Casey v State Trustees Limited (ACN 064 593 148)
[2010] FCA 163
•26 February 2010
FEDERAL COURT OF AUSTRALIA
Casey v State Trustees Limited (ACN 064 593 148) [2010] FCA 163
Citation: Casey v State Trustees Limited (ACN 064 593 148) [2010] FCA 163 Parties: JOHN STANLEY FRANCIS CASEY and PAULA GRACE CASEY v STATE TRUSTEES LIMITED (ACN 064 593 148) File number: VID 162 of 2008 Judge: GORDON J Date of judgment: 26 February 2010 Date of hearing: 26 February 2010 Place: Melbourne Division: GENERAL DIVISION Number of paragraphs: 17 Counsel for the Applicants: Mr NJ O’Bryan SC Solicitor for the Applicants: Australian Securities and Investments Commission Counsel for the Respondent: Mr RA Brett QC with Mr G Ahern Solicitor for the Respondent: Maddocks
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 162 of 2008
BETWEEN: JOHN STANLEY FRANCIS CASEY
First ApplicantPAULA GRACE CASEY
Second Applicant
AND: STATE TRUSTEES LIMITED (ACN 064 593 148)
Respondent
JUDGE:
GORDON J
DATE OF ORDER:
26 FEBRUARY 2010
WHERE MADE:
MELBOURNE
THE COURT NOTES THAT:
A.The Applicants and the Respondent have agreed to settle the claims made on the terms set out in the Deed of Settlement, a copy of which is Annexure ‘A’ to these Orders (the Deed of Settlement), save that the Applicants and the Respondent have further agreed that they will seek an order of this Court that the Settlement Scheme, comprising Schedule 1 to the Deed of Settlement, be substituted by an amended Settlement Scheme which comprises ‘Annexure B’ to this Order.
THE COURT ORDERS THAT:
1.The document comprising Annexure ‘B’ to these Orders (Settlement Scheme) be and is hereby substituted for Schedule 1 to the Deed of Settlement.
2.Paragraph 2 of the Amended Application filed on 28 May 2008 (the Amended Application) be further amended to provide that the group members to whom the proceeding relates within the meaning of s 33H of the Federal Court of Australia Act 1976 (Cth) (the Act) are those persons who:
2.1invested in or otherwise hold or held mezzanine notes issued by Market Street Mezzanine Ltd (ACN 091 354 513) pursuant to a prospectus dated 20 November 2002;
2.2suffered financial loss or damage as a result; and
2.3either:
2.3.1appear in the Schedule of Potential Group Members (schedule 5 to the Deed of Settlement); or
2.3.2do not appear in the Schedule of Potential Group Members but lodge a proof of claim which is accepted by the administrator in accordance with the Settlement Scheme -
(hereinafter referred to as the group members).
3.Pursuant to s 33V of the Act, the Court hereby approves the settlement of this Proceeding in accordance with the Deed of Settlement.
4.The Respondent pay the sum of $13,500,000 to the Australian Securities and Investments Commission (ASIC) in accordance with the Deed of Settlement no later than 15 March 2010.
5.Pursuant to s 33ZF of the Act or otherwise, the Court authorises the Applicants nunc pro tunc on behalf of the group members to enter into and to give effect to the Deed of Settlement and the transactions thereby contemplated for and on behalf of the group members.
6.Pursuant to s 33ZB(a) of the Act, the Court declares that the persons affected and bound by these Orders are the Applicants, the Respondent, and the group members, save for those group members who have opted out of the representative proceeding where the opt out notice was received by the Court before 4:00pm on 16 September 2008 pursuant to s 33J of the Act.
7.ASIC shall cause a notice in the form of Annexure ‘C’ to this Motion to be sent by pre-paid post to the last known address of each person listed in Schedule 5 of the Deed of Settlement by no later than 10 March 2010.
8.ASIC shall cause a notice in the form of Annexure ‘D’ to this Motion to be published in the legal notices section or the equivalent of The Australian newspaper and on ASIC’s website by no later than 15 March 2010.
9.The cost of complying with paragraphs 7 and 8 of these Orders be paid by ASIC on behalf of the Applicants and then be part of the Applicants’ costs in the cause.
10.All costs orders made to date as between the Applicants and the Respondent are vacated.
11.As between the Applicants and the Respondent there shall be no orders as to the costs of the proceeding.
12.The Amended Application (as amended by paragraph 2 of these Orders) is otherwise dismissed.
13.The Respondent have liberty to pursue its cross-claims against any of the cross-respondents in the proceeding, subject to the terms of clause 5(d) of the Deed of Settlement.
14.Pursuant to s 50 of the Act, the Affidavit of Savas Miriklis sworn 24 February 2010 and the exhibits thereto (the Affidavit) not be published to any person without further order of the Court. The Affidavit be sealed on the Court file and not be disclosed to any person without further order of the Court.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.
ANNEXURE A
Deed of Settlement
John Stanley Francis Casey and Paula Grace Casey (the "Applicants")
State Trustees Limited (the "Respondent")
Australian Securities and Investments Commission ("ASIC")
Table of contents
Contents
1......... ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... Settlement
2......... ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... Approval Order refused or set aside
3......... ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... Releases
4......... ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... Plea in bar
5......... ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... Obligations of the Parties
6......... ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... Court approval
7......... ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....... Settlement Scheme
8......... ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... ASIC to retain any surplus
9......... ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... No admissions
10......... ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....... No further step in the Proceeding
11......... ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . No orders as to costs
12......... ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. Binding effect of this Deed
13......... ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... Execution of documents
14......... ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... Notices14.1........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... How and where Notices may be sent
14.2........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... Email not to be used
14.3........ ........ ........ ........ ........ ........ ...... When Notices are taken to have been given and received15......... ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . Entire agreement and legal effect
16......... ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... General16.1........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... Governing law and jurisdiction
16.2........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... Variation
16.3........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ Counterparts17......... ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... Definitions and interpretation
17.1........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ Agreement components
17.2........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... Definitions
17.3........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....... Interpretation
17.4........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... Interpretation of inclusive expressions
17.5........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....... Business DaySchedule 1 - Settlement Scheme
Schedule 2 - First Orders
Schedule 3 – Approval Order
Schedule 4 – Notice details
Schedule 5 – List of potential Group Members
Signing pageDeed of settlement
Date ►8 December 2009
Between the parties John Stanley Francis Casey and Paula Grace Casey
both C/- ASIC of Level 24,120 Collins Street, Melbourne, Victoria, 3000
(Applicants)Australian Securities and Investments Commission
of Level 24,120 Collins Street, Melbourne, Victoria, 3000
(ASIC)State Trustees Limited
ACN 064 593 148 of 168 Exhibition Street, Melbourne, Victoria, 3000
(Respondent)
(collectively, the Parties)
Background A. The Applicants and the Respondent are parties to Federal Court of Australia Proceeding No.VID 162 of 2008, a representative proceeding under Part IVA of the Federal Court of Australia Act 1976 (Cth) in which the Applicants, on their own behalf and for and on behalf of the group members (as defined in the Amended Application) claim damages pursuant to s283F of the Corporations Act 2001 (Cth) and equitable compensation from the Respondent on alleged causes of action as pleaded in the Amended Statement of Claim.
B. The Respondent denies the allegations made against it in the Amended Statement of Claim and has defended the Proceeding.
C. The Applicants (on their own behalf and for and on behalf of the Group Members) and the Respondent have agreed to seek approval of a resolution of the Proceeding from the Federal Court under section 33V of the Federal Court of Australia Act 1976 (Cth) on the terms and conditions set out in this Deed without any admission of liability by the Respondent.
D. This Deed has been entered into by the Applicants for and on behalf of the Group Members as representative of the Group Members pursuant to Part IVA of the Federal Court of Australia Act 1976 (Cth).
This Deed witnesses that in consideration of, among other things, the mutual promises contained in this Deed, the Parties agree as set out in this Deed.
1. Settlement
The Respondent will pay the Settlement Sum to ASIC within 10 Business Days of the making of the Approval Order.
