the Group Members, where such storage, use or disposal was or will be undertaken in compliance with [Monash IVF's] statutory or other legal obligations.

36 I was initially concerned that the quoted portion of the release might go beyond what was fair and reasonable, particularly for those group members who would be bound by the settlement but receive no compensation under it. Counsel for Monash IVF submitted, and I accept, that the quoted portion of the release arises directly from an issue which arose where an application was made in the proceeding to extend the time for storage of embryos beyond certain statutory limits. In the circumstances, I am satisfied that this portion of the release has a sufficient connection with matters arising in the proceeding and it is fair and reasonable that group members give it.

37 Overall, I am satisfied that the scope of the claims released is permissible having regard to the Court of Appeal's decision in Laszczuk v Bendigo & Adelaide Bank Ltd[3] and I am satisfied that the scope of the releases is fair and reasonable.

38 The Settlement Distribution Scheme provides for:

(a) Ms Margalit to be appointed as Administrator;

(b) Individual assessment according to relevant common law principles;

(c) Mr Tobin SC with assistance from another assessor, if necessary, to determine if a claim is a small claim or a large claim;

(d) Small Claims will be assessed by the Administrator with assistance of another assessor if necessary;

(e) Large Claims will be assessed by Mr Tobin SC with assistance of another assessor if necessary;

(f) Assessments are to primarily be conducted on the basis of records relating to the group member;

(g) Group members will be provided with an assessment report and entitlement notice which will provide information as to whether their claim was treated as a Large or Small Claim, a summary of the assessment method and a calculation of their damages;

(h) The scheme provides appropriate rights of review in relation to assessments; and

(i) Group members will participate in the distribution sum in proportion to the amount their assessment bears to the total assessed losses of registered group members.

39 I asked for the Settlement Distribution Scheme to be amended to make clear that in the performance of her role as Scheme Administrator, Ms Margalit was to act impartially and for the benefit of group members as a whole and not as a lawyer for any particular group member. The plaintiffs agreed to such an amendment.

40 The plaintiffs filed a confidential affidavit of Ms McIlwraith dated 17 December 2024 which annexes a revised version of the Settlement Distribution Scheme. That revised version contains the amendment referred to in the previous paragraph together with a number of other amendments to reflect the orders I indicated I was prepared to make at the hearing. I am satisfied the provisions of the Settlement Distribution Scheme annexed to the affidavit of Ms McIlwraith dated 17 December 2024 are fair and reasonable and in the interests of group members.

41 Three group members objected to the settlement based on their concern that the settlement would not adequately compensate them for their individual losses. Rayna Baker-Birding and her husband Tsewang Gurney objected on the mistaken basis that the settlement sum would be evenly divided between group members. It will not. Mr Grimshaw appears concerned that the settlement will inadequately compensate his individual losses. As I have indicated above, the evidence available to me is that the settlement will compensate registered group members for all or nearly all of the losses assessed in accordance with relevant legal principles. It is possible that the losses for which Ms Baker-Birding, Mr Gurney and Mr Grimshaw believe they should be compensated would not have been recoverable in the proceeding. There is no basis in these objections to reject the settlement or the proposed Settlement Distribution Scheme.

42 The plaintiffs seek approval of 'reimbursement payments' of $50,000 each. The plaintiffs deserve a reimbursement payment; they took on the burden of representing the group. In particular each of the plaintiffs was exposed to the risk of a costs order being made against them if the case was ultimately unsuccessful. This is a real and serious burden which warrants a substantial reimbursement payment.

43 The plaintiffs did not, as is often the case, provide evidence of the time they spent in their representative capacity and nor was I provided with the usual evidence regarding the range of payments to plaintiffs in other class actions to allow for some form of comparative exercise. I accept that the plaintiffs would have spent substantial time fulfilling their role as representatives.

44 Doing the best I can with the evidence, and having regard to payments made to plaintiffs in other cases (where these are known), I have determined that the plaintiffs should receive a substantially greater payment than those which are typically made where plaintiffs receive an indemnity for adverse costs. I am not satisfied that the figure of $50,000 has been justified. In all the circumstances, I will order a payment of $35,000 to each of the plaintiffs.

45 Ms Harris is a costs consultant of considerable experience. In her affidavits Ms Harris exhibited reports which assessed the reasonableness of the plaintiffs costs. The second report updates the assessment in the first.

46 Ms Harris assesses the reasonable legal costs of the plaintiffs up to and including settlement approval as $10,608,800.04. I approve the payment of that amount from the amount to Margalit Injury Lawyers.

47 Ms Harris also has provided an estimate of the costs of the settlement administration. The Court will not approve those costs in advance. Over the course of the administration or at its conclusion the Administrator can seek approval for costs incurred in the administration.

48 As noted above, there were 171 late registration applications, that is, applications by people who qualified as group members but did not register in accordance with orders of John Dixon J dated 20 December 2022. The consequence of the failure to register is that those persons remain group members but, absent an order of the Court, will not be entitled to receive any payment from the settlement.

49 It will take some time to determine those applications. In the circumstances, I have decided to approve the settlement notwithstanding the fact that those applications have not been determined. There are two reasons for doing so:

(a) First, the plaintiffs submitted, and I accept, that even if I admitted all 171 late registrant applicants, the settlement would still be fair and reasonable. Assuming for present purposes that the 171 applicants have the same loss profile as the currently registered group members, admitting all 171 to participate in the settlement would still leave group members obtaining more than 80% of their potential assessed damages. That outcome would still be fair and reasonable in light of the risks in the proceeding.

(b) Secondly, the plaintiffs submit and I accept, that it is in group members' interests for the settlement administration process to commence as soon as possible. Making orders approving the settlement and the Settlement Distribution Scheme and appointing an administrator allows that to occur.

50 Senior Counsel for the plaintiffs submitted that a reason to approve the settlement now before the determination of late registration applications was that the solicitors for the plaintiffs took the matter on perhaps not realising how big an undertaking it was and, because they are a small firm they were now 'overstretched' and 'desperate' to receive their costs. For the sake of completeness, I should record that in deciding to approach the making of orders in the way that I have, I have not taken into account those matters.

51 Having regard to all of the above matters, I will make orders reflecting these reasons.

ADELAIDE FERTILITY CENTRE PTY LTD trading as Repromed (ACN 116 453 126)

[1] Iddles & Anor v Fonterra Aust Pty Ltd & Ors [2023] VSC 566, [24].

[2] Ibid [25]-[27]; Williams v FAI Security Pty Ltd (No 4) (2000) 180 ALR 459, 465 [19]; Matthews v Ausnet Electricity Services Pty Ltd [2014] VSC 663, [43].

[3] (2020) 61 VR 1, 14-17 [51]-[62] (Whelan, Hargrave and Emerton JJA).