Camping Warehouse v Downer EDI Administrator's application for judicial advice
[2016] VSC 312
•6 June 2016
| IN THE SUPREME COURT OF VICTORIA AT MELBOURNE | Not Restricted |
COMMERCIAL COURT
S CI 2014 1423
BETWEEN
| CAMPING WAREHOUSE AUSTRALIA PTY LIMITED (formerly Mountain Buggy Australia Pty Ltd) (ACN 097 355 578) | Plaintiff |
| and | |
| DOWNER EDI LIMITED (ACN 003 872 848) | Defendant |
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JUDGE: | DIGBY J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | Determined on the papers |
DATE OF JUDGMENT: | 6 June 2016 |
CASE MAY BE CITED AS: | Camping Warehouse v Downer EDI – Administrator’s application for judicial advice |
MEDIUM NEUTRAL CITATION: | [2016] VSC 312 |
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PRACTICE AND PROCEDURE – Group proceedings – Orders made for approval of settlement of group proceeding – Supreme Court Act 1986 (Vic) Part 4A, ss 33V and 33ZF – Application by Administrator of Settlement Distribution Fund for judicial advice in relation to Terms of Settlement and Settlement Scheme.
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| The Papers: |
| 1. Administrator’s application for judicial advice and order dated 17 May 2016. 2. Email from Colin Biggers & Paisley Pty Ltd to the Administrator dated 13 May 2016 [2.33pm]. 3. Letter from the Administrator to Colin Biggers & Paisley Pty Ltd dated 15 May 2016. 4. Email from Colin Biggers & Paisley Pty Ltd to the Administrator dated 16 May 2016 [7.55pm]. 5. Email from the Administrator to the Court dated 18 May 2016 [6.59pm] 6. Email Colin Biggers & Paisley Pty Ltd to the Court and the Administrator dated 19 May 2016 [7.39am]. |
HIS HONOUR:
Background to the proceedings
In 2014 the plaintiff commenced a group proceeding of the type authorised by Part 4A of the Supreme Court Act 1986 (Vic) (the Act).
On 5 February 2016, the fourth day of trial and approaching the conclusion of opening submissions, Camping Warehouse Australia Pty Ltd (Camping Warehouse) and Downer EDI Limited (Downer) informed the Court that an in-principle settlement agreement had been reached between the parties.
On 26 February 2016, I made orders, inter alia, for an approved Notice of Proposed Settlement to be sent to the group members and to be displayed on the website The Notice of Proposed Settlement informed the group members of the terms of settlement and informed the group members of their right to object to the proposed settlement if they chose to do so.
Orders approving compromise
On 3 May 2016, pursuant to ss 33V and 33ZF of the Act, Court approval was given in relation to the settlement of the above proceeding on the terms set out in Terms of Agreement of Settlement (the Terms of Settlement) between Camping Warehouse and Downer, executed on 9 February 2016.
The Court orders of 3 May 2016 included an order pursuant to ss 33V and 33ZF of the Act also approving a Settlement Distribution Scheme (Settlement Distribution Scheme) in the terms annexed to those orders. The Terms of Settlement and the Settlement Distribution Scheme provided a procedure for distributing the Settlement Amount to be paid by Downer under the Terms of Settlement.
The Orders of 3 May 2016 also provided for notice of Settlement Approval pursuant to ss 33X and 33Y of the Act, and pursuant to s 33ZF of the Act also provided for the appointment of Elliott Legal Pty Ltd as Administrator of the Scheme in accordance with the Settlement Distribution Scheme.
The orders of 3 May 2016 also included the following:
Settlement Administration
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.
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.
Issues arising in relation to the construction of the Terms of Settlement and Settlement Scheme
The Administrator’s application
By application dated 17 May 2016, the Administrator, Elliott Legal Pty Ltd (the Administrator) seeks judicial advice as to the construction of the Terms of Settlement and Settlement Scheme approved on 3 May 2016.
