Cantor v Audi Australia Pty Limited (No 5)
[2020] FCA 637
•1 April 2020
FEDERAL COURT OF AUSTRALIA
Cantor v Audi Australia Pty Limited (No 5) [2020] FCA 637
File numbers:
NSD 1307 of 2015
NSD 1308 of 2015
NSD 1459 of 2015
NSD 1472 of 2015
NSD 1473 of 2015
Judge:
FOSTER J
Date of Orders:
1 April 2020
Date of publication of Reasons:
13 May 2020
Catchwords:
CONSUMER LAW – representative proceedings – whether the Court should approve the settlement of five class actions brought under Pt IVA of the Federal Court of Australia Act 1976 (Cth) in which Australian purchasers of Volkswagen-branded, Audi-branded and Skoda-branded diesel-powered motor vehicles sued for (inter alia) compensation for loss and damage allegedly suffered by them as a consequence of the respondents (Volkswagen Aktiengesellschaft and certain of its related corporations) installing illegal sophisticated two-mode software in the engines of such vehicles designed to circumvent Australian emissions standards in respect of NOx – whether, in addition, the Court should make a common fund order either at the instigation of the litigation funder of two of those class actions or at the instigation of the applicants in those two class actions – whether, in the event that the Court declines to make any common fund order, the Court should make a funding equalisation order in respect of percentage commission payments and project management fees which a small number of group members in the classes specified in two of those class actions agreed to make to that litigation funder
Legislation:
Australian Consumer Law, ss 18, 29(1), 54(1) and 106(1)
Civil Procedure Act 2005 (NSW), ss 165, 166, 173 and 183
Competition and Consumer Act 2010 (Cth), Sch 2
Evidence Act 1995 (Cth), s 135
Federal Court of Australia Act 1976 (Cth), ss 17, 20(1A), 23, 33C, 33M, 33N, 33V, 33Z, 33ZB, 33ZF, 37AF and 37AG
Motor Vehicle Standards Act 1989 (Cth), ss 5, 7, 10A, 14 and 18
Trade Practices Act 1974 (Cth), ss 52, 53(a), 53(c), 65C(1) and 74D
Federal Court Rules 2011, r 9.05
Australian Design Rule 79—Emission Control for Light Vehicles
United Nations Economic Commission for Europe Regulation 83, Uniform Provisions Concerning the Approval of Vehicles with Regard to the Emission of Pollutants According to Engine Fuel Requirements
18 U.S.C. §371
18 U.S.C. §542
18 U.S.C. §1343
18 U.S.C. §1512(c)
42 U.S.C. §7413(c)(2)(A)
Cases cited:
Australian Competition and Consumer Commission v Volkswagen Aktiengesellschaft [2019] FCA 2166
Andrews v Australia and New Zealand Banking Group Limited [2019] FCA 2216
Australian Competition and Consumer Commission v Cascade Coal Pty Ltd (No 4) [2018] FCA 1243
Australian Securities and Investments Commission v Richards [2013] FCAFC 89
Blairgowrie Trading Ltd v Allco Finance Group Ltd (In Liq) (2015) 325 ALR 539
Blairgowrie Trading Ltd v Allco Finance Group Ltd (Receivers and Managers Appointed (In Liq) (No 3) (2017) 343 ALR 476
BMW Australia Ltd v Brewster (2019) 366 ALR 171
BMW Australia Ltd v Brewster (2019) 374 ALR 627
Camilleri v The Trust Company (Nominees) Limited [2015] FCA 1468
Caason Investments Pty Ltd v International Litigation Partners No 3 Ltd (2018) 265 FCR 487
Central Railroad & Banking Co of Georgia v Pettus 113 U.S. 116 (1885)
Clime Capital Limited v UGL Pty Limited [2020] FCA 66
Clime Capital Limited v UGL Pty Limited (No 2) [2020] FCA 257
Crossley and Ors v Volkswagen Aktiengesellschaft and Ors [2020] EWHC 783 (QB)
Evans v Davantage Group Pty Ltd (No 2) [2020] FCA 473
Farey v National Australia Bank Ltd [2014] FCA 1242
Fisher (Trustee for the Tramik Super Fund Trust) v Vocus Group Limited (No 2) [2020] FCA 579
Haselhurst v Toyota Motor Corporation Australia Ltd (t/as Toyota Australia) [2020] NSWCA 66
Inabu Pty Ltd as trustee for the Alidas Superannuation Fund v CIMIC Group Limited [2020] FCA 510
Kelly v Willmott Forests Limited (In Liq) (No 4) (2016) 335 ALR 439
Lenthall v Westpac Banking Corporation (No 2) [2020] FCA 423
Lifeplan Australia Friendly Society Limited v S&P Global Inc [2018] FCA 379
McKay Super Solutions Pty Ltd (Trustee) v Bellamy’s Australia Ltd (No 3) [2020] FCA 461
McKenzie v Cash Converters International Ltd (No 3) [2019] FCA 10
McMullin v ICI Australia Operations Pty Ltd (1998) 84 FCR 1
Modtech Engineering Pty Ltd v GPT Management Holdings Ltd [2013] FCA 626
Money Max Int Pty Ltd v QBE Insurance Group Ltd (2016) 245 FCR 191
National Bolivian Navigation Company v Wilson (1880) 5 App Cas 176
Pathway Investments Pty Ltd v National Australia Bank Ltd (No 3) [2012] VSC 625
Pearson v State of Queensland (No 2) [2020] FCA 619
Rushleigh Services Pty Ltd v Forge Group Limited (In Liq) (Receivers and Managers Appointed) [2019] FCA 2113
Trustees v Greenough 105 U.S. 527 (1881)
Westpac Banking Corporation v Lenthall (2019) 265 FCR 21
Date of hearing:
26 March 2020
Date of last submissions:
31 March 2020
Registry:
New South Wales
Division:
General Division
National Practice Area:
Commercial and Corporations
Sub-area:
Regulator and Consumer Protection
Category:
Catchwords
Number of paragraphs:
476
Counsel for the Applicants in NSD 1307 of 2015 and NSD 1308 of 2015:
Dr P Cashman and Mr R White
Solicitor for the Applicants in NSD 1307 of 2015 and NSD 1308 of 2015:
Bannister Law
Counsel for the Applicants in NSD 1459 of 2015, NSD 1472 of 2015 and NSD 1473 of 2015:
Mr CA Moore SC, Mr AM Hochroth and Ms J Taylor
Solicitor for the Applicants in NSD 1459 of 2015, NSD 1472 of 2015 and NSD 1473 of 2015:
Maurice Blackburn Lawyers
Counsel for the Respondents in NSD 1307 of 2015, NSD 1308 of 2015, NSD 1459 of 2015, NSD 1472 of 2015 and NSD 1473 of 2015:
Mr G Rich SC and Mr IJM Ahmed
Solicitor for the Respondents in NSD 1307 of 2015, NSD 1308 of 2015, NSD 1459 of 2015, NSD 1472 of 2015 and NSD 1473 of 2015:
Clayton Utz
Counsel for Grosvenor Litigation Services Pty Ltd:
Mr L Armstrong QC and Mr EL Olivier
Solicitor for Grosvenor Litigation Services Pty Ltd:
Corrs Chambers Westgarth
Counsel for the Independent Contradictors:
Mr N Owens SC and Mr R Yezerski
Objectors:
Mr A Loy and Mr M Tehan both appeared and Mr I Hepburn observed
Table of Corrections
25 May 2020
In the first sentence of paragraph 232, the words “the interests of” have been inserted after the words “fair and reasonable having regard to” and before the words “the class members as a whole”.
25 May 2020
In the first sentence of paragraph 334, “s 23ZF” has been replaced with “s 33ZF”.
25 May 2020
At the end of paragraph 340, “(s 183)” has been replaced with “(s 173)”.
ORDERS
NSD 1307 of 2015
BETWEEN:
RICHARD CANTOR
Applicant
AND:
AUDI AUSTRALIA PTY LIMITED (ACN 077 092 776)
Respondent
JUDGE:
FOSTER J
DATE OF ORDER:
1 APRIL 2020
THE COURT ORDERS THAT:
1. Confidential Material means the information and evidence in:
(a) Paragraphs 5 to 27 of the confidential affidavit of Julian Klaus Schimmel affirmed on 10 December 2019 and filed in proceedings NSD1459 of 2015, NSD1472 of 2015 and NSD1473 of 2015 (together, the MB proceedings) and Annexure 2 to the Deed of Release and Settlement comprising Annexure JK-67 to the said affidavit;
(b) Annexure 2 to the Deed of Release and Settlement in Annexure JKS-68 to the confidential affidavit of Julian Klaus Schimmel affirmed on 20 March 2020 and filed in the MB proceedings;
(c) The Settlement Payment Methodology specified in Annexure JKS-69 to the confidential affidavit of Julian Klaus Schimmel affirmed on 20 March 2020 and filed in the MB proceedings;
(d) The expert report of Terence Michael Potter dated 20 March 2020 including all appendices and relied upon in the MB proceedings;
(e) Confidential exhibit AGR-1 to the affidavit of Alexandra Gay Rose sworn on 24 March 2020 and filed in the MB proceedings;
(f) Paragraphs 3.1(2) and (3), 6.1 to 6.25 and Annexure A to the expert report of Abe Tomas dated 20 March 2020 and relied upon in the MB proceedings and the letter of instruction from Maurice Blackburn Pty Ltd (Maurice Blackburn) to Mr Tomas; and
(g) The confidential affidavit of Gregory John Williams sworn on 25 March 2020.
2. Confidential Settlement Evidence means:
The confidential opinion of the applicant’s Counsel dated 20 March 2020.
3. VW WO Data means the following information from the National Exchange of Vehicle and Driver Information System (NEVDIS) contained in the spreadsheet entitled SR1727_data.xlsx:
(a) Vehicle Information Number (VIN);
(b) Write-Off Status; and
(c) Write-Off Date.
4. Skoda WO Data means the following information from NEVDIS contained in the spreadsheet entitled SR1726_data.xlsx:
(a) Vehicle Information Number (VIN);
(b) Write-Off Status; and
(c) Write-Off Date.
5. Audi WO Data means the following information from NEVDIS contained in the spreadsheet entitled SR1965.xlsx:
(a) Vehicle Information Number (VIN);
(b) Write-Off Status; and
(c) Write-Off Date.
6. Pursuant to s 33V of the Federal Court of Australia Act 1976 (Cth) (the Act), the settlement of this proceeding be approved upon the terms set out in:
(a) The Deed of Release and Settlement comprising Annexure JKS-68 to the confidential affidavit of Julian Klaus Schimmel affirmed on 20 March 2020 and filed in the MB proceedings (Settlement Deed);
(b) The Settlement Scheme (version 2) comprising Annexure JKS-71 to the affidavit of Julian Klaus Schimmel affirmed on 20 March 2020 and filed in the MB proceedings (Settlement Scheme); and
(c) The Settlement Payment Methodology comprising Annexure JKS-69 to the confidential affidavit of Julian Klaus Schimmel affirmed on 20 March 2020 and filed in the MB proceedings.
7. Pursuant to s 33ZF of the Act, the applicant be authorised, nunc pro tunc, to enter into and give effect to the Settlement Deed for and on behalf of all Group Members (being those persons who meet the definition of group members as set out in the Third Further Amended Statement of Claim filed herein on 18 September 2017 [which definition is set out in the Schedule to these Orders] and who did not opt out of this proceeding).
8. Pursuant to s 33ZB(a) of the Act, the persons affected and bound by the settlement are the parties to the Settlement Deed and Group Members.
9. Pursuant to s 33V(2) and s 33ZF of the Act:
(a) The payment to Richard Cantor of AUD20,000 be approved as a Lead Applicant Reimbursement Payment (as defined in clause 1.1 of the Settlement Deed) and be paid by the respondents in accordance with clause 5.2 of the Settlement Deed.
(b) The Bannister Law component of the Applicants’ Reasonable Costs (as defined in clause 1.1 of the Settlement Deed) be approved in the amount verified as reasonable in respect of the period up to and including 29 February 2020 in the report of Ian Ramsey-Stewart dated 20 March 2020 and filed in the MB proceedings and be paid in accordance with clause 5.1 of the Settlement Deed.
(c) The payment to the applicant in this proceeding and the applicant in proceeding NSD1308 of 2015 jointly of the amount of AUD752,844 being the total of the premiums payable under and for the Bannister Law Applicants’ ATE insurance described in clauses 1.1 and 5(b) of the Settlement Deed be approved.
10. Pursuant to s 33ZF of the Act, Maurice Blackburn be appointed as the Administrator of the Settlement Scheme.
11. The proceeding be dismissed:
(a) With no order as to costs and with all previous costs orders vacated;
(b) Without prejudice to parties’ or the Administrator’s liberty to relist the matter for the purpose of seeking orders consequential to the Settlement Deed and/or the Settlement Scheme, and, to this end, pursuant to r 9.05 of the Federal Court Rules 2011 the Administrator be joined as a party to this proceeding for the limited purpose of exercising such liberty; and
(c) With the dismissal of the proceeding to take effect upon completion of the administration of the settlement.
