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[2011] FCA 801
Federal Court of Australia
2011-07-01
Emmett J
Original judgment source is linked above.
IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1433 of 2010
JUDGE: EMMETT J DATE OF ORDER: 1 JULY 2011 WHERE MADE: SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1127 of 2009
BETWEEN: HOBBS ANDERSON INVESTMENTS PTY LIMITED (ACN 115 787 052)
NSD 1433 of 2010 BETWEEN: ANTHONY SCOTT and NICOLA TAWS
JUDGE: EMMETT J DATE: 1 JULY 2011 PLACE: SYDNEY
REASONS FOR JUDGMENT 1 I have before me two applications for approval of the settlement of representative proceedings under s 33V of the Federal Court of Australia Act 1976 (Cth) (the Federal Court Act). Part IVA of the Federal Court Act, which contains s 33V, is concerned with representative proceedings. Section 33C, which is also in Part IVA, provides that, where seven or more persons have claims against the same person, and the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances, and the claims of all those persons give rise to a substantial common issue of law or fact, the proceeding may be commenced by one or more of those persons as representing some or all of them. 2 Two separate proceedings were commenced under Part IVA against Oz Minerals Limited (Oz Minerals). The first proceeding (the Hobbs Anderson proceeding), NSD 1127 of 2009, has as its lead plaintiff Hobbs Anderson Investments Pty Ltd. The second proceeding (the Scott and Taws proceeding), NSD 1433 of 2010, has as its lead plaintiffs Anthony Scott and Nicola Taws. Following negotiations and a mediation, a compromise has been proposed in respect of both proceedings. However, under s 33V of the Act, a representative proceeding may not be settled or discontinued without the approval of the Court. 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. Before considering the nature of the claims made in the two proceedings, I propose to say something about the principles applicable to the granting of approval under s 33V. 3 The Court's task under s 33V is an onerous one. Before granting approval, it is appropriate for the Court to be satisfied that any settlement has been undertaken in the interests not merely of the lead plaintiff and the defendant, who will ordinarily be represented by solicitors and counsel, but also of the other group members, many of whom will not be so represented. The Court must determine whether the proposed settlement or compromise is fair and reasonable, having regard to the claims made on behalf of the group members who will be bound by the settlement. The Court must take into account the amount offered to each group member, the prospects of success in the proceeding, the likelihood of group members obtaining judgment for an amount significantly in excess of the proposed compromise amount, the terms of any advice received from counsel and solicitors in relation to the issues that might arise in the proceeding, the likely duration and cost of the proceeding, and the attitude of the group members to the proposed settlement or compromise. 4 One approach for the Court is to identify any features of the proposed settlement or compromise that are obviously unreasonable or unfair. Where some group members object to a settlement or compromise and state their reasons for doing so, it is appropriate for the Court to have regard to those reasons as a point of reference by which to determine matters of fairness and reasonableness. Thus the Court's task is to determine whether the settlement or compromise involves any actual or potential unfairness to any group member, or any category of group members, having regard to all of the relevant matters that I have outlined. So long as the proposed settlement or compromise falls within the range of fair and reasonable outcomes, it should be regarded as qualifying for approval under s 33V. 5 Both of the present proceedings involve allegations concerning misleading and deceptive conduct on the part of Oz Minerals, and a failure on its part to comply with the continuing disclosure obligations imposed upon it, in circumstances where its shares were listed for quotation on the Australian Securities Exchange (ASX). The two applications for approval under s 33V have been brought together because of the unusual circumstance that their respective allegations as to the conduct of Oz Minerals overlap significantly. The two sets of group members, however, are exclusive of each other. 6 The group in the Hobbs Anderson proceeding consists of persons who obtained an interest in ordinary shares in Oz Minerals by the purchase of shares on the financial market operated by ASX at some time during the period commencing on 1 August 2008 and ending on 27 November 2008, and who suffered loss and damage by, or resulting from, the alleged wrongful conduct of Oz Minerals, and who have, prior to 22 October 2010, entered into a litigation funding agreement with IMF Australia Limited (IMF). The group members in the Scott and Taws proceeding are those persons who, at some time during the period between 23 July 2008 and 1 December 2008, acquired an interest in securities of Oz Minerals, or who, at some time during the period between 29 February 2008 and 22 July 2008 inclusive, acquired an interest in securities of Oz Minerals under its former name of Oxiana Limited, and who suffered loss and damage by, or resulting from, the conduct alleged against Oz Minerals, and who are not, as at the date of the statement of claim filed in November 2010, represented in any other Court proceeding, including the Hobbs Anderson proceeding, against Oz Minerals in respect of the loss or damage alleged to be suffered as a result of their investment in securities of Oz Minerals. While there is a significant overlap, in the sense that the period of acquisition covered by the Hobbs Anderson proceeding is wholly within one of the periods described in the Scott and Taws proceeding, the period of acquisition referred to in the Scott and Taws proceeding is separate and distinct. 