Subject to clause 2, after the Respondent has paid the Settlement Sum to ASIC and on the expiration of the period provided for an appeal from the Approval Order (but not before that time):(a) the releases provided in clause 3 will become operative; and
(b) the plea in bar provided in clause 4 will become operative.
If the Approval Order is made and an appeal or an application for leave to appeal from the Approval Order is commenced and the Approval Order is not set aside or materially varied then clauses 1(a) and (b) (and the clauses referred to in those clauses) will become operative 5 Business Days after the date of the Ultimate Determination of that appeal.
2. Approval Order refused or set aside
If the Court refuses to make the Approval Order, or as part of the Ultimate Determination of an appeal from the Approval Order, the Approval Order is set aside:
(a)clauses 1(a) and (b) (and the clauses referred to in those clauses) will not operate and will be of no effect;
(b)ASIC, the Applicants and the Respondent will negotiate in good faith for the purposes of seeking to reach agreement upon a new form of approval order to address the reasons why the Approval Order was either not made or set aside;
(c)if a new form of approval order is:
(i) agreed upon by the Parties pursuant to clause 2(b) above; and
(ii) made by the Court substantially in the new form so agreed pursuant to an application made by ASIC pursuant to clause 6 of this Deed,
then in the event that the Respondent has either not paid the Settlement Sum to ASIC pursuant to clause 1, or the Respondent has paid the Settlement Sum to ASIC pursuant to clause 1 (and ASIC has returned the Settlement Sum to the Respondent pursuant to clause 2(h)), the Respondent will pay the Settlement Sum to ASIC within 10 Business Days of the making of the new form of approval order;
(d)if a new form of approval order is:
(i) agreed upon by the Parties pursuant to clause 2(b) above; and
(ii) made by the Court substantially in the new form so agreed pursuant to an application made by ASIC pursuant to clause 6 of this Deed,
then, if there be no appeal from the making of that order within the time period provided for issuing such an appeal then the releases in clause 3 and the plea in bar provided in clause 4 will become operative immediately after the expiration of that period;
(e) if a new form of approval order is:
(i) agreed upon by the Parties pursuant to clause 2(b) above; and
(ii) made by the Court substantially in the new form so agreed pursuant to an application made by ASIC pursuant to clause 6 of this Deed,
and an appeal is issued against the making of such order within the time period provided for issuing such an appeal then if the Ultimate Determination of that appeal is that the new form of approval order is not set aside or materially varied the releases in clause 3 and the plea in bar provided in clause 4 will become operative immediately upon the Ultimate Determination of that appeal;
(f)if:
(i)ASIC, the Respondent and the Applicants are unable to agree a new form of approval order within 30 days of the Approval Order being refused or set aside; or
(ii)a new form of approval order having been agreed upon by them is not made by the Court substantially in the new form so agreed; or
(iii)a new form of approval order having been made by the Court is subsequently set aside on appeal (including any subsequent appeal or leave to appeal),
then any of ASIC, the Respondent and/or the Applicants may opt to set this Deed aside, by giving written notice to the other parties to this Deed;
(g)in the event that ASIC, the Respondent and/or the Applicants provide written notice under clause 2(f) and notwithstanding clause 10, ASIC, the Applicants and the Respondent may take any step which any of them deem necessary in the Proceeding as if this Deed was never executed; and
(h)where the Respondent has paid the Settlement Sum to ASIC and where the Respondent, ASIC and/or the Applicants have given notice under clause 2(f), ASIC will in accordance with any written direction of the Respondent, return the Settlement Sum to the Respondent together with any accrued interest on that sum within 10 Business Days.
3. Releases
Subject to clause 1 and clause 2:
(a)the Proceeding as between the Applicants and the Respondent, including the Applicants' and Group Members’ claims for damages, equitable compensation, interest and legal and administrative costs and disbursements (present and future) is fully and finally settled;
(b)the Applicants, on their own behalf and on behalf of all Group Members, release and discharge the Respondent and its present and former directors, servants, insurers, contractors and agents (Related Parties) jointly and severally from:
(i)the claims made by the Applicants and all Group Members in the Proceeding;
(ii)any claim arising out of or related in any way to matters that are as at the date of this Deed or were at any time the subject of the Proceeding or any part of the Proceeding including any loss suffered by Group Members as a result of investing in or holding Eligible Mezzanine Notes (as defined in the Settlement Scheme); and
(iii)any claim, action, demand, suit or proceeding for damages, debt, restitution, equitable compensation, account, injunction, specific performance or any other remedy that the Applicant or any Group Member has or may have against the Respondent or any of the Related Parties in respect of:
1.the subject matter of the Proceeding or any part of the Proceeding; and
2.anything related to the Proceeding including, without limitation, any damage, loss, cost or expense suffered as a result of the subject matter of the Proceeding or any part of the Proceeding,
whether arising at common law, in equity, or under statute or otherwise.
4. Plea in bar
Subject to clause 1 and clause 2, any party bound by this Deed may plead this Deed in bar to any claim or proceeding by any other party bound by this Deed (including the Applicants and the Group Members) arising out of or related in any way to the matters that are as at the date of this Deed or were at any time the subject of the Proceeding or any part of the Proceeding.
5. Obligations of the Parties
(a)The Parties agree to execute all documents, and do all acts reasonably necessary to comply with the terms of this Deed, including but not limited to consenting to the First Orders and the Approval Order and refraining from performing any act incompatible with the terms of this Deed.
(b)ASIC agrees to comply with any orders of the Court in relation to advertising or notification of settlement of the Proceeding.
(c)The Respondent agrees to provide reasonable assistance to ASIC in relation to any proceeding or contemplated proceeding in respect of the Westpoint collapse brought by ASIC or the Commonwealth Director of Public Prosecutions, with the reasonable costs of such assistance to be paid by ASIC.
(d)The Respondent agrees to release a Party to the Global Mediation from:
(i)any claims made by the Respondent in the Proceeding;
(ii)any claim arising out of or related in any way to matters which are as at the date of this Deed or were at any time the subject of the Proceeding or any part of the Proceeding; and
(iii)any claim, action, demand, suit or proceeding for damages, debt, restitution, equitable compensation, account, injunction, specific performance or any other remedy that the Respondent has or may have against the Party to the Global Mediation in respect of:
1.the subject matter of the Proceeding or any part of the Proceeding; and
2.anything related to the Proceeding including, without limitation, any damage, loss, cost or expense suffered as a result of the subject matter of the Proceeding or any part of the Proceeding,
whether arising at common law, in equity, or under statute or otherwise,
provided that the Party to the Global Mediation agrees to release the Respondent as per clause 5(d)(i), (ii) and (iii) mutatis mutandis and both the Respondent and the Party to the Global Mediation agree to bear their own costs, if any, in the Proceeding and the Party to the Global Mediation provides such release in writing to the Respondent by no later than 14 days after the Approval Order.
(e)The Respondent agrees that it will not prove in the liquidation of any company that issued, or was the responsible entity for, an Eligible Mezzanine Note (as that term is defined in the Settlement Scheme) or a related entity of any such company, in respect of any claim that the Respondent has or may have against that company that relates to, or arises out of, or is in any way connected with, the subject matter or any part of the Proceeding.
6. Court approval
ASIC on behalf of the Applicants shall take those steps which it considers appropriate:
(a) in order to obtain the Approval Order as soon as practicable, including the tender of such expert or other evidence to the Court to facilitate the Court making the First Orders and the Approval Order; or
(b)where the Approval Order is not made by the Court or is set aside on appeal, in order to obtain such new form of approval order as may be agreed by the Parties pursuant to clause 2(b) of this Deed as soon as practicable, including the tender of such expert or other evidence to the Court to facilitate the Court making the new form of approval order.
7. Settlement Scheme
Subject to clause 1 and clause 2, the Settlement Sum must be applied and administered in accordance with the Settlement Scheme.
8. ASIC to retain any surplus
Any portion of the Settlement Fund, including any interest earned on the Settlement Fund, remaining after the completion of the administration of the Settlement Scheme will be retained by ASIC in accordance with the terms of the Settlement Scheme.
9. No admissions
The Respondent makes no admissions.