The Administrator’s application is in the following terms:
2.The two Trustees of the Fund, being the Administrator and the defendant’s solicitors, disagree as to whether the Terms of Settlement and Settlement Scheme:
(i)permit the payments to the plaintiff and litigation funder to be paid from the Fund immediately; or
(ii)require the Trustees to retain those sums until after the making of an Interim Distribution (Settlement Scheme cl 9) and prior to the making of the Final Distribution (Settlement Scheme cl 10).
3.The Administrator now seeks:
(i)judicial advice as to which of the above stated constructions, or any alternative construction, of the Terms of Settlement and Settlement Scheme the Trustees should adopt; and
(ii)an order to permit the Administrator’s costs of this application on an indemnity basis from the residue of the Fund which would otherwise be returned to Downer pursuant to cl 10 of the Settlement Scheme on or before 31 December 2017.
By exchange of correspondence filed with the Court in relation to the Administrator’s application, the parties have confirmed that they are agreeable to that application being determined on the papers and that they do not seek to rely on materials beyond those defined correspondence.[1] The parties have also confirmed their view that no other party or person in addition to the defendant need be notified of the subject application.
[1]Subparagraphs 1, 2 and 3 of the emails from Colin Biggers & Paisley Lawyers of 19 May 2016 [7.39am] and Elliott Legal Pty Ltd dated 18 May 2016 [6.59pm].
The materials relied upon by the parties in relation to the Administrator’s Application of 17 May 2016, in addition to that Application and the Orders of 3 May 2016 and attachments are CPB’s email to the Administrator dated 13 May 2016 [2.33pm], letter from the Administrator to CPB dated 15 May 2016, email from CPB to the Administrator dated 16 May 2016 [7.55pm], the Administrator’s email to the Court dated 18 May 2016 [6.59pm] and CBP’s email to the Court and the Administrator dated 19 May 2016 [7.39am].
The Court’s power to deal with the issues raised by the Administrator and the defendant
The provisions of the Act Part 4A Division 2 dealing with Group Proceedings includes the following provisions in relation to the settlement and discontinuance of a group proceeding:
33V(i) A group proceeding may not be settled or discontinued without the approval of the Court.
(ii) If the Court gives such approval, it may make such orders as it thinks fit with respect to the distribution of any money, including interest, paid under a settlement or paid into Court.
Further, in relation to the general power of the court to make orders in any group proceeding the Act provides:
33ZFIn 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 orders made on 3 May 2016 in this proceeding, including by Order [1], approve Terms of Settlement which in turn contemplate a relatively lengthy administration of the agreed Scheme of Settlement between the parties in this Group Proceeding.
Order [8] provides for ongoing liberty to each party and to the Administrator to apply to the Court. Order [12] also expressly provides for liberty to the Administrator to apply to the Court in relation to matters including the proceedings, the settlement and its approval, and the administration of the Settlement Distribution Scheme.
Further, the terms of the Settlement Scheme agreed by the parties provides in clause 12.1 that the Administrator may refer any issue arising in relation to the Settlement Scheme or the administration of the Settlement Scheme to the Court for determination.
Accordingly, in my view, the Court has, and will until final orders continue to have, power to provide advice, make rulings, decisions and appropriate orders, as it thinks fit, in connection with these proceedings, the approved Terms of Settlement, and their operation, and in respect of and in connection with the orders made on 3 May 2016 and the administration of the Settlement Distribution Scheme.
The parties’ contentions in relation to the Administrator’s Application
The Administrator’s application
The Administrator defines the dispute between the Trustees of the Fund, namely, itself as Administrator, and the defendant’s solicitors Colin Biggers & Paisley, as to whether the Terms of Settlement and the Settlement Scheme:
(a) permit the immediate payment to the plaintiff of the plaintiff’s reimbursement payment and the Litigation Funder of the Litigation Funder’s Consideration referred to in the Terms of Settlement and the Settlement Scheme from the Fund; or
(b) require the Trustees to retain those sums until after the making of an Interim Distribution (Settlement Scheme Clause 9) and prior to the making of the Final Distribution (Settlement Scheme Clause 10).
The plaintiff’s Reimbursement Claim is in the sum of $100,000 (PRC) and the Litigation Funder’s Consideration is in the sum of $825,000 (LFC).