12. Pursuant to s 37AF and s 37AG(1)(a) of the Act, until further order, on the ground that the order is necessary to prevent prejudice to the proper administration of justice, the Confidential Settlement Evidence:
(a) Be treated as confidential;
(b) To the extent that such material is held by the Court in paper form, be held with the Court file in envelopes marked “Not to be opened except by leave of the Court or a Judge” or destroyed;
(c) To the extent that such material is held by the Court in electronic form, be kept in a confidential section of the relevant Court file;
(d) Not be published, made available (whether electronically or otherwise) or disclosed to any person or entity except:
(i) The Court;
(ii) The applicant in this proceeding NSD1307 of 2015 and the applicant in proceeding NSD1308 of 2015 and their legal representatives; and
(iii) The legal representatives of the applicants in the MB proceedings,
such permitted disclosures to be on terms that none of those persons or entities disclose the Confidential Settlement Evidence or any part of it to any person or entity other than those listed in this Order.
13. Pursuant to s 33ZF of the Act:
(a) The claim registered by Mr Barry Holmes on 12 March 2020 be deemed to have been validly registered in accordance with clause 5.3 of the Settlement Scheme and Mr Holmes be permitted to participate in the Settlement Scheme; and
(b) Provided that a claim is registered by Mr Peter Shakes by 16 April 2020, his claim be deemed to have been validly registered in accordance with clause 5.3 of the Settlement Scheme and Mr Shakes be permitted to participate in the Settlement Scheme.
14. Pursuant to s 33ZF of the Act, and notwithstanding Order 13 made on 12 December 2019, persons who have, after 10 March 2020 but on or before 26 March 2020, registered claims in accordance with the Settlement Scheme shall be deemed to have validly registered their claims in accordance with clause 5 of the Settlement Scheme and shall be permitted to participate in the Settlement Scheme.
15. Pursuant to s 33ZF of the Act:
(a) On or before 1 April 2020, Volkswagen Group Australia Pty Limited produce copies of the VW WO Data and Skoda WO Data to Maurice Blackburn;
(b) On or before 1 April 2020, Audi Australia Pty Limited produce copies of the Audi WO Data to Maurice Blackburn;
(c) Maurice Blackburn be permitted to use the VW WO Data, Skoda WO Data and Audi WO Data (together, the NEVDIS WO Data) for the limited purpose of verifying whether or not a group member held an interest in an affected vehicle in accordance with the Settlement Scheme and whether, and if so, when that vehicle was written off;
(d) Maurice Blackburn keep and store the NEVDIS WO Data in a manner that preserves its confidentiality; and
(e) Maurice Blackburn not disclose the NEVDIS WO Data to any person other than the following who have provided an undertaking to keep the NEVDIS WO Data confidential and not use it in a manner that is inconsistent with these Orders:
(i) Officers and employees of Maurice Blackburn who are involved in or responsible for the conduct of this proceeding;
(ii) Officers and employees of any third parties engaged to provide technical or project support services in relation to the settlement of this proceeding;
(iii) Counsel retained and appointed to perform the role of “Review Assessor” pursuant to clause 8 of the Settlement Scheme; and
(iv) Experts engaged by Maurice Blackburn to assist in carrying out any functions under the Settlement Scheme.
16. The parties have liberty to apply in the event that further orders are required:
(a) Should it become apparent that, for the reasons set out in paragraph 20 of the non-confidential affidavit of Julian Klaus Schimmel affirmed on 20 March 2020 and filed in the MB proceedings, certain group members were not notified of the proposed settlement prior to 10 March 2020, for the purpose of seeking orders as may be appropriate to permit some or all of such persons to participate in the Settlement Scheme;
(b) Should it become apparent that amendments are needed to the Settlement Scheme for the reasons set out in paragraph 72 of the non-confidential affidavit of Julian Klaus Schimmel affirmed on 20 March 2020 and filed in the MB proceedings, for the purpose of seeking approval of such amendments; or
(c) Should any of the parties or Group Members consider that it is desirable to seek the assistance of the Court in relation to any matter concerning the Settlement Scheme.
17. As soon as practicable after completion of the settlement administration, the Administrator provide a report to the Court as to the completion of the Settlement Scheme.
18. The claims for relief made by the applicant in the Interlocutory Application filed by him on 4 November 2016 be dismissed.
19. The claims for relief made by the applicant in the Interlocutory Application filed by him on 10 December 2019 be dismissed.
20. Pursuant to r 1.32 of the Federal Court Rules 2011 and s 33ZF of the Act, Grosvenor Litigation Services Pty Ltd (Grosvenor) be joined to this proceeding as an additional respondent.
21. The claims for relief made by Grosvenor in the Interlocutory Application filed by it in this proceeding on 11 December 2019 otherwise be dismissed.
22. The claim by Grosvenor for a Funding Order made orally before the Court on 26 March 2020 be dismissed.
23. Grosvenor’s claims for non-publication or suppression orders in respect of particular evidence tendered before the Court on 26 March 2020 be reserved into Chambers to be dealt with on the papers.
AND THE COURT NOTES THAT:
24. In addition to information already provided and noting that the parties otherwise have sought non-publication orders in respect of the Confidential Material and the Confidential Settlement Evidence as set out proposed Orders 1, 12 and 13 of certain draft Orders submitted by Maurice Blackburn to the Court for its consideration at approximately 2.10 pm on 27 March 2020:
(a) Volkswagen AG will pay approximately AUD120 million as the total settlement amount to be made available to eligible group members.
(b) When the settlement has been finalised and all requisite payments thereunder have been made, the total of all amounts paid is unlikely to be significantly less than AUD120 million and may be more than AUD120 million.
(c) Individual settlement payments will be determined in accordance with the methodology developed by the applicant and approved by the Court.
(d) The precise amount of each individual payment must await the finalisation of the assessment of registrations by Maurice Blackburn as the Administrator (which is ongoing).
(e) The estimated average settlement payment for each participating vehicle is AUD2,800.
(f) Persons with an interest in different types of vehicles are eligible to receive different payment amounts, for example, as a result of the type and age of their vehicle. The range of per vehicle payments is approximately AUD1,589 to AUD6,554.
25. Exhibits AGR1 and AGR2 to the affidavit of Alexandra Gay Rose sworn on 24 March 2020 and filed in the MB proceedings, which are in the form of Excel files stored on a USB, are to be retained by the solicitors for the respondents until the date which is 12 months from the date upon which dismissal of this proceeding takes effect in accordance with Order 11 above.
26. The total amount of the Bannister Law applicants’ costs and disbursements verified by Mr Ramsey-Stewart pursuant to and for the purposes of clauses 1.1 and 5 of the Settlement Deed to be paid pursuant to Order 9(b) above and Order 9(b) made this day in proceeding NSD1308 of 2015 is AUD7,800,696.50 inclusive of GST.
27. The names of those Group Members who have opted out of this proceeding are specified in the Orders made by the Court on 6 May 2019.
THE SCHEDULE HEREINBEFORE REFERRED TO
Group Members are those persons (other than those persons who had retained Maurice Blackburn as their legal representative in proceeding NSD1472 of 2015 as at 1 August 2017, except for those Group Members who had also retained Bannister Law as their legal representative in this proceeding NSD1307 of 2015 as at 1 August 2017) who:
(a) At any time during the period between January 2008 and 28 October 2015 inclusive purchased or leased or otherwise acquired an interest in an Audi diesel motor vehicle fitted with 1.6L or 2.0L EA189 diesel engines, in particular the following models, and who still had a legal interest in that vehicle as at 18 September 2015:
Make
Model
Year
Audi
A1
2011–2014
A3 (1.6)
2011–2013
A3 (2.0)
2009–2013
A4
2008–2015
A5
2012–2016
A6
2009–2014
Q3
2012–2014
Q5
2009–2016
TT
2009–2014
and
(b) Suffered loss or damage by or resulting from the conduct and contraventions by the respondent pleaded in the Third Further Amended Statement of Claim filed herein on 18 September 2017.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
ORDERS
NSD 1308 of 2015
BETWEEN:
JOSEFINA TOLENTINO
Applicant
AND:
VOLKSWAGEN GROUP AUSTRALIA PTY LIMITED (ACN 093 117 876)
Respondent
JUDGE:
foster j
DATE OF ORDER:
1 APRIL 2020
THE COURT ORDERS THAT:
1. Confidential Material means the information and evidence in:
(a) Paragraphs 5 to 27 of the confidential affidavit of Julian Klaus Schimmel affirmed on 10 December 2019 and filed in proceedings NSD1459 of 2015, NSD1472 of 2015 and NSD1473 of 2015 (together, the MB proceedings) and Annexure 2 to the Deed of Release and Settlement comprising Annexure JK-67 to the said affidavit;
(b) Annexure 2 to the Deed of Release and Settlement in Annexure JKS-68 to the confidential affidavit of Julian Klaus Schimmel affirmed on 20 March 2020 and filed in the MB proceedings;
(c) The Settlement Payment Methodology specified in Annexure JKS-69 to the confidential affidavit of Julian Klaus Schimmel affirmed on 20 March 2020 and filed in the MB proceedings;
(d) The expert report of Terence Michael Potter dated 20 March 2020 including all appendices relied upon in the MB proceedings;
(e) Confidential exhibit AGR-1 to the affidavit of Alexandra Gay Rose sworn on 24 March 2020 and filed in the MB proceedings;
(f) Paragraphs 3.1(2) and (3), 6.1 to 6.25 and Annexure A to the expert report of Abe Tomas dated 20 March 2020 and relied upon in the MB proceedings and the letter of instruction from Maurice Blackburn Pty Ltd (Maurice Blackburn) to Mr Tomas; and
(g) The confidential affidavit of Gregory John Williams sworn on 25 March 2020.
2. Confidential Settlement Evidence means:
The confidential opinion of the applicant’s Counsel dated 20 March 2020.
3. VW WO Data means the following information from the National Exchange of Vehicle and Driver Information System (NEVDIS) contained in the spreadsheet entitled SR1727_data.xlsx:
(a) Vehicle Information Number (VIN);
(b) Write-Off Status; and
(c) Write-Off Date.
4. Skoda WO Data means the following information from NEVDIS contained in the spreadsheet entitled SR1726_data.xlsx:
(a) Vehicle Information Number (VIN);
(b) Write-Off Status; and
(c) Write-Off Date.
5. Audi WO Data means the following information from NEVDIS contained in the spreadsheet entitled SR1965.xlsx:
(a) Vehicle Information Number (VIN);
(b) Write-Off Status; and
(c) Write-Off Date.
6. Pursuant to s 33V of the Federal Court of Australia Act 1976 (Cth) (the Act), the settlement of this proceeding be approved upon the terms set out in:
(a) The Deed of Release and Settlement comprising Annexure JKS-68to the confidential affidavit of Julian Klaus Schimmel affirmed on 20 March 2020 and filed in the MB proceedings (Settlement Deed);
(b) The Settlement Scheme (version 2) comprising Annexure JKS-71 to the affidavit of Julian Klaus Schimmel affirmed on 20 March 2020 and filed in the MB proceedings (Settlement Scheme); and
(c) The Settlement Payment Methodology comprising Annexure JKS-69 to the confidential affidavit of Julian Klaus Schimmel affirmed on 20 March 2020 and filed in the MB proceedings.
7. Pursuant to s 33ZF of the Act, the applicant be authorised, nunc pro tunc, to enter into and give effect to the Settlement Deed for and on behalf of all Group Members (being those persons who meet the definition of group members as set out in the Third Further Amended Statement of Claim filed herein on 18 September 2017 [which definition is set out in the Schedule to these Orders] and who did not opt out of this proceeding).
8. Pursuant to s 33ZB(a) of the Act, the persons affected and bound by the settlement are the parties to the Settlement Deed and Group Members.
9. Pursuant to s 33V(2) and s 33ZF of the Act:
(a) The payment to Josefina Tolentino of AUD20,000 be approved as a Lead Applicant Reimbursement Payment (as defined in clause 1.1 of the Settlement Deed) and be paid by the respondents in accordance with clause 5.2 of the Settlement Deed.
(b) The Bannister Law component of the Applicants’ Reasonable Costs (as defined in clause 1.1 of the Settlement Deed) be approved in the amount verified as reasonable in respect of the period up to and including 29 February 2020 in the report of Ian Ramsey-Stewart dated 20 March 2020 and filed in the MB proceedings and be paid in accordance with clause 5.1 of the Settlement Deed.
(c) The payment to the applicant in this proceeding and the applicant in proceeding NSD1307 of 2015 jointly of the amount of AUD752,844 being the total of the premiums payable under and for the Bannister Law Applicants’ ATE insurance described in clauses 1.1 and 5(b) of the Settlement Deed be approved.