There will be no orders for relief except as are necessary to give effect to this Deed or are otherwise agreed by all the Parties.
10. No further step in the Proceeding
No further step is to be taken in the Proceeding by the parties bound by this Deed other than those provided for in this Deed or ordered by the Court or otherwise required by the Act or the Federal Court Rules.
11. No orders as to costs
Except as otherwise provided by this Deed, no Party shall seek orders for its costs of the Proceeding or the costs of or incidental to the application for Court approval of the settlement.
The Parties agree to bear their own costs in relation to the negotiation, preparation and execution of this Deed and the performance of any obligations under this Deed.
12. Binding effect of this Deed
(a)The Applicants acknowledge that, subject to the Court's approval of this Deed, they have entered into this Deed both on their own behalf and for and on behalf of the Group Members pursuant to Part IVA of the Act.
(b) This Deed binds:
(i)the Parties and any executor, administrator, transferee, assignee, liquidator or trustee in bankruptcy appointed in respect of any Party;
(ii)each Group Member and any executor, administrator, transferee, assignee, liquidator or trustee in bankruptcy appointed in respect of such Group Member.
13. Execution of documents
Each Party:
(a) must do, sign, execute and deliver; and
(b)that is a body corporate must take all reasonable steps to procure that each of its directors, employees and agents does, signs, executes and delivers,
all deeds, documents, instruments and acts reasonably required of it or them by notice from another Party to carry out and give full effect to this Deed and the rights and obligations of the Parties under it.
14. Notices
14.1 How and where Notices may be sent
Notice under this Deed must be in writing and delivered by hand or sent by pre-paid post or fax to a party at the address or the fax number for that party in Schedule 4 or as otherwise specified by a party by Notice.
14.2 Email not to be used
Email or similar electronic means of communication must not be used to give Notices under this Deed.
14.3 When Notices are taken to have been given and received
A Notice sent by post is regarded as given and received on the second Business Day following the date of postage.
A fax is regarded as given and received on production of a transmission report by the machine from which the fax was sent which indicates that the fax was sent in its entirety to the recipient’s fax number, unless the recipient informs the sender that the Notice is illegible or incomplete within 24 hours of it being transmitted.
A Notice delivered or received other than on a Business Day or after 4.00pm (recipient’s time) is regarded as received at 9.00am on the following Business Day and a Notice delivered or received before 9.00am (recipient’s time) is regarded as received at 9.00am.
15. Entire agreement and legal effect
This Deed constitutes the entire agreement of the Parties in relation to the matters the subject of this Deed.
16. General
16.1 Governing law and jurisdiction
This Deed is governed by the law in force in Victoria.
Each party irrevocably submits to the non-exclusive jurisdiction of courts exercising jurisdiction in Victoria.
16.2 Variation
A variation of any term of this Deed must be in writing and signed by the Parties.
16.3 Counterparts
This Deed may be executed in any number of counterparts.
16.4 Cross- respondents
It is acknowledged and agreed that nothing in this Deed shall operate to prevent or limit the Respondent from prosecuting its cross claims against:
(a)the Nominated Cross Respondents or any of them; and
(b)any other cross-respondent to the Proceeding who does not provide a release to the Respondent within 14 days of the Approval Order and in accordance with clause 5(d).
17. Definitions and interpretation
17.1 Agreement components
This agreement includes any schedule.
17.2 Definitions
The meanings of the terms used in this Deed are set out below.
Term Meaning the Act Federal Court of Australia Act 1976 (Cth) Amended Application the Amended Application filed by the Applicants in the Proceeding on 28 May 2008 Amended Statement of Claim the Amended Statement of Claim filed by the Applicants in the Proceeding on 28 May 2008 Approval Order orders substantially in the form of Schedule 3 to this Deed approving the settlement of the Proceeding on the terms set out in this Deed or with such variations thereto as are agreed by each Party before the making of such order Business Day a day on which banks are open for business in Melbourne excluding a Saturday, Sunday or public holiday in that city Court the Federal Court of Australia Deed this deed executed by each and every Party First Orders orders substantially in the form of Schedule 2 to this Deed with such variations thereto as are agreed by each Party before the making of such order Group Members as defined in paragraph 2 of the Amended Application filed by the Applicants in the Proceeding on 28 May 2008 (as amended by proposed Order 7 of the Approval Order or as may be amended by any new form of approval order agreed between the Parties pursuant to clause 2(b) of this Deed) other than those persons who have opted out of the Proceeding pursuant to s33J of the Act Nominated Cross Respondents Brighton Hall Securities Pty Ltd
Norton Capital Ltd
Elm Financial Services Pty Ltd
Lewis Securities Ltd
ASG Investment Solutions Pty Ltd
IFA Securities Pty Ltd
Strategic Project Marketing LtdNotice a notice or other communication under this Deed Party a party to this Deed and, in respect of the Applicants, means the Applicants both in their own capacity and in their capacity as representatives of the Group Members pursuant to Part IVA of the Act Party to the Global Mediation each of parties to the following proceedings in the Federal Court of Australia:
1. Ann Street Mezzanine Pty Ltd (In Liquidation) v Beck & Ors VID 485 of 2008;
2. York Street Mezzanine Pty Ltd (In Liquidation) v Beck & Ors VID 484 of 2008;
3. Market Street Mezzanine Limited (In Liquidation) v Beck & Ors VID 607 of 2008;
4. Bayshore Mezzanine Pty Ltd (In Liquidation) v Beck & Ors VID 608 of 2008;
5. Mount Street Mezzanine Pty Ltd (In Liquidation) v Beck & Ors VID 609 of 2008;
6. Bayview Heritage Mezzanine Pty Ltd (In Liquidation) v Beck & Ors VID 611 of 2008;
7. Market Street Mezzanine No 2 Pty Ltd (In Liquidation) v Beck & Ors VID 613 of 2008;
8. Cinema City Mezzanine Pty Ltd (In Liquidation) v Beck & Ors VID 614 of 2008;
9. Frank Bosnjak and Leonie Bosnjak v Bongiorno Financial Advisers Ltd VID 114 of 2008;
10. Peter Cyril Rikys and Ngaire Grace Rikys v Bongiorno Financial Advisers (Aust) Ltd VID 1208 of 2007;
11. Colin Anthony Green v Barzen Pty Ltd (Formerly Dukes Financial Services Pty Ltd) & Anor VID 208 of 2008;
12. Eve Markov v Joseph Dukes VID 207 of 2008;
13. Joseph Goodman v Glenhurst Corporation Pty Ltd VID 638 of 2008;
14. Jennifer Adamson and Michael Allen v Professional Investment Services Pty Ltd QUD 418 of 2007;
15. Anita Louise Rubin v Strategic Joint Partners Pty Ltd QUD 61 of 2008;
each of the parties to the Supreme Court of Victoria proceeding Ann Street Mezzanine Pty Ltd (in Liquidation) and Ors v KPMG (a firm) Supreme Court of Victoria proceeding number 206 of 2008; and
Finchley Holdings Pty Ltd (ACN 003 574 203).Proceeding Federal Court of Australia Proceeding No. VID 162 of 2008
Settlement Fund the Settlement Sum, together with any interest that has accrued on the Settlement Sum and has been credited at the date the determination is made under paragraph 10 of the Settlement Scheme Settlement Scheme the scheme detailed in Schedule 1
Settlement Sum the sum of AU$13.5 million to be paid by the Respondent to ASIC in accordance with clause 1 Ultimate Determination The determination of an appeal, where no subsequent appeal is made in any period provided for appeal from that appeal 17.3 Interpretation
In this Deed:
(a)Headings and bold type are for convenience only and do not affect the interpretation of this Deed.
(b)The singular includes the plural and the plural includes the singular.
(c)Words of any gender include all genders.
(d)Other parts of speech and grammatical forms of a word or phrase defined in this Deed have a corresponding meaning.
(e)An expression importing a person includes any company, partnership, joint venture, association, corporation or other body corporate and any government agency as well as an individual.
(f)A reference to a clause, party, schedule, attachment or exhibit is a reference to a clause of, and a party, schedule, attachment or exhibit to, this Deed and a reference to this Deed includes any schedule, attachment and exhibit.