The Administrator seeks judicial advice as to whether the above alternative constructions, or perhaps a further alternative construction of the Terms of Settlement and the Settlement Scheme should be adopted and implemented by the Trustees.
Further, the Administrator seeks an order permitting the Administrator’s costs of the Administrator’s Application of 17 May 2016 to be paid on an indemnity basis from the residue of the Fund, which would otherwise be returned to Downer on or before 31 December 2017 pursuant to clause 10 of the Settlement Scheme.
I address Downer’s position first because its communication on 13 May 2016 to the Administrator first raised the issues sought to be resolved by the Administrator’s Application.
The Defendant’s Submissions
The defendant contends that:
(a) Order [11] of the Orders made 3 May 2016 which approved payment of the PRC and the LFC did not specifically deal with the timing of those payments. The parties’ approved Settlement Distribution Scheme provided for the procedure for distributing the Settlement Amount payable from the Fund;
(b) the Settlement Distribution Scheme in clause 10 deals with the payment of the PRC and the LFC amounts prior to the Final Distribution of the Fund;
(c) clauses 9 and 10 of the Settlement Distribution Scheme were contained in the original draft of that Scheme. Clause 10, which deals with Final Distribution, is a provision which follows the Interim Distribution provisions under clause 9 of the Scheme, which distributions occur at a date not earlier than six months following the Settlement Approval Date;
(d) if it had been intended by the parties that the PRC and the LRC were to be paid immediately after the establishment of the Fund, the terms of settlement and/or the Orders sought by the parties could have so provided;
(e) given the terms of the Settlement Distribution Scheme referred to above, and in particular the language of clauses 9 and 10, a Court order would be required to authorise the payment of the PRC and the LFC immediately after payment of the subject settlement monies into the Fund and before the Interim Distributions contemplated in clause 9 of the Settlement Distribution Scheme;
(f) payment in the near future of out of the Fund of the PRC and the LFC would deny the Fund the opportunity to earn interest on that large sum of $925,000 for a period in excess of at least five months;
(g) there are some circumstances, including statements made in argument by the plaintiff’s counsel on the approval application, which indicate that it was intended that the interest earned on the PRC and the LFC until, at least a point in time when Interim Distributions were made pursuant to clause 9 of the Settlement Distribution Scheme, would generate interest on the Fund monies and thereby in turn fund or partially fund the administration expenses for each shareholder;[2]
(h) it is conceded by the defendant that the amount of $0.66 per share referred to in the Settlement Approval Notice was estimated without the allowance of any sum for interest earned on the Fund. The defendant also concedes that the calculation of the said amount of $0.66 per share referred to in the Settlement Approval Notice did not factor in the cost of administration services to each class member which is also payable out of the Fund;
(i) if the Fund included the amounts of the PRC and the LFC, that Fund would generate interest which would probably pay for the administration fees in respect of many thousands of shareholders.
[2]See transcript 34.17, page 38.
The Administrator’s Submissions
The Administrator contends that:
(a) the purpose and proper interpretation of the Settlement Scheme is reflected in clause 1.4 of that Scheme which provides that:
The operative provisions of this Settlement Scheme are set out below and they should be read and interpreted in conjunction with the Terms of Settlement and to give effect to the Terms of Settlement. Accordingly the Terms of Settlement are paramount;
(b) the Trustees, which includes the defendant’s solicitors, are bound by clause 6 of the Terms of Settlement which provides that:
Each party must do anything necessary (including executing agreements and documents) to give full effect to these Terms. Without limiting the foregoing, the Parties will progress the filing material and any Appeal with all reasonable expedition. Each party will perform its obligations under the settlement promptly;
(c) the obligations created by clause 6 of the Terms of Settlement extend to Downer’s solicitor in the performance of its role as Trustee of the interest bearing account which holds the Fund;[3]
[3]Terms of Settlement Schedule (B) 2(a).
