Bulense Holdings Pty Ltd v Arup Pty Ltd
[2015] FCA 726
•20 July 2015
FEDERAL COURT OF AUSTRALIA
Bulense Holdings Pty Ltd v Arup Pty Ltd [2015] FCA 726
Citation: Bulense Holdings Pty Ltd v Arup Pty Ltd [2015] FCA 726 Parties: BULENSE HOLDINGS PTY LTD AS TRUSTEE FOR THE BULENSE RETIREMENT FUND v ARUP PTY LTD File number: NSD 770 of 2014 Judge: GLEESON J Date of judgment: 20 July 2015 Catchwords: PRACTICE AND PROCEDURE – application for Court’s approval of settlement of representative proceeding – whether settlement fair and reasonable compromise of claims made on behalf of group members – where litigation complex – where positive evidence of approval of group members – settlement approved – Federal Court of Australia Act 1976 (Cth), s 33V
PRACTICE AND PROCEDURE – whether non-publication orders should be made – where affidavits annex legal advice supporting s 33V application – where affidavits contain confidential information concerning settlement – non-publication order made
Legislation: Federal Court Act 1976 (Cth), ss 33V, 37AF
Federal Court Rules 2011 (Cth), r 2.32(1)(b)Cases cited: Lopez v Star World Enterprises Pty Ltd [1999] FCA 104; (1999) ATPR 41-678
P Dawson Nominees Pty Ltd v Brookfield Multiplex Limited (No 4) [2010] FCA 1029
Williams v FAI Home Security Pty Ltd (No 4) [2000] FCA 1925; (2000) 77 ACSR 265
Wingecarribee Shire Council v Lehman Brothers Australia (in liq) (No 9) [2013] FCA 1350; (2013) 97 ACSR 227Date of hearing: 15 July 2015 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 40 Counsel for the Applicant: Mr WAD Edwards Solicitor for the Applicant: Piper Alderman Counsel for the Respondent: Ms A Munro Solicitor for the Respondent: MolinoCahill Lawyers
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 770 of 2014
BETWEEN: BULENSE HOLDINGS PTY LTD AS TRUSTEE FOR THE BULENSE RETIREMENT FUND
ApplicantAND: ARUP PTY LTD
Respondent
JUDGE:
GLEESON J
DATE OF ORDER:
20 JULY 2015
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The settlement of these representative proceedings be approved pursuant to section 33V of the Federal Court of Australia Act 1976 (Cth) (“Act”) on the terms set out in:
(a)The settlement deed which is exhibit GJW-1 to the affidavit of Gregory John Whyte sworn 28 May 2015; and
(b)The amended settlement scheme which is annexure GJW-15 to the affidavit of Gregory John Whyte sworn 7 July 2015 and annexure GJW-17 to the affidavit of Mr Whyte sworn 15 July 2015.
2.Further to order 7 made on 4 June 2015, pursuant to s 37AF of the Act, on the ground that the order is necessary to prevent prejudice to the proper administration of justice, each of the following documents is ordered confidential within the meaning of rule 2.32(1)(b) of the Federal Court Rules 2011 (Cth) and is not to be published or disclosed except in accordance with an order of a Judge of the Court:
(a)the affidavit of Mr Whyte sworn 7 July 2015 (including annexures “GJW-13”, “GJW-14” and “GJW-15”);
(b)annexure LML-1 to the affidavit of Lachlan McAllister Lamont sworn 7 July 2015;
(c)the affidavit of Mr Whyte sworn 10 July 2015 (including annexure “GJW-16”); and
(d)the affidavit of Mr Whyte sworn 15 July 2015 (including annexures “GJW-17”, “GJW-18” and “GJW-19”).
3.To give effect to order 2 above, the affidavits, exhibits and annexures referred to in that order are to remain on the Court file in sealed envelope(s) marked “Confidential – Not to be Opened Except by Direction of a Judge of the Court”.
4.Pursuant to s 33V of the Act, the applicant be at liberty to discontinue the proceeding by filing with the Court a Notice of Discontinuance.