10. Pursuant to s 33ZF of the Act, Maurice Blackburn be appointed as the Administrator of the Settlement Scheme.
11. The proceeding be dismissed:
(a) With no order as to costs and with all previous costs orders vacated;
(b) Without prejudice to parties’ or the Administrator’s liberty to relist the matter for the purpose of seeking orders consequential to the Settlement Deed and/or the Settlement Scheme, and, to this end, pursuant to r 9.05 of the Federal Court Rules 2011 the Administrator be joined as a party to this proceeding for the limited purpose of exercising such liberty; and
(c) With the dismissal of the proceeding to take effect upon completion of the administration of the settlement.
12. Pursuant to s 37AF and s 37AG(1)(a) of the Act, until further order, on the ground that the order is necessary to prevent prejudice to the proper administration of justice, the Confidential Settlement Evidence:
(a) Be treated as confidential;
(b) To the extent that such material is held by the Court in paper form, be held with the Court file in envelopes marked “Not to be opened except by leave of the Court or a Judge” or destroyed;
(c) To the extent that such material is held by the Court in electronic form, be kept in a confidential section of the relevant Court file;
(d) Not be published, made available (whether electronically or otherwise) or disclosed to any person or entity except:
(i) The Court;
(ii) The applicants in this proceeding NSD1308 of 2015 and the applicant in proceeding NSD1307 of 2015 and their legal representatives; and
(iii) The legal representatives of the applicants in the MB proceedings,
such permitted disclosures to be on terms that none of those persons or entities disclose the Confidential Settlement Evidence or any part of it to any person or entity other than those listed in this Order.
13. Pursuant to s 33ZF of the Act:
(a) The claim registered by Mr Barry Holmes on 12 March 2020 be deemed to have been validly registered in accordance with clause 5.3 of the Settlement Scheme and Mr Holmes be permitted to participate in the Settlement Scheme; and
(b) Provided that a claim is registered by Mr Peter Shakes by 16 April 2020, his claim be deemed to have been validly registered in accordance with clause 5.3 of the Settlement Scheme and Mr Shakes be permitted to participate in the Settlement Scheme.
14. Pursuant to s 33ZF of the Act, and notwithstanding Order 13 made on 12 December 2019, persons who have, after 10 March 2020 but on or before 26 March 2020, registered claims in accordance with the Settlement Scheme shall be deemed to have validly registered their claims in accordance with clause 5 of the Settlement Scheme and shall be permitted to participate in the Settlement Scheme.
15. Pursuant to s 33ZF of the Act:
(a) On or before 1 April 2020, Volkswagen Group Australia Pty Limited produce copies of the VW WO Data and Skoda WO Data to Maurice Blackburn;
(b) On or before 1 April 2020, Audi Australia Pty Limited produce copies of the Audi WO Data to Maurice Blackburn;
(c) Maurice Blackburn be permitted to use the VW WO Data, Skoda WO Data and Audi WO Data (together, the NEVDIS WO Data) for the limited purpose of verifying whether or not a group member held an interest in an affected vehicle in accordance with the Settlement Scheme and whether, and if so, when that vehicle was written off;
(d) Maurice Blackburn keep and store the NEVDIS WO Data in a manner that preserves its confidentiality; and
(e) Maurice Blackburn not disclose the NEVDIS WO Data to any person other than the following who have provided an undertaking to keep the NEVDIS WO Data confidential and not use it in a manner that is inconsistent with these Orders:
(i) Officers and employees of Maurice Blackburn who are involved in or responsible for the conduct of this proceeding;
(ii) Officers and employees of any third parties engaged to provide technical or project support services in relation to the settlement of this proceeding;
(iii) Counsel retained and appointed to perform the role of “Review Assessor” pursuant to clause 8 of the Settlement Scheme; and
(iv) Experts engaged by Maurice Blackburn to assist in carrying out any functions under the Settlement Scheme.
16. The parties have liberty to apply in the event that further orders are required:
(a) Should it become apparent that, for the reasons set out in paragraph 20 of the non-confidential affidavit of Julian Klaus Schimmel affirmed on 20 March 2020 and filed in the MB proceedings, certain group members were not notified of the proposed settlement prior to 10 March 2020, for the purpose of seeking orders as may be appropriate to permit some or all of such persons to participate in the Settlement Scheme;
(b) Should it become apparent that amendments are needed to the Settlement Scheme for the reasons set out in paragraph 72 of the non-confidential affidavit of Julian Klaus Schimmel affirmed on 20 March 2020 and filed in the MB proceedings, for the purpose of seeking approval of such amendments; or
(c) Should any of the parties or Group Members consider that it is desirable to seek the assistance of the Court in relation to any matter concerning the Settlement Scheme.
17. As soon as practicable after completion of the settlement administration, the Administrator provide a report to the Court as to the completion of the Settlement Scheme.
18. The claims for relief made by the applicant in the Interlocutory Application filed by her on 4 November 2016 be dismissed.
19. The claims for relief made by the applicant in the Interlocutory Application filed by her on 10 December 2019 be dismissed.
20. Pursuant to r 1.32 of the Federal Court Rules 2011 and s 33ZF of the Act, Grosvenor Litigation Services Pty Ltd (Grosvenor) be joined to this proceeding as an additional respondent.
21. The claims for relief made by Grosvenor in the Interlocutory Application filed by it in this proceeding on 11 December 2019 otherwise be dismissed.
22. The claim by Grosvenor for a Funding Order made orally before the Court on 26 March 2020 be dismissed.
23. Grosvenor’s claims for non-publication or suppression orders in respect of particular evidence tendered before the Court on 26 March 2020 be reserved into Chambers to be dealt with on the papers.
AND THE COURT NOTES THAT:
24. In addition to information already provided and noting that the parties otherwise have sought non-publication orders in respect of the Confidential Material and the Confidential Settlement Evidence as set out proposed Orders 1, 12 and 13 of certain draft Orders submitted by Maurice Blackburn to the Court for its consideration at approximately 2.10 pm on 27 March 2020:
(a) Volkswagen AG will pay approximately AUD120 million as the total settlement amount to be made available to eligible group members.
(b) When the settlement has been finalised and all requisite payments thereunder have been made, the total of all amounts paid is unlikely to be significantly less than AUD120 million and may be more than AUD120 million.
(c) Individual settlement payments will be determined in accordance with the methodology developed by the applicant and approved by the Court.
(d) The precise amount of each individual payment must await the finalisation of the assessment of registrations by Maurice Blackburn as the Administrator (which is ongoing).
(e) The estimated average settlement payment for each participating vehicle is AUD2,800.
(f) Persons with an interest in different types of vehicles are eligible to receive different payment amounts, for example, as a result of the type and age of their vehicle. The range of per vehicle payments is approximately AUD1,589 to AUD6,554.
25. Exhibits AGR1 and AGR2 to the affidavit of Alexandra Gay Rose sworn on 24 March 2020 and filed in the MB proceedings, which are in the form of Excel files stored on a USB, are to be retained by the solicitors for the respondents until the date which is 12 months from the date upon which dismissal of this proceeding takes effect in accordance with Order 11 above.
26. The total amount of the Bannister Law applicants’ costs and disbursements verified by Mr Ramsey-Stewart pursuant to and for the purposes of clauses 1.1 and 5 of the Settlement Deed to be paid pursuant to Order 9(b) above and Order 9(b) made this day in proceeding NSD1307 of 2015 is AUD7,800,696.50 inclusive of GST.
27. The names of those Group Members who have opted out of this proceeding are specified in the Orders made by the Court on 6 May 2019.
THE SCHEDULE HEREINBEFORE REFERRED TO
Group Members are those persons (other than those persons who had retained Maurice Blackburn as their legal representative in proceeding NSD1459 of 2015 or NSD1473 of 2015 as at 1 August 2017, except for those Group Members who had also retained Bannister Law as their legal representative in this proceeding NSD1308 of 2015 as at 1 August 2017) who:
(a) At any time during the period between January 2008 and 28 October 2015 inclusive purchased or leased or otherwise acquired an interest in a Volkswagen or Skoda motor vehicle fitted with 1.6L or 2.0L EA189 diesel engines, in particular the following models, and who still had a legal interest in that vehicle as at 18 September 2015:
Make
Model
Year
Volkswagen Passenger Cars
Golf
2009–2013
Polo
2009–2014
Jetta
2010–2015
Passat CC
2008–2012
Volkswagen CC
2011–2015
Passat
2008–2015
Eos
2008–2014
Tiguan
2008–2015
Skoda
Octavia
2009–2013
Yeti
2011–2015
Superb
2009–2015
Volkswagen Commercial Vehicles
Caddy
2010–2015
Amarok
2011–2012
and
(b) Suffered loss or damage by or resulting from the conduct and contraventions by the respondent pleaded in the Third Further Amended Statement of Claim filed herein on 18 September 2017.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
ORDERS
NSD 1459 of 2015
BETWEEN:
ALISTER DALTON
First Applicant
JOANNA DALTON
Second Applicant
AND:
VOLKSWAGEN AG
First Respondent
VOLKSWAGEN GROUP AUSTRALIA PTY LIMITED (ACN 093 117 876)
Second Respondent
JUDGE:
foster j
DATE OF ORDER:
1 april 2020
THE COURT ORDERS THAT:
1. Confidential Material means the information and evidence in:
(a) Paragraphs 5 to 27 of the confidential affidavit of Julian Klaus Schimmel affirmed on 10 December 2019 and Annexure 2 to the Deed of Release and Settlement comprising Annexure JK-67 to the said affidavit;
(b) Annexure 2 to the Deed of Release and Settlement in Annexure JKS-68 to the confidential affidavit of Julian Klaus Schimmel affirmed on 20 March 2020;
(c) The Settlement Payment Methodology specified in Annexure JKS-69 to the confidential affidavit of Julian Klaus Schimmel affirmed on 20 March 2020;
(d) The expert report of Terence Michael Potter dated 20 March 2020 including all appendices;
(e) Confidential exhibit AGR-1 to the affidavit of Alexandra Gay Rose sworn on 24 March 2020 and filed herein;
(f) Paragraphs 3.1(2) and (3), 6.1 to 6.25 and Annexure A to the expert report of Abe Tomas dated 20 March 2020 and the letter of instruction from Maurice Blackburn Pty Ltd (Maurice Blackburn) to Mr Tomas; and
(g) The confidential affidavit of Gregory John Williams sworn on 25 March 2020.
2. Confidential Settlement Evidence means:
(a) The confidential affidavit of Julian Klaus Schimmel affirmed on 20 March 2020.
(b) The confidential opinion of the applicants’ Counsel dated 24 March 2020.
3. VW WO Data means the following information from the National Exchange of Vehicle and Driver Information System (NEVDIS) contained in the spreadsheet entitled SR1727_data.xlsx:
(a) Vehicle Information Number (VIN);
(b) Write-Off Status; and
(c) Write-Off Date.
4. Skoda WO Data means the following information from NEVDIS contained in the spreadsheet entitled SR1726_data.xlsx:
(a) Vehicle Information Number (VIN);
(b) Write-Off Status; and
(c) Write-Off Date.
5. Audi WO Data means the following information from NEVDIS contained in the spreadsheet entitled SR1965.xlsx:
(a) Vehicle Information Number (VIN);
(b) Write-Off Status; and
(c) Write-Off Date.
6. Pursuant to s 33V of the Federal Court of Australia Act 1976 (Cth) (the Act), the settlement of this proceeding be approved upon the terms set out in:
(a) The Deed of Release and Settlement comprising Annexure JKS-68 to the confidential affidavit of Julian Klaus Schimmel affirmed on 20 March 2020 (Settlement Deed);
(b) The Settlement Scheme (version 2) comprising Annexure JKS-71 to the affidavit of Julian Klaus Schimmel affirmed on 20 March 2020 and filed herein (Settlement Scheme); and
(c) The Settlement Payment Methodology comprising Annexure JKS-69 to the confidential affidavit of Julian Klaus Schimmel affirmed on 20 March 2020.
7. Pursuant to s 33ZF of the Act, the applicants be authorised, nunc pro tunc, to enter into and give effect to the Settlement Deed for and on behalf of all Group Members (being those persons who meet the definition of group members as set out in the Second Further Amended Statement of Claim filed herein on 18 September 2017 [which definition is set out in the Schedule to these Orders] and who did not opt out of this proceeding).
8. Pursuant to s 33ZB(a) of the Act, the persons affected and bound by the settlement are the parties to the Settlement Deed and Group Members.
9. Pursuant to s 33V(2) and s 33ZF of the Act:
(a) The following payments be approved as Lead Applicant Reimbursement Payments (as defined in clause 1.1 of the Settlement Deed) and be paid by the respondents in accordance with clause 5.2 of the Settlement Deed:
(i) Alister Dalton – AUD20,000 and
(ii) Joanna Dalton – AUD10,000.
(b) The Maurice Blackburn component of the Applicants’ Reasonable Costs (as defined in clause 1.1 of the Settlement Deed) be approved in the amount verified as reasonable in respect of the period up to and including 29 February 2020 in the report of Ian Ramsey-Stewart dated 20 March 2020 and filed herein and be paid by the respondents in accordance with clause 5.1 of the Settlement Deed.