7 It is desirable to summarise, in general terms, the claims made in the proceedings. First, it is said that, in its half-yearly report issued on 21 August 2008, Oz Minerals misclassified approximately $320 million of interest bearing liabilities as non-current rather than current liabilities, and, in so doing, engaged in misleading or deceptive conduct (the misclassification claim). By failing to disclose to ASX the correct debt position, Oz Minerals is also said to have breached its continuous disclosure obligations under the Corporations Act 2001 (Cth) (the Corporations Act). Secondly, it is alleged that, by virtue of the terms of an inter-creditor deed entered into by Oz Minerals and its lenders at the end of February 2008, Oz Minerals was obliged to refinance certain facilities with those lenders by 8 August 2008, a date later extended to 30 November 2008. It is alleged that Oz Minerals breached its continuous disclosure obligations under the Corporations Act by failing to inform ASX of that refinancing obligation and the liquidity risk said to be associated with it (the refinancing risk claim). Oz Minerals, in its defence to both claims, denied liability. 8 In relation to the misclassification claim, Oz Minerals' position, in summary, was that the half-yearly report correctly classified its current and non-current interest bearing liabilities. It said that the analysis of its debt classification that was advanced on behalf of the group members misconstrued the contractual mechanism available to Oz Minerals under the inter-creditor deed to extend the refinancing date under that deed. In any event, Oz Minerals contended that it had a complete defence to the misclassification claim because the directors' declarations in the half-yearly report were statements of opinion, identifiable as such. Oz Minerals asserted that it had reasonable grounds for making those statements, given that the half-yearly report had been audited and that, prior to its issue, the auditor had advised Oz Minerals that the presentation and classification of debt in the report were correct and compliant with applicable accounting standards. Oz Minerals also said that, if there was a misclassification of a portion of its debt in the half-yearly report, the plaintiffs could only establish compensable loss if they could demonstrate that the misclassification, and/or the failure of Oz Minerals to disclose the correct current liability position to the market, caused them loss and damage. 9 In their respective statements of claim, the plaintiffs advanced two alternative views of causation. The first was an indirect causation theory, to the effect that causation was established by the mere fact that the share price must be taken to have been inflated by reason of the non-disclosure of the alleged correct current liability position, despite the absence of any evidence that the plaintiffs' purchases of securities in Oz Minerals were made in direct reliance on any misconduct alleged. The second causation theory advanced on behalf of the plaintiffs is a direct reliance theory, namely, that loss was caused by their purchasing shares in direct reliance on the alleged misconduct by Oz Minerals. Oz Minerals' position is that the indirect causation theory is not part of Australian law, and that the position in Australia is that, in circumstances where a claim is founded on a voluntary entry into a transaction, such as the acquisition of shares in Oz Minerals, it is necessary to establish reliance on the particular misconduct in order to establish liability. 10 Thus, in relation to the misclassification claim, Oz Minerals contended that, in order to recover loss and damage, each group member needed individually to establish actual reliance on the alleged misconduct of Oz Minerals in acquiring its securities during the relevant period. That, Oz Minerals suggested, would be forensically difficult. Each group member would have to prove reliance, having regard to his or her own individual facts, circumstances and investment behaviour. 11 In relation to the refinancing risk claim, the position of Oz Minerals was, in summary, that the question of whether the alleged refinancing risk was real or material was a matter of judgment and opinion. It contended that, at all times throughout the relevant period, it reasonably and honestly believed that it would be able to refinance the facilities on reasonable terms. It claimed that, at all times during the relevant period, it had good and longstanding relationships with its lenders, and that at various times throughout the relevant period it received lending commitments from them. The fact that Oz Minerals was ultimately not able to refinance some of its facilities successfully was, it says, the result of a combination of unforeseen and extraordinary circumstances. Further, Oz Minerals took the position that, even if it could be established that the alleged refinancing risk existed and that Oz Minerals was aware of it, that information was not material and, therefore, there was no obligation to disclose it. Even if the plaintiffs could establish any contravention, the position taken by Oz Minerals concerning causation of loss was the same as in relation to the misclassification claim. That is to say, it would be necessary for each claimant to establish a claim independently and on a case-by-case basis. 