Clarke (as Trustee of the Clarke Family Trust) v Great Southern Finance Pty Ltd (Receivers and Managers Appointed) (in liquidation)
[2014] VSC 516
•11 December 2014
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
S CI 2010 02882
| PETER CLARKE (as trustee of the Clarke Family Trust) & Ors (according to the Schedule attached) | Plaintiff |
| v | |
| GREAT SOUTHERN FINANCE PTY LTD (Receivers and Managers Appointed) (In liquidation) & Ors | Defendant |
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JUDGE: | CROFT J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 17 - 19 November 2014 |
DATE OF JUDGMENT: | 11 December 2014 |
CASE MAY BE CITED AS: | Clarke (as trustee of the Clarke Family Trust) & Ors v Great Southern Finance Pty Ltd (Receivers and Managers Appointed) (in liquidation) & Ors |
MEDIUM NEUTRAL CITATION: | [2014] VSC 516 |
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PRACTICE AND PROCEDURE - GROUP PROCEEDINGS – Approval of Settlement Application under Supreme Court Act 1986 (Vic), s 33V – Relevant factors to be considered – Opt Out Application - Clarke v Great Southern Finance Pty Ltd (in liquidation) [2014] VSC 569 – Publication of reasons - Clarke (as trustee of the Clarke Family Trust) v Great Southern Finance Pty Ltd (Receivers and Managers Appointed) (in liquidation) (Ruling No 3) [2014] VSC 584 - Barclays Bank PLC v Nylon Capital LLP [2011] EWCA Civ 826 - Voss & Davidson [2003] QCA 252 - Osborne v Auckland Council [2014] 1 NZLR 766 – Principles applicable to Supreme Court Act 1986, s 33V - Australian Competition and Consumer Commission v Chats House Investments Pty Ltd (1996) 71 FCR 250 - Lopez v Star World Enterprises Pty Ltd (1999) ATPR 41-678 - Williams v FAI Home Security Pty Ltd (No 4) (2000) 180 ALR 459 - Darwalla Milling Co Pty Ltd v F Hoffman La Roche Limited (No 2) (2006) 236 ALR 322 - Taylor v Telstra Corporation Limited [2007] FCA 2008 - Rod Investments Pty Ltd v Abeyratne [2010] VSC 457 - Wheelahan v City of Casey [2011] VSC 215 - Thomas v Powercor [2011] VSC 614 - Tasfast Air Freight Pty Ltd v Mobil Oil Australia Ltd [2002] VSC 457 - Verschuur v Vynotas Pty Ltd [2004] VSC 130 - Wotton v State of Queensland (2009) 109 ALD 534 - Mercedes Holding Pty Ltd v Waters (No 1) (2010) 77 ACSR 265 - Hobbs Anderson Investments Pty Limited v OZ Minerals Limited [2011] FCA 801 - Harrison v Sandhurst [2011] FCA 541 - Re General Motors Corp Pick-Up Truck Fuel Tank Products Liability Litigation 55 F 3d 768 - ExxonMobil Superannuation Plan Pty Ltd v Esso Australia Pty Ltd [2010] VSC 357 - In re Timbercorp Security Ltd (in liq) (Applications for the approval of compromises) [2012] VSC 590 - Mercieca v SPI Electricity Pty Ltd [2012] VSC 204 - Perry v Powercor Australia Ltd [2012] VSC 113 - Johnson v Gore Wood & Co [2002] 2 AC 1 - Henderson v Henderson (1843) 3 Hare 100 - Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175 – Issue Estoppel - Blair v Curran (1939) 62 CLR 464 - Hoystead v Commissioner of Taxation (1925) 37 CLR 290 – Anshun Estoppel and Abuse of Process - Johnson v Gore Wood & Co [2002] 2 AC 1 - Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 - Henderson v Henderson (1843) 3 Hare 100.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs in the Group Proceedings and the Defendants in the Separate Proceedings | Mr M. Galvin SC | M+K Lawyers |
| For the Bendigo & Adelaide Bank Limited, ABL Custodian Services Pty Ltd, ABL Nominees Pty Ltd and Pirie Street Holdings Pty Ltd | Mr P.D. Crutchfield QC Mr W.H.C. Forrester | Allens |
| Great Southern Managers Australia Ltd | Mr A.J. McClelland | DLA Piper |
| Javelin Asset Management Pty Ltd | Mr R. Jepson | Mills Oakley Lawyers |
| Mr John Carlton Young | Mr A. Meyer | Colin Biggers & Paisley |
| Mr Cameron Rhodes and Mr Charles Butlin | Mr C. Moller | Arnold Bloch Liebler |
| Mr Jeffrey Mews and Mr Peter Patrikeos | Mr D.G. Guidolin | Moray & Agnew Lawyers |
| ASIC | Mr T. Woodward SC | ASIC |
| “DC Objectors” | Mr D. Bailey | DC Legal |
| “ERA Objectors” | Mr D. Anderson | ERA Legal |
| “Clamenz Objectors” | Mr T. Chalke-Clamenz | Clamenz Lawyers |
SCHEDULