FEDERAL COURT OF AUSTRALIA
Bradgate (Trustee) v Ashley Services Group Limited (No 2) [2019] FCA 1210
File number: NSD 2074 of 2016 Judge: MIDDLETON J Date of judgment: 13 June 2019 Date of publication of reasons: 5 August 2019 Catchwords: PRACTICE AND PROCEDURE – representative proceeding – application for settlement under s 33V of Federal Court of Australia Act 1976 (Cth) – settlement approved Legislation: Federal Court of Australia Act 1976 (Cth) s 33V Cases cited: Blairgowrie Trading Ltd v Allco Finance Group Ltd (in liq) (No 3) [2017] FCA 330; (2017) 343 ALR 476
Caason Investments v Cao (No 2) [2018] FCA 527
Dillon v RBS Group (Australia) Pty Limited (No 2) [2018] FCA 395
Dorajay Pty Ltd v Aristocrat Leisure Limited [2009] FCA 19
Earglow Pty Ltd v Newcrest Mining Limited [2016] FCA 1433
HFPS Pty Limited (Trustee) v Tamaya Resources Limited (in liq) (No 3) [2017] FCA 650
King v AG Australia Holdings Ltd(formerly GIO Australia Holdings Ltd) [2003] FCA 980
Liverpool City Council v McGraw-Hill Financial, Inc (now known as S&P Global Inc) [2018] FCA 1289
Matthews v AusNet Electricity Services Pty Ltd [2014] VSC 663
McKenzie v Cash Converters International Ltd (No 3) [2019] FCA 10
Modtech Engineering Pty Limited v GPT Management Holdings Limited [2013] FCA 626
Money Max Int Pty Ltd (Trustee) v QBE Insurance Group Ltd [2016] FCAFC 148; (2016) 245 FCR 191
P Dawson Nominees Pty Ltd v Brookfield Multiplex Limited (No 4) [2010] FCA 1029
Petersen Superannuation Fund Pty Ltd v Bank of Queensland Ltd (No 3) [2018] FCA 1842
Date of hearing: 13 June 2019 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Regulator and Consumer Protection Category: Catchwords Number of paragraphs: 28 Counsel for the Plaintiff: Mr S G Habib SC and Mr T Bagley Solicitor for the Plaintiff: William Roberts Lawyers Counsel for the Defendant/Cross-Claimant in the First, Second and Third Cross-Claims/Cross-Respondent in the Fourth Cross-Claim: Mr I Ahmed Solicitor for the Defendant/Cross-Claimant in the First, Second and Third Cross-Claims/Cross-Respondent in the Fourth Cross-Claim: Herbert Smith Freehills Counsel for the Cross-Respondents to the First Cross-Claim: Ms L Rich Solicitor for the Cross-Respondents to the First Cross-Claim: Price Sierakowski Corporate Solicitor for the Cross-Respondents to the Second Cross-Claim: Ms V McGlynn of Corrs Chambers Westgarth Counsel for the Cross-Respondent to the Third Cross-Claim/Fourth Cross-Claimant to the Fourth Cross-Claim: Ms A Horvath Solicitor for the Cross-Respondent to the Third Cross-Claim/Fourth Cross-Claimant to the Fourth Cross-Claim: Moray & Agnew ORDERS
NSD 2074 of 2016 BETWEEN: RICHARD JOHN FINDLAY BRADGATE AS TRUSTEE OF THE BRADGATE SUPERANNUATION FUND
Plaintiff
AND: ASHLEY SERVICES GROUP LIMITED ACN 094 747 510
Defendant
JUDGE:
MIDDLETON J
DATE OF ORDER:
13 June 2019
THE COURT ORDERS THAT:
Approval of settlement
1.Pursuant to sections 33V and 33ZF of the Act, settlement of the proceeding on the terms set out in the Deed of Settlement dated 24 April 2019 (Settlement Deed) and the Settlement Distribution Scheme (and any…
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- Case
- [2019] FCA 1210
- Decision Date
CaseChat Overview and Summary
The court was required to determine whether the proposed settlement was fair, reasonable and in the best interests of the group members, and whether the administration costs claimed by the applicant were reasonable. The court also needed to decide whether the settlement was consistent with the principles of representative proceedings and whether the proposed distribution of settlement funds was appropriate.
The court found that the settlement was fair and reasonable, and in the best interests of the group members. The court noted that the settlement amount was lower than those approved in similar cases, and that the administration costs were reasonable. The court also found that the settlement was consistent with the principles of representative proceedings, and that the proposed distribution of settlement funds was appropriate. The court approved the settlement and authorised the applicant to enter into and give effect to the settlement on behalf of the group members.
The court approved the proposed settlement on the terms set out in the Deed of Settlement and the Settlement Distribution Scheme. The court also approved the administration costs and legal costs claimed by the applicant, and made orders for the dismissal of the proceeding once the distribution under the Settlement Distribution Scheme was complete. The court further made orders for the confidentiality of certain documents and information related to the settlement.
Orders
Orders of the court
Approval of settlement
1. Pursuant to sections 33V and 33ZF of the Act, settlement of the proceeding on the terms set out in the Deed of Settlement dated 24 April 2019 (Settlement Deed) and the Settlement Distribution Scheme (and any annexures therein) exhibited to the confidential affidavit of Blagoj Petrovski sworn 7 June 2019 (together, Settlement Documents) be approved.