(g)A reference to any legislation includes all delegated legislation made under it and amendments, consolidations, replacements or re-enactments of any of them.
(h)A reference to a document includes all amendments or supplements to, or replacements or novations of, that document.
(i)A reference to a party to a document includes that party’s successors and permitted assignees.
(j)A promise on the part of 2 or more persons binds them jointly and severally.
(k)A reference to an agreement other than this Deed includes a Deed and any legally enforceable undertaking, agreement, arrangement or understanding, whether or not in writing.
(l)No provision of this Deed will be construed adversely to a party because that party was responsible for the preparation of this Deed or that provision.
17.4 Interpretation of inclusive expressions
Specifying anything in this Deed after the words ‘include’ or ‘for example’ or similar expressions does not limit what else is included.
17.5 Business Day
Where the day on or by which any thing is to be done is not a Business Day, that thing must be done on or by the next Business Day.
Schedule 1 - Settlement Scheme
Definitions
Unless otherwise stated, words defined in the Deed have the same meaning in the Settlement Scheme.
Unless otherwise stated, references in this schedule to paragraph numbers are references to paragraphs in this schedule.
"Administrator": The person nominated by ASIC to be the administrator of the Settlement Scheme. “Approved Unrecorded Transaction”: An Unrecorded Transaction that ASIC is reasonably satisfied occurred and is properly supported by documentary evidence. “Capital Return”: A:
1. payment received under the terms of an Eligible Mezzanine Note other than a payment of interest;
2. dividend declared payable on an Eligible Mezzanine Note in the liquidation of an entity that issued that Eligible Mezzanine Note;
3. payment received as a result of a determination or settlement through the Financial Industry Complaints Service or the Financial Ombudsman Service of a complaint made in relation to an investment in an Eligible Mezzanine Note; or
4. payment received in purported settlement of claims against any party in relation to the loss suffered as a result of investing in an Eligible Mezzanine Note.
“Capital Return Schedule”: A schedule, compiled as provided in paragraph 3, organised by Group Member, and which identifies all Capital Returns known to ASIC. “Class Closure Date”: The 28th day following:
(i) where no appeal is commenced from the Approval Order in the time provided for an appeal from the Approval Order, the expiration of the period provided for an appeal from the Approval Order;
(ii) where an appeal is commenced from the Approval Order in the time provided for an appeal from the Approval Order and the Approval Order is not materially set aside following the Ultimate Determination, the date of the Ultimate Determination;
(iii) where a new form of approval order is agreed upon by the Parties pursuant to clause 2(b) of the Deed and made by the Court substantially in the new form so agreed and where no appeal is commenced from that order within the provided for an appeal from that order, the expiration of the period provided for an appeal from that order;
(iv) where a new form of approval order is agreed upon by the Parties pursuant to clause 2(b) of the Deed and made by the Court substantially in the new form so agreed and an appeal is commenced from that order in the time provided for an appeal from that order, and that order is not materially set-aside following the Ultimate Determination, the date of the Ultimate Determination.
“Completion of Administration”: 1 year following the date of determination in paragraph 10(a). “Confirmed Return”: A Capital Return that appears:
1. in the Capital Return Schedule and the Proof of Claim of a Group Member;
2. in the Proof of Claim of a Group Member; or
3. in the Capital Return Schedule but not the Proof of Claim of a Group Member but for which the relevant Group Member does not provide a statutory declaration in accordance with paragraph 6 that is acceptable to ASIC in consultation with the Administrator.
“Confirmed Return Schedule”: A schedule which identifies each Confirmed Return, organised by Group Member, compiled as provided in paragraphs 5(c). “Confirmed Transactions Schedule”: A schedule which identifies Eligible Claimants who have submitted a Proof of Claim, compiled as provided in paragraphs 5(b) and 0. “Eligible Claimant”: A person, other than a person who appears on the Opt-Out Schedule, who holds an Eligible Mezzanine Note and has suffered financial loss as a result.
For the purpose of this definition, where a person has an economic interest in an Eligible Mezzanine Note, and the Eligible Mezzanine Note was acquired or is held by RBC Global Services Australia Nominees Pty Ltd or Netwealth Investments Ltd as custodian, and the discretion to decide to acquire or dispose of the Eligible Mezzanine Note (but not necessarily when to acquire or dispose of the Eligible Mezzanine Note) was and is the person's, that person will be deemed to hold such Eligible Mezzanine Note.“Eligible Mezzanine Note”: A Mezzanine Note, save where an Eligible Rollover Product was issued in respect of a Mezzanine Note in which case it will be the Eligible Rollover Product where no Further Eligible Rollover Product was issued in respect of that Eligible Rollover Product or where one or more than one Further Eligible Rollover Product was issued, the last Further Eligible Rollover Product issued. “Eligible Rollover Product”: A Rollover Product, excluding any part of that Rollover Product that was not issued in lieu of any repayment of capital invested in a Mezzanine Note. “Face Value”: Where the Eligible Claimant holds a Mezzanine Note, the dollar amount of that Mezzanine Note less any amount issued in Mezzanine Note(s) held or previously held in lieu of payment(s) of interest on a Mezzanine Note; or
Where the Eligible Claimant holds an Eligible Rollover Product, the dollar amount of that Eligible Rollover Product; or
Where the Eligible Claimant holds a Further Eligible Rollover Product, the dollar amount of that Further Eligible Rollover Product.“Further Eligible Rollover Product”: A Rollover Product, excluding any part of that Rollover Product that was not issued in lieu of any repayment of capital invested in an Eligible Rollover Product. “Individual Proportion”: The amount to be paid to a Participating Claimant calculated in accordance with the Individual Proportion Formula. “Individual Proportion Formula”: The formula at paragraph 0. “Ineligible Claimant”: A person who submits a Proof of Claim who is not an Eligible Claimant. “Mezzanine Note”: A 'Mezzanine Note' issued by Market Street Mezzanine Ltd (ACN 091 354 513) pursuant to a prospectus dated 20 November 2002, and including any supplementary prospectus issued by Market Street Mezzanine Ltd. “Opt-out Claimants Schedule”: A schedule compiled by the Administrator in accordance with paragraph 5(a) of persons who appear on both the Proof of Claim Schedule and the Opt-out Schedule. “Opt-out Schedule”: The schedule compiled from information made available to the Applicants by the Court identifying persons who opted-out of the Proceeding before 4.00pm on 16 September 2008. “Participating Claimant”: A person who appears in the Confirmed Transactions Schedule. “Participating Claimants Schedule”: A schedule which identifies, by Participating Claimant, the Individual Proportion to be distributed, compiled as provided in paragraph 0. This Schedule must include all details required by the Administrator to facilitate payment in accordance with paragraph 00. “Proof of Claim”: The form that a person is required, in accordance with paragraph 0, to complete and submit to the Administrator in order to participate in the Settlement Scheme. “Proof of Claim Schedule”: A schedule which identifies all persons who have submitted a Proof of Claim by the Class Closure Date. “Transactions Schedule”: A schedule, compiled as provided in paragraph 0, which identifies all Eligible Mezzanine Notes and the identity of each holder of those Eligible Mezzanine Notes, known to ASIC. "Rollover Product": 1. 'Promissory Note' issued by Bayshore Mezzanine Pty Ltd (ACN );
2. 'Mezzanine Note' issued by Emu Brewery Mezzanine Ltd(ACN );
3. 'Promissory Note' issued by Emu Brewery Mezzanine Ltd (ACN );
4. 'Promissory Note' issued by Market Street Mezzanine No 2 Pty Ltd (ACN );
5. 'Unsecured Note' issued by North Sydney Finance Ltd (ACN );
6. 'Unit' in the Westpoint Income Fund; or
7. any other financial product issued by a Westpoint entity.
“Terms of Participation”: That:
1. The person submitting the Proof of Claim is a Group Member or upon submitting the Proof of Claim will become a Group Member or has the authority to covenant in writing these terms on such person’s behalf;
2. The person is an Eligible Claimant;
3. All the details in the Proof of Claim are true; and
4. Following the proper administration of the Settlement Scheme, the allocation of Individual Proportions from the Settlement Fund is final and cannot be challenged, reviewed, quashed or called into question before any court of law or administrative review body in any proceedings.
