Camping Warehouse v Downer (Application to be registered as a Registrant)
[2017] VSC 295
•2 June 2017
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
S CI 2014 1423
| CAMPING WAREHOUSE AUSTRALIA PTY LTD (ACN 097 355 578) (formerly Mountain Buggy Australia Pty Limited) | Plaintiff |
| v | |
| DOWNER EDI LTD (ACN 003 872 848) | Defendant |
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JUDGE: | Digby J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | “On the papers” having considered an application of Tulshyan Holdings Pty Ltd filed 23 May 2017 |
DATE OF JUDGMENT: | 2 June 2017 |
CASE MAY BE CITED AS: | Camping Warehouse v Downer (Application to be registered as a Registrant) |
MEDIUM NEUTRAL CITATION: | [2017] VSC 295 |
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PRACTICE AND PROCEDURE – Application for an order that a Group Member be registered for entitlement – Settlement of a group proceeding alleging breach of continuous disclosure obligations under Corporations Act 2001 (Cth), ss 674, 674(2) and 1041H – Settlement approved – Subsequent application to be registered as a Registrant in the Settlement Scheme in respect of any entitlement to a share of the distribution of the Fund established pursuant to Terms of Settlement – Supreme Court Act 1986, ss 33ZA(4) and 33ZF - Application allowed.
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The Papers:
Summons dated 22 May 2017.
Affidavit of Rajesh Shankeral Tulshyan affirmed 22 May 2017 together with exhibits “RST-1” to “RST-6”.
Letter from Elliott Legal to the Supreme Court of Victoria dated 23 May 2017.
Letter from Colin Biggers & Paisley to the Supreme Court of Victoria dated 24 May 2017, and attachments.
HIS HONOUR:
The Application
On 23 May 2017 the applicant, Tulshyan Holdings Pty Ltd (the Company), filed a Summons together with a supporting affidavit and exhibits thereto. That summons seeks an order of this Court to the effect that the Company be registered as a Registrant in relation to the Settlement Scheme established pursuant to Terms of Agreement of Settlement dated 9 February 2016 in relation to this proceeding between Camping Warehouse Australia Pty Ltd (Camping Warehouse) and Downer EDI Ltd (Downer) and thereby be eligible to any settlement entitlement in respect of distributions from the Fund referred to below.
Between 5 February 2016 and 24 October 2016 this proceeding was settled as between Camping Warehouse and Downer, subject to Court approval.
On 3 May 2016 orders were made in this proceeding, approving the above settlement and its associated Settlement Distribution Scheme. Schedule Part A of the Terms of Settlement executed on 9 February 2016 identifies and defines the relevant Fund.
Background
In March 2014 Camping Warehouse commenced proceedings on its own behalf and on behalf of group members against Downer to recover damages. Camping Warehouse claimed that such damages had been caused by Downer’s alleged failure to properly inform the Australian Stock Exchange (ASX) pursuant to the continuous disclosure provisions of the Corporations Act 2001 (Cth) which mandate continuous disclosure of materially price sensitive information to the ASX (the Camping Warehouse Proceeding). Those same provisions prohibit misleading and deceptive conduct, including under s 674(2) and s 1041H of the Corporations Act 2001 (Cth); and ASX Listing Rule 3.1 also requires continuous disclosure of certain information.
The trial of the Camping Warehouse Proceeding commenced on 2 February 2016.
On 5 February 2016, the fourth day of trial near the conclusion of opening submissions and shortly after Camping Warehouse had applied for leave to significantly amend its case, Camping Warehouse and Downer informed the Court that an in-principle settlement agreement had been reached between the parties.
On 26 February 2016, orders were made which included orders approving a Notice of Proposed Settlement to be sent to the group members and displayed on the pre-established website The Notice of Proposed Settlement informed the group members of the terms of the proposed settlement and also informed the group members of their right to object to the proposed settlement if they chose to do so.
