Bradshaw v BSA Limited (No 2)

Case [2022] FCA 1440

FEDERAL COURT OF AUSTRALIA

Bradshaw v BSA Limited (No 2) [2022] FCA 1440  

File numbers: VID 488 of 2020
Judgment of: BROMBERG J
Date of judgment: 30 November 2022
Catchwords: REPRESENTATIVE PROCEEDINGS – application for approval of settlement of representative proceeding – s 33V of Federal Court of Australia Act 1976 (Cth) – principles relevant to settlement approval – whether proposed settlement fair and reasonable – whether common fund order should be made and in what terms – relevant principles – whether certain deductions from settlement sums should be allowed – whether sum proposed as funder’s commission is appropriate – consideration as to the appropriate rate of commission in a proceeding instituted in the “no‑costs” jurisdiction of the Fair Work Act 2009 (Cth) – whether costs incurred by a funder for adverse costs insurance should be allowed – whether pre-retainer legal costs should be allowed in full – whether deduction sought for legal costs including uplift appropriate – whether non‑publication orders should be made – settlement approved on basis that the distribution of the settlement sum proposed be adjusted to reflect a reduction of the funder’s commission, the disallowance of adverse costs insurance and the disallowance in part of pre-retainer legal costs.
Legislation:

Fair Work Act 2009 (Cth)

Federal Court of Australia Act 1976 (Cth)

Independent Contractors Act 2006 (Cth)

Legal Profession Uniform Law Application Act 2014 (Vic)
Cases cited:

Asirifi-Otchere v Swann Insurance (Aust) Pty Ltd (No 3) (2020) 385 ALR 625; [2020] FCA 1885

Augusta Ventures Limited v Mt Arthur Coal Pty Limited (2020) 283 FCR 123

Australian Education Union v State of Victoria (Department of Education and Early Childhood Development) (2015) 239 FCR 461

Australian Securities and Investments Commission v Richards [2013] FCAFC 89

Blairgowrie Trading Ltd v Allco Finance Group Ltd (Recs and Mgrs Apptd) (In Liq) (No 3) (2017) 343 ALR 476; [2017] FCA 330

BMW Australia Ltd v Brewster (2019) 269 CLR 574

Botsman v Bolitho (2018) 57 VR 68

Bradshaw v BSA Limited (2021) 394 ALR 76; [2021] FCA 1080

BSA Limited v Bradshaw, in the matter of BSA Limited (No 2) [2022] FCA 1182

BSA Limited v Bradshaw, in the matter of BSA Limited [2022] FCA 747

C7A/2017 v Minister for Immigration and Border Protection (No 2) [2020] FCAFC 70

Caason Investments v Cao (No 2) [2018] FCA 527

Clime Capital Ltd v UGL Pty Ltd [2020] FCA 66

Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd (2022) 398 ALR 404; [2022] HCA 1

Court v Spotless Group Holdings Ltd [2020] FCA 1730

Davaria Pty Ltd v 7 Eleven Stores Pty Ltd (2020) 281 FCR 501

Duck v Airservices Australia (No 3) [2021] FCA 304

Endeavour River Pty Ltd v MG Responsible Entity Ltd [2019] FCA 1719

Evans v Davantage Group Pty Ltd (No 3) [2021] FCA 70

Fair Work Ombudsman v Woolworths Group Limited (Case Management) [2022] FCA 376

Kellyv Willmott Forests Ltd (in liquidation) (No 4) (2016) 335 ALR 439;

Continue reading Bradshaw v BSA Limited (No 2)

Sign in free to access the full text

Details
AGLC
Bradshaw v BSA Limited (No 2) [2022] FCA 1440
Case
[2022] FCA 1440
Decision Date

CaseChat Overview and Summary

In Bradshaw v BSA Limited (No 2), the applicants sought approval of a settlement for a representative proceeding under section 33V of the Federal Court of Australia Act 1976 (Cth). The primary legal issues before the court were whether the proposed settlement was fair and reasonable, the appropriateness of a common fund order, and the legitimacy of various deductions from the settlement sum, including the funder's commission, adverse costs insurance, and pre-retainer legal costs. The court also had to consider the appropriateness of a non-publication order.

The court carefully examined the evidence presented, including affidavits from Vicky Antzoulatos, a partner at Shine Lawyers, and expert reports on costs and loss assessment. It weighed the arguments for and against the various deductions from the settlement sum. The court found that while the overall settlement was fair and reasonable, certain adjustments were necessary. Specifically, the funder's commission was deemed too high and was reduced. Additionally, the court disallowed the deduction for adverse costs insurance and only partially allowed the deduction for pre-retainer legal costs. The court also considered the applicants' request for non-publication orders to replace the interim orders previously made, ultimately setting aside the interim orders and imposing new non-publication restrictions on certain documents.