“Unacknowledged Return”: A Capital Return that appears in the Capital Return Schedule but not in the Proof of Claim of the relevant Group Member. “Unacknowledged Return Schedule”: A schedule which identifies each Unacknowledged Return, organised by Group Member, compiled as provided in paragraph 5(c). “Unrecorded Transaction”: An issue or transfer of Eligible Mezzanine Notes that is not recorded as a transaction on the Transactions Schedule, but appears in a Proof of Claim. “Unrecorded Transactions Schedule”: A schedule of Unrecorded Transactions, organised by Group Member, compiled pursuant to paragraph 5(b).
Receipt of the Settlement Sum and payment of costs
1.ASIC is authorised to retain any portion of the Settlement Fund, including any interest earned on the Settlement Fund remaining after the Completion of the Administration, in respect of the Applicants' costs of the Proceeding.
2.The Administrator's reasonable costs of:
(a)preparing the Transactions Schedule, Capital Return Schedule, the Opt-out Claimants Schedule, the Confirmed Transactions Schedule, Confirmed Return Schedule, Unacknowledged Return Schedule and the Unrecorded Transactions Schedule; and
(b)paying the Individual Proportions in accordance with paragraph 00,
must be paid by ASIC and are not to be paid out of the Settlement Fund.
Proof of Claim Process
3.By the Class Closure Date, ASIC must request the Administrator to prepare a Transactions Schedule and Capital Return Schedule, and provide the Administrator with a copy of the Opt-out Schedule.
4.Any Eligible Claimants who wish to participate in the Settlement Scheme must submit to the Administrator by the Class Closure Date a Proof of Claim containing the following information:
(a)Name of person or legal entity that holds the Eligible Mezzanine Notes;
(b)A copy of the Eligible Mezzanine Notes;
(c)Address of legal entity that holds the Eligible Mezzanine Notes;
(d)The amount, date received/declared, payor and type of any Capital Return;
(e)Name, business hours phone number, email address and postal address (if different from legal entity address) of contact for the Eligible Claimant; and
(f)Confirmation and acceptance of the Terms of Participation.
The Proof of Claim is to be available electronically on the website or in hard copy from ASIC by request.
Where two or more persons hold or are deemed to hold the same Eligible Mezzanine Note, such persons will be treated as joint holders of the note and only one proof of claim may be accepted in respect of that Eligible Mezzanine Note.5.Within 7 days after the Class Closure Date, ASIC must provide to Administrator and to the Respondent (in electronic form to be agreed with the Administrator) a Proof of Claim Schedule and request the Administrator to:
(a)create the Opt-out Claimants Schedule;
(b)reconcile the Transactions Schedule with the Proof of Claim Schedule (excluding persons listed on the Opt-out Claimants Schedule) to create:
(i) the Confirmed Transactions Schedule; and
(ii) the Unrecorded Transactions Schedule; and
(c)reconcile the Capital Return Schedule with the Proof of Claim Schedule (excluding persons listed on the Opt-out Claimants Schedule) to create:
(i) the Confirmed Return Schedule; and
(ii) the Unacknowledged Return Schedule; and
(d)provide the Opt-out Claimant Schedule, Confirmed Return Schedule, Confirmed Transactions Schedule, Unacknowledged Return Schedule and Unrecorded Transactions Schedule to ASIC and the Respondent within a further 14 days.
6.(a) Within 14 days after receiving the Unrecorded Transactions Schedule, ASIC must request any claimant listed on it to provide documentary support for all Unrecorded Transactions supported by a statutory declaration incorporating each sub-paragraph of the Terms of Participation from a person with authority to make the declaration on behalf of the claimant (to be provided to ASIC within a further 21 days).
(b)Within 14 days after receiving the Unacknowledged Return Schedule, ASIC must request any claimant listed on it to provide a statutory declaration stating that they have not received the relevant Unacknowledged Return and incorporating each sub-paragraph of the Terms of Participation from a person with authority to make the declaration on behalf of the claimant (to be provided to ASIC within a further 21 days).
7.Within 21 days after the deadline for the provision of documentary support for Unrecorded Transactions and statutory declarations for Unacknowledged Returns, ASIC in consultation with the Administrator must:
(a)determine which (if any) of the Unrecorded Transactions are Approved Unrecorded Transactions;
(b)add Approved Unrecorded Transactions to the Confirmed Transactions Schedule;
(c)determine which (if any) of the Unacknowledged Returns are not Confirmed Returns; and
(d)update the Confirmed Returns Schedule to include Capital Returns that appear in the Capital Return Schedule but do not appear in the Proof of Claim of a Group Member, where the relevant Group Member does not provide a statutory declaration in accordance with paragraph 6 that is acceptable to ASIC in consultation with the Administrator.
8.Within 7 days after completing the Confirmed Transactions Schedule, ASIC must send a letter to each:
(a)Ineligible Claimant advising that their claim is ineligible; and
(b)Eligible Claimant where:
(i) an Unrecorded Transaction of that Eligible Claimant is not included on the Confirmed Transactions Schedule advising the Eligible Claimant that the relevant Unrecorded Transaction(s) was not accepted for the purposes of calculating the payment to the Eligible Claimant; and/or
(ii) an Unacknowledged Return of that Eligible Claimant remains on the Confirmed Return Schedule advising the Eligible Claimant that the relevant Unacknowledged Return(s) was not disregarded for the purposes of calculating the payment to the Eligible Claimant.
9.No less than 7 days (and within 21 days) after providing the notification in paragraph 8, ASIC must calculate the Individual Proportion of each Participating Claimant by applying the Individual Proportion Formula to the Confirmed Transactions Schedule and Confirmed Return Schedule to create a Participating Claimants Schedule, and provide a copy of that Schedule to the Administrator and the Respondent.
Payment of Individual Proportions
10.No less than 7 days (and within 21 days) after providing the Participating Claimants Schedule to the Administrator and the Respondent, ASIC must:
(a)Determine the total amount of the Settlement Fund; and
(b)Distribute the Individual Proportions to Participating Claimants by cheque sent to each Participating Claimant's last known address.
11.The Settlement Fund is to be distributed to Participating Claimants in accordance with the Individual Proportion Formula, which follows:
Individual Proportion =
(Face Value of the Participating Claimant’s Eligible Mezzanine Note(s) held - the Participating Claimant’s Confirmed Returns) X
Settlement Fund
Total of (Face Value of all Participating Claimants' Eligible Mezzanine Notes held – all Participating Claimants' Confirmed Returns)
Worked Examples
– Mr Smythe
Mr Smythe holds a Eligible Mezzanine Note with a face value of $150,000. He has received no Capital Return (No Liquidator Dividends have been declared on the Eligible Mezzanine Note, nor has he received any settlement payments).
Assuming:
- the Settlement Fund is $13,500,000:
- the total number of Eligible Mezzanine Notes held by all Participating Claimants is $20,000,000:
- Liquidator Dividends declared in relation to Participating Claimants' Eligible Mezzanine Notes total $600,000
-Participating Claimants' settlement payments total $100,000
Then Mr Smythe's Individual Proportion is calculated as follows:
150,000 / 19,300,000 ($20M-$.6M-.1M) x $13,500,000 =104,922 (rounded to the nearest dollar)
Therefore, Mr Smythe’s Individual Proportion = $104,922 (rounded to the nearest dollar)
–Ms Jone (a roll-over investor)
Ms Jone, a roll-over investor, holds Eligible Mezzanine Notes with a face value of $100,000. The Liquidator of the Westpoint company that issued the Eligible Mezzanine Notes has declared a dividend of 21.5 percent. She has received no other Capital Return (e.g. settlement payments).