12 Finally, even if, contrary to Oz Minerals' position as briefly outlined, the plaintiffs were able to establish any of the alleged contraventions, it would still be necessary for them to establish the quantum of their claims. In each proceeding, the group members placed reliance, for the purposes of settlement discussions, on expert reports, which Oz Minerals contends were seriously flawed and did not support the quantum claims made on behalf of the group members. 13 Of necessity, the above summary is an oversimplification, but it is sufficient to enable an understanding of the nature of the compromise that has now been reached. The significant difference between the Hobbs Anderson proceeding and the Scott and Taws proceeding is the longer period that is the subject of the claims in the Scott and Taws proceeding. That difference has resulted in the creation of what are effectively two subgroups within the Scott and Taws proceeding. I shall return to that shortly. 14 A mediation was conducted by Mr Roger Gyles, AO QC, in relation to both proceedings. Necessarily, the negotiations were complicated, in the sense that, because of the common ground in the two claims, Oz Minerals took the stance that it wished to dispose of both proceedings for a given sum. While the mediation was not successful on the day on which it was conducted, further discussions have ultimately led to a compromise, the net effect of which is that Oz Minerals is prepared to pay a total sum of $60 million to settle both claims. That in itself, however, raises a further question as to how that sum should be apportioned between the Hobbs Anderson proceeding and the Scott and Taws proceeding and, further, as to how the sum apportioned to the Scott and Taws proceeding should be apportioned between the two subgroups of plaintiffs in that proceeding. 15 The sum of $60 million, which has been proposed in full settlement, is to be apportioned as to $39 million to the Hobbs Anderson proceeding and as to $21 million to the Scott and Taws proceeding. In general terms, the total claims made in the two proceedings, if completely successful, could result in verdicts in the order of $185 million. The total settlement sum of $60 million, therefore, represents about 32 per cent of the aggregated claims. 16 The proposed settlement is evidenced by deeds of settlement entered into in respect of each proceeding. In the case of the Hobbs Anderson proceeding, the parties to the deed of settlement are the lead plaintiff, Hobbs Anderson Investments Pty Ltd, that company's solicitors, Maurice Blackburn Pty Ltd (Maurice Blackburn), Oz Minerals, and IMF, a litigation funder. The parties to the deed of settlement in the Scott and Taws proceeding are the lead plaintiffs, Anthony Scott and Nicola Taws, their solicitors, Slater & Gordon Ltd (Slater & Gordon), Oz Minerals, and Litigation Lending Services Ltd (LLS), also a litigation funder. The fact that the litigation has apparently been funded by litigation funders has a bearing on the decision that ultimately needs to be made by the Court. 17 In support of the application for approval, the Court has been provided with written opinions by counsel and solicitors for the plaintiffs in both proceedings. Having regard to the sensitivity of the legal opinions in the event that settlement is not approved or that some other claim may be made, application has been made under s 50 of the Act for the opinions to be kept confidential and not to be disclosed to any other person. The application is not opposed by Oz Minerals, and it is appropriate to make orders accordingly. 18 In relation to the Hobbs Anderson proceeding, I have had the benefit of reading a very detailed written opinion by Mr Peter Brereton SC dated 24 June 2011. Mr Brereton's opinion was supplemented by an addendum of 30 June 2011, which deals specifically with an objection raised by a group member. It is not appropriate, having regard to the open nature of these reasons, to canvass in detail the questions and difficulties dealt with by Mr Brereton in his opinion. The opinion deals with questions of liability, including the establishment of the alleged contraventions and the causation of any alleged loss suffered by group members, together with the quantification of that loss. Mr Brereton specifically addresses the issues raised by Oz Minerals in its position as I have earlier described it. Mr Brereton also addresses questions that arise concerning the apportionment of the relevant settlement sum among the group members. 19 Mr Brereton's opinion is that the settlement sum is fair and reasonable for all group members. That opinion is expressed on the basis of his view that the case is factually and legally complex and involves matters of some novelty, his analysis of the risks in establishing liability on the part of Oz Minerals, and his analysis of the risks in proving damages. He also has regard to the very substantial costs that are likely to be incurred in order to prosecute the claim. Finally, Mr Brereton expresses the opinion that the settlement distribution scheme that is proposed as part of the deed of settlement is fair and reasonable to group members as a whole. 