(d) depending on the extent to which Downer’s solicitor did not perform its role as Trustee promptly, or to give full effect to the Terms of Settlement, a new cause of action may arise against Downer;
(e) the Fund is specifically intended to bear administration costs, including Elliott Legal’s estimated ongoing administration costs, Elliott Legal’s reasonable fees for contact with the class, the reimbursement payable to the plaintiff, the sum payable to BSL Litigation Partners Limited, and the indemnification of the Trustees in respect of tax liabilities;[4]
[4]Terms of Settlement Schedule (A)(5).
(f) no time for payment of the sums mentioned in (e) above is referred to in the Terms of Settlement, however there is a clear implication, in the Administrator’s submission, that the costs will be paid as and when they are due and payable;[5]
[5]Note under (A)(5) Elliott Leal’s fees for contact with the class are payable monthly.
(g) Elliott Legal Pty Ltd is not in a position to fund the work required to be undertaken by the Administrator on the basis that it will not be until late 2017 that the defendant will accede to the payment of administration fees and fees for contacting the class;
(h) the only payments in respect of which there is a specific time for payment under the Terms of Settlement and/or the Settlement Scheme are the Interim and Final distribution payments to class members and the return of the balance of the Fund to the defendant, which must be complete on or before 31 December 2017;[6]
[6]Terms of Settlement Schedule (C) (1); Settlement Scheme clauses 9 and 10.
(i) clause 10 of the Settlement Scheme is specifically directed to giving priority to the payments to the Litigation Funder, the plaintiff, and the Administrator over payments made to class members, and thereby protects the achievement of the objectives of the Terms of Settlement;
(j) clause 10 of the Settlement Scheme contemplates that such payments will be made “prior to” distribution to class members and that clause does not impose a “not before” date.
(k) there is no basis for an implication that any of the payments must be delayed until after the payment of any Interim Distribution (clause 9) particularly given that the Administrator has sole discretion as to whether any Interim Distribution is paid and given that the Litigation Funder and the plaintiff are not “Registrants with a completed Assessment”, as contemplated by the clause;
(l) in the circumstances, payments for administration costs and the costs of contacting group members, payment to the plaintiff and payment to the Litigation Funder should be approached as payments to be made as and when they are due and payable;
(m)given that the Court has approved each of the payments referred to it is appropriate that payments to the plaintiff and the Litigation Funder be made now and that the administration costs be paid on an ongoing monthly basis.
The Administrator’s letter of 15 May 2016 states that because the defendant’s solicitors disagree with the Administrator’s view of the payment regime to be inferred from the Terms of Settlement and the Settlement Scheme and further because that disagreement is raised in the face of the plain meaning of the Terms of Settlement and the Settlement Scheme, the Administrator seeks indemnity costs in relation to its Application (if successful), such costs to be drawn on the Fund and in particular from the residue which would otherwise be paid to Downer, rather than by way of diminution of the sums payable to class members under the settlement.
The Defendant’s Reply Submissions
In response to the above Downer’s solicitors clarify their position as follows:
(a) there is no dispute that Elliott Legal Pty Ltd, as Administrator, is entitled to the monthly administration payments as they are incurred each month;
(b) moneys may be held in a call account to meet these payments as they are incurred each month;
(c) the PRC and the LFC amounts are not in the nature of administration fees;
(d) the only issue is the timing of the payment of the PRC and the LFC;
(e) the Administrator is to act in accordance with the rules of the Settlement Distribution Scheme (Order 7 of the orders of 3 May 2016);
(f) the Settlement Distribution Scheme, by clause 10, provides that the PRC and the LFC are to be paid prior to final distribution;
(g) however, if it was intended that the PRC and the LFC were to be paid on the first day after the Settlement Fund is established, express provision to that effect would have been made in the agreements between the parties and or the agreed Court Orders and probably in particular in clause 10 of the Settlement Distribution Scheme;
(h) the plaintiff’s submissions at the time of the parties’ application for approval of the compromise the parties had reached, and in relation to interest, inferred that the payment of the PRC and the LFC were intended to be made at a time later than the first day of the establishment of the Settlement Fund in order that a greater sum of interest accrued “than otherwise would be the case if payment was made out straight away”;[7]
(i) the defendant’s solicitors do not dispute that the Administrator’s costs of it seeking clarification by its Application dated 17 May 2016 should be paid from the Fund and that such costs should be indemnified from the Fund.
