Australian Securities & Investments Commission v GDK Financial Solutions Pty Ltd (in liq) (No 8)

In this case, the applicant, as a representative of investors in an unregistered managed investment scheme known as the Mews Scheme, sought approval from the court to settle various claims on the scheme fund. The court was tasked with determining whether the proposed compromise was fair and reasonable and in the interests of the investors, and whether the investors must be notified of the application for approval. The compromise related to the Touma proceedings and was agreed upon by Mr Dollard, who concurred with counsel’s views that the settlement was fair and reasonable and in the interests of the investors.

The court considered whether the absence of notification to the investors constituted an impediment to the approval of the compromise. The court noted that the identity of the investors was not finally ascertained, the total amount to be paid out represented only a modest proportion of the existing fund, yet averted an appreciable risk of its total depletion. Additionally, the compromise was considered fair and reasonable based on the confidential opinions of counsel, which would not be made available to the investors. The court also took into account the other criteria for approval identified by the Full Court in ZMB v Warne (Full Court).

The court ultimately concluded that the absence of notification to investors did not constitute an impediment to the approval of the compromise. The court approved the entry into an agreement in settlement of the Touma Proceedings, vacated the further hearing of the Touma Proceedings until further order, and directed the seventh defendant and the Mews Receivers to execute the Deed of Settlement within seven days of the date on which these orders were made. The court also ordered that the costs and expenses of the parties be paid out of the Mews Scheme and that a particular exhibit remain confidential on the court file and not be provided to any other parties or persons without the express consent of Peter Hastings Warne or order of the court.

In summary, the court approved the compromise as it was fair and reasonable and in the interests of the investors, despite the absence of notification to the investors. The court considered the other relevant factors, such as the modest proportion of the fund to be paid out and the averting of the risk of total depletion of the fund. The court also took into account the other criteria for approval identified by the Full Court in ZMB v Warne (Full Court). The court ordered the execution of the Deed of Settlement and the payment of costs and expenses out of the Mews Scheme.