The final orders approved the settlement with modifications, including adjustments to the funder's commission and disallowances of certain costs, while also implementing new non-publication orders to protect sensitive information. The court's decision balanced the need for a fair settlement with the necessity to prevent prejudice to the administration of justice.

Orders

Orders of the court

1. On or before 7 December 2022, the applicants, the respondent and LLS Fund Services Pty Ltd (LLS) consult, agree upon and provide to the Chambers of Justice Bromberg the terms of paragraphs [27]-[29] of the Settlement Distribution Scheme reformulated so as to accord with the reasons for judgment of the Court published on 30 November 2022, together with the terms of any consequential amendments to the Settlement Distribution Scheme that may be required.

2. The interim non-publication orders made on 12 July 2022 be set aside.

3. Subject to further order, pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth) (FCA Act), there be no publication or other disclosure of the material specified in “Schedule 1” to these orders (other than to the Court, the applicants’ legal representatives, LLS, the legal representatives of LLS, the respondent and the legal representatives of the respondent), on the ground that it is necessary to prevent prejudice to the proper administration of justice under s 37AG(1)(a) of the FCA Act.

4. Subject to further order, pursuant to s 37AF of the FCA Act, there be no publication or other disclosure of the material specified in “Schedule 2” to these orders (other than to the Court, the applicants’ legal representatives, LLS and the legal representatives of LLS), on the ground that it is necessary to prevent prejudice to the proper administration of justice under s 37AG(1)(a) of the FCA Act.

5. Subject to further order, pursuant to s 37AF of the FCA Act, there be no publication or other disclosure of the material specified in “Schedule 3” to these orders (other than to the Court, LLS, and the legal representatives of LLS), on the ground that it is necessary to prevent prejudice to the proper administration of justice under s 37AG(1)(a) of the FCA Act.

6. On or before 12 December 2022, in relation to each of the documents specified in Schedules 1, 2 and 3, the document be redacted to reflect the non-publication provided for in the schedules and be filed by the party from whom the document originated.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

SCHEDULE 1

1. Confidential Written Submissions of BSA on settlement approval application dated 4 July 2022

Reference

Text

Paragraph 12(e).

Sub-heading C.

Paragraph 13.

Paragraph 14.

Footnotes 11 and 12.

In accordance with yellow highlights in Annexure A to BSA’s proposed non-publication orders circulated on 11 July 2022.

2. Confidential Affidavit of A Piesiewicz dated 4 July 2022

Reference

Text

Sub-heading A.

Paragraph 7.

Paragraph 9(b).

In accordance with the yellow highlights in Annexure B to BSA’s proposed non-publication orders circulated on 11 July 2022.

3. Confidential Exhibit APP-1 referred to in the affidavit of A Piesiewicz of 4 July 2022

Whole document.

4. Affidavit of V Antzoulatos dated 27 June 2022

Reference

Text

Paragraphs 101(c) and (d) – all title references to enable identification of report, author and company of author.

Paragraphs 103(c) to (g).

In accordance with yellow highlights in Annexure B1 to BSA’s proposed non-publication orders circulated on 11 July 2022.

5. Exhibit VA-16 referred to in the affidavit of V Antzoulatos dated 27 June 2022

Whole document.

6. Exhibit VA-17 referred to in the affidavit of V Antzoulatos dated 27 June 2022

Whole document.

7. LLS outline of submissions dated 4 July 2022

Reference

Text

Paragraph 9(c) (the first seven words).

Paragraph 9(d).

Paragraph 10.

Paragraph 34.

The first seven words.

The whole sub-paragraph.

The last sentence.

The last six words in the first sentence.

8. Affidavit of S Conrad dated 4 July 2022

Reference

Text

Paragraph 52.

The first sentence.

9. Affidavit of A Becker sworn 21 July 2022

Reference

Text

Paragraph 10(b).

Paragraph 13.

Paragraph 14.

Paragraph 16.

The second and third sentence.

All.

All.

All.

10. Confidential written submissions of BSA on application for non-publication orders

Reference

Text

Paragraph 3.

Paragraph 18.

Footnote 13.

The words in brackets.

From “(a)” to end of the paragraph.

After the words “…including by reason of” to the end of the footnote.

SCHEDULE 2

1. Exhibit VA-14 to the affidavit of V Antzoulatos of 27 June 2022

Reference

Text

Page 119.

The whole page.

2. Exhibit VA-15 to the affidavit of V Antzoulatos of 27 June 2022

Whole document.

3. Exhibit VA-22 to the affidavit of V Antzoulatos of 11 July 2022

Reference

The name of a person or address on pages 28, 52, 59 to 116, 118, 121, 126, 130, 132, 138 and 141 to 144.

SCHEDULE 3

1. Affidavit of S Conrad dated 4 July 2022

Reference

Text

Paragraph 51.