[7]T34.17.
Terms of Settlement
The Terms of Settlement dated 9 February 2016, Attachment 1 to the Orders of 3 May 2016, inter alia includes the following terms:
1.1Proposed Orders means orders giving effect to the terms of settlement set out in the Schedule.
2.2Hearing of the approval Application
The Parties will:
(a)consent to the Proposed Orders in the Proceeding, save that the Defendant will neither consent to nor oppose the orders sought in respect of items A5(c) and (d) in the schedule to these Terms; and
(b)appear at the hearing of the Proceeding and will in good faith make every endeavour to support the making of the Proposed Orders, save that the Defendant will neither consent to nor oppose the orders sought in respect of items A5(c) and (d) in the schedule to these Terms.
6Further Assurances
Each party must do anything necessary (including executing agreements and documents) to give full effect to these Terms. Without limiting the foregoing, the Parties will progress the filing of material and any appeal with all reasonable expedition. Each party will perform its obligations under the settlement promptly.
The Schedule to the Terms of Settlement contains the following Schedule:
Schedule
(A) Size of Fund
3.
Payment to be made by Downer EDI into the Fund
$8,250,000 payable within 21 days of court approval to this settlement arrangement
5.
Inclusive of ongoing Fund administration costs
a. Elliott Legal’s estimated ongoing costs involved in the administration of the Fund — $25,000 per calendar month, inclusive of GST and inclusive of out-of-pocket expenses, until 31 December 2017
b. Elliott Legal’s reasonable fees for contact with class and provision of administration services to each class member payable out of the Fund — agreed as $22 per shareholder per annum inclusive of GST payable monthly in respect of each shareholder on a pro-rated basis up to and including the month in which the funds clear for each individual shareholder or 31 December 2017, whichever occurs first
c. $100,000 payable to the plaintiff in respect of reimbursement of the plaintiff’s reasonable costs.
d. $825,000 payable to BSL Litigation Partners Limited (the plaintiff’s litigation funder).
e. Indemnification of Trustees in respect of tax liabilities.
f. Downer’s costs involved in the administration: to be borne by Downer.
g. Interest earned on the Fund to accrue to the Fund net of tax
(B) Where is the Fund paid?
2.
Interest bearing account
a. Who is the Trustee: Elliott Legal Pty Ltd and Downer’s solicitors on trust for both parties to the litigation.
c. Who gets the benefit of the interest if not used towards payment of administration of the Fund: the Fund itself (of which Downer is the residual beneficiary).
(C) Administration of the Fund
1.
Duration
(a) Investigation of the size of the class and the search to identify all class members to be completed by 30 September 2016.
(b) Payments to members to be completed by 30 September 2017.
(c) On or before 31 December 2017, the balance of the Fund (including any accrued interest) unpaid to identified class members (for any reason, incl. inability to trace address etc.) will be repaid to Downer.
Settlement Scheme
The Settlement Scheme, Attachment 2 to the Orders of 3 May 2016 provides as follows:
1.3This Settlement Scheme provides for the following major steps:
(e)The Administrator will deduct from the Settlement Distribution Fund the Litigation Funder’s Consideration, the Plaintiff’s Reimbursement Payment, and the Administration Costs (clause 10.1).
1.4The operative provisions of this Settlement Scheme are set out below and they should be read and interpreted in conjunction with the Terms of Settlement and to give effect to the Terms of Settlement.
2.1Administration Costs means the costs and disbursements incurred by Elliott Legal Pty Ltd agreed in the sums set out in the Terms of Settlement – Conditions Part A(5), subject to Court approval, in connection with administering the Settlement Scheme.
Settlement Approval Notice means the notice at Annexure A.
4.Settlement Scheme Administrator
4.1The Settlement Scheme shall be administered and applied by Elliott Legal Pty Ltd as Administrator.