5.There be no order as to costs of the proceedings.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 770 of 2014
BETWEEN: BULENSE HOLDINGS PTY LTD AS TRUSTEE FOR THE BULENSE RETIREMENT FUND
ApplicantAND: ARUP PTY LTD
Respondent
JUDGE:
GLEESON J
DATE:
20 JULY 2015
PLACE:
SYDNEY
REASONS FOR JUDGMENT
This is an application for the Court’s approval of a settlement of this representative proceeding, and for ancillary orders including non-publication orders. Pursuant to s 33V(1) of the Federal Court Act 1976 (Cth) (“the Act”), a representative proceeding may not be settled without the approval of the Court.
The applicant is the trustee of the Bulense Retirement Fund. The applicant and the persons whom it represents are persons who:
(a)acquired an interest in stapled units in the BrisConnections Investment Trust and the BrisConnections Holding Trust on the allotment date or on about 29 July 2008; and
(b)claim to have suffered loss or damage because of the conduct of the respondent (“Arup”) pleaded in the further amended statement of claim; and
(c)had, as at 28 July 2014, entered into a litigation funding agreement with Bentham IMF (Australia) Ltd (“group members”).
There are 379 group members. There is positive evidence that all group members approve of the proposed settlement, recorded in a deed of settlement dated 8 May 2015 (“settlement deed”). This is a very significant factor in support of the approval application.
The claim against Arup is for damages suffered by reason of the inclusion of allegedly misleading or deceptive statements and/or the omission of material information from a “Summary Letter” which Arup consented to being included in a product disclosure statement issued on 24 June 2008 by BrisConnections Management Company, as responsible entity for BrisConnections Investment Trust and the BrisConnections Holding Trust.
The trusts were established and capitalised in order to finance, design, construct and operate an infrastructure project being a connection between Bowen Hills, Kedron and Toombul in Brisbane including the physical tunnel, road, works, facilities and systems (including a tolling system) known as “AirportLink” and to own a leasehold interest from the State of Queensland on the land on which AirportLink would be built.
The central issue in the proceeding is whether certain traffic forecasts prepared by Arup for AirportLink and included in the “Summary Letter” were made without reasonable grounds.
I accept the submission made on behalf of the applicant that this is a highly technical issue which depends upon complex methodologies and computer programmes, with a wide range of diverse inputs and assumptions. The expected complexity of the litigation, with the attendant risks and costs of complex litigation, is a second significant factor in favour of the approval application.
Notice of the application
On 4 June 2015, I made orders for notice of the application to be given to the group members.
I am satisfied, on the affidavit evidence submitted by the applicant, that notice of the application was given in accordance with those orders by Piper Alderman, the applicant’s solicitor.
There is also evidence that a solicitor employed by Piper Alderman communicated with the nominated representative of each group member by telephone or email to inquire whether they had received and understood the notice and approved of the proposed settlement. I was informed by Mr Edwards, counsel for the applicant, that there are 23 nominated representatives for the 379 group members. There is affidavit evidence, which I accept, that each nominated representative advised the solicitor that they approved the proposed settlement.
There was no appearance before the Court by or on behalf of any person seeking to oppose the approval application.