Assuming:
- the Settlement Fund is $13,500,000:
- the total number of Eligible Mezzanine Notes held by all Participating Claimants is $20,000,000:
- Liquidator Dividends declared in relation to Participating Claimants' Eligible Mezzanine Notes total $600,000
-Participating Claimants' settlement payments total $100,000
Then Ms Jone's Individual Proportion is calculated as follows:
100,000-21,500 / 19,300,000 ($20M-$.6M-.1M) x $13,500,000 =54,909 (rounded to the nearest dollar)
Therefore, Ms Jone's Individual Proportion = $54,909 (rounded to the nearest dollar)Miscellaneous
12. ASIC may extend by up to 14 days, any date referred to in the Settlement Scheme, where ASIC considers it is reasonably necessary to do so.
13.Nothing in this Settlement Scheme imposes any obligation on the Respondent to review, validate or verify:
(a)the adequacy of the Proof of Claim Schedule, the Transactions Schedule, the Capital Return Schedule, the Opt-out Claimants Schedule, the Confirmed Return Schedule, the Confirmed Transactions Schedule, the Unacknowledged Return Schedule, the Unrecorded Transactions Schedule, or the Participating Claimants Schedule;
(b)the determination of Eligible Claimants or Ineligible Claimants;
(c)whether Unrecorded Transactions should be Approved Unrecorded Transactions;
(d)whether Unacknowledged Returns should be Confirmed Returns;
(e)the calculation of Individual Proportions to be paid to Participating Claimants;
(f)the discharge of any other responsibility allocated to ASIC, or the performance of any task carried out by ASIC, under this Settlement Scheme; or
or to otherwise deal with the determination of Proofs of Claim.
Schedule 2 - First Orders
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIAN DISTRICT REGISTRYNo. VID 162 of 2008
BETWEEN
JOHN STANLEY FRANCIS CASEY AND PAULA GRACE CASEY
Applicants
and
STATE TRUSTEES LIMITED (ACN 064 593 148)Respondent
THE COURT NOTES THAT:
A.The Applicants and the Respondent have agreed to settle the claims made herein on the terms set out in the Deed of Settlement, a copy of which is Annexure ‘A’ to these Orders (the Deed of Settlement).
THE COURT ORDERS BY CONSENT THAT:
1.ASIC cause a notice in the form of Annexure ‘B’ to these Orders together with Annexure 'A' to these Orders, to be sent by pre-paid post to the last known address of each person in the Schedule of Potential Group Members (schedule 5 to the Deed of Settlement) by no later than [insert date].
2.ASIC cause a notice in the form of Annexure 'C' to these Orders to be published in the legal notices section or the equivalent of The Australian and on the ASIC website by no later than [10 days after the First Orders are made].
3.The cost of complying with Orders 1 and 2 be paid by the Applicants and then be part of their costs in the cause.
4.Any group member who wishes to object to the Court’s approval of the Deed of Settlement or otherwise to the disposal of the Proceeding must do so by filing a notice with the Registry that is in the form of the Schedule to Annexure ‘B’ to these Orders by [insert date 10 days before the approval hearing].
5.Except with leave of the Court, any group member who has not filed a notice in accordance with Order 4, shall not be entitled to object to the Court’s approval of the Deed of Settlement or otherwise to the disposal of the Proceeding.
6.ASIC and the Respondent’s solicitors have leave to inspect the court file and to copy any notices of objection filed by group members objecting to the settlement.
7.The hearing of the application to approve the Deed of Settlement be adjourned to [at least 28 days after the date of this Order].
8.Costs of the application and the day be reserved.
Dated: 2009
ANNEXURE A
DEED OF SETTLEMENT
ANNEXURE B
Annexure 'B' to the Order made [] December 2009
Letter to be sent to potential group members
«Title» «Given_Name» «Surname»
«Address_Line_1»
«Address_Line_2»
«Street»
«Locality» «State» «PostCode»Private & Confidential
Dear «Title» «Surname»
WESTPOINT COLLAPSE: The Australian Securities & Investments Commission’s (“ASIC”) class action; John Casey & Anor against State Trustees Limited ("State Trustees")
Federal Court Proceeding No VID 162 of 2008 (the "Proceeding")1.This notice relates to a class action (defined above as the Proceeding), arising out of the Westpoint collapse. This notice is sent to you by order of the Hon Justice Finkelstein made on 11 December 2009.
2.ASIC and State Trustees understand that you invested in mezzanine notes known as ‘Market Street Mezzanine Notes’. If you did invest in, ‘Market Street Mezzanine Notes’, even if you subsequently rolled those notes into other Westpoint products then you may be in a class of people on whose behalf ASIC has brought the Proceeding (which means they believe you may be a ‘group member’ in the Proceeding).
3.This notice is important and contains information which concerns your legal rights and money that may be paid to you. You should read it carefully. If you do not understand any part of it, please seek independent legal advice in relation to its contents.
4.This notice discusses:
a.a proposed settlement of the Proceeding;
b.how the proposed settlement affects you;
c.what you need to do in order to accept or challenge the settlement, or to raise any queries about the settlement.
5.Full details of the settlement are contained in the Deed of Settlement, copies of which are enclosed with this letter. The following is a high-level summary.
THE PROPOSED SETTLEMENT
6.An agreement has been reached between ASIC and State Trustees to settle the Proceeding. Under the proposed settlement, State Trustees has agreed to pay $13,500,000 to be distributed pro-rata according to net capital loss (being the amount invested less any capital returns) amongst those group members who lodge a proof of claim. This settlement cannot take effect without Court approval.
7.If the settlement is approved, a settlement scheme to distribute the money paid by State Trustees will be administered by ASIC.
8.Group members will need to satisfy the requirements of the settlement scheme in order to be entitled to receive money. For example, where a group member fails to lodge a proof of claim within the prescribed period, or where a group member's only loss is loss of interest payments or incurring legal costs, the group member would not be entitled to receive money under the settlement scheme.
WHAT YOU STAND TO RECEIVE UNDER THE SETTLEMENT
9.The amount available for distribution to eligible group members will be approximately $13.5 million.
10.The amount payable to eligible group members will be calculated according to a formula set out in the settlement scheme (see Schedule 1 of the Deed of Settlement).
11.On the information known to ASIC, if all known eligible group members submit a proof of claim it is estimated that group members will recover at least 69 percent of the capital they invested in Market Street Mezzanine Notes, taking into account:
a.monies payable under the proposed settlement;
b.any other settlement payments received; and
c.where a group member rolled over their investment in Market Street Mezzanine Notes into another Westpoint product, any dividends declared by a liquidator in respect of that Westpoint product.
12.The amount received by group members may be less if there are group members not known to ASIC or if information held on group members' investments in Market Street Mezzanine Notes and capital returns is not accurate.
Worked Examples
13.If you invested $10,000 in Market Street Mezzanine Notes, and have not recovered any of your capital invested, your claim will be for the full $10,000 and it is estimated you will be eligible to receive approximately $6,900 (providing you submit a proof of claim within the time required).
14.Alternatively, if you invested $10,000 in Market Street Mezzanine Notes, and recovered $5000 of your capital invested through a settlement with your financial adviser, your claim will be $5000 and it is estimated you will be eligible to receive approximately $3,450 (providing you submit a proof of claim within the time required).
15.If you invested $10,000 in Market Street Mezzanine Notes and rolled over your investment into York Street Promissory Notes (or any other Westpoint product) and the liquidator of York Street Mezzanine Pty Ltd (or the relevant Westpoint company product) declared a dividend of 21.5 percent, your claim will be $7,850 and it is estimated you will be eligible to receive approximately $5,416.50.
COURT APPROVAL
16.The settlement requires the approval of the Federal Court before it can take effect.
17.A hearing is scheduled for determining whether the Federal Court should approve the settlement. The hearing is at the Federal Court (305 Williams Street, Melbourne) at [INSERT DATE] 2010. At the hearing, ASIC will seek the Court’s approval of the settlement, including the total settlement sum, the distribution of the settlement sum among group members, and each aspect of the proposed settlement scheme.
18.If the Court approves the settlement, then the settlement will be binding on you. This would mean that you would lose any rights you might have to take action against State Trustees in future in connection with your investment in Market Street Mezzanine Notes.
WHAT YOU NEED TO DO
19.It is advisable that you seek legal advice about the settlement, particularly if you do not understand any part of this document. ASIC is not able to give you legal advice.