4.2In acting as Administrator (including any incidental functions), the Administrator:
(a)will administer this Settlement Scheme fairly and reasonably according to its terms, with its duty owed to the Court to take priority over any obligation to any individual Registrant;
4.5Following Settlement Approval and payment of the Settlement Sum into the Settlement Distribution Fund, the Administrator and Downer’s solicitors shall hold jointly the monies standing from time to time in the Settlement Distribution Fund on trust for Registrants, with Downer as the residuary beneficiary of the trust, subject to and in accordance with the terms of this Settlement Scheme.
4.6In consideration of the provisions made by the Terms of Settlement and this Settlement Scheme regarding the payment of Administration Costs, Elliott Legal Pty Ltd undertakes not to seek to recover from the Settlement Sum, the Settlement Distribution Fund or from any individual Group Member any costs incurred in connection with the Claims of the individual Group Member, except as otherwise provided in this Settlement Scheme and the Terms of Settlement. All such costs whether incurred prior to Settlement Approval or after Settlement Approval shall form part of the Administration Costs.
9. Interim Distribution
9.1At a date not earlier than six (6) months following the Settlement Approval Date, the Administrator may at its absolute discretion make interim Distributions from the Settlement Distribution Fund to those Registrants with completed Assessments.
9.2The Administrator: may make interim Distributions progressively as claims are resolved, or in tranches; and
(a)may vary the proportions at which interim Distributions are paid, for all Registrants or for particular groups of Registrants;
as the Administrator deems appropriate.
9.3The proportion at which interim Distributions may be paid pursuant to clause 9.1:
(a)shall be determined by the Administrator having regard to the imperative to retain sufficient funds to pay pending Assessments, Administration Costs and indemnities; and
(b)for any Registrant whose Assessment Value is in excess of $1,000,000, shall not exceed 80% of the Registrant’s Assessment Value.
10 Final Distribution
10.1Prior to any final Distribution from the Settlement Distribution Fund to Registrants, the following payments shall be made from the Settlement Distribution Fund:
(a)an amount to BSL Litigation Partners Limited for the Litigation Funder’s Consideration;
(b)an amount to the Plaintiff for the Plaintiff’s Reimbursement Payment;
(c)an amount to the Administrator for Administration Costs incurred by the Administrator and approved by the Court.
10.2Once the payments referred to in clause 10.1 are made, the amount in the Settlement Distribution Fund shall then be distributed as follows:
(a)from the balance remaining of the Residual Settlement Amount, there shall be distributed to Registrants a final Distribution so that each Registrant receives in total from all Interim Distributions and the final Distribution a sum equal to the Final Assessment;
(b)the remainder of the Settlement Distribution Fund shall be distributed to Downer or at its direction by a date not later than 31 December 2017.
Annexure A – Settlement Approval Notice
The terms of the Settlement Approval Notice, Annexure A to the Settlement Scheme states:
Payments from the settlement fund will be made after deduction of administration costs and any other payments approved by the Court.
Orders made 3 May 2016
The orders made on 3 May 2016 include the following:
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.
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.
Considerations
Power to decide and/or advise in relation to the Application of 17 May 2016
The Court’s power to determine and/or advise the parties in relation to the above questions which have arisen concerning the meaning and effect of the Orders of 3 May 2016, the Terms of Settlement and the Settlement Scheme, is clear on the bases identified above.[8]
[8]Reasons [7(12)], [12 (of the Act s 33ZF)], [14] and [15].
The proper construction of the Terms of Settlement and the Settlement Scheme
The Terms of Settlement, Schedule A5(c) and (d), and clauses 1.3(e), 10.1 and the Settlement Approval Notice [“Settlement”, unnumbered paragraph 3][9] read together and as part of the overall Terms of Settlement and Settlement Scheme in my view reflect the parties’ intent that the Trustees are entitled and obliged to deduct the specified amount of the LFC and the PRC (Settlement Scheme 1.3(e)), identified in the Terms of Settlement, Schedule A(5)(c) and (d), and pay such sums to the plaintiff and BSL Litigation Partners Limited (BSL) promptly (Terms of Settlement Clause 6), and before any final distribution for the Settlement Fund (Settlement Scheme, Clause 10.1).