10. Pursuant to s 33ZF of the Act, Maurice Blackburn be appointed as the Administrator of the Settlement Scheme.
11. The proceeding be dismissed:
(a) With no order as to costs and with all previous costs orders vacated;
(b) Without prejudice to parties’ or the Administrator’s liberty to relist the matter for the purpose of seeking orders consequential to the Settlement Deed and/or the Settlement Scheme, and, to this end, pursuant to r 9.05 of the Federal Court Rules 2011 the Administrator be joined as a party to this proceeding for the limited purpose of exercising such liberty; and
(c) With the dismissal of the proceeding to take effect upon completion of the administration of the settlement.
12. Pursuant to s 37AF and s 37AG(1)(a) of the Act, until further order, on the ground that the order is necessary to prevent prejudice to the proper administration of justice, the Confidential Settlement Evidence:
(a) Be treated as confidential;
(b) To the extent that such material is held by the Court in paper form, be held with the Court file in envelopes marked “Not to be opened except by leave of the Court or a Judge” or destroyed;
(c) To the extent that such material is held by the Court in electronic form, be kept in a confidential section of the relevant Court file;
(d) Not be published, made available (whether electronically or otherwise) or disclosed to any person or entity except:
(i) The Court;
(ii) The applicants in this proceeding NSD1459 of 2015 and the applicants in proceedings NSD1472 of 2015 and NSD1473 of 2015 and their legal representatives; and
(iii) The legal representatives of the applicants in proceedings NSD1307 of 2015 and NSD1308 of 2015
such permitted disclosures to be on terms that none of those persons or entities disclose the Confidential Settlement Evidence or any part of it to any person or entity other than those listed in this Order.
13. Pursuant to s 37AF and s 37AG(1)(a) of the Act, on the ground that the order is necessary to prevent prejudice to the proper administration of justice, up to and including 31 December 2021, the Confidential Material:
(a) Be treated as confidential;
(b) To the extent that such material is held by the Court in paper form be held with the Court file in envelopes marked “Not to be opened except by leave of the Court or a Judge” or destroyed;
(c) To the extent that such material is held by the Court in electronic form, be kept in a confidential section of the relevant Court file;
(d) Not be published, made available (whether electronically or otherwise) or disclosed (by publication or otherwise) to any other person than:
(i) The Court;
(ii) The applicants in this proceeding NSD1459 of 2015 and the applicants in proceedings NSD1472 of 2015 and NSD1473 of 2015 and their legal representatives;
(iii) The applicants and the legal representatives of the applicants in proceedings NSD1307 of 2015 and NSD1308 of 2015;
(iv) The respondents in proceedings NSD1459 of 2015, NSD1472 of 2015, NSD1473 of 2015, NSD1307 of 2015 and NSD1308 of 2015 and their legal representatives;
(v) Grosvenor Litigation Services Pty Ltd and its legal representatives; and
(vi) Nicholas Owens SC and Robert Yezerski in their capacity as independent contradictors appointed by the Court pursuant to Order 10 made on 12 December 2019.
14. Pursuant to s 33ZF of the Act:
(a) The claim registered by Mr Barry Holmes on 12 March 2020 be deemed to have been validly registered in accordance with clause 5.3 of the Settlement Scheme and Mr Holmes be permitted to participate in the Settlement Scheme; and
(b) Provided that a claim is registered by Mr Peter Shakes by 16 April 2020, his claim be deemed to have been validly registered in accordance with clause 5.3 of the Settlement Scheme and Mr Shakes be permitted to participate in the Settlement Scheme.
15. Pursuant to s 33ZF of the Act, and notwithstanding Order 13 made on 12 December 2019, persons who have, after 10 March 2020 but on or before 26 March 2020, registered claims in accordance with the Settlement Scheme shall be deemed to have validly registered their claims in accordance with clause 5 of the Settlement Scheme and shall be permitted to participate in the Settlement Scheme.
16. Pursuant to s 33ZF of the Act:
(a) On or before 1 April 2020, Volkswagen Group Australia Pty Limited produce copies of the VW WO Data and Skoda WO Data to Maurice Blackburn;
(b) On or before 1 April 2020, Audi Australia Pty Limited produce copies of the Audi WO Data to Maurice Blackburn;
(c) Maurice Blackburn be permitted to use the VW WO Data, Skoda WO Data and Audi WO Data (together, the NEVDIS WO Data) for the limited purpose of verifying whether or not a group member held an interest in an affected vehicle in accordance with the Settlement Scheme and whether, and if so, when that vehicle was written off;
(d) Maurice Blackburn keep and store the NEVDIS WO Data in a manner that preserves its confidentiality; and
(e) Maurice Blackburn not disclose the NEVDIS WO Data to any person other than the following who have provided an undertaking to keep the NEVDIS WO Data confidential and not use it in a manner that is inconsistent with these Orders:
(i) Officers and employees of Maurice Blackburn who are involved in or responsible for the conduct of this proceeding;
(ii) Officers and employees of any third parties engaged to provide technical or project support services in relation to the settlement of this proceeding;
(iii) Counsel retained and appointed to perform the role of “Review Assessor” pursuant to clause 8 of the Settlement Scheme; and
(iv) Experts engaged by Maurice Blackburn to assist in carrying out any functions under the Settlement Scheme.
17. As soon as practicable after completion of the settlement administration, the Administrator provide a report to the Court as to the completion of the Settlement Scheme.
18. The claims for relief made by Richard Cantor, the applicant in proceeding NSD1307 of 2015, in the Interlocutory Application filed by him in this proceeding on 23 March 2020 be dismissed.
19. The claims for relief made by Josefina Tolentino, the applicant in proceeding NSD1308 of 2015, in the Interlocutory Application filed by her in this proceeding on 23 March 2020 be dismissed.
20. The parties have liberty to apply in the event that further orders are required:
(a) Should it become apparent that, for the reasons set out in paragraph 20 of the non-confidential affidavit of Julian Klaus Schimmel affirmed on 20 March 2020, certain group members were not notified of the proposed settlement prior to 10 March 2020, for the purpose of seeking such orders as may be appropriate to permit some or all of such persons to participate in the Settlement Scheme;
(b) Should it become apparent that amendments are needed to the Settlement Scheme for the reasons set out in paragraph 72 of the non-confidential affidavit of Julian Klaus Schimmel affirmed on 20 March 2020, for the purpose of seeking approval of such amendments; or
(c) Should any of the parties or Group Members consider that it is desirable to seek the assistance of the Court in relation to any matter concerning the Settlement Scheme.
AND THE COURT NOTES THAT:
21. In addition to information already provided and noting that the parties otherwise have sought non-publication orders in respect of the Confidential Material and the Confidential Settlement Evidence as set out proposed Orders 1, 12 and 13 of certain draft Orders submitted by Maurice Blackburn to the Court for its consideration at approximately 2.10 pm on 27 March 2020:
(a) Volkswagen AG will pay approximately AUD120 million as the total settlement amount to be made available to eligible group members.
(b) When the settlement has been finalised and all requisite payments thereunder have been made, the total of all amounts paid is unlikely to be significantly less than AUD120 million and may be more than AUD120 million.
(c) Individual settlement payments will be determined in accordance with the methodology developed by the applicants and approved by the Court.
(d) The precise amount of each individual payment must await the finalisation of the assessment of registrations by Maurice Blackburn as the Administrator (which is ongoing).
(e) The estimated average settlement payment for each participating vehicle is AUD2,800.
(f) Persons with an interest in different types of vehicles are eligible to receive different payment amounts, for example, as a result of the type and age of their vehicle. The range of per vehicle payments is approximately AUD1,589 to AUD6,554.
22. Exhibits AGR1 and AGR2 to the affidavit of Alexandra Gay Rose sworn on 24 March 2020 and filed herein, which are in the form of Excel files stored on a USB, are to be retained by the solicitors for the respondents until the date which is 12 months from the date upon which dismissal of this proceeding takes effect in accordance with Order 11 above.
23. The total amount of the Maurice Blackburn applicants’ costs and disbursements verified by Mr Ramsey-Stewart pursuant to and for the purposes of clauses 1.1 and 5 of the Settlement Deed to be paid pursuant to Order 9(b) above and Order 9(b) made this day in each of proceedings NSD 1472 of 2015 and NSD 1473 of 2015 is AUD43,296,810.22 inclusive of GST.
24. The names of those Group Members who have opted out of this proceeding are specified in the Orders made by the Court on 6 May 2019.
THE SCHEDULE HEREINBEFORE REFERRED TO
1. The Group Members are the applicants and all other persons who:
(a) Prior to 3 October 2015, acquired an interest in an affected VW diesel vehicle (as defined in paragraph 35 of the Second Further Amended Statement of Claim filed herein on 18 September 2017); and
(b) Still had an interest in that vehicle as at 3 October 2015,
but not including:
(c) The respondents, or any wholly or partly owned subsidiary of either of the respondents;
(d) Any Volkswagen authorised dealer;
(e) Any Judge of the Federal Court of Australia; or
(f) Any group member in proceeding NSD 1308 of 2015 (the VW-Skoda BL Proceeding) who has retained Bannister Law as its legal representative in the VW-Skoda BL Proceeding as at 1 August 2017, except for those group members who have also retained Maurice Blackburn as its legal representative in proceeding NSD 1459 of 2015 or proceeding NSD 1473 of 2015 as at 1 August 2017.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
ORDERS
NSD 1472 of 2015
BETWEEN:
ROBYN TANYA RICHARDSON
Applicant
AND:
AUDI AG
First Respondent
AUDI AUSTRALIA PTY LIMITED (ACN 077 092 776)
Second Respondent
VOLKSWAGEN AG
Third Respondent
JUDGE:
foster j
DATE OF ORDER:
1 april 2020
THE COURT ORDERS THAT:
1. Confidential Material means the information and evidence in:
(a) Paragraphs 5 to 27 of the confidential affidavit of Julian Klaus Schimmel affirmed on 10 December 2019 and Annexure 2 to the Deed of Release and Settlement comprising Annexure JK-67 to the said affidavit;
(b) Annexure 2 to the Deed of Release and Settlement in Annexure JKS-68 to the confidential affidavit of Julian Klaus Schimmel affirmed on 20 March 2020;
(c) The Settlement Payment Methodology specified in Annexure JKS-69 to the confidential affidavit of Julian Klaus Schimmel affirmed on 20 March 2020;
(d) The expert report of Terence Michael Potter dated 20 March 2020 including all appendices;
(e) Confidential exhibit AGR-1 to the affidavit of Alexandra Gay Rose sworn on 24 March 2020 and filed herein;
(f) Paragraphs 3.1(2) and (3), 6.1 to 6.25 and Annexure A to the expert report of Abe Tomas dated 20 March 2020 and the letter of instruction from Maurice Blackburn Pty Ltd (Maurice Blackburn) to Mr Tomas; and
(g) The confidential affidavit of Gregory John Williams sworn on 25 March 2020.
2. Confidential Settlement Evidence means:
(a) The confidential affidavit of Julian Klaus Schimmel affirmed on 20 March 2020.
(b) The confidential opinion of the applicant’s Counsel dated 24 March 2020.
3. VW WO Data means the following information from the National Exchange of Vehicle and Driver Information System (NEVDIS) contained in the spreadsheet entitled SR1727_data.xlsx:
(a) Vehicle Information Number (VIN);
(b) Write-Off Status; and
(c) Write-Off Date.
4. Skoda WO Data means the following information from NEVDIS contained in the spreadsheet entitled SR1726_data.xlsx:
(a) Vehicle Information Number (VIN);
(b) Write-Off Status; and
(c) Write-Off Date.
5. Audi WO Data means the following information from NEVDIS contained in the spreadsheet entitled SR1965.xlsx:
(a) Vehicle Information Number (VIN);
(b) Write-Off Status; and
(c) Write-Off Date.
6. Pursuant to s 33V of the Federal Court of Australia Act 1976 (Cth) (the Act), the settlement of this proceeding be approved upon the terms set out in:
(a) The Deed of Release and Settlement comprising Annexure JKS-68 to the confidential affidavit of Julian Klaus Schimmel affirmed on 20 March 2020 (Settlement Deed);
(b) The Settlement Scheme (version 2) comprising Annexure JKS-71 to the affidavit of Julian Klaus Schimmel affirmed on 20 March 2020 and filed herein (Settlement Scheme); and
(c) The Settlement Payment Methodology comprising Annexure JKS-69 to the confidential affidavit of Julian Klaus Schimmel affirmed on 20 March 2020.
7. Pursuant to s 33ZF of the Act, the applicant be authorised, nunc pro tunc, to enter into and give effect to the Settlement Deed for and on behalf of all Group Members (being those persons who meet the definition of group members as set out in the Second Further Amended Statement of Claim filed herein on 18 September 2017 [which definition is set out in the Schedule to these Orders] and who did not opt out of this proceeding).
8. Pursuant to s 33ZB(a) of the Act, the persons affected and bound by the settlement are the parties to the Settlement Deed and Group Members.