20.If you are in favour of the settlement, there is nothing that you need to do at this time. You will be notified of the outcome of the application to the Court to approve the settlement and what you need to do to participate in the distribution of the settlement sum.
21.If you wish to object to the settlement, you should notify the Federal Court. You should use the form set out in Schedule 1 (attached) and detail the reason why you object to the settlement It must be received by the Court before [date] 2010. If you send a notice objecting to the settlement you may appear in person, or engage a lawyer, to explain your objection to the Federal Court at [time] on [date] 2010.
22.If you require further information you should contact Mark White-Robinson of ASIC (03 9280 4629 or [email protected] or Christina Klemis of ASIC (03 9280 3575 or [email protected]).
Schedule 1
Notice in relation to Proposed Settlement of the Proceeding
(To be filed in the Victoria District Registry)IN THE MATTER OF STATE TRUSTEES LIMITED (ACN 064 593 148)
AND IN THE MATTER OF
MARKET STREET MEZZANINE LTD (IN LIQUIDATION) (ACN 091 354 513)
John Stanley Francis Casey & Paula Grace Casey v State Trustees Limited
No. VID 162 of 2008
To: The Registrar
Federal Court of Australia (Victoria District Registry)
305 Williams StreetMelbourne VIC 3000
I, ___________________________________________,
a group member in the above proceedings, give notice that I object to the proposed settlement of the representative proceeding on the terms proposed because [SET OUT IN THE SPACE BELOW THE REASONS WHY YOU OBJECT TO THE PROPOSED SETTLEMENT. IF THERE IS NOT ENOUGH SPACE, PLEASE ATTACH YOUR COMMENTS TO THIS NOTICE]:Signed: _________________________________________
Name: _________________________________________
Address: _________________________________________
Phone number: _________________________________________Email address
(if available): _________________________________________Date: _________________________________________
-Participating Claimants' settlement payments total $100,000
Then Mr Smythe's Individual Proportion is calculated as follows:
150,000 / 19,300,000 ($20M-$.6M-.1M) x $13,500,000 =104,922 (rounded to the nearest dollar)
Therefore, Mr Smythe’s Individual Proportion = $104,922 (rounded to the nearest dollar)
–Ms Jone (a roll-over investor)
Ms Jone, a roll-over investor, holds Eligible Mezzanine Notes with a face value of $100,000. The Liquidator of the Westpoint company that issued the Eligible Mezzanine Notes has declared a dividend of 21.5 percent. She has received no other Capital Return (e.g. settlement payments).
Assuming:
- the Settlement Fund is $13,500,000:
- the total number of Eligible Mezzanine Notes held by all Participating Claimants is $20,000,000:
- Liquidator Dividends declared in relation to Participating Claimants' Eligible Mezzanine Notes total $600,000
-Participating Claimants' settlement payments total $100,000
Then Ms Jone's Individual Proportion is calculated as follows:
100,000-21,500 / 19,300,000 ($20M-$.6M-.1M) x $13,500,000 =54,909 (rounded to the nearest dollar)
Therefore, Ms Jone's Individual Proportion = $54,909 (rounded to the nearest dollar)
Miscellaneous
12.ASIC may extend by up to 14 days, any date referred to in the Settlement Scheme, where ASIC considers it is reasonably necessary to do so.
13.Nothing in this Settlement Scheme imposes any obligation on the Respondent to review, validate or verify:
(a) the adequacy of the Proof of Claim Schedule, the Transactions Schedule, the Capital Return Schedule, the Opt-out Claimants Schedule, the Confirmed Return Schedule, the Confirmed Transactions Schedule, the Unacknowledged Return Schedule, the Unrecorded Transactions Schedule, or the Participating Claimants Schedule;
(b) the determination of Eligible Claimants or Ineligible Claimants;
(c) whether Unrecorded Transactions should be Approved Unrecorded Transactions;
(d) whether Unacknowledged Returns should be Confirmed Returns;
(e) the calculation of Individual Proportions to be paid to Participating Claimants;
(f) the discharge of any other responsibility allocated to ASIC, or the performance of any task carried out by ASIC, under this Settlement Scheme;
or to otherwise deal with the determination of Proofs of Claim.
Annexure C TO THE ORDER OF GORDON J OF 26 FEBRUARY 2010
Letter to be sent to group members
«Title» «Given_Name» «Surname»
«Address_Line_1»
«Address_Line_2»
«Street»
«Locality» «State» «PostCode»
Private & ConfidentialDear «Title» «Surname»
WESTPOINT COLLAPSE: The Australian Securities & Investments Commission’s (“ASIC”) class action; John Casey & Anor against State Trustees Limited (“State Trustees”)
Federal Court Proceeding No VID 162 of 2008 (the “Proceeding”)1.This notice relates to a class action (defined above as the Proceeding), arising out of the Westpoint collapse. This notice is sent to you by order of the Hon Justice Gordon made on 26 February 2010.
COURT APPROVAL
2.On 26 February 2010 the Federal Court of Australia approved the settlement of the Proceeding.
3.Under the settlement:
a.State Trustees shall pay ASIC $13,500,000 to be distributed amongst eligible group members who lodge a proof of claim;
b.The settlement is binding on group members including you and you may take no further action against State Trustees in connection with your Market Street Mezzanine Notes;
c.The settlement scheme is being administered by ASIC; and
d.The proceeding was dismissed.
WHAT YOU NEED TO DO
4.If you wish to make a claim, you will need to complete the following steps:
a. Complete the Proof of Claim form enclosed.
b.The Proof of Claim must be completed by no later than [70 days after the date of the approval order] (“Closing Date”). If you do not submit your claim by the Closing Date you will not be entitled to participate in the settlement scheme and you will not receive any of the settlement monies.
c.Claims will be processed after verification against the information held by ASIC. You will be advised if you have submitted an ineligible claim or if further supporting documents are required.
5.If you have submitted a valid claim it is anticipated that payment will be made approximately 3 months after the Closing Date.
6.If you require further information you should contact Mark White-Robinson of ASIC (03 9280 4629 or [email protected]: or Christina Klemis of ASIC (03 9280 3575 or [email protected]).
LEGAL ADVICE
7.It is advisable that you seek legal advice about the settlement, particularly if you do not understand any part of this document. ASIC is not able to give you legal advice.
Annexure D TO THE ORDER OF GORDON J OF 26 FEBRUARY 2010
Notice for Publication – intended to notify group members of the approval hearing
COURT APPROVES SETTLEMENT OF WESTPOINT RELATED CLASS ACTION BETWEEN ASIC AND STATE TRUSTEES LIMITED
The Australian Securities & Investments Commission’s (“ASIC”) class action; John Casey & Anor against State Trustees Limited (“State Trustees”)
Federal Court Proceeding No VID 162 of 2008 (the “Proceeding”)
This notice is published pursuant to the order of the Hon Justice Gordon made on 26 February 2010, under the rules of the Federal Court of Australia, which govern the conduct of representative proceedings (“Class Actions”)
You should read this notice if you have lost money through investing in the failed Westpoint group
On 26 February 2010 the Federal Court of Australia approved the settlement of the Proceeding.
Under the settlement:·State Trustees shall pay ASIC $13,500,000 to be distributed amongst eligible group members who lodge a proof of claim;
·The settlement is binding on group members and group members may take no further action against State Trustees in connection with their Market Street Mezzanine Notes;
·The settlement scheme is being administered by ASIC; and
·The Proceeding was dismissed.
Who is a group member?
You may be a group member if you invested in Market Street Mezzanine Notes issued by Market Street Mezzanine Ltd, pursuant to a prospectus, even if you later rolled those notes into other Westpoint products. However, you will not be a group member if you invested only in Market Street Promissory Notes and did not also invest in Market Street Mezzanine Notes.
Am I already identified as a group member?
ASIC and State Trustees already have the details of many group members.
If you believe you are a group member, you should wait to see whether you receive correspondence from ASIC by [insert date]. The correspondence will enclose a proof of claim form which group members must complete and return by [70 days after the date of the approval order] should they wish to participate in the distribution of settlement monies. A copy of the correspondence including the proof of claim form is available on ASIC’s website [insert website details].
