Plaintiff v Defendants

2 By August 2010 the plaintiff had entered judgment in default against four defendants and had settlements with two others. Those settlements were subsequently approved by the Court.

3 The trial of the proceeding was due to start before me on 10 August 2010 but was deferred to facilitate settlement discussions. Those discussions resulted in terms of settlement between the plaintiff and the remaining defendants.

4 In the present matter application is made pursuant to s 33V of the Act for the approval of a compromise between the plaintiff and the third defendant, Michael Andrew Ramsden, and the second defendant, Terrain Capital Limited and an application for approval of a compromise between the eighth defendant, The Tolly Group Inc and the tenth defendant, Kevin Tolly.

5 Terms of settlement which have been agreed in group proceedings are of no effect unless and until they are approved by the Court under s 33V of the Act.

6 On the material and in submissions I have been referred to numerous authorities. I refer to several of these to elaborate on the applicable principles.

7 In Australian Competition and Consumer Commission v Chats House Investments Pty Ltd,[1] Branson J said:

The purpose intended to be served by s 33V(1) is obvious.

It is appropriate for the Court to be satisfied that any settlement or discontinuance of representative proceedings 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.

8 In Lopez v Star World Enterprises Pty Ltd,[2] Finkelstein J said in an application under s 33V the principal task is to assess whether the compromise is a fair and reasonable compromise of the claims made on behalf of the group members especially those group members who did not have solicitors and counsel to advise them as to how their best interests would be served in the litigation. His Honour noted that it is true that any group member may opt out of the proceeding to avoid his or her rights being affected by the outcome of the litigation, but many members of the group would remain as represented parties without a real appreciation of what that entails. Further, his Honour said that the task of the court in considering an application under s 33V is an onerous one, especially where the application is not opposed because the court inevitably must rely heavily on the solicitor retained by and counsel who appears for the applicant to put before it all matters relevant to the court's consideration of the matter in circumstances where the interests of their client will not always be coincident with the interests of the members of the group.

9 The above passages were adopted in this Court by Mandie J in Verschuur v Vynotas Pty Ltd.[3] I also respectfully adopt them.

10 In Tasfast Air Freight v Mobil Oil,[4] Bongiorno J noted that the purpose of s 33V is to ensure the protection of parties who might not be present before the Court.

11 Recently in P Dawson Nominees Pty Ltd v Brookfield Multiplex Limited (No. 4),[5] Finkelstein J said that despite the obvious advantage of settling class actions there remains the need to ensure that the interests of class members are adequately looked after and that when it comes to a settlement it is the court that assumes responsibility for protecting the interests of the class members. His Honour also said in that task the court necessarily places considerable reliance on the parties' lawyers and that as a settlement proposal is in reality a proposal put up by both sides it is not just the applicants' lawyers that carry the burden of ensuring that the court is given sufficient information to assess whether the proposed settlement is to be approved. The respondents' lawyers should also bear some responsibility for ensuring that the court has all the information that objectively describes the merits of the case and brings to the court's attention the obstacles to recovery and the benefits to be derived from the proposed settlement.

12 I have been guided by the above principles and observations in the present case.

13 The plaintiff's application made by summons dated 13 August 2010 contemplated the hearing of the application in two stages. I heard the first stage of the application on 16 August 2010 and made orders:

(a) approving the terms of the notice to group members informing them of the proposed settlements and their entitlements to object to either or both settlements; and

(b) regarding the mechanism for giving notice to group members.

14 I have had regard to the affidavit of Christine Therese Monnox sworn 5 October 2010 and I am satisfied there has been proof of compliance with my order, made on 16 August 2010 requiring the approved notice to be given to group members.

15 I have read the affidavits of Christine Therese Monnox sworn 13 August 2010, 5 October 2010 and 6 October 2010, the terms of settlement agreed between the plaintiff and the third and seventh defendants, and the terms of settlement agreed between the plaintiff and the eighth and tenth defendants. I have also read the affidavits of Michael Andrew Ramsden sworn 5 August 2010 for and on behalf of the third and seventh defendants, and the affidavits of Kevin Tolly sworn 12 August 2010 and 28 September 2010 on behalf of the eighth and tenth defendants each of which was provided subject to conditions as to confidentiality.