20 The major feature of the Hobbs Anderson settlement deed is the provision for the sum of $39 million to be paid by Oz Minerals into an interest bearing account. The deed is, of course, subject to approval under s 33V of the Act, and also requires the plaintiffs to apply for approval of the form and content of a notice to group members. It further provides that the lead plaintiff must apply for orders providing for an opt out date, pursuant to s 33J of the Federal Court Act. Under s 33J(1), the Court must fix a date before which a group member may opt out of a representative proceeding. Under s 33J(2), a group member may opt out of a representative proceeding by written notice given under the Rules of the Court before the date so fixed. The deed of settlement makes provision for Maurice Blackburn to prepare a settlement distribution scheme, and further provides for an application to be made to the Court for approval of the settlement distribution scheme pursuant to s 33V. 21 The total settlement payment, plus interest, less tax on the interest, is to be paid to Maurice Blackburn, who are to pay the settlement sum into an interest bearing fund. Upon the payment to Maurice Blackburn, Oz Minerals is to have no interest in or claim to the settlement sum except for any surplus of funds after full implementation of the settlement distribution scheme. The settlement deed provides for payment of a reimbursement to the lead plaintiff from the interest that accrues on the moneys in the settlement distribution fund. It also provides for payment in respect of legal costs and disbursements from the settlement distribution fund. Ultimately, the settlement deed provides for a release on behalf of all group members of Oz Minerals and related parties from all claims arising out of the subject matter of the proceeding. 22 Under the settlement distribution scheme, Maurice Blackburn is appointed as administrator. A procedure is established for obtaining and verifying trading data for group members. A provision is then made for the assessment of the individual claims of group members by the use of a loss assessment formula, the effect of which will be to assign to each group member a pro rata amount of the settlement sum. Assessment notices will be sent to each group member, which notices will be deemed to be accepted unless the group member makes a request for a review. The administrator will have the power to correct any errors, slips or omissions in an assessment notice. Any group member may request a review determination of an assessment notice and will be at liberty to apply to the Court regarding the determination of such a review. 23 Interest that accrues on the distribution sum and the settlement sum will be applied in payment of the costs of the administration and for reimbursement payments. The settlement distribution scheme provides that the following amounts will be paid prior to the distribution to group members, subject to the Court's approval: 1. The lead plaintiff's legal costs and disbursements in the sum of $3.1 million, or such other amount as the Court should approve. 2. The reimbursement payment to the lead plaintiff. 3. Administration costs. 24 The settlement distribution scheme then provides that the residual settlement sum after those payments is to be distributed to group members in the proportion that the final assessment of each group member bears to the aggregate of the final assessments for all group members, subject to the deduction of any commission payable to IMF. Provision is made under the scheme for an interim distribution to group members, subject to an obligation to leave sufficient funds to distribute to group members with outstanding assessments. Provision is made for Maurice Blackburn, as administrator, to refer any issue relating to the settlement distribution scheme to the Court for determination. 25 In relation to the Scott and Taws proceeding, I have been provided with a detailed opinion of 24 June 2011 by Mr Noel Hutley SC and Mr Alister Abadee. That opinion canvasses in considerable detail the nature of the plaintiffs' case and the difficulties that might be presented for a successful resolution of the case. The ultimate conclusion in the joint opinion is that the settlement sum is fair, reasonable and adequate for group members. 26 The opinion also examines the proposed settlement distribution scheme. The scheme is in general terms similar to that for the Hobbs Anderson proceeding. However, because of the subgroups within the Scott and Taws proceeding, the differential payment is examined in some detail by Mr Hutley and Mr Abadee. The joint opinion is supplemented by a supplementary submission by Mr Abadee of 1 July 2011. 27 The joint opinion concludes that a differential in return for the two subgroups before and after 1 August 2008 does not represent an unfair outcome. There are differing prospects for each of the two subgroups. The joint opinion indicates that it is desirable for there to be general parity between what an investor in the Scott and Taws proceeding who purchased after 1 August 2008 might recover, on the one hand, and what an investor in fundamentally similar circumstances in the Hobbs Anderson proceeding might receive, on the other. The conclusion on the figures provided indicates that there is indeed close parity, although the returns are not identical, being in the order of 25 and 23 per cent respectively. Those who invested during the period before 1 August 2008 will receive a significantly lower proportion, having regard to the greater difficulties associated with their claims, as described in some detail in the joint opinion. 