FEDERAL COURT OF AUSTRALIA
Adams v Navra Group Pty Ltd [2019] FCA 1157
File number: ACD 91 of 2014 Judge: MURPHY J Date of judgment: 26 July 2019 Catchwords: PRACTICE AND PROCEDURE – Representative proceedings – whether leave to discontinue should be granted – Federal Court of Australia Act 1976 (Cth) s 33V Legislation: Australian Securities and Investments Commission Act 2001 (Cth)
Corporations Act 2001 (Cth)
Cases cited: Australian Securities and Investments Commission v Richards [2013] FCAFC 89
Kelly v Willmott Forests Ltd (in liquidation) (No 4) [2016] FCA 323; (2016) 335 ALR 439
Lopez v Star World Enterprises Pty Ltd [1999] FCA 104; (1999) ATPR 41-678
Mercedes Holdings Pty Limited v Waters(No 1) [2010] FCA 124; (2010) 77 ACSR 265
Petersen Superannuation Fund Pty Ltd v Bank of Queensland Ltd (No 3) [2018] FCA 1842; (2018) 132 ACSR 258
Williams v FAI Home Security Pty Ltd (No 4) [2000] FCA 1925; (2000) 180 ALR 459
Date of hearing: Heard on the papers Date of last submissions: 5 March 2019 Registry: Australian Capital Territory Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 27 Solicitor for the Applicants: Minter Ellison Solicitor for the Respondents: Gilchrist Connell ORDERS
ACD 91 of 2014 BETWEEN: CAROLYN ANNE ADAMS (and others named in the Schedule)
First Applicant
AND: NAVRA GROUP PTY LTD (EXTERNAL ADMINISTRATION)
Respondent
JUDGE:
MURPHY J
DATE OF ORDER:
26 JULY 2019
THE COURT ORDERS THAT:
1.The application to discontinue the proceeding pursuant to s 33V of the Federal Court of Australia Act 1976 (Cth) (the Act) be approved.
2.The proceeding be dismissed with each party to bear their own costs.
3.Pursuant to ss 37AF and 37AG of the Act, for a period of 12 months from the date of this order exhibit, ‘AKG1’ to the affidavit of Andrew Keith Gill affirmed on 5 March 2019 be treated as confidential on the ground that it is necessary to prevent prejudice to the proper administration of justice. The parties, class members and AIG Australia have liberty to apply if they seek extension of the confidentiality order beyond the period allowed.
4.Within 14 days the solicitors for the applicant provide a copy of these reasons to the class members listed in the Statement of Claim.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
MURPHY J:
The present proceeding is a class action brought by the applicant, Ms Carolyn Adams, against the respondent, Navra Group Pty Ltd (in liquidation) (Navra). The statement of claim states that Ms Adams brings the proceeding for herself and on behalf of persons who:
(a)on, or around or after March 2006 received financial advice from Navra in relation to the entry into margin loans for the purposes of purchasing units in managed funds for which NavraInvest Limited was the responsible entity, using real property held in his or…
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- Case
- [2019] FCA 1157
- Decision Date
CaseChat Overview and Summary
The primary legal issue was whether leave to discontinue the class action should be granted under section 33V of the Federal Court of Australia Act 1976 (Cth). The Court had to consider the implications of the liquidator's scheme, which had already resulted in Ms Adams and the named class members receiving their respective settlement monies. The Court also needed to address the ambiguity in the pleadings regarding the status of the named class members, who were also listed as applicants in the proceeding.
The Court concluded that despite the ambiguity in the pleadings, it was appropriate to infer that the named persons were class members, as they had been advised of the application. The Court emphasised that the class action had served its purpose since all the named persons had resolved their rights to claim damages from Navra and had been paid their settlement monies. Given the liquidation of Navra and the distribution of the available insurance monies, the Court found that there was no utility to the class action remaining on foot. Consequently, the Court granted leave to discontinue the proceeding, dismissing it with each party to bear their own costs. Additionally, the Court ordered that an exhibit to the affidavit filed in support of the application be treated as confidential for a period of 12 months.
Orders
Orders of the court
1. The application to discontinue the proceeding pursuant to s 33V of the Federal Court of Australia Act 1976 (Cth) (the Act) be approved.
2. The proceeding be dismissed with each party to bear their own costs.
3. Pursuant to ss 37AF and 37AG of the Act, for a period of 12 months from the date of this order exhibit, ‘AKG1’ to the affidavit of Andrew Keith Gill affirmed on 5 March 2019 be treated as confidential on the ground that it is necessary to prevent prejudice to the proper administration of justice. The parties, class members and AIG Australia have liberty to apply if they seek extension of the confidentiality order beyond the period allowed.
4. Within 14 days the solicitors for the applicant provide a copy of these reasons to the class members listed in the Statement of Claim.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
The statement of claim alleges that Navra:(a)failed to exercise the skill and care of an experienced provider of financial services, with regards to the identification of factors such as risk and investment suitability;(b)engaged in misleading and deceptive conduct in contravention of ss 1041E and 1041H of the Corporations Act 2001 (Cth) (Corporations Act) and s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act);(c)contravened ss 945A and 945B of the Corporations Act, as those provisions then existed, by making recommendations which were inappropriate and made without determining individual investors’ circumstances; and(d)breached the fiduciary duties it owed to class members insofar as it gave certain advice when there existed a conflict between the interests of Navra and the class members. By an interlocutory application Ms Adams now seeks Court approval to discontinue the proceeding pursuant to s 33V of the Federal Court of Australia Act 1976 (Cth) (the Act). Section 33V requires Court approval before discontinuance of a representative proceeding is permitted, because such proceedings involve the rights of class members who are not directly before the Court. Unfortunately, in the present case it is unclear whether the 14 persons listed as class members in the schedule to the statement of claim are indeed class members, or whether they are applicants in the proceeding along with Ms Adams. I say that because the originating application lists the same 14 class members as named applicants. A similar ambiguity appears in the affidavit of Andrew Keith Gill, a solicitor with Minter Ellison, affirmed on 5 March 2019 filed in support of the application. Mr Gill deposes that the proceeding was commenced by Ms Adams as the “lead applicant” but he also states that he is the solicitor on the record for “the applicants”. If each of the 14 persons listed as class members in the statement of claim are actually applicants in the proceeding, then they are parties and directly before the Court. In that circumstance there would be no class members and no requirement for the Court to exercise a protective role in relation to their interests. Indeed, if there are no class members then the matter is not properly constituted as a representative proceeding and discontinuance does not require Court approval. I will proceed on the assumption that the persons listed in schedule to the statement of claim are class members. That is how the statement of claim is pleaded and that is the basis underpinning the application for Court approval to discontinue the proceeding. In the finish, little turns on the regrettable ambiguity. Whether they are properly described as class members or applicants Minter Ellison has been retained by each of the named persons, and it is appropriate to infer that they have been advised of the application. More fundamentally, Navra is in liquidation and the only assets it has are rights under three insurance policies it held and those policies are insufficient to meet all the claims made against Navra. In a related proceeding the Court approved a scheme for the fair distribution of the insurance monies available to claimants against Navra and each of Ms Adams and the class members elected to participate in that scheme, signed settlement deeds which released Navra and related persons and entities from all liability, and have been paid their respective settlement monies. In circumstances where Ms Adams and each of the named persons have resolved their rights to claim damages from Navra there is no utility to the class action remaining on foot and it is appropriate to approve its discontinuance.THE BACKGROUND FACTS