On 29 April 2016, both Camping Warehouse and Downer applied pursuant to ss 33V and 33ZF of the Supreme Court Act 1986 (Vic) (the Act) for approval of the proposed settlement of the Camping Warehouse Proceeding (the Approval Application).[1]
[1]Plaintiff’s Summons dated 4 March 2016 and hearing 29 April 2016, including T17–18 and T21.6–11.
On 3 May 2016, following consideration of the oral submissions made on 29 April 2016 and supporting material of the parties, orders were made approving the proposed settlement pursuant to ss 33V and 33ZF of the Act. Those orders principally included the following:
Settlement Approval
1.Pursuant to sections 33V and 33ZF of the Supreme Court Act 1986 (Vic) (the Act), the Court approves the settlement of this proceeding upon the terms set out in the Terms of Agreement of Settlement (the Terms of Settlement) executed for and on behalf of the parties on 9 February 2016.
2.Pursuant to section 33ZF of the Act, the Court authorises the plaintiff, nunc pro tunc, for and on behalf of the group members and each of them, to enter into and give effect to the Terms of Settlement as an agreement duly executed by the parties according to its terms, and enter into and give effect to the transactions contemplated by the Terms of Settlement.
3.Pursuant to section 33ZB and section 33ZF of the Act, the persons affected and bound by the settlement of the proceedings be the plaintiff, the defendant and the group members.
Settlement Distribution Scheme
4.Pursuant to sections 33V and 33ZF of the Act, the provisions of the Settlement Distribution Scheme (Settlement Distribution Scheme) be approved as the procedure for distributing among the plaintiff, group members and defendant the Settlement Amount payable by the defendant pursuant to the Terms of Settlement.
Notice of Settlement Approval
5.Pursuant to section 33X of the Act, the form and content of the notice to the Settlement Distribution Scheme be approved as a notice to advise group members of the approval of the settlement of the proceedings (the Notice of Settlement Approval).
6.Pursuant to section 33Y of the Act, the Notice of Settlement Approval be given to the group members through the mechanism specified in clause 6.1 of the Settlement Distribution Scheme.
Settlement Administration
7.Pursuant to section 33ZF of the Act, Elliott Legal Pty Ltd be appointed as Administrator of the Scheme (the Administrator) and act in accordance with the rules in the Settlement Distribution Scheme.
8.Each party, and Elliott Legal Pty Ltd in its capacity as Administrator, have liberty to apply on not less than three clear business days’ notice to each party to the proceeding.
Costs inter partes
9. All costs orders made to date in the proceeding be vacated.
10.There be no order as to costs as between the plaintiff and the defendant.
Other parties
11. Pursuant to section 33V(2) and section 33ZF of the Act, the amount of:
(a)$100,000.00 be approved as the amount of the Plaintiff’s Reimbursement Claim as defined in the Settlement Distribution Scheme; and
(b)$825,000.00 be approved as the amount of the Litigation Funder’s Consideration as defined in the Settlement Distribution Scheme.
Court supervision
12.The Administrator have liberty to apply by correspondence addressed to the Associates to the Honourable Justice Digby.
13.Within 30 days after the completion of the steps referred to in clause 10 of the Settlement Distribution Scheme, the plaintiff apply to list the proceeding for final orders, including orders that the proceeding be dismissed.
The Application
The Company’s application in substance is, pursuant to ss 33ZA(4) and 33ZF of the Act, to have Tulshyan Holdings Pty Ltd registered as a Registrant in respect of the Fund, defined in the Settlement Scheme established pursuant to the Terms of Agreement of Settlement dated 9 February 2016.
Sections 33ZA and 33ZF of the Act provide as follows:
Section 33ZA - Constitution etc. of fund
(1)Without limiting the operation of section 33Z(2) , in making provision for the distribution of money to group members, the Court may provide for—
(a)the constitution and administration of a fund consisting of the money to be distributed; and
(b)either—
(i)the payment by the defendant of a fixed sum of money into the fund; or
(ii)the payment by the defendant into the fund of such instalments, on such terms, as the Court directs to meet the claims of group members; and
(c)entitlements to interest earned on the money in the fund.