28 In the case of the Hobbs Anderson proceeding, provision is made for a reimbursement to Mr Norman Bell, who has the day-to-day responsibility for management of the investments of Hobbs Anderson Investments Pty Limited, for the time he spent on the preparation of the claim. Prior to the commencement of the proceeding, IMF agreed to reimburse Mr Bell for the time he reasonably spent on the proceeding at Maurice Blackburn's request at the rate of $150 per hour. There is evidence that that is reasonable compensation to Mr Bell after taking into account his professional qualifications, and his wide ranging experience as an accountant, business operator, company director and investor. Mr Bell has provided sworn evidence as to the time that he has expended in relation to the proceeding. In relation to the Scott and Taws proceeding, there is no provision made for reimbursement of the lead plaintiffs. However, LLS has agreed to forego a claim to commission by way of remuneration of the time, effort and risk that has been undertaken by the lead plaintiffs. 29 Provision is made for reimbursement of legal costs in both proceedings. In relation to the Hobbs Anderson proceeding, Mr Ian Ramsey-Stewart, a principal consultant of Stewart Lawyers, who has no connection with Maurice Blackburn, has provided a written report concerning the assessment of costs. After a detailed examination, Mr Ramsey-Stewart concluded that the reasonable solicitor and own client costs, including disbursements, counsel's fees and experts' fees, inclusive of GST, would range between $3,127,216 and $3,152,351. He therefore concluded that the sum of $3,100,000 agreed between the parties as solicitor and own client fees represents a fair and reasonable charge. Mr Ramsey-Stewart expressed the opinion that the Maurice Blackburn retainer agreement, pursuant to which the work was done, was reasonable and complied with relevant New South Wales legislation, that the fees were calculated in accordance with the retainer agreement, and that no portion of the fees or disbursements charged has been inappropriately or unreasonably incurred. 30 In relation to the Scott and Taws proceeding, Mr Paul Linsdell, a costs lawyer and a director of Blackstone Legal Costing Pty Ltd, which has no connection with Slater & Gordon has provided a sworn opinion. Mr Linsdell has conducted an assessment of Slater & Gordon's costs and allowed only those costs that he considered were reasonably incurred on a solicitor and own client basis. After applying a test of what is fair and reasonable and comparing the ledgers and other electronic files made available to him, and after assessing the files in their own right, he considered that a sum of approximately $1,659,518.70 was an appropriate allowance for the professional costs of the proceeding. Mr Linsdell also assessed the disbursements incurred by Slater & Gordon. The actual disbursements claimed totalled $275,561.76. Mr Linsdell concluded that an appropriate allowance for disbursements was $234,227.50. Thus, overall, he assessed the total costs and disbursements as amounting to $1,923,746.20. He is therefore of the opinion that the amount of $1.8 million, which is proposed to be set aside from the settlement sum in the Scott and Taws proceeding to reimburse the plaintiffs' legal costs, is fair and reasonable. 31 Objections have been notified in respect of both of the applications for approval under s 33V. In relation to the Hobbs Anderson proceeding, an objection was received from Mr Paul Groves. Mr Groves' objection was forwarded in unusual circumstances, in that documents were sent by email directly to my associate, and were also delivered by hand. There was some suggestion that Mr Groves wished to appear, but he did not appear when the matter was called, either on 29 June 2011 or today, notwithstanding that he was informed that, if he wished to make any additional submissions, he would be required to do so in person. 32 It is not easy to understand the precise nature of Mr Groves' objection. He states in one of his communications that he opposes the proposed settlement on the grounds that shares bought or held during the period in question should not be excluded from the proposed settlement on the basis of how those shares were purchased or delivered. It is not entirely certain which shares are the shares in respect of which Mr Groves makes his complaint. There is a reference to the purchase of 15,965 shares in Oz Minerals on 26 June 2008. Clearly, they could not be compensable as part of the Hobbs Anderson claim, since the group is limited to those who acquired shares on or after 1 August 2008. It may be that the purchase gave rise to an acquisition that was settled during the relevant period, but that is by no means clear. Other transactions listed in an attachment provided by Mr Groves also appear to have been conducted prior to the relevant period, and, in any event, they involved shares in a company that merged with Oz Minerals during the course of 2008. Mr Groves makes reference to option contracts being entered into, closed and re-entered several times during the relevant period, and complains that the strategy employed by him, in using what he describes as "a synthetic position", relied completely on the information provided by Oz Minerals. I have difficulty in understanding the nature of Mr Groves' opposition. I am not persuaded that it should stand in the way of approval of the settlement of the Hobbs Anderson proceeding. 