2. Pursuant to section 33ZF of the Act, the Court authorises the Applicant nunc pro tunc for and on behalf of the Group Members (being those persons who meet the definition of “Group Member” in the Further Amended Statement of Claim and who did not file an opt out notice) to enter into and give effect to the Settlement Documents and the transactions contemplated for and on behalf of Group Members.
3. Pursuant to section 33ZB and section 33ZF of the Act, the persons affected and bound by the settlement of the proceedings and these orders (other than order 8 which applies generally to all persons) be the Applicant, the Respondent, the Cross Respondents and Group Members as defined in order 2 above.
4. Pursuant to section 33ZF of the Act, William Roberts Pty Ltd t/as William Roberts Lawyers be appointed Administrator of the Settlement Distribution Scheme and is to act in accordance with the rules of the Settlement Distribution Scheme.
Costs in the proceeding
5. All costs orders made to date in the proceeding be vacated.
6. There be no order as to costs of the proceeding as between:
(a) the Applicant and the Respondent;
(b) the Applicant and the Cross Respondents; or
(c) the Respondent and the Cross Respondents.
7. Pursuant to section 33ZF of the Act:
(a) the costs and disbursements incurred by the Applicant, in connection with the administration of the Settlement Distribution Scheme from the date of the approval of the Settlement Documents to the date of completion of distribution of the Settlement Sum, be approved up to the amount of $151,250;
(b) the Applicant’s legal costs and disbursements on a solicitor and own client basis, incurred in connection with the proceeding on its own behalf and on behalf of all Group Members in the proceeding, including the costs of this application, be approved up to the amount of $3,569,755;
(c) IMF Bentham Limited’s claim for its project costs be approved in the amount of $5,949.51;
(d) the Applicant’s reasonable claim for compensation for the time and/or expenses incurred in the interests of prosecuting the proceeding on behalf of Group Members as a whole, be approved in the amount of $21,900.
Other Matters
8. Pursuant to s 37AF(1)(b) and s 37AG(1)(a), on the ground that the order is necessary to prevent prejudice to the proper administration of justice and until further order:
(a) the affidavit of Ding Pan affirmed on 29 April 2019 including annexures;
(b) the affidavit of Blagoj (Bill) Petrovski sworn on 7 June 2019;
(c) Exhibit BP8 to the affidavit of Mr Petrovski sworn on 7 June 2019;
(d) paragraphs 8 and 9 of the affidavit of Blagoj (Bill) Petrovski sworn on 12 June 2019; and
(e) the affidavit of Joseph Anthony Mazzeo sworn on 6 June 2019 including annexures not be published or disclosed without prior leave of the Court to any person or entity other than the Court, the Applicant, IMF and their legal advisors
9. William Roberts have liberty to apply to the Court, including for directions, in relation to any matter referred to in cl10.1 of the Settlement Distribution Scheme. Without limitation, William Roberts may so apply in the manner set out in cl10.3 of the Scheme.
10. The proceeding be dismissed, 7 days after the Administrator of the Settlement Distribution Scheme notifies the Court and the parties in writing that the distribution under the Settlement Distribution Scheme is complete.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
This proceeding concerned the respondent’s alleged breaches of certain provisions relating to prospectuses, continuous disclosure and misleading or deceptive conduct contained within the Corporations Act 2001 (Cth) (the ‘Corporations Act’). The applicant commenced the proceeding as a representative proceeding under Part IVA of the FCA Act on behalf of itself and its fellow group members, being persons who or which acquired shares in the respondent based on a prospectus for an initial public offering. By way of background, the respondent issued the prospectus as part of the initial public offering to raise funds to acquire Integracom, a private education provider specialising in the delivery of telecommunications and electronic security training. Integracom’s primary source of revenue was Commonwealth and State Government Funding Schemes. Under one of these schemes, before it was replaced on 1 July 2014, new apprentices received what were called ‘Tools for Your Trade’ payments: tax-free payments to ease their financial burden (and therefore lower the barriers to entry faced when enrolling in courses of the kind offered by Integracom). At a high level, the applicant and group members’ claim against the respondent was that Integracom’s consolidated revenue, enrolment and EBITDA forecasts, which were contained in the respondent’s prospectus, were misleading because:(1)the respondent could not be satisfied that the reporting systems within Integracom enabled reasonable or reliable forecasts to be prepared;(2)the Integracom enrolment figures were unreliable and inappropriate; and(3)the respondent could have, and should have, checked the Integracom forecasts against actual figures but chose not to. By making allegedly misleading statements in the financial statements and forecasts contained within the prospectus, the applicant claimed that the respondent contravened s 728 of the Corporations Act. The applicant also alleged that the respondent had engaged in misleading or deceptive conduct in issuing the prospectus, contravening s 1041H of the Corporations Act, s 18 of the Australian Consumer Law (being Sch 2 to the Competition and Consumer Act 2010 (Cth)), and s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth). It was also alleged that the respondent breached ASX Listing Rule 3.1 and s 674 of the Corporations Act by failing to disclose the EBITDA figures and the effect of the replacement of the ‘Tools for Your Trade’ payment scheme on Integracom’s revenue, which was (on the applicant’s submission) information that a reasonable person would expect to have a material effect on the price or value of its securities, and which should have been communicated to the Australian Stock Exchange. After prolonged settlement negotiations between the parties’ legal representatives, including four days of private mediation, an ‘in principle’ settlement agreement was struck on 13 December 2018. By 24 April 2019, a formal Deed of Settlement had been signed by each of the parties. A Settlement Distribution Scheme was also prepared as part of the proposed settlement.