9. Pursuant to s 33V(2) and s 33ZF of the Act:
(a) The following payments be approved as Lead Applicant Reimbursement Payments (as defined in clause 1.1 of the Settlement Deed) and be paid by the respondents in accordance with clause 5.2 of the Settlement Deed:
(i) Robyn Tanya Richardson – AUD20,000 and
(ii) William McIntyre – AUD20,000.
(b) The Maurice Blackburn component of the Applicants’ Reasonable Costs (as defined in clause 1.1 of the Settlement Deed) be approved in the amount verified as reasonable in respect of the period up to and including 29 February 2020 in the report of Ian Ramsey-Stewart dated 20 March 2020 and filed herein and be paid by the respondents in accordance with clause 5.1 of the Settlement Deed.
10. Pursuant to s 33ZF of the Act, Maurice Blackburn be appointed as the Administrator of the Settlement Scheme.
11. The proceeding be dismissed:
(a) With no order as to costs and with all previous costs orders vacated;
(b) Without prejudice to parties’ or the Administrator’s liberty to relist the matter for the purpose of seeking orders consequential to the Settlement Deed and/or the Settlement Scheme, and, to this end, pursuant to r 9.05 of the Federal Court Rules 2011 the Administrator be joined as a party to this proceeding for the limited purpose of exercising such liberty; and
(c) With the dismissal of the proceeding to take effect upon completion of the administration of the settlement.
12. Pursuant to s 37AF and s 37AG(1)(a) of the Act, until further order, on the ground that the order is necessary to prevent prejudice to the proper administration of justice, the Confidential Settlement Evidence:
(a) Be treated as confidential;
(b) To the extent that such material is held by the Court in paper form, be held with the Court file in envelopes marked “Not to be opened except by leave of the Court or a Judge” or destroyed;
(c) To the extent that such material is held by the Court in electronic form, be kept in a confidential section of the relevant Court file;
(d) Not be published, made available (whether electronically or otherwise) or disclosed to any person or entity except:
(i) The Court;
(ii) The applicant in this proceeding NSD1472 of 2015 and the applicants in proceedings NSD1459 of 2015 and NSD1473 of 2015 and their legal representatives; and
(iii) The legal representatives of the applicants in proceedings NSD1307 of 2015 and NSD1308 of 2015
such permitted disclosures to be on terms that none of those persons or entities disclose the Confidential Settlement Evidence or any part of it to any person or entity other than those listed in this Order.
13. Pursuant to s 37AF and s 37AG(1)(a) of the Act, on the ground that the order is necessary to prevent prejudice to the proper administration of justice, up to and including 31 December 2021, the Confidential Material:
(a) Be treated as confidential;
(b) To the extent that such material is held by the Court in paper form, be held with the Court file in envelopes marked “Not to be opened except by leave of the Court or a Judge” or destroyed;
(c) To the extent that such material is held by the Court in electronic form, be kept in a confidential section of the relevant Court file;
(d) Not be published, made available (whether electronically or otherwise) or disclosed to any other person than:
(i) The Court;
(ii) The applicant in this proceeding NSD1472 of 2015 and the applicants in proceedings NSD1459 of 2015 and NSD1473 of 2015 and their legal representatives;
(iii) The applicants and the legal representatives of the applicants in proceedings NSD1307 of 2015 and NSD1308 of 2015;
(iv) The respondents in proceedings NSD1459 of 2015, NSD1472 of 2015, NSD1473 of 2015, NSD1307 of 2015 and NSD1308 of 2015 and their legal representatives;
(v) Grosvenor Litigation Services Pty Ltd and its legal representatives; and
(vi) Nicholas Owens SC and Robert Yezerski in their capacity as independent contradictors appointed by the Court pursuant to Order 10 made on 12 December 2019.
14. Pursuant to s 33ZF of the Act:
(a) The claim registered by Mr Barry Holmes on 12 March 2020 be deemed to have been validly registered in accordance with clause 5.3 of the Settlement Scheme and Mr Holmes be permitted to participate in the Settlement Scheme; and
(b) Provided that a claim is registered by Mr Peter Shakes by 16 April 2020, his claim be deemed to have been validly registered in accordance with clause 5.3 of the Settlement Scheme and Mr Shakes be permitted to participate in the Settlement Scheme.
15. Pursuant to s 33ZF of the Act, and notwithstanding Order 13 made on 12 December 2019, persons who have, after 10 March 2020 but on or before 26 March 2020, registered claims in accordance with the Settlement Scheme shall be deemed to have validly registered their claims in accordance with clause 5 of the Settlement Scheme and shall be permitted to participate in the Settlement Scheme.
16. Pursuant to s 33ZF of the Act:
(a) On or before 1 April 2020, Volkswagen Group Australia Pty Limited produce copies of the VW WO Data and Skoda WO Data to Maurice Blackburn;
(b) On or before 1 April 2020, Audi Australia Pty Limited produce copies of the Audi WO Data to Maurice Blackburn;
(c) Maurice Blackburn be permitted to use the VW WO Data, Skoda WO Data and Audi WO Data (together, the NEVDIS WO Data) for the limited purpose of verifying whether or not a group member held an interest in an affected vehicle in accordance with the Settlement Scheme and whether, and if so, when that vehicle was written off;
(d) Maurice Blackburn keep and store the NEVDIS WO Data in a manner that preserves its confidentiality; and
(e) Maurice Blackburn not disclose the NEVDIS WO Data to any person other than the following who have provided an undertaking to keep the NEVDIS WO Data confidential and not use it in a manner that is inconsistent with these Orders:
(i) Officers and employees of Maurice Blackburn who are involved in or responsible for the conduct of this proceeding;
(ii) Officers and employees of any third parties engaged to provide technical or project support services in relation to the settlement of this proceeding;
(iii) Counsel retained and appointed to perform the role of “Review Assessor” pursuant to clause 8 of the Settlement Scheme; and
(iv) Experts engaged by Maurice Blackburn to assist in carrying out any functions under the Settlement Scheme.
17. As soon as practicable after completion of the settlement administration, the Administrator provide a report to the Court as to the completion of the Settlement Scheme.
18. The claims for relief made by Richard Cantor, the applicant in proceeding NSD1307 of 2015, in the Interlocutory Application filed by him in this proceeding on 23 March 2020 be dismissed.
19. The claims for relief made by Josefina Tolentino, the applicant in proceeding NSD1308 of 2015, in the Interlocutory Application filed by her in this proceeding on 23 March 2020 be dismissed.
20. The parties have liberty to apply in the event that further orders are required:
(a) Should it become apparent that, for the reasons set out in paragraph 20 of the non-confidential affidavit of Julian Klaus Schimmel affirmed on 20 March 2020, certain group members were not notified of the proposed settlement prior to 10 March 2020, for the purpose of seeking such orders as may be appropriate to permit some or all of such persons to participate in the Settlement Scheme;
(b) Should it become apparent that amendments are needed to the Settlement Scheme for the reasons set out in paragraph 72 of the non-confidential affidavit of Julian Klaus Schimmel affirmed on 20 March 2020, for the purpose of seeking approval of such amendments; or
(c) Should any of the parties or Group Members consider that it is desirable to seek the assistance of the Court in relation to any matter concerning the Settlement Scheme.
AND THE COURT NOTES THAT:
21. In addition to information already provided and noting that the parties otherwise have sought non-publication orders in respect of the Confidential Material and the Confidential Settlement Evidence as set out proposed Orders 1, 12 and 13 of certain draft Orders submitted by Maurice Blackburn to the Court for its consideration at approximately 2.10 pm on 27 March 2020:
(a) Volkswagen AG will pay approximately AUD120 million as the total settlement amount to be made available to eligible group members.
(b) When the settlement has been finalised and all requisite payments thereunder have been made, the total of all amounts paid is unlikely to be significantly less than AUD120 million and may be more than AUD120 million.
(c) Individual settlement payments will be determined in accordance with the methodology developed by the applicant and approved by the Court.
(d) The precise amount of each individual payment must await the finalisation of the assessment of registrations by Maurice Blackburn as the Administrator (which is ongoing).
(e) The estimated average settlement payment for each participating vehicle is AUD2,800.
(f) Persons with an interest in different types of vehicles are eligible to receive different payment amounts, for example, as a result of the type and age of their vehicle. The range of per vehicle payments is approximately AUD1,589 to AUD6,554.
22. Exhibits AGR1 and AGR2 to the affidavit of Alexandra Gay Rose sworn on 24 March 2020 and filed herein, which are in the form of Excel files stored on a USB, are to be retained by the solicitors for the respondents until the date which is 12 months from the date upon which dismissal of this proceeding takes effect in accordance with Order 11 above.
23. The total amount of the Maurice Blackburn applicants’ costs and disbursements verified by Mr Ramsey-Stewart pursuant to and for the purposes of clauses 1.1 and 5 of the Settlement Deed to be paid pursuant to Order 9(b) above and Order 9(b) made this day in each of proceedings NSD 1459 of 2015 and NSD 1473 of 2015 is AUD43,296,810.22 inclusive of GST.
24. The names of those Group Members who have opted out of this proceeding are specified in the Orders made by the Court on 6 May 2019.
THE SCHEDULE HEREINBEFORE REFERRED TO
1. The Group Members are the applicant and all other persons who:
(a) Prior to 3 October 2015, acquired an interest in an affected Audi diesel vehicle (as defined in paragraph 38 of the Second Further Amended Statement of Claim filed herein on 18 September 2017); and
(b) Still had an interest in that vehicle as at 3 October 2015,
but not including:
(c) The respondents, or any wholly or partly owned subsidiary of any of the respondents;
(d) Any Audi or Volkswagen authorised dealer;
(e) Any Judge of the Federal Court of Australia; or
(f) Any group member in proceeding NSD 1307 of 2015 (the Audi BL Proceeding) who has retained Bannister Law as its legal representative in the Audi BL Proceeding as at 1 August 2017, except for those group members who have also retained Maurice Blackburn as its legal representative in proceeding NSD 1472 of 2015 as at 1 August 2017.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
ORDERS
NSD 1473 of 2015
BETWEEN:
STEVEN ROE
Applicant
AND:
SKODA AUTO A.S.
First Respondent
VOLKSWAGEN GROUP AUSTRALIA PTY LIMITED (ACN 093 117 876)
Second Respondent
VOLKSWAGEN AG
Third Respondent
JUDGE:
foster j
DATE OF ORDER:
1 april 2020
THE COURT ORDERS THAT:
1. Confidential Material means the information and evidence in:
(a) Paragraphs 5 to 27 of the confidential affidavit of Julian Klaus Schimmel affirmed on 10 December 2019 and Annexure 2 to the Deed of Release and Settlement comprising Annexure JK-67 to the said affidavit;
(b) Annexure 2 to the Deed of Release and Settlement in Annexure JKS-68 to the confidential affidavit of Julian Klaus Schimmel affirmed on 20 March 2020;
(c) The Settlement Payment Methodology specified in Annexure JKS-69 to the confidential affidavit of Julian Klaus Schimmel affirmed on 20 March 2020;
(d) The expert report of Terence Michael Potter dated 20 March 2020 including all appendices;
(e) Confidential exhibit AGR-1 to the affidavit of Alexandra Gay Rose sworn on 24 March 2020 and filed herein;
(f) Paragraphs 3.1(2) and (3), 6.1 to 6.25 and Annexure A to the expert report of Abe Tomas dated 20 March 2020 and the letter of instruction from Maurice Blackburn Pty Ltd (Maurice Blackburn) to Mr Tomas; and
(g) The confidential affidavit of Gregory John Williams sworn on 25 March 2020.
2. Confidential Settlement Evidence means:
(a) The confidential affidavit of Julian Klaus Schimmel affirmed on 20 March 2020.
(b) The confidential opinion of the applicant’s Counsel dated 24 March 2020.
3. VW WO Data means the following information from the National Exchange of Vehicle and Driver Information System (NEVDIS) contained in the spreadsheet entitled SR1727_data.xlsx:
(a) Vehicle Information Number (VIN);
(b) Write-Off Status; and
(c) Write-Off Date.
4. Skoda WO Data means the following information from NEVDIS contained in the spreadsheet entitled SR1726_data.xlsx:
(a) Vehicle Information Number (VIN);
(b) Write-Off Status; and
(c) Write-Off Date.
5. Audi WO Data means the following information from NEVDIS contained in the spreadsheet entitled SR1965.xlsx:
(a) Vehicle Information Number (VIN);
(b) Write-Off Status; and
(c) Write-Off Date.
6. Pursuant to s 33V of the Federal Court of Australia Act 1976 (Cth) (the Act), the settlement of this proceeding be approved upon the terms set out in:
(a) The Deed of Release and Settlement comprising Annexure JKS-68 to the confidential affidavit of Julian Klaus Schimmel affirmed on 20 March 2020 (Settlement Deed);
(b) The Settlement Scheme (version 2) comprising Annexure JKS-71 to the affidavit of Julian Klaus Schimmel affirmed on 20 March 2020 and filed herein (Settlement Scheme); and
(c) The Settlement Payment Methodology comprising Annexure JKS-69 to the confidential affidavit of Julian Klaus Schimmel affirmed on 20 March 2020.