[9]I consider that certain parts of the Settlement Approval notice, which form part of the Settlement Scheme, including unnumbered paragraph three under the heading “Settlement” in the Settlement Scheme are of relevance and assistance in the task of objectively discerning the intent of the parties as to the payment regime established by the documents which comprised the terms of their settlement. (See: Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640, [35].
Further, by clear implication and practical necessity, the PRC and LFC sums of $100,000 and $825,000 respectively, are not payable by the Trustees to the plaintiff and BSL before the receipt of the Fund from Downer in the sum of $8,250,000, which in turn was to be paid by Downer within 21 days of Court approval of the settlement between the parties (Terms of Settlement, Schedule A(3)).
Otherwise, the PRC and the LFC are, in my view, to be paid within a reasonable time and promptly, prior to other payments from the Settlement Fund (Terms of Settlement Clause 6, Settlement Scheme Clause 1.3(e) and Clause 10.1 and Settlement Approval Notice, “Settlement” unnumbered paragraph 3).[10]
[10]Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at 199 [40].
In the commercial and legal setting in which the subject settlement was entered into, which included the parties’ agreement that substantial sums, including the substantial sums representing the PRC and LFC, were payable, but which also included the parties’ omission to expressly stipulate a precise time for payment in my view an implied term is to be inferred that such payments would be made by the Trustees to the plaintiff and BSL Litigation Partners Ltd, within a reasonable time.[11]
[11]B.P. Refinery (Westernport) Pty Limited v Shire of Hastings 180 CLR 266 at 282-3.
I see no basis for an implication that the payment of the PRC and the LFC is to be delayed until “some later time”, as contended for by the defendant. Such an implication would also be forlorn for uncertainty.
I also consider that the parties to the Terms of Settlement intended that substantial sums of money agreed to be “payable” (Terms of Settlement, Schedule A(5)(c) and (d)), absent a clear contrary stipulation, would be payable within a reasonable time after the establishment of the Fund from which they were to be paid, particularly given that those payments, it can be discerned, were in respect of time and expenditure, spent and incurred.
Further, I consider that the obligation imposed on the parties, including the Trustees to perform their obligations under the Terms of Settlement “promptly” is consistent with and bolsters the above implication of a term that the plaintiff and BSL were to be paid the PRC and the LFC within a reasonable time.
In my view, in the circumstances to which I have referred, a reasonable and prompt time for payment by the Trustees to the plaintiff and BSL is within 30 days after the establishment of the Fund.
The defendant’s argument that the Terms of Settlement and Settlement Scheme was one by which the parties intended that the payment of PRC and LFC would be made after some time, and arguably after the Interim Distribution, so as to generate enough interest from the corpus of the Fund (which would on that scenario be $925,000 larger) finds no support in the above express Terms of Settlement and incorporated documents agreed by the parties. In this regard I do not consider that the informal statements made by the plaintiff’s senior counsel, arguably to the general effect of this argument by the defendant, to be probative or instructive as to the proper construction or operation of the terms of the parties’ settlement on 9 February 2016.
Costs
I consider that the Administrator should be indemnified in relation to its legal costs incurred in making the application dated 17 May 2016 and that such costs be paid from the Fund. Such indemnification is appropriate because the plaintiff’s application has proved to be necessary and also because the parties expressly contemplated that the Administrator may need to apply to the Court in relation to the Settlement Scheme [Settlement Scheme 12.1], and thereby in effect agreed to such on application being made.
At all events, Downer concedes that the Administrator’s costs of the subject application should be paid to the Administrator and that such costs should be indemnified from the Fund.
I reject however as unjustified in the circumstances, including by the stance the defendant has taken on this application, which in my view was reasonable, that the Administrator’s costs should be recoverable on other than a standard basis.
Conclusion
Accordingly, I find, declare and order that:
1.The Trustees of the Fund make payment of the PRC and LFC to the plaintiff and litigation funder BSL within 30 days of the establishment of the Fund.
2.The Administrator recover the Administrator’s costs of this application on a standard basis from the residue of the Fund which would otherwise be returned to the defendant pursuant to clause 10 of the Settlement Scheme on or before 31 December 2017.
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