33 Three notices of objection have been lodged in respect of the proposed settlement of the Scott and Taws proceeding. The first is from a Mr D. Richard Steinwarder, whose complaint seems to be in respect of the quantum of the legal costs to be paid to Slater & Gordon. His concern arises out of what he believes was poor record keeping on the part of Slater & Gordon, which he appears to believe may have led to that quantum, namely $1.8 million, being excessive. I have already referred to Mr Linsdell's evidence, and am satisfied, in the light of that and in the absence of something more concrete indicating that the quantum of the fees is excessive, that Mr Steinwarder's complaint should not stand in the way of approval of the settlement of the Scott and Taws proceeding. 34 Secondly, there is an objection from Mr Harry Ahimastos of Vivnat Curtin Pty Ltd. Mr Ahimastos expresses the view that awarding damages according to whether shares in Oz Minerals were purchased in the first period or the second period is unfair. Again, it is not entirely clear precisely what objection is raised by Mr Ahimastos. I have already mentioned the detailed analysis given to the differential treatment of plaintiffs within the two periods, and the opinion expressed by senior and junior counsel that the differentiation is not inappropriate. I do not consider that Mr Ahimastos' objection should stand in the way of the approval of the settlement of the Scott and Taws proceeding. 35 The third objection is from Mr Brett Wilson, who provided written reasons for his objection and also appeared in person to address the Court. As I understand Mr Wilson's complaint, he believes that if the proceeding were to be prosecuted to finality, there is a prospect that the claims might succeed and that the return to group members would be significantly greater than it will be under the settlement that is now proposed. Mr Wilson also asserts that the proceeding is an appropriate one for establishing, as a matter of principle, how the integrity of the market should be maintained. He asserts that the proceeding should be prosecuted to finality, such that either the plaintiffs are compensated fully or Oz Minerals is fully exonerated, thereby protecting the interests of current shareholders. That is an admirably even-handed approach. However, it is no function of the Court to insist that proceedings proceed to finality, simply to ensure that one or the other party wins. For the reasons given in detail in the joint opinion, there is a not unreasonable prospect that the proceeding, if fully prosecuted, could fail, or that the plaintiffs could fail to establish substantial quantum. 36 Mr Wilson says that, in his opinion, the proposed calculation method does not allow for the full losses that he asserts that he suffered as a result of the conduct of Oz Minerals. That question, of course, would depend upon the evidence that was adduced in the proceeding, not only on behalf of Mr Wilson but also all other members of the group. 37 Finally, Mr Wilson refers to the fact that Oz Minerals had foreshadowed, and has apparently filed, a cross-claim against its auditors, although it appears that the cross-claim has not yet been served. Mr Wilson suggests that the group members will be deprived of the opportunity of sharing in the outcome of that possible cross-claim. That, it seems to me, involves a misapprehension. The cross-claim, as I apprehend it, would be a claim for indemnity in respect of the claim made by the group members. There is no prospect that the cross-claim, as propounded, would result in a net gain to Oz Minerals. If the cross-claim were pursued, it would be for recovery of only the amount paid pursuant to the settlement. That would then, of course, compensate current shareholders, a matter that was the subject of Mr Wilson's complaint. 38 As I have said, whether or not Mr Wilson has in fact suffered a substantial loss is not something that can be investigated at this stage. It would have been open to Mr Wilson to opt out of the settlement if he wished to pursue his own claim, but he has elected not to do so. In the circumstances, I do not consider that the matters raised by Mr Wilson are such as should stand in the way of approval of the settlement. 39 Both proceedings have been brought to settlement at an early stage, in that, while the pleadings have closed and the issues formulated, there has been no discovery. The evidence indicates that discovery could be very extensive, bearing in mind the difficulties that arise in relation to the possible need to prove the state of mind of all group members. There is no doubt that both proceedings would involve complex legal and factual issues. The settlement has been reached after a mediation and hard-fought negotiations on all sides. Oz Minerals' participation in the settlement is on the basis that it does not admit liability and maintains its position, that if the proceedings were to continue, it would defend all of the claims. The parties have been represented throughout by very experienced counsel and solicitors and, as I have said, formal written opinions have been provided by senior and junior counsel indicating their belief that the settlement is fair and reasonable. They have also expressed their opinions that the manner of distribution of the settlement moneys is fair and reasonable. In those circumstances, I propose to accede to the applications made in each proceeding. It follows from a consideration of the matters to which I have referred, that approval of the proposed settlements should be given under s 33V. I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.
Hobbs Anderson Investments Pty Limited
Oz Minerals Limited