7. Pursuant to s 33ZF of the Act, the applicant be authorised, nunc pro tunc, to enter into and give effect to the Settlement Deed for and on behalf of all Group Members (being those persons who meet the definition of group members as set out in the Second Further Amended Statement of Claim filed herein on 18 September 2017 [which definition is set out in the Schedule to these Orders] and who did not opt out of this proceeding).
8. Pursuant to s 33ZB(a) of the Act, the persons affected and bound by the settlement are the parties to the Settlement Deed and Group Members.
9. Pursuant to s 33V(2) and s 33ZF of the Act:
(a) The payment to Steven Roe of AUD20,000 be approved as a Lead Applicant Reimbursement Payment (as defined in clause 1.1 of the Settlement Deed) and be paid by the respondents in accordance with clause 5.2 of the Settlement Deed.
(b) The Maurice Blackburn component of the Applicants’ Reasonable Costs (as defined in clause 1.1 of the Settlement Deed) be approved in the amount verified as reasonable in respect of the period up to and including 29 February 2020 in the report of Ian Ramsey-Stewart dated 20 March 2020 and filed herein and be paid by the respondents in accordance with clause 5.1 of the Settlement Deed.
10. Pursuant to s 33ZF of the Act, Maurice Blackburn be appointed as the Administrator of the Settlement Scheme.
11. The proceeding be dismissed:
(a) With no order as to costs and with all previous costs orders vacated;
(b) Without prejudice to parties’ or the Administrator’s liberty to relist the matter for the purpose of seeking orders consequential to the Settlement Deed and/or the Settlement Scheme, and, to this end, pursuant to r 9.05 of the Federal Court Rules 2011 the Administrator be joined as a party to this proceeding for the limited purpose of exercising such liberty; and
(c) With the dismissal of the proceeding to take effect upon completion of the administration of the settlement.
12. Pursuant to s 37AF and s 37AG(1)(a) of the Act, until further order, on the ground that the order is necessary to prevent prejudice to the proper administration of justice, the Confidential Settlement Evidence:
(a) Be treated as confidential;
(b) To the extent that such material is held by the Court in paper form, be held with the Court file in envelopes marked “Not to be opened except by leave of the Court or a Judge” or destroyed;
(c) To the extent that such material is held by the Court in electronic form, be kept in a confidential section of the relevant Court file;
(d) Not be published, made available (whether electronically or otherwise) or disclosed to any person or entity except:
(i) The Court;
(ii) The applicant in this proceeding NSD1473 of 2015 and the applicants in proceedings NSD1459 of 2015 and NSD1472 of 2015 and their legal representatives; and
(iii) The legal representatives of the applicants in proceedings NSD1307 of 2015 and NSD1308 of 2015
such permitted disclosures to be on terms that none of those persons or entities disclose the Confidential Settlement Evidence or any part of it to any person or entity other than those listed in this Order.
13. Pursuant to s 37AF and s 37AG(1)(a) of the Act, on the ground that the order is necessary to prevent prejudice to the proper administration of justice, up to and including 31 December 2021, the Confidential Material:
(a) Be treated as confidential;
(b) To the extent that it is held by the Court in paper form, be held with the Court file in envelopes marked “Not to be opened except by leave of the Court or a Judge” or destroyed;
(c) To the extent that such material is held by the Court in electronic form, be kept in a confidential section of the relevant Court file;
(d) Not be published, made available (whether electronically or otherwise) or disclosed to any other person than:
(i) The Court;
(ii) The applicant in this proceeding NSD1473 of 2015 and the applicants in proceedings NSD1459 of 2015 and NSD1472 of 2015 and their legal representatives;
(iii) The applicants and the legal representatives of the applicants in proceedings NSD1307 of 2015 and NSD1308 of 2015;
(iv) The respondents in proceedings NSD1459 of 2015, NSD1472 of 2015, NSD1473 of 2015, NSD1307 of 2015 and NSD1308 of 2015 and their legal representatives;
(v) Grosvenor Litigation Services Pty Ltd and its legal representatives; and
(vi) Nicholas Owens SC and Robert Yezerski in their capacity as independent contradictors appointed by the Court pursuant to Order 10 made on 12 December 2019.
14. Pursuant to s 33ZF of the Act:
(a) The claim registered by Mr Barry Holmes on 12 March 2020 be deemed to have been validly registered in accordance with clause 5.3 of the Settlement Scheme and Mr Holmes be permitted to participate in the Settlement Scheme; and
(b) Provided that a claim is registered by Mr Peter Shakes by 16 April 2020, his claim be deemed to have been validly registered in accordance with clause 5.3 of the Settlement Scheme and Mr Shakes be permitted to participate in the Settlement Scheme.
15. Pursuant to s 33ZF of the Act, and notwithstanding Order 13 made on 12 December 2019, persons who have, after 10 March 2020 but on or before 26 March 2020, registered claims in accordance with the Settlement Scheme shall be deemed to have validly registered their claims in accordance with clause 5 of the Settlement Scheme and shall be permitted to participate in the Settlement Scheme.
16. Pursuant to s 33ZF of the Act:
(a) On or before 1 April 2020, Volkswagen Group Australia Pty Limited produce copies of the VW WO Data and Skoda WO Data to Maurice Blackburn;
(b) On or before 1 April 2020, Audi Australia Pty Limited produce copies of the Audi WO Data to Maurice Blackburn;
(c) Maurice Blackburn be permitted to use the VW WO Data, Skoda WO Data and Audi WO Data (together, the NEVDIS WO Data) for the limited purpose of verifying whether or not a group member held an interest in an affected vehicle in accordance with the Settlement Scheme and whether, and if so, when that vehicle was written off;
(d) Maurice Blackburn keep and store the NEVDIS WO Data in a manner that preserves its confidentiality; and
(e) Maurice Blackburn not disclose the NEVDIS WO Data to any person other than the following who have provided an undertaking to keep the NEVDIS WO Data confidential and not use it in a manner that is inconsistent with these Orders:
(i) Officers and employees of Maurice Blackburn who are involved in or responsible for the conduct of this proceeding;
(ii) Officers and employees of any third parties engaged to provide technical or project support services in relation to the settlement of this proceeding;
(iii) Counsel retained and appointed to perform the role of “Review Assessor” pursuant to clause 8 of the Settlement Scheme; and
(iv) Experts engaged by Maurice Blackburn to assist in carrying out any functions under the Settlement Scheme.
17. As soon as practicable after completion of the settlement administration, the Administrator provide a report to the Court as to the completion of the Settlement Scheme.
18. The claims for relief made by Richard Cantor, the applicant in proceeding NSD1307 of 2015, in the Interlocutory Application filed by him in this proceeding on 23 March 2020 be dismissed.
19. The claims for relief made by Josefina Tolentino, the applicant in proceeding NSD1308 of 2015, in the Interlocutory Application filed by her in this proceeding on 23 March 2020 be dismissed.
20. The parties have liberty to apply in the event that further orders are required:
(a) Should it become apparent that, for the reasons set out in paragraph 20 of the non-confidential affidavit of Julian Klaus Schimmel affirmed on 20 March 2020, certain group members were not notified of the proposed settlement prior to 10 March 2020, for the purpose of seeking such orders as may be appropriate to permit some or all of such persons to participate in the Settlement Scheme;
(b) Should it become apparent that amendments are needed to the Settlement Scheme for the reasons set out in paragraph 72 of the non-confidential affidavit of Julian Klaus Schimmel affirmed on 20 March 2020, for the purpose of seeking approval of such amendments; or
(c) Should any of the parties or Group Members consider that it is desirable to seek the assistance of the Court in relation to any matter concerning the Settlement Scheme.
AND THE COURT NOTES THAT:
21. In addition to information already provided and noting that the parties otherwise have sought non-publication orders in respect of the Confidential Material and the Confidential Settlement Evidence as set out proposed Orders 1, 12 and 13 of certain draft Orders submitted by Maurice Blackburn to the Court for its consideration at approximately 2.10 pm on 27 March 2020:
(a) Volkswagen AG will pay approximately AUD120 million as the total settlement amount to be made available to eligible group members.
(b) When the settlement has been finalised and all requisite payments thereunder have been made, the total of all amounts paid is unlikely to be significantly less than AUD120 million and may be more than AUD120 million.
(c) Individual settlement payments will be determined in accordance with the methodology developed by the applicant and approved by the Court.
(d) The precise amount of each individual payment must await the finalisation of the assessment of registrations by Maurice Blackburn as the Administrator (which is ongoing).
(e) The estimated average settlement payment for each participating vehicle is AUD2,800.
(f) Persons with an interest in different types of vehicles are eligible to receive different payment amounts, for example, as a result of the type and age of their vehicle. The range of per vehicle payments is approximately AUD1,589 to AUD6,554.
22. Exhibits AGR1 and AGR2 to the affidavit of Alexandra Gay Rose sworn on 24 March 2020 and filed herein, which are in the form of Excel files stored on a USB, are to be retained by the solicitors for the respondents until the date which is 12 months from the date upon which dismissal of this proceeding takes effect in accordance with Order 11 above.
23. The total amount of the Maurice Blackburn applicants’ costs and disbursements verified by Mr Ramsey-Stewart pursuant to and for the purposes of clauses 1.1 and 5 of the Settlement Deed to be paid pursuant to Order 9(b) above and Order 9(b) made this day in each of proceedings NSD 1459 of 2015 and NSD 1472 of 2015 is AUD43,296,810.22 inclusive of GST.
24. The names of those Group Members who have opted out of this proceeding are specified in the Orders made by the Court on 6 May 2019.
THE SCHEDULE HEREINBEFORE REFERRED TO
1. The Group Members are the applicant and all other persons who:
(a) Prior to 3 October 2015, acquired an interest in an affected Skoda diesel vehicle (as defined in paragraph 38 of the Second Further Amended Statement of Claim filed herein on 18 September 2017); and
(b) Still had an interest in that vehicle as at 3 October 2015,
but not including:
(c) The respondents, or any wholly or partly owned subsidiary of either of the respondents;
It is not for me to speculate on what the High Court might do if it is called upon to decide the precise question of whether or not this Court and the Supreme Court have the power to make a CFO or an order in the nature of a CFO at the conclusion of a group proceeding. The reasoning of the majority Justices in Brewster would suggest that the Court would consider that question as involving the true construction of the relevant statutory provisions, in particular s 33V(2) of the FCA Act and s 173 of the CPA. As I have already mentioned, Moshinsky J said in Vocus that this precise question has probably not been finally answered in Brewster although clearly the majority Justices favour the view that the Courts do not have the power to make a CFO or order in the nature of a CFO at any time including at the conclusion of a group proceeding.
In my judgment, the making of a CFO, whether at an early stage of a group proceeding or at the conclusion of such a proceeding, cannot be supported by the equitable principles to which I have referred at [412(e)] above which addressed the sharing of reasonable legal costs expended in the creation of a court ordered trust fund and did not concern spreading the burden of a litigation funder’s profits amongst all the beneficiaries of the trust fund thereby created, or by notions of unjust enrichment. The question of whether the Court has power to make such an order at any time must be resolved by construing the relevant statutory provisions and not otherwise.
In my judgment, the reasoning of the plurality in Brewster which led to the conclusion that neither this Court nor the Supreme Court has power to make a CFO at an early stage of a representative proceeding, with its emphasis on the true construction of the relevant legislative provisions, probably forecloses resort to s 33V of the FCA Act and s 173 of the CPA as an appropriate source of the power to make a CFO at the conclusion of a representative proceeding. As I have already noted, the plurality rejected the idea that a CFO could be supported by reference to equitable principles of the kind to which I referred at [412(e)] above or notions of unjust enrichment. A question for the Court posed by an application for a CFO at the conclusion of a representative proceeding is whether such an order is “… just with respect to the distribution of any money paid under a settlement or paid into Court” in the case of an agreed settlement or one resulting from a payment into Court (as to which see s 33V(2)) and the true construction of s 33Z(1)(g), (2) and (4) in the case of a judgment. On 1 April 2020, when I made orders dismissing all of the funding applications, I was of the opinion that the reasoning of the majority in Brewster required me to dismiss the Grosvenor CFO Application and the BL applicants’ CFO application because I did not have power to grant those applications. Notwithstanding that I had formed that opinion, in the circumstances of the present cases, I considered that there were very strong reasons for refusing all funding applications on discretionary grounds. Accordingly, I did not find it necessary finally to decide the question before me upon the basis that there was no power to make the CFO which had been sought. Instead, I assumed that I had the necessary power and then proceeded to refuse the applications on discretionary grounds.
Discussion and Decision
In this section of these Reasons, I will address the three extant funding applications being those which I identified at [297] above. Although there are three such funding applications, as I have previously noted, the substance of the Grosvenor CFO is the same as the CFO application made by the BL applicants in par 1 of their 10 December 2019 Interlocutory Application.