Evidence of fair and reasonable settlement
The applicant relies on the following affidavits of Gregory Whyte, the solicitor with the day to day conduct of the proceeding on behalf of the applicant, and accompanying annexures and exhibits:
(1)affidavit sworn 28 May 2015 exhibiting, relevantly:
(a) The settlement deed;
(b)A document entitled “Arup Pty Ltd Shareholder class action settlement distribution scheme” (“settlement distribution scheme”) setting out how, subject to Court approval under s 33V of the Act, the settlement sum payable under the settlement deed is to be distributed including a schedule entitled “confidential quantum schedule”;
(c)The funding agreement between the applicant and Bentham IMF (Australia) Ltd which, I was informed by Mr Edwards, is relevantly identical to the funding agreements signed by or on behalf of each of the group members;
(2)affidavit sworn 3 June 2015 exhibiting a further quantum schedule;
(3)affidavit sworn 7 July 2015 containing evidence including evidence concerning the progress of the proceeding, proceedings commenced by receivers appointed to various members of the BrisConnections group of companies, and costs;
(4)A second affidavit sworn 7 July 2015 (“Mr Whyte’s confidential 7 July 2015 affidavit”) addressing risks associated with recoverability of any judgment sum from Arup following a successful contested hearing, the potential costs of progressing the proceeding to trial and the approximate percentage return to group members from the proposed settlement (prior to the deduction of amounts for costs and litigation funding fees). Mr Whyte expresses his opinion about the extent to which the expected recovery reflects an appropriate discount having regard to the risks of the litigation. The affidavit annexes, in particular, a confidential opinion of Mr Edwards of counsel dated 7 July 2015 concerning whether the proposed discontinuance is fair and reasonable in the interests of the group members and an amended settlement distribution scheme. Mr Whyte’s evidence is that he agrees with the conclusions expressed by Mr Edwards in his opinion. Mr Whyte also expresses the opinion that the proposed settlement is fair and reasonable and in the interests of the group members; and
(5)Affidavit sworn 15 July 2015 annexing a further quantum schedule and a supplementary opinion of Mr Edwards, and seeking to verify the reasonableness of certain expenses incurred by Bentham IMF (Australia) Ltd.
In addition, the applicant relies on the affidavit of Lydia Fogl sworn 10 July 2015 annexing her report which contains her independent expert opinion as to the reasonableness of costs and disbursements incurred on behalf of the applicant in these proceeding.
Counsel’s opinion and supplementary opinion
Mr Edwards’ opinion dated 7 July 2015 includes a detailed and careful analysis of the nature of the claims made in the proceeding and a detailed and careful assessment of the applicant’s prospects of success in the litigation.
The opinion also analyses the settlement distribution scheme and records Mr Edwards’ conclusion that the ultimate effect of the funding agreements and the settlement scheme is to ensure that the settlement sum is divided pro rata between group members, with deductions to be made strictly in accordance with the terms of the funding agreements between the group members and Bentham IMF (Australia) Ltd.
Finally, the opinion analyses the reasonableness of the settlement, considered both in the aggregate and by reference to the position of group members considered individually. The opinion makes certain assumptions about Ms Fogl’s expert opinion, which was not yet available at the time the opinion was finalised. The opinion concludes that the proposed settlement on the terms set out in the settlement deed and the settlement distribution scheme are fair, reasonable and in the interests of group members.
The supplementary opinion dated 15 July 2015 confirms Mr Edwards’ previous opinion, taking into account Ms Fogl’s report and some adjustments to the quantum schedule consequent upon receipt of Ms Fogl’s report.
Costs assessor’s report
Ms Fogl is a legal practitioner with over 30 years’ experience who has practised exclusively in the area of legal costs since June 2000.
Based on her review of the file, Ms Fogl expresses the view that the proceedings involve a high level of complexity and difficulty. Ms Fogl calculated the total reasonable professional fees and disbursements for the proper conduct of the proceedings to completion (by approval of this application) to be $697,483.42. Ms Fogl’s reasons are set out in detail in her 24 page report.
Proceeding so far
The proceeding was commenced in July 2014 and is at a relatively early stage of preparation for hearing. On 4 November 2014, the applicant filed an amended statement of claim which made allegations about the nature of Arup’s work. These allegations were then incorporated by way of particulars into the allegation that Arup did not have reasonable grounds for making the forecasts that it made. A further amended statement of claim was filed on 7 November 2014, correcting some minor errors in the amended statement of claim.
Arup served its defence to the further amended statement of claim on 2 April 2015.
Discovery took place during March and April 2015 and inspection of discovered documents commenced.
On 22 April 2015, I made directions for the preparation of the matter including extending the date for Arup to file and serve any cross-claims until 29 May 2015. The proposed cross-respondents have been identified to the Court as the financial sponsors of the Airport Link project.
On 6 and 8 May 2015, a facilitated settlement discussion occurred with the assistance of the Honourable Kevin Lindgren QC. This discussion occurred in connection with other facilitated settlement discussions between Arup and other plaintiffs in other proceedings. The result of these discussions was a resolution, recorded in the settlement deed, subject to Court approval.