(2)The costs of administering a fund are to be borne by the fund or the defendant, or by both, as the Court directs.
(3)If the Court orders the constitution of a fund mentioned in subsection (1), the order must—
(a)require notice to be given to group members in such manner as is specified in the order; and
(b)specify the manner in which a group member is to make a claim for payment out of the fund and establish the group member's entitlement to the payment; and
(c)specify a day (which is 6 months or more after the day on which the order is made) on or before which the group members are to make a claim for payment out of the fund; and
(d)make provision in relation to the day before which the fund is to be distributed to group members who have established an entitlement to be paid out of the fund.
(4)The Court may, if it is just, allow a group member to make a claim after the day fixed under subsection (3)(c) if the fund has not already been fully distributed.
(5)On application by the defendant after the day fixed under subsection (3)(d), the Court may make such orders as it thinks fit for the payment from the fund to the defendant of the money remaining in the fund.
Section 33ZF - General power of court to make orders
In any proceeding (including an appeal) conducted under this Part the Court may, of its own motion or on application by a party, make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding.
The Court’s task
The task of the Court on this application is to evaluate whether, in the exercise of its discretion, it is just in all the relevant circumstances to allow the Company to make a claim on the Fund yet to be distributed at this time.
Each application is to be considered on its own facts and individual merit, and such applications should provide details of the circumstances and reasons as to why the application should be allowed and sufficient to satisfy the Court as to the matters referred to in the last preceding paragraph.
Considerations
In this application the following factors are, in my view, relevant to the exercise of the court’s discretion under ss 33ZA(4) and 33ZF of the Act.
These factors are established by the affidavit of Rajesh Shankeral Tulshyan (Mr Tulshyan), the sole director and secretary of the Company, affirmed 22 May 2017:
(a) The Company is a Group Member in this proceeding.
(b) The Company, which was formerly known as Ankit Pty Ltd, acts as the trustee for the Tulshyan Family Trust, trades in shares listed on the Australian Stock Exchange through a Margin Lending (Loan) Account with the National Australia Bank.
(c) Between 26 February and 20 April 2010, the Company bought 44,000 shares in Downer. The Company still holds those shares.
(d) In December 2016, the Company received a document entitled “Supreme Court of Victoria - Notice to Group Members of Settlement - Downer EDI Shareholder Class Action” by ordinary post (Notice). This was the only relevant Notice the Company received about the Downer EDI Shareholder Class Action.
(e) That Notice included a Group Member Registration Form, which was to be completed and sent by the Company to the solicitors for the Administrator of the Settlement Distribution Scheme (Elliott Legal) by 4:00pm on 1 March 2017, along with specified supporting documents. The address provided for Elliott Legal was Level 2, 90 William Street, Melbourne Victoria 3000.[2]
[2]Affidavit of Rajesh Shankeral Tulshyan, Exhibit “RST-2”.
(f) That Notice gave the Company two options:
(i) Option A - to register the Company's interest in the settlement by sending a completed Group Member Registration Form to Elliott Legal by 1 March 2017; and
(ii) Option B - do nothing and thus lose any rights to claim compensation in this Class Action.
(g) The Company chose Option A.
(h) On 19 February 2017 various documents were prepared including:
(i) a completed Group Member Registration Form (the Form);
(ii) a copy of a NAB Margin Lending Account Statement for January 2010, which showed the Company did not hold any Downer shares on 12 January 2010;
(iii) a copy of a NAB Margin Lending Account Statement for May 2010, which showed the Company held 44,000 Downer shares on 31 May 2010;
(iv)a copy of three Contract Notes from Morgan Stanley Smith Barney which showed the purchases of 44,000 Downer shares by the Company; and
(v) a copy of Mr Tulshyan’s passport, Medicare card and other identity verifying documents.