In order to regularise its involvement in the BL proceedings, Grosvenor also applied for leave to intervene in the BL proceedings or, in the alternative, to be joined as a respondent to each of those class actions. On 1 April 2020, I made an order joining Grosvenor as a respondent to each of those class actions. I will give brief reasons for making that order later in these Reasons.
In addition to the above claims for relief, Grosvenor sought non-publication orders in respect of parts of the evidence tendered before me on 26 March 2020. On that day, I did not make any non-publication orders in respect of Grosvenor’s evidentiary material and reserved its application for such orders into Chambers for further consideration. Given that these Reasons for Judgment are my reasons for making the orders which I made on 1 April 2020, I will address Grosvenor’s application for non-publication orders in a separate judgment.
Grosvenor relies upon s 33V(2) of the FCA Act as the source of the Court’s power to make the CFO which it has sought in its CFO Application. It does not rely upon s 33ZF nor does it rely upon any general equitable principles. Similarly, the BL applicants rely upon s 33V(2) of the FCA Act as the sole source of the Court’s power to make the CFO which they claimed in par 1 of their 10 December 2019 Interlocutory Application.
The BL applicants take a different position in relation to their application for the Alternative FEO. In support of their claim for that relief, the BL applicants rely upon s 33ZF.
Grosvenor made detailed submissions both in writing and orally in support of the proposition that s 33V(2) empowered the Court to make the CFO which it claimed. In those submissions, Grosvenor analysed the judgments of the High Court in Brewster and addressed other authorities in this Court which predated Brewster. Grosvenor’s submissions on the question of power were supported by the BL applicants.
The Independent Contradictors submitted that the Court does not have the power to make the CFO sought by Grosvenor or the CFO sought by the BL applicants. In particular, the Independent Contradictors submitted that s 33V(2) was not a source of such a power. The Independent Contradictors placed heavy reliance on the majority judgments in Brewster.
At [310]–[421] above, I have analysed the judgments of the Full Court in Money Max and the High Court in Brewster and also looked at a number of single judge decisions of this Court given after the delivery of judgment in Brewster. At [421] above, I made clear that, in my opinion, the reasoning of the majority in Brewster led to the conclusion that I did not have power to make the CFOs now sought. I also said that, notwithstanding that that was my view, I did not find it necessary to decide the question because I had formed the view that, even if I had the requisite power, the applications for a CFO in the present cases should be refused on discretionary grounds. Given that this was my view when I made the 1 April 2020 orders, I do not consider it necessary to revisit the question of power in this part of these Reasons. As I have said, I will assume that I have the requisite power and determine the CFO applications by addressing the discretionary matters relied upon by the relevant parties.
Before addressing the parties’ submissions in relation to the extant applications for funding orders, I wish to note a number of important matters.
First, until I closed the classes on 12 December 2019 for the purposes of settlement, all five class actions were open class actions. In my view, closing the classes for the purposes of a settlement which has been agreed in principle at the time the class closure orders are made is a legitimate exercise of the powers of the Court under s 33V and s 33ZF of the FCA Act. The class closure orders which I made in the present case do not run foul of the decision of the NSW Court of Appeal in Haselhurst v Toyota Motor Corporation Australia Ltd (t/as Toyota Australia) [2020] NSWCA 66 or the reasoning of the Court in that case. In Inabu Pty Ltd as trustee for the Alidas Superannuation Fund v CIMIC Group Limited [2020] FCA 510 at [8], Jagot J held that this Court has power to make a class closure order as part of a settlement approval.
Second, the three MB proceedings were unfunded. As already mentioned, one of the MB proceedings was commenced on 20 November 2015 and the other two were commenced on 22 November 2015. This was three weeks after the BL applicants commenced the BL proceedings.
Under the Retainer and Costs Agreements entered into by Maurice Blackburn and each of the applicants in the MB proceedings:
(a) Maurice Blackburn agreed to act for those applicants as their solicitor in respect of their claims and group members’ claims arising out of the emissions scandal;
(b) Each of the MB applicants agreed to pay to Maurice Blackburn professional fees and disbursements in accordance with the rates specified in the Retainer and Costs Agreement but only if there was a successful outcome. That is, the fee arrangement was on a “no win/no fee” basis;
(c) Each MB applicant agreed that, if there is a successful outcome, they would pay an uplift fee equal to 25% of the professional fees otherwise due and payable by them to Maurice Blackburn; and
(d) Interest was payable on fees and disbursements which remained unpaid for 30 days after Maurice Blackburn has given a bill for Legal Costs (as defined in the Retainer and Costs Agreement) in accordance with that Agreement.
Over the period from October 2015 to August 2019, a total of 17,830 group members retained Maurice Blackburn as their solicitors in respect of the MB proceedings and did so upon the same terms as the MB applicants had done in November 2015.
Third, the BL proceedings were partially funded by Grosvenor. According to Mr Bannister, there are approximately 100,000 affected vehicles within the classes covered by the BL proceedings and the MB proceedings. Of those, approximately 2,700 class members have opted out of all of the proceedings. Approximately 1,300 group members have retained Bannister Law to act for them in respect of the emissions scandal and of those 693 have also signed litigation funding agreements with Grosvenor. Mr Hill, the Chief Executive of Grosvenor, said that the number of group members who had signed litigation funding agreements with Grosvenor was 692.
As I have already said, 17,830 group members have retained Maurice Blackburn as their solicitors.
Although there are probably somewhere between 90,000 and 95,000 persons who are group members of the classes covered by both the BL proceedings and the MB proceedings, the evidence before me on 26 March 2020 strongly suggested that, in the end, approximately 43,000 group members would participate in the settlement. Upon the assumption that that figure is reasonably accurate, in the final reckoning, there will be approximately 23,870 group members who participate in the settlement who have not retained either Bannister Law or Maurice Blackburn. In addition, of the 43,000 persons who will participate in the settlement, 42,307 of them are presently unfunded and are not obliged contractually to pay any amounts to Grosvenor.
Fourth, it must be remembered that the settlement which has been agreed among the parties is on a “plus costs” basis. That is, the respondents have agreed to pay the applicants’ legal costs and disbursements upon the basis laid down in cl 5.1 of the Settlement Deed in addition to paying the Aggregate Settlement Sum in accordance with that Deed, the latter sum being an amount to be distributed amongst Participating Group Members. The orders which I made on 1 April 2020 approved the quantum of those costs in the amounts verified by Mr Ramsey-Stewart, the expert appointed by the parties in accordance with cl 5.1 of the Settlement Deed. In addition to agreeing to pay the applicants’ legal costs and disbursements, the respondents also agreed to reimburse to the BL applicants, subject to the terms set out in cl 5.2 of the Settlement Deed, the ATE insurance premium which the BL applicants had outlaid in order to secure adverse costs insurance.
In order to arrive at the final figures for legal costs and disbursements, Mr Ramsey-Stewart reduced the amounts initially claimed by Maurice Blackburn and by Bannister Law by the following amounts:
(a) In the case of Maurice Blackburn, by the amount of $802,079.10; and
(b) In the case of Bannister Law, by the amount of $549,031.46 in respect of professional fees and by the amount of $685,521.38 in respect of its claim for disbursements. That is, Mr Ramsey-Stewart deducted a total of $1,234,552.84 from the initial claims made by Bannister Law.
In 2016, Maurice Blackburn informed its clients that it would forego any shortfall between the overall amount recovered on account of costs and the overall amount incurred and billed in respect of costs. The evidence did not disclose any similar arrangement on the part of Bannister Law in respect of its clients. Accordingly, strictly speaking, the clients of Bannister Law may be liable to pay the difference between the total amount of fees and disbursements rendered by that firm to those clients and the amount recovered under the settlement by the BL applicants on account of legal costs and disbursements which amount is at least $1,234,552.84.
In the course of its submissions in support of its CFO Application, Grosvenor referred to par 15.4 of the Court’s Class Actions Practice Note for various purposes. Grosvenor did not go so far as to submit that, in some way, the Practice Note should be construed as supplying an independent source of power to make the CFO which it sought. Nonetheless, it placed reliance upon par 15.4 of the Practice Note in order to support a broader submission to the effect that, throughout the life of the class actions in the present cases, until December 2019, when Brewster was delivered, Grosvenor was entitled to expect that the Court would, at the conclusion of the proceedings when dealing with settlement, make a CFO in its favour. There are many difficulties with this submission. The principal difficulty is that the submission accords far too much significance to par 15.4 of the Practice Note. I have already made a number of observations about Practice Notes at [173] above. To those observations, I would add the following: A Practice Note cannot be used to overrule or circumvent principles of law laid down in judgments of the Courts. This is particularly the case in respect of judgments of the High Court. Paragraph 15.4 of the Class Actions Practice Note is expressed in very general terms. It should not be construed as a binding indication from the Court that a funding equalisation mechanism of some kind will invariably be deployed at the conclusion of class actions proceedings, particularly when the Court is called upon to approve a settlement of such proceedings. In addition, it should not be construed as an invitation to parties to class actions litigation or to litigation funders to make application for a CFO at the conclusion of class action proceedings. In terms, par 15.4 says no such thing and is merely meant to indicate that the Court will consider appropriate applications for orders sharing the costs of class actions at the conclusion of such proceedings.
I now turn to deal with the question of leave to intervene or joinder.
Grosvenor submitted that the preferred option in the present case was for it to be joined as a respondent to the BL proceedings. It submitted that the Court has power to join it as such a party in the present circumstances and ought to do so because the determination of its CFO Application would affect its rights. The alternative, granting Grosvenor leave to intervene, may cause jurisdictional difficulties of the kind discussed by the Full Court in Caason Investments Pty Ltd v International Litigation Partners No 3 Ltd (2018) 265 FCR 487 (Caason). It seemed to me that it did not matter greatly whether Grosvenor was granted leave to intervene or whether it was joined as a party. In order to avoid any technical arguments about its participation in the hearings on 26 March 2020, I made an order joining it as a respondent to each of the BL class actions. In Caason, the Full Court held (at 502 [64]) that making such an order in those circumstances would be appropriate.
I will now address the substance of Grosvenor’s submissions in support of its application for a CFO. The BL applicants did not add anything of substance to Grosvenor’s submissions insofar as its claim for a CFO was concerned.
The effect of the Grosvenor CFO, if granted, was to convert an entitlement to recover from the 693 group members who had signed litigation funding agreements with Grosvenor 30% of the total amount which those group members would receive under the settlement together with a total management fee in the amount of $390,000 into an entitlement to recover from all group members other than those who were clients of Maurice Blackburn and those who had opted out, 10% of their share of the Aggregate Settlement Sum plus costs together with the management fee of $390,000. Assuming that there will ultimately be 43,000 group members who participate in the settlement and upon the basis of the other figures to which I have referred at [434]–[437] above, the effect of granting to Grosvenor a CFO in accordance with its claimed CFO would be to increase its return from investing in the BL class actions from a total of approximately $985,000 to a total of just over $7.5 million. In addition, the funded group members would end up receiving more than they would have done had the Grosvenor CFO not been made because the deduction from their entitlements would go down from 30% to 10%.
In support of its application to increase its return to the extent I have outlined, Grosvenor made the following submissions.
First, it submitted that, after it repays financing costs incurred by it in the course of the litigation, it will make a substantial net loss if the CFO is not made. On the other hand, if the CFO is made, its return on its investment would be modest. The financing costs referred to in that submission are costs of approximately $3.5 million paid to an organisation called Vannin Capital Operations Limited (Vannin) under an arrangement embodied in a document styled ‘Litigation Co-Funding Agreement’ dated 20 February 2018.
Second, Grosvenor submitted that it was in the interests of justice that the burden of litigation funding costs incurred in achieving a favourable outcome in the proceedings should fall equally upon group members who have benefitted. This submission raises the problem of “free riders” which has been considered on multiple occasions in the authorities. Grosvenor went on to submit that the CFO proposed by it will appropriately share equally the burden of the funding costs.
Third, Grosvenor submitted that a FEO is not a useful comparator. Grosvenor argued that, absent the prospect of a CFO, it would have pursued the litigation differently: It said that it would have undertaken a more substantial book-build and, if that had been unsuccessful, it would have withdrawn its support for the proceedings.
Fourth, par 15.4 of the Class Actions Practice Note requires litigation funders and class action applicants to notify group members as soon as possible if there is an intention to apply for an order reflecting an appropriate funding equalisation mechanism in the event of settlement or judgment. Grosvenor submitted that an appropriate notification was given to group members by Grosvenor in July 2016. This was a limited notification and did not truly serve the purpose referred to in par 15.4 of the Practice Note. Grosvenor then relied upon the opt out notice published in September or October 2017 which included a number of notifications concerning the application for a CFO which the BL applicants had filed on 7 November 2016. Grosvenor then submitted that group members had received ample notice that the BL applicants had intended to seek a CFO on the terms now sought and ample opportunity to opt out in the face of that notice. The notice also enabled them to object to the making of such an order.