Receipt of settlement sum
The settlement sum payable under the settlement deed was received on 2 June 2015. It is presently held in an “At Call Account” with the ANZ Bank, accruing interest daily.
Relevant principles
The question that arises on an application under s 33V of the Act is whether the settlement is “a fair and reasonable compromise of the claims made on behalf of the group members”: Lopez v Star World Enterprises Pty Ltd [1999] FCA 104; (1999) ATPR 41-678 (“Lopez”) at [15] per Finkelstein J.
The Court’s role in considering whether to approve a settlement pursuant to s 33V has been described in the following ways:
(1)“Ordinarily the task of a court upon an application such as this, is to determine whether the proposed settlement or compromise is fair and reasonable, having regard to the claims made on behalf of the group members who will be bound by the settlement. Ordinarily in such circumstances the Court will take into account the amount offered to each group member, the prospects of success in the proceeding, the likelihood of the group members obtaining judgment for an amount significantly in excess of the settlement offer, the terms of any advice received from counsel and from any independent expert in relation to the issues which arise in the proceeding, the likely duration and cost of the proceeding if continued to judgment, and the attitude of the group members to the settlement”: Williams v FAI Home Security Pty Ltd (No 4) [2000] FCA 1925; (2000) 77 ACSR 265 at [19] per Goldberg J.
(2)“Despite the obvious advantages of settling class actions, there remains the need to ensure that the interests of class members are adequately looked after. In the trial preparation, and the conduct of the trial itself, their protection depends, in no small measure, on the capacity of the named applicant to monitor the actions of the lawyers who have been retained to run the case. When it comes to a settlement it is the court that assumes responsibility for protecting the interests of the class members. In that task the court necessarily places considerable reliance on the parties’ lawyers”: P Dawson Nominees Pty Ltd v Brookfield Multiplex Limited (No 4) [2010] FCA 1029 at [4] per Finkelstein J;
(3)“[T]he task of the court in considering an application under s 33V is indeed an onerous one especially where the application is not opposed. It is a task in which 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 this regard there would be few cases where the court can properly exercise its power under s 33V without evidence from the solicitor supported by counsel that the proposed compromise is in the interests of the group members. I appreciate that, on occasion, this will place the solicitor and counsel in a difficult position. The interests of their client will not always be coincident with the interests of the members of the group. But, in my view, that is no more than a necessary consequence of their client instituting a representative action”: Lopez at [16].
The discontinuance is fair and reasonable
In my opinion, the evidence establishes that the settlement is fair and reasonable and in the interests of the group members as a whole for the following reasons:
(a) The group members have approved of the proposed settlement;
(b)The settlement distribution scheme is intended to ensure that the settlement sum is divided pro rata between group members, with deductions to be made strictly in accordance with the terms of the funding agreements between the group members and Bentham IMF (Australia);
(c)The costs to be deducted from the settlement sum are the reasonable costs as assessed by Ms Fogl, an experienced independent costs assessor;
(d)There are obvious litigation risks arising from the complexity of the proceedings, which warrant an appropriate settlement at this early stage of the litigation. Counsel’s opinion identifies risks of establishing liability and loss or damage;
(e)Mr Whyte has identified a significant litigation risk concerning about the recoverability of a greater amount than the settlement sum and arising from the concurrent proceedings brought against Arup by the BrisConnection receivers; and
(f)The settlement provides a return to group members which Mr Whyte considers to reflect an appropriate discount of the claim having regard to the risks of the litigation.
The applicants’ prospects of success, as analysed in the opinions of Mr Edwards, support my conclusion that the discontinuance is fair and reasonable in the interests of the group members as a whole.
