Determination
16 In my view the debate about whether or not Mr Braham should be treated as an intervenor is not really to the point: cf Tongue v City of Tamworth [2004] FCA 1050 (Tongue). He was a class member whose interests were directly affected by the proposed settlement, the notice of proposed settlement specifically invited class members to object if they had concerns about the settlement, and noted that they may wish to seek legal advice in relation to any affidavit they submitted. He was entitled to object to the settlement, and in the finish the Court concluded that the settlement was not fair and reasonable and should not be approved.
17 It is plain that the Court has power under s 43 and/or s 33ZF to award costs in favour of an objecting class member. The decision in Tongue (at [7]) does not propose a rule that objectors should pay their own costs of successfully opposing settlement approval, subject to the ability of the trial judge to later vary that order should the circumstances warrant. In Winterford v Pfizer Australia Pty Ltd (VID4/2010) Davies J made orders for the applicant to pay objectors their reasonable party/party legal costs.
18 There are also policy reasons for allowing an objector to recoup the costs incurred in successfully opposing settlement approval. It will depend on the circumstances and where the interests of justice lie but, where it protects class member's interests and assists the Court, it may be in the interests of justice in the proceeding that objectors are allowed to recoup the costs they incur and are not discouraged through cost from raising legitimate objections.
19 For the reasons I now explain, in the circumstances of the present case I am not persuaded that it is appropriate to make a costs order in favour of Mr Braham.
20 First, the primary burden of protecting class members' interests in the settlement approval application was carried by the contradictor. I appointed Mr Armstrong QC as contradictor because he is experienced in class action litigation and could be expected to discern and raise any material concerns about the proposed settlements. Although it became the focus of the contradictor's submissions, the appointment was not limited to questions of the applicants' power or authority to enter into the proposed settlements.
21 Second, Mr Braham overstates the position in submitting that the notice of proposed settlement invited him to seek legal advice and that he is therefore entitled to recover the costs of retaining solicitors and senior and junior counsel. All the notices relevantly said was if a class member wished to object to the proposed settlement he or she must file a notice of objection and an affidavit. It said:
A proposed form of affidavit is included with this notice. However, you may wish to seek legal advice on the preparation of the affidavit.
The notice also informed the class member that "[y]ou or your legal representative" may attend and make submissions at the settlement approval hearing.
22 Mr Braham was, of course, entitled to retain lawyers to make submissions on his behalf. But in circumstances where the Court had already appointed a contradictor to represent class members' interests, and directed that the contradictor's fees be met by the applicants and respondents, I am not persuaded that the applicants and respondents should be visited with the further burden of Mr Braham's costs. In my view, consistently with the overarching purpose in s 37M of the Act, Mr Braham should have relayed his concerns to the contradictor rather than separately instructing solicitors and counsel.
23 Third, Mr Braham overstates the significance of the submissions made on his behalf to the decision to refuse settlement approval. The primary reason for refusing settlement approval was that the settlements purported to include binding loan enforceability admissions which constituted a significant detriment for some class members, with little or no counterbalancing benefit, and that class members had been given no notice that this might occur. The contradictor made persuasive submissions on this issue and Mr Braham's submissions did not take the matter any further.
24 Fourth, Mr Braham overstates the extent to which the Court accepted the submissions made on his behalf. While I accepted some of his submissions they were not central to the decision, and I found a number of his other submissions lacked force. For example, I did not accept Mr Braham's submissions that approval should be refused because:
(a) the proposed settlement involved a loss of class members' rights to make a claim against M+K: see Kelly No 4 at [349(c)];
(b) M+K's legal costs are unreasonable. The question as to whether M+K's costs were unreasonable was put off to allow the firm to put on evidence from an independent costs assessor or a Registrar undertook a costs assessment: Kelly No 4 at [343]. Ultimately I accepted that the firm's costs were reasonable: see Kelly No 5;
(c) the settlement in the 2007/08/09 Schemes proceedings is significantly less advantageous than the settlement in the 2010 Scheme proceeding and inconsistent with it: see Kelly No 4 at [349(a)]; and
(d) class members preferred that the proceedings go to trial on the basis that their claims were likely to be successful and that the settlements were essentially a capitulation. Ultimately I concluded that the applicants had limited prospects of success in proceeding VID 1485 of 2011 and were unlikely to be able to establish their case in proceedings VID 1483 and VID 1484: see Kelly No 5 at [55]-[64].
25 Relatedly, I did not accept Mr Braham's submission that the fact that the pleadings were prepared by senior and junior counsel and M+K certified that the facts and available legal material provided a proper basis for each allegation showed that the proceedings had merit and were not bound to fail: see Kelly No 4 at [278]. Nor did I accept that my assumption (when dealing with the security for costs application) that the proceedings had a reasonable prospect of success because the claims were prima facie regular on the face of the pleadings and disclosed various arguable causes of action, showed the 2007/08/09 Schemes proceedings had realistic prospects of success: see Kelly No 4 at [279].
26 Fifth, looking to Mr Braham's contention that the applicants should pay part of his costs, the revised settlements in the 2007/08/09 Schemes proceedings did not create any pool of settlement monies from which the applicants might do so. The applicants and class members were unsuccessful in the litigation and the only settlement monies they received covered approximately half of the legal costs they paid to M+K. I see no good reason to exercise the discretion in relation to costs so that the applicants (and/or class members) suffer further losses through a requirement to also pay Mr Braham's costs. I am not persuaded that it would be in the interests of justice in the proceeding to make such an order.
27 Nor do I consider it appropriate to order M+K to pay Mr Braham's costs. The firm entered into the proposed settlements on the instructions of the applicants and consistently with counsel's advice. There was a serious problem with the proposed settlements, and some significant gaps in the material before the Court, but I am not persuaded that the costs of objecting to the settlement should be met from M+K's pocket.
28 Moving to Mr Braham's contention that the respondents should pay part of his costs, he did not articulate why they should meet his costs of objecting to what he considered to be an unfair settlement when, unlike the applicants, they did not owe fiduciary obligations to class members and were entitled to reach the most favourable settlement that was available (from their perspective). Particularly given that the respondents have already been required to share in meeting the contradictor's fees I am not persuaded that it is appropriate to direct that they also pay part of Mr Braham's costs.
I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Murphy.