16 I have acceded to the plaintiff's application for certain of the materials to be filed on the basis that they remain confidential in the interests of encouraging full and frank disclosure of information to enable an informed assessment to be made of the merits of the application. I accept the submission by counsel for the plaintiff that confidentiality facilitates the settlement of class actions and that the confidentiality orders which were sought are adequately confined, appropriate and necessary.

17 Some of the group members have expressed their disappointment to the plaintiff's solicitor regarding the proposed settlements. This is entirely understandable but does not affect the test I need to apply. It is my role to determine whether each settlement is fair and reasonable in the interests of group members in the specific circumstances of this case. In particular, I take account of the following matters.

18 First, there is a memorandum of opinion from counsel for the plaintiff setting out his views on the question of whether the settlements proposed are fair and reasonable in the interests of the group members. The opinion is protected by legal professional privilege and is provided on the basis that it shall remain confidential. Accordingly, I do not disclose its contents. However, I am able to say that it is evident that counsel was fully cognisant of the test applicable in applications of this kind, and that the opinion is balanced, comprehensive and well reasoned. It supports the application for approval.

19 Secondly, the terms of settlement do not discriminate between the plaintiff and group members or between individual group members. All group members are treated equally.

20 Thirdly, it is apparent to me that the plaintiff's solicitors and its counsel had sufficient information to assess and evaluate the risk and likely rewards of the litigation.

21 Fourthly, the content of affidavit material provided by the third and seventh defendants and the eighth and tenth defendants respectively (provided on a confidential basis) has been considered and factored into counsel's opinion.

22 Finally, despite being given notice of this application, no group member has appeared to oppose the application for approval of the proposed settlements.

23 After consideration of the material and the submissions made by counsel for the plaintiff, counsel for the third and seventh defendants and counsel for the eighth and tenth defendants respectively, I am satisfied it is appropriate to approve each compromise in the terms agreed.

24 Accordingly, I make orders in terms of the draft orders which include orders dismissing the third party claim and the contribution claims.

1. Pursuant to s 33V of the Act, settlement of the claims made by the plaintiff and group members against the third and seventh defendants, upon the terms set out in Confidential Exhibit P1 filed in Court on 13 August 2010, be approved.
2. The plaintiff have leave to discontinue the proceeding as against the third and seventh defendants, and:

(a) there be no order as to costs as between the plaintiff and the third and seventh defendants; and

(b) any prior orders as to costs between the plaintiff and the third and seventh defendants be set aside.

1. There be no order as to the plaintiff's costs of this application as against the third and seventh defendants, or as to the costs of the third and seventh defendants of this application.
2. Pursuant to section 33V of the Act, settlement of the claims made by the plaintiff and group members against the eighth and tenth defendants, upon the terms set out in Confidential Exhibit P2 filed in Court on 13 August 2010, be approved.
3. The plaintiff have leave to discontinue the proceeding as against the eighth and tenth defendants, and:

(a) there be no order as to costs as between the plaintiff and the eighth and tenth defendants; and

(b) any prior orders as to costs between the plaintiff and the eighth and tenth defendants be set aside.

1. There be no order as to the plaintiff's costs of this application as against the eighth and tenth defendants, or as to the costs of the eighth and tenth defendants of this application.
2. The third and seventh defendants' third party claim against Mr Peter Graham be dismissed with no order as to costs.
3. The third party's counterclaim against the seventh defendant be dismissed with no order as to costs.
4. The second defendant's contribution claims against the third, seventh and eighth defendants dated 9 November 2007 be dismissed with no order as to costs.
5. The third and seventh defendants' contribution claims against the first, second, fourth, fifth, sixth and eighth defendants dated 26 September 2007 be dismissed with no order as to costs.
6. The eight defendant's contribution claims against the first, fifth and sixth defendants dated 4 February 2008, 14 March 2008 and 14 March 2008 respectively be dismissed.

[1] (1996) 71 FCR 250, 258.

[2] (1999) FCA 104, [15]-[16];

[3] [2004] VSC 130, [74]-[75].

[4] [2002] VSC 457, [7].

[5] [2010] FCA 1029, [4].