Confidentiality
On 4 June 2015, I made the following order:
7. Until further order, Annexure A to this Order, Confidential Exhibits GJW-1 to GJW-5 to the Affidavit of Gregory John Whyte sworn 28 May 2015, Confidential Exhibit GJW6 to the Affidavit of Gregory John Whyte sworn 3 June 2015, and any confidential affidavit filed pursuant to Order 6 above be ordered confidential:
a. within the meaning of Regulation 2.32(1)(b) of the Federal Court Rules 2011 and their publication and disclosure be restricted within the meaning of section 37AF(1)(b)(i) of the Act (on the ground that it is necessary to prevent prejudice to the proper administration of justice within the meaning of section 37AG(1)(a) of the Act); and/or
b. pursuant to s 33ZF of the Act,
and not be disclosed to any person other than by order of a Judge of the Court:
Annexure A to the order of 4 June 2015 is the form of the notice ordered to be sent to group members.
The applicant now seeks the following additional order:
Further to Order 7 made on 4 June 2015, the Confidential Affidavit of Gregory John Whyte sworn 7 July 2015 (including its annexures), Confidential Annexure LML-1 to the Affidavit of Lachlan McAllister Lamont sworn 7 July 2015, the Confidential Affidavit of Gregory John Whyte sworn 10 July 2015 (including its annexures) and the Confidential Affidavit of Gregory John Whyte sworn 15 July 2015 (including its annexures) be ordered confidential:
a. within the meaning of Regulation 2.32(1)(b) of the Federal Court Rules 2011 and their publication and disclosure be restricted within the meaning of section 37AF(1)(b)(i) of the Act (on the ground that it is necessary to prevent prejudice to the proper administration of justice within the meaning of section 37AG(1)(d) of the Act); and/or
b. pursuant to s 33ZF of the Act,
and not be disclosed to any person other than by order of a Judge of the Court.
The contents of Mr Whyte’s confidential 7 July 2015 affidavit are summarised above. The annexures are Mr Edwards’ 7 July 2015 opinion (“GJW-13”), clause 3.6 of the solicitor’s retainer agreement between Piper Alderman and the applicant (“GJW-14”) and an amended settlement distribution scheme (“GJW-15”).
Annexure “LML-1” is an email dated 5 June 2015 to group members attaching the notice that is annexure A to the 4 June 2014 orders.
Mr Whyte’s 10 July 2015 affidavit was not read on the approval application. In summary, it annexes and explains an amended quantum schedule (“GJW-16”). The amended quantum schedule is the only annexure to the affidavit.
The contents of Mr Whyte’s 15 July 2015 affidavit are also summarised above. The annexures to that affidavit are the final amended quantum schedule (“GJW-17”), a schedule of costs and expenses of project investigation and project management incurred by IMF Bentham Limited (“GJW-18”) and Mr Edwards’ supplementary opinion (“GJW-19”).
It is well established that non-publication orders may be made to protect the confidentiality of legal advice tendered in support of an application for approval under s 33V of the Act: see, Wingecarribee Shire Council v Lehman Brothers Australia (in liq) (No 9) [2013] FCA 1350; (2013) 97 ACSR 227 at [104] and [105] and the cases there cited. I am satisfied that non-publication orders should be made over “GJW-13” and “GJW-19” to protect the confidentiality of the legal advice contained in those documents.
I am satisfied that “LML-1” is a confidential communication containing confidential information concerning the settlement and that the non-publication order should be extended to protect the confidentiality of that communication. Similarly, “GJW-15”, “GJW-16” and “GJW-17” are versions of the quantum schedule containing confidential information concerning the settlement, which information should be protected by a non-publication order. The entirety of Mr Whyte’s 10 July 2015 affidavit is directed to the quantum schedule and should therefore also be protected by a non-publication order.
Mr Whyte’s confidential 7 July 2015 affidavit and his 15 July 2015 affidavit appear to me to contain both confidential and non-confidential information. In my view, having regard to the unanimous consent of the group members to the settlement and the high degree of confidentiality of information concerning the settlement arising from the ongoing litigation brought by the BrisConnection receivers against Arup, the interests of justice warrant that the whole of the affidavits, including their annexures, be protected by the non-publication order.
Orders
Orders will be made substantially in accordance with the proposed short minute of orders.
I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gleeson. Associate:
Dated: 20 July 2015
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