Group members who do not complete and return the proof of claim form by [insert date] will not be eligible to participate in the distribution of settlement monies.
Who do I contact for further information?
You should contact Mark White-Robinson of ASIC (03 9280 4629 or [email protected]: or Christina Klemis of ASIC (03 9280 3575 or [email protected]).
Please note that ASIC cannot give you legal advice, and you should seek your own legal advice about the proposed settlement.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 162 of 2008
BETWEEN: JOHN STANLEY FRANCIS CASEY
First ApplicantPAULA GRACE CASEY
Second Applicant
AND: STATE TRUSTEES LIMITED (ACN 064 593 148)
Respondent
JUDGE:
GORDON J
DATE:
26 FEBRUARY 2010
PLACE:
MELBOURNE
REASONS FOR JUDGMENT
The events giving rise to this proceeding relate to one aspect of the collapse of the Westpoint group.
The Australian Securities and Investments Commission (ASIC), with the consent of the named applicants, commenced this proceeding pursuant to s 50 of the Australian Securities and Investments Commission Act 2001 (Cth) (the ASIC Act). The named applicants are John Stanley Francis Casey and Paula Grace Casey (the Applicants). The respondent is State Trustees Limited (STL).
By an Amended Application filed on 28 May 2008, the Applicants claim for themselves and on behalf of group members, damages pursuant to s 283F of the Corporations Act 2001 (Cth) (the Corporations Act) and equitable compensation from STL in respect of alleged causes of action pleaded in the Amended Statement of Claim filed on 28 May 2008 (the ASC).
The relationship between the Applicants (and other group members) and STL is not in dispute. In about September 2000, Westpoint Management Limited (WML), in its capacity as trustee for the 60 Market Street Trust (the Trust), acquired land at 60 Market Street, Melbourne (the Property) to develop into a hotel and residential apartments (the Development). WML was a related body corporate of Market Street Mezzanine Limited (Market Street). Between February 2000 and January 2003, Market Street issued six information memoranda seeking to raise funds from investors by way of promissory notes. Market Street on-lent to WML the amount raised by issue of promissory notes and Market Street took a second ranking fixed and floating charge over the assets of the Trust including the Property.
On 20 November 2002, Market Street lodged a prospectus with ASIC seeking to raise up to $20 million by way of the issue of mezzanine notes. The Applicants allege that the prospectus contained a number of representations including to the effect that:
1.Market Street was seeking to raise up to $20 million by way of unsecured debt (whether by way of the promissory notes or the mezzanine notes);
2.the trustee of the mezzanine notes was STL;
3.Market Street had to ensure that the aggregate amount of principal outstanding and interest accrued on all mezzanine notes issued under the trust deed did not exceed $21,600,000.
STL agreed to act as trustee for the issue of the mezzanine notes in accordance with the requirements of Ch 2L of the Corporations Act and for that purpose, STL and Market Street entered into a trust deed dated 14 November 2002 (the Trust Deed). For present purposes, it is sufficient to note that Annexure C to the Trust Deed contained what was described as the “Last Consolidated Balance Sheet” of Market Street as at 30 June 2002 and which recorded the promissory notes as a non-current liability of $7,818,331.
The Applicants allege that from 14 November 2002 (when the Trust Deed was signed) up until and including 28 May 2003 (when the last mezzanine note was issued), Market Street’s liability to investors in promissory notes continuously exceeded $20 million.
The principal claim by the Applicants is that STL breached s 283DA(a), (b), (c) and / or (e)(i) of the Corporations Act. The Applicants contend that after its appointment as Trustee, and up until the issue of the first mezzanine notes pursuant to the Prospectus, STL inter alia:
1.failed to ascertain from Market Street, and monitor, the amount of liabilities which Market Street had from time to time;
2.failed to exercise reasonable diligence to ascertain whether the property of Market Street that was available would be sufficient to repay the amount deposited or lent by way of Mezzanine Notes when it became due; and
3.failed to exercise reasonable diligence to ascertain whether Market Street had committed any breach of the provisions of the Trust Deed or the Corporations Act.
The ASC sought damages and equitable compensation from STL on the basis that if STL had not breached its obligations, then the mezzanine notes would not have been issued at all or, at least, would not have issued without full and proper disclosure of the true position with respect to the amount of unsecured debt that Market Street had already incurred.
The proceeding was brought pursuant to Pt IVA of the Federal Court of Australia Act 1976 (Cth) (the FCA). Following a mediation conducted by the Honourable Ian Callinan AC QC, these proceedings as between the Applicants and STL have settled. STL, whilst denying liability, has agreed to pay $13,500,000 to be distributed pro-rata according to the net capital loss (being the amount invested less any capital returns) among those group members who lodge a proof of claim. The settlement is recorded in a Settlement Deed executed on 8 December 2009 (the Settlement Deed). STL remains entitled to pursue its cross-claims against any of the seven nominated cross-respondents in the proceeding: see cl 16.4 of the Settlement Deed. These nominated cross-respondents may be broadly described as financial advisors to one or more of the group members. The nominated cross-respondents do not make any claims against the Applicants and I am informed by Counsel for the Applicants and Counsel for STL that it is unlikely that they will do so.
The Settlement Fund to be distributed will comprise the settlement sum together with any interest accrued and credited as at the distribution date. ASIC will determine the claims and each eligible group member’s individual proportion of the Settlement Fund. The Applicants’ costs and the costs of administration of the Settlement Fund will not be recovered from the Settlement Fund save that ASIC will retain any amount that remains in the Settlement Fund 12 months after a date specified in the Settlement Deed and known as the Distribution Date. At present, if all known potential group members submit a proof of claim, it is estimated that group members will recover at least 71% of the capital they invested in the mezzanine notes after taking into account:
1.monies payable under the proposed settlement;
2.any other settlement payments received; and
3.where a group member rolled over their investment in the mezzanine notes into another Westpoint product, any dividends declared by a liquidator in respect of that Westpoint product.
The potential group members are some 526 members: see sch 5 of the Settlement Deed.
The Applicants and the group members are estimated to hold $20,184,800 in Market Street mezzanine notes and other Westpoint products issued in lieu of mezzanine notes. The majority of the group members invested $20,000 or less in the mezzanine notes. Although the number of group members is significant, there is no real risk that the total proofs of claim to be submitted will be less than the settlement sum agreed between ASIC and STL. ASIC, through the collective efforts of their officers over the past 14 months, has established contact with and confirmed contact details for approximately 411 of the group members. This accounts for $16,982,100 of the capital invested in mezzanine notes. The effort by ASIC to contact remaining group members is continuing.
In support of the application to approve the settlement, an affidavit sworn by Mr Miriklis, Litigation Counsel for ASIC, explained the background to the litigation and the reasons it is thought that the settlement sum is to be regarded as a fair and reasonable compromise of the claims of the group members. Exhibited to his affidavit is advice from Counsel. That advice deals with the prospects of success. Counsel is of the view that the settlement sum is fair, reasonable and adequate in the circumstances.
Being actions commenced under Pt IVA of the FCA, the proceedings cannot be compromised without the approval of the Court: s 33V of the FCA. The Applicants and STL seek that approval.
The principles that govern approval applications under s 33V of the FCA are well established: see Dorajay Pty Ltd v Aristocrat Leisure Limited [2009] FCA 19 at [10] and [11] and the authorities there cited. Consistent with these principles, I would approve the proposed settlement of these proceedings. The amount each group member will recover is a substantial proportion of the loss. No group member is required to bear any costs. Some group members may have already, or will in the future, recoup some of their losses from other sources including other litigation initiated by ASIC against others concerned with the collapse of the Westpoint group. The litigation is being settled at a relatively early stage thereby avoiding significant costs and uncertainties and without the need for an examination of the particular facts and circumstances in which each group member invested in the mezzanine notes.
For these reasons, there will be orders approving the settlement in accordance with the terms of the Settlement Deed dated 8 December 2009 and ancillary orders.
I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon. Associate:
Dated: 26 February 2010
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