Fifth, the Court should infer that it was the combined efforts of the MB applicants and Maurice Blackburn, on the one hand, and the BL applicants and Bannister Law, on the other hand, which produced the successful outcome. In this regard, Grosvenor submitted that the BL applicants had made a significant contribution to that outcome. I think that this submission overstates Grosvenor’s contribution.
Sixth, Grosvenor also submitted that it was not necessarily the case that the Maurice Blackburn no win/no fee basis of acting without a litigation funder was a more desirable arrangement for group members to pursue their rights. It also developed its submissions concerning the BL applicants’ role in the litigation and Grosvenor’s support of that role by reference to certain costs sharing arrangements and co-operation arrangements which had been entered into between Bannister Law and Maurice Blackburn. It was said that the participation of the BL applicants in the litigation against VWAG and its affiliates added value to that litigation and that Grosvenor, as the partial funder of the BL applicants, should be rewarded accordingly.
In the balance of its submissions, Grosvenor addressed the rate of commission (viz the 10% sought from all group members except those who had retained Maurice Blackburn and those who had opted out) and the significance of the objections to Grosvenor’s CFO Application lodged by group members. Given that, on 1 April 2020, I dismissed Grosvenor’s CFO Application, I do not need to discuss the rate of commission that was sought. However, in the course of addressing the rate of commission, Grosvenor made a number of other submissions that bear upon the question of whether, in the exercise of the Court’s discretion, the CFO sought by it should be made. Grosvenor submitted that, without its involvement, the BL proceedings would not have proceeded. It submitted that the BL proceedings had delivered benefits to the group members including the co-operative conduct between the two sets of lawyers and the shared costs. It also submitted that there was a significant contribution made by Bannister Law and Grosvenor at the mediation. It also argued that it had initially indemnified the BL applicants against adverse costs orders and then, through the ATE insurance policy, secured adverse costs insurance for the benefit of those applicants. Finally, it submitted that it already paid $5 million to Bannister Law on account of that firm’s legal costs and disbursements and was obliged to pay a further $2,616,592.07 on account of those fees and disbursements.
Grosvenor submitted that, given that only seven of the 68 objectors based their objections upon complaints about the CFO applications, the Court should infer that, in effect, the group members support the making of the CFOs. I do not consider that such a conclusion can be drawn from the fact that such a small number of persons objected to the making of the CFOs. In reality, I think that little can be drawn from the small number of objections, either way.
The Independent Contradictors made detailed submissions as to why the Court should not make the CFOs sought by Grosvenor and by the BL applicants.
First, the Independent Contradictors submitted that the Court lacks the power to make the orders sought. This argument was based upon a close analysis of Brewster. For reasons already explained, I do not need to deal with this argument. When I decided to dismiss Grosvenor’s application for a CFO and the BL applicants’ application for a CFO, I assumed that I had the requisite power but dismissed those applications on discretionary grounds.
The Independent Contradictors made the following submissions.
First, they submitted that there was no free riding problem in the present case having regard to the existence of the MB proceedings and the interaction between those proceedings and the BL proceedings.
It was submitted that the members of the classes specified in the MB proceedings were in two categories: One group comprised those who had formally retained Maurice Blackburn as their solicitors and the other group comprised those persons who had not entered into any retainer agreement with either Maurice Blackburn or Bannister Law. A total of 17,830 group members had signed retainer agreements with Maurice Blackburn by the time settlement in principle was achieved. In respect of the BL proceedings, there were approximately 1,300 group members who had retained Bannister Law as their solicitors. Of that number, 692 had entered into a litigation funding agreement with Grosvenor. The balance of the classes as defined in the BL proceedings were unfunded and had not retained Bannister Law. As submitted by the Independent Contradictors, it follows from the matters to which I have just referred that there is a large number of group members who were group members in both the MB proceedings and the BL proceedings who had no contractual obligation to pay anything at all to Maurice Blackburn, Bannister Law, Grosvenor or anyone else in connection with the costs of the proceedings. The Independent Contradictors called this large group the Unsigned Group Members.
The Independent Contradictors then submitted that the Unsigned Group Members cannot sensibly be described as “free riding” on Grosvenor or on Bannister Law in circumstances where they were also group members in the MB proceedings. They were not dependent upon Grosvenor funding the BL proceedings in order to pursue their claims because they had the benefit of the MB proceedings. The MB proceedings provided a perfectly satisfactory vehicle for the ventilation of the claims of the Unsigned Group Members (as well as all other group members) because there was no funder in those proceedings and the costs of running those proceedings were confined essentially to the legal costs and disbursements payable to Maurice Blackburn. The only circumstance in which the Unsigned Group Members would be required to pay anything was if the Court made a CFO of the kind outlined in the opt out notice given to group members generally in 2017 or if such an order was made now.
The Independent Contradictors then submitted that there was no persuasive evidence that either Grosvenor or Bannister Law meaningfully contributed to the outcome of the proceedings.
I am prepared to accept that the continued existence of the BL proceedings added some value to the applicants’ side of the record although it was minimal. I made clear to Bannister Law from the outset that I would not tolerate unnecessary duplication of work or costs. By and large, I think it is fair to say that there was very little unnecessary duplication of effort or costs. I pause to note here that, notwithstanding that Bannister Law had agreed to share some costs (the costs of some experts and the cost of the use of a discovery platform), unfortunately it did not meet its share of those costs and substantial sums remain outstanding.
The Independent Contradictors submitted that, at some point during the life of the litigation, the BL applicants should have dropped out and left the vindication of the applicants’ claims to the applicants in the MB proceedings. After all, Maurice Blackburn had commenced those proceedings only three weeks after Bannister Law had commenced its proceedings and took the running in the litigation at all times thereafter. Maurice Blackburn did most of the work and took most of the risk as to costs.
The Independent Contradictors submitted that, by January 2018, Grosvenor had almost exhausted its financial capacity to continue funding the BL proceedings. That submission is clearly correct. Instead of dropping out at that stage, Grosvenor entered into an extraordinarily disadvantageous financial arrangement with Vannin. Under that arrangement, in the period after February 2018, it incurred a liability to Vannin of $3.5 million. At about the same time, it adjusted the litigation funding agreements with some of the persons who had entered into such agreements with it. The adjustments were not favourable to those persons.
At par 43 of their Outline of Written Submissions filed on 24 March 2020, the Independent Contradictors submitted:
Again, it is relevant that Grosvenor entered into the Vanin agreement in circumstances where the MB Proceedings were on foot. If there was insufficient funding for the BL Proceedings to continue at that point, group members would not have suffered because their claims were being pursued in the MB Proceedings. Thus, it was not in group members’ interests for Grosvenor to enter into the funding agreement with Vanin. The only sensible explanation for why that was done was the Grosvenor did not want to give up on its pecuniary interest in the litigation. By entering into the Vanin agreement Grosvenor was not acting in the interests of group members and it is therefore inappropriate to tax group members with the cost.
The Independent Contradictors then submitted that the Court should infer that these financial arrangements between Grosvenor and Vannin were so disadvantageous to Grosvenor as to be of a kind which would not have been entered into by a prudent and capable funder operating within its means and acting in the interests of group members as a whole. Those arrangements reflected the fact that Grosvenor simply lacked the financial wherewithal to fund the BL proceedings adequately without entering into financial arrangements on extreme and unfavourable terms. Worse still, these unfavourable financial arrangements were totally unnecessary given that the MB proceedings were still on foot and adequately protected group members’ interests. Not only did those proceedings adequately protect those interests but, as I have already said, it was Maurice Blackburn and the MB applicants who carried the lion’s share of the work and the costs of running the class actions. The contribution of the BL applicants and Bannister Law (together with Grosvenor) was minimal.
The submissions made by the Independent Contradictors to which I have referred at [458]–[466] above are correct and I accepted them.
The Independent Contradictors then submitted that, if there is power to make a CFO under s 33V(2) of the FCA Act, that power is only appropriately exercised where the funder has consistently acted in the interests of group members, has not unduly enlarged the costs of the proceedings and has materially contributed to the outcome of the claims. They submitted that Grosvenor’s conduct of the BL proceedings does not meet that description. I agreed with that submission.
At pars 48 and 49 of their Outline of Written Submissions, the Independent Contradictors submitted:
Indeed, making the Proposed CFO would be contrary to the public interest. It is not the role of the Court to bail out litigation funders that enter into unwise financing arrangements or to otherwise ensure that the business of litigation funders is profitable. To the contrary, the long term interests of group members in representative proceedings are served by ensuring that such litigation funders fail. That risk of failure will ensure that litigation funders have a strong incentive to act in the best interests of group members, to keep litigation costs low and to fund only those matters which are within their means. As the plurality said in Brewster (at [94]), it is no part of the judicial function under Part IVA “to ease the commercial anxieties of litigation funders or to relieve them of the need to make their decisions as to whether a class action should be supported based on their own analysis of risk and reward”.
It remains to deal with three points raised in Grosvenor’s submissions in relation to discretion:
a) First, the assertion that the BL Proceedings would not have proceeded had Grosvenor not funded those proceedings is irrelevant in circumstances where the MB Proceeding would have proceeded in any event (GS [38]). Indeed, the Court might fairly form the view that the interests of group members would have been best served had the BL Proceedings not proceeded, at least once the MB Proceedings was on foot. The MB Proceedings afforded group members a means by which their claims could be pursued at lower cost to group members.
b) Secondly, the circumstance that Grosvenor has long communicated to group members that it intended to make an application for a common fund order is irrelevant (GS [31]). It cannot be inferred from the mere fact that Grosvenor provided notice that group members consented to, or acquiesced in, the making of such an order.
c) Thirdly, the assertion that Grosvenor would have conducted a book build had it known that a common fund order would not be made is irrelevant (GS [29]). Indeed, comparing the terms upon which Maurice Blackburn was acting in the MB Proceeding with the terms of Grosvenor’s funding agreements in the BL Proceedings, the Court could readily conclude that any book build would have been unsuccessful. The paltry number of BL Signed Group Members as compared with the number of MB Signed Group Members reflects the fact that Maurice Blackburn’s terms were obviously more favourable from the perspective of group members.
Those submissions are correct. I accepted them.
During oral submissions, at a point when Senior Counsel for Grosvenor was about to embark upon his submissions as to why I should make the Grosvenor CFO (at Transcript 70 ll 15–26), the following exchange took place between Counsel and me:
HIS HONOUR: Let me tell you how I see that: what it did was enter into a speculative arrangement with Bannister Law in circumstances where it didn’t have sufficient funds by way of capital and then available debt funds to meet the commitments which it made which ultimately, by maintaining its position in relation to the Bannister Law proceedings beyond the difficult times, caused it to borrow money at ridiculous rates in order to keep going long enough to keep its hand in so it could get an opportunity to make the application which it is currently making.
MR ARMSTRONG: Your Honour, can I put a different complexion on things?
HIS HONOUR: Of course. I just wanted you to know how I felt about it at the moment.
I saw matters much the same way when I made the orders which I made on 1 April 2020.
At all relevant times, Grosvenor acted as if it was assured of obtaining the CFO which it now seeks. It was not induced to acting in that fashion by par 15.4 of the Class Actions Practice Note as that paragraph was not included in that form in the Class Actions Practice Note until late December 2019. Furthermore, the making of CFOs in this Court only gained momentum after Money Max was decided in late 2016. Grosvenor went to extraordinary lengths to maintain the BL proceedings not for the benefit of group members in those proceedings but for its own benefit. The arrangements which it made with Vannin were utterly imprudent and can only be seen as a last ditch effort to prop up its ever dwindling hope of sharing in a substantial settlement of the Volkswagen litigation. Its conduct should not now be rewarded by the making of the CFO which it seeks. In the proper exercise of the Court’s discretion, the Court should not sanction such entrepreneurial activity entered into solely for the financial benefit of Grosvenor and in complete disregard of the interests of group members.
I now turn to deal with the BL applicants’ Alternative FEO Application.
I am compelled to deal with this application because I have refused to make the Grosvenor CFO or the BL applicants’ CFO.
The substance of the application made by the BL applicants for the Alternative FEO was that I should spread across all group members covered by the classes specified in the BL proceedings (except those who had retained Maurice Blackburn and those who had opted out) the amount of approximately $985,500, being the total of the amounts due to Grosvenor from the 693 group members who had entered into litigation funder agreements with Grosvenor. In circumstances where the unfunded group members covered by the classes specified in the BL proceedings were adequately catered for by the claims made in the MB proceedings, I saw no warrant for acceding to this application. I recognised that the amount that would be deducted from the group members (including the unfunded group members in the BL proceedings) would be very small. Nonetheless, I saw no good reason, in the proper exercise of the Court’s discretion, to authorise the making of such a deduction.
For all of the above reasons, I declined to make the Grosvenor CFO and declined to make the CFO sought by the BL applicants. In addition, I declined to make the BL applicants’ Alternative FEO.
I certify that the preceding four hundred and seventy-six (476) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster.
Associate:
Dated: 13 May 2020
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