Paragraph 25.

The final sentence.

The figure before the words “of the resolution sum”.

2. Exhibit SC-4 to the affidavit of S Conrad dated 4 July 2022

Whole document.

3. Exhibit SC-1 to the affidavit of S Conrad dated 4 July 2022

Reference

Text

First page, sentence commencing “Shine Lawyers has requested…”

The first figure and figure following the words “assuming we only attract…” and before “…of potential”.

Second page, sentence commencing “I have attached…”

The words after “(Tabs 1 and 2)” to end of sentence.

Second page, sentence commencing “I have also attached…”

The words after “(Tab 3)” to end of sentence.

Second page, sentence commencing “[a]s referred to in paragraphs…”

Whole paragraph and following three paragraphs until the words “…I will send you a copy” overleaf.

Section titled “Quantum”.

The words following “Shine has been…” up to “…estimate of $50 million” overleaf.

Section titled “Costs”.

The words following “factual matrix…” up to conclusion of that paragraph.

The sentence commencing “[t]herefore…” and concluding “…by Shine”.

Section titled “Timing”.

The whole paragraph.

Section titled “Recoverability”.

The whole paragraph except “I am unaware whether BSA has any indemnity insurance policies in place.”

Section titled “Recommendation”.

All paragraphs in this section until end of document.

4. Exhibit SC-2 to the affidavit of S Conrad dated 4 July 2022

Reference

Text

First page.

Entire first page.

Second page.

Entire second page except “…the CAC recommended the matter to the Board”.

Third page.

Entire third page.

Background

Background to the litigation

The parties also filed material relating to proposed non-publication orders sought to replace the interim non-publication orders made on 12 July 2022. I discuss this material further below at [237]-[255].BACKGROUND TO THE PROCEEDING AND SETTEMENT APPROVAL APPLICATION The procedural background to the proceeding is described in the Second Antzoulatos Affidavit at [45]-[69], the Fourth Antzoulatos Affidavit at [7]-[15] and the First Conrad Affidavit at [20]‑[27]. As there described, Shine began investigating the prospect of a class action against BSA in around January 2019. Shine approached the Funder about funding the proceeding in about February 2019. Ms Antzoulatos deposed that on 23 November 2018, Shine had commenced another class action in this Court entitled Robert Mutch v ISG Managements Pty Ltd, being proceeding number VID 1492 of 2018 (Mutch Proceeding). The Mutch Proceeding was also funded by the Funder. Ms Antzoulatos deposed that the issues in the Mutch Proceeding are very similar to the issues in this proceeding. Ms Antzoulatos deposes that in the circumstances, Shine was already familiar with the issues and investigations that needed to take place prior to the commencement of the proceedings. Ms Antzoulatos deposed that there was an extensive period of without prejudice negotiations with BSA’s lawyers prior to the proceeding being filed. A chronology of communications with BSA and BSA’s lawyers prior to the commencement of the proceeding was annexed to the Fourth Antzoulatos Affidavit. The proceeding was commenced as an open class action by originating application and statement of claim filed on 24 July 2020. On 23 November 2020, I made orders regarding, inter alia, the common issues to be determined at the initial trial, and requiring the parties to file and serve a list setting out proposed categories of discovery sought in the proceeding. In late November and December 2020, the applicants filed a reply to the defence, and the applicants and their corporate entities filed defences to the first and second cross-claims. On 16 March 2021, I made orders, inter alia, requiring the parties to give discovery of documents falling within agreed categories of discovery. On 4 June 2021, I made orders, including:(1)granting leave for BSA to file and serve cross-claims against group members and their associated corporations;(2)requiring Shine to make the pleadings filed in the proceeding available for download from its website from 7 July 2021 until further order of the Court;(3)staying the cross-claims and ordering no further steps be taken by BSA or by the relevant cross-respondents in respect of them;(4)requiring BSA to provide the applicants with a list of all group members in the proceeding known to BSA together with the last known contact details of those persons. On 11 and 15 June 2021, the applicants gave discovery of documents falling within agreed categories (with further discovery later given on 30 June, 12 August and 24 September 2021).