(i) The required Forms were signed and placed in a sealed large yellow envelope and posted by Mr Tulshyan to Elliott Legal on 20 February 2017, as specified in the Notice and Form.
(j) At no time has the Company taken any action to opt out of the abovementioned Class Action.
(k) The Company at no time, other than as specified above, received any further notices or correspondence or notifications regarding the Class Action.
(l) On 1 May 2017, having not received any distribution or further communication from Elliott Legal for over two months, Mr Tulshyan attempted to contact Elliott Legal.
(m)Mr Tulshyan made another set of copies of all the documents sent to Elliott Legal on 20 February 2017, the Administrator defined in Order [7] of the Order of the Court made 3 May 2016, referred to in paragraph [9] above and, with a covering letter, sent them by express post to Elliott Legal.
(n) On 4 May 2017, Mr Tulshyan received an email from Elliott Legal saying they had not received the documents referred to as sent to them on 20 February 2017. Elliott Legal also advised that they proposed to refer the application to Downer for its consideration.[3]
(o) On 15 May 2017, Mr Tulshyan received an email from Elliott Legal informing him that the solicitors for Downer had stated that "it is a matter for Tulshyan Holdings Pty Ltd to move the Court by way of Summons (in this matter S CI 2014 1423) and supporting affidavit to be admitted as a registrant entitled to participate in the distribution". The email also stated that the solicitors for Downer "indicated that only when they have been served with any summons and supporting affidavit, will they obtain instructions from Downer in relation to the orders sought".[4]
[3]Ibid “RST-4”.
[4]Ibid “RST-6”.
Mr Tulshyan’s evidence establishes that he has taken all necessary steps to ensure that the documents required by the said Notice to Group Members of Settlement were provided to Elliott Legal by the date stipulated in that Notice. Further, Mr Tulshyan has established that the apparent failure of the documents referred to, to reach their destination, was caused other than through any fault of the Company.
Further, the Company’s evidence establishes that on becoming aware that the Company's potential interest in the said settlement and in the distribution of the Fund had not been registered as a Registrant in the Settlement Scheme, the Company acted promptly and took all reasonable steps to become registered.
By letter dated 23 May 2017 Elliott Legal corresponded with the Court in essence only to refute the statements made in Mr Tulshyan’s affidavit of 22 May 2017 in relation to difficulties encountered by the deponent in making contact with and providing materials to that firm. In this regard, as outlined above, I accept the evidence of Mr Tulshyan in relation to his prompt, reasonable and extensive efforts to communicate with the Administrator of the Settlement Distribution Scheme.
By letter dated 24 May 2017 the lawyers for Downer stated, inter alia, that their client was content to have the application by Summons dated 22 May 2017 dealt with “on the papers”.
By email received 26 May 2017 Elliott Legal also confirmed they have no objection to this matter being dealt with “on the papers”.
Finally, Camping Warehouse and Downer do not oppose this application.
Conclusions
In the circumstances referred to above, I am satisfied that it is just to allow this application that the Court make orders that the Company be admitted as a Registrant in respect of the Settlement Scheme established pursuant to Terms of Agreement of Settlement dated 9 February 2016 in relation to this proceeding between Camping Warehouse and Downer and thereby to be eligible to any settlement entitlement to distribution from the Fund.
Decision
For the above reasons I shall make the order sought pursuant to s 33ZA(4), or alternatively s 33ZF, of the Act.
Orders
I order that:
Pursuant to s 33ZA(4), or alternatively s 33ZF, of the Supreme Court Act 1986 that Tulshyan Holdings Pty Ltd (ACN 068 877 798), a Group Member in this proceeding, be registered as a Registrant in respect of the Settlement Scheme established pursuant to Terms of Agreement of Settlement dated 9 February 2016 in relation to this proceeding between Camping Warehouse Australia Pty Ltd and Downer EDI Ltd and thereby be eligible to any settlement entitlement to distribution from the Fund.
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