Evidence

Evidence Before The Court

I now provide my reasons for making the 26 July 2022 orders to approve the settlement pursuant to s 33V(1) of the FCA Act, and my preparedness to make further orders for the distribution of the Settlement Sum pursuant to s 33V(2) of the FCA Act.THE EVIDENCE At the commencement of the hearing, the applicants relied on the affidavits of Vicky Antzoulatos, a partner at Shine Lawyers, sworn on 9 May 2022, 27 June 2022 and 7 July 2022, (the First, Second and Third, Antzoulatos Affidavits). The applicants also relied on short written submissions on the settlement approval application dated 27 June 2022. The First Antzoulatos Affidavit annexed the Deed and Settlement Distribution Scheme (as it then was). In the Second Antzoulatos Affidavit, Ms Antzoulatos addressed, amongst other matters, the proposed settlement, the steps taken to notify group members of the proposed settlement, objections to the settlement, her own assessment of the complexity of the litigation, the merits of the claim, the reasonableness of the settlement and the costs of the proceeding. The annexures to the Second Antzoulatos Affidavit included: (1)a confidential affidavit of Arno Becker, Chief Financial Officer and Interim Chief Executive Officer of BSA, sworn on 21 April 2022 pursuant to clause 2.4(b) of the Deed, which in turn deposes to a confidential report prepared by [name redacted] of [name redacted] dated 29 September 2022 (the [name redacted] Report); (2)the expert report of Christopher Hill, Chartered Accountant and Registered Liquidator, dated 27 June 2022;(3)the expert report of Catherine Mary Dealehr, a costs consultant, dated 27 June 2022;(4)a confidential and without prejudice loss assessment report of Mariano Rossetto prepared for the purpose of mediation (Mediation Loss Assessment Report); and(5)the confidential counsel opinion of Mr Ian Pike SC and Mr Jonathon Dooley who appeared for the applicants (the Counsel Opinion). In the Third Antzoulatos Affidavit, Ms Antzoulatos addressed, amongst other matters, the applicants’ legal costs and other proposed deductions from the Settlement Sum, further objections to the proposed settlement, settlement registration and settlement modelling. Annexed to this affidavit is a supplementary expert report of Ms Dealehr dated 30 June 2022 (Second Dealehr Report). In response to concerns I raised during the course of the approval hearing regarding the sufficiency of the applicants’ evidence on costs, including the pre-retainer and pre-commencement costs and the costs of the settlement approval itself, the applicants filed the further affidavits of Ms Antzoulatos sworn on 11 July 2022 and 14 July 2022 (the Fourth and Fifth Antzoulatos Affidavits). The applicants also filed an affidavit of Mariano Rossetto, Chartered Accountant, sworn on 12 July 2022 (Rossetto Affidavit) regarding the “Loss Assessment Formula” adopted in Schedule 1 of the Settlement Distribution Scheme. The applicants later filed a second supplementary expert report of Ms Dealehr dated 26 July 2022 (Third Dealehr Report).

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

The Settlement Notice contained a section dealing with how group members should register to participate (emphasis in original):[22]If you have already (a) entered into a funding agreement with LLS and a Retainer with Shine Lawyers and/or (b) previously registered for the class action with Shine Lawyers, you do not need to take any further steps to register your claim and interest in participating in the settlement…[23]If you have not previously registered for the class action, you will need to register before you can receive any compensation, because the applicants intend to ask the Court to approve the settlement on the basis that only registered group members will be eligible to receive a distribution. To register you must complete the registration form at Annexure 1 to this Notice and return it to Shine Lawyers. Alternatively you can complete and submit an online registration form on the Shine Lawyers website … You must register before 17 June 2022. Registrations received after that time will not be accepted, and you will be treated as having not validly registered. The Settlement Notice explained the consequences of not registering to participate (emphasis in original):[42]If you did not opt out of the BSA Limited Class Action before 4.00pm on 24 September 2021 and you do not take steps to register with Shine Lawyers to participate in the settlement (that is, you do nothing), then you will be bound by the settlement, however if the Court approves the settlement on the basis put forward by the applicants you will not be entitled to the distribution of any monies from the settlement. This is because the applicants intend to ask the Court to approve the settlement on the basis that only registered group members receive a distribution. [43]If you do nothing, it also means that if the settlement is approved you will no longer have the right to pursue any claims against BSA and its related parties (including related bodies corporate and BSA’s past or present directors and officers) of the kind made in the BSA Limited Class Action. Similarly, BSA will no longer have the right to pursue any claims made in the Cross Claims against you. In relation to how much group members will receive under the settlement, the Settlement Notice set out that (emphasis in original):[26]The dollar amount you receive if you register to participate and are found to be eligible will be worked out following a process set out in the Settlement Distribution Scheme… The precise amount that will be payable to each individual group member is not yet known and cannot yet be accurately estimated, including because it depends on information which has not yet been provided by group members who have not yet registered, such as the length of time group members provided services to BSA and the number of hours worked each day based on group member data to be provided by BSA.[27]Importantly, group members’ entitlements will be calculated using an agreement entitlement calculation model that has regard to, at least, the factors mentioned above (Calculation Model). As mentioned above, the Settlement Distribution Scheme, including the Calculation Model must be approved by the Court.[28]Please note you will not receive the full value of your claim under the settlement. The settlement is a compromise of the claims made taking into account, amongst other matters, BSA’s financial capacity to pay and the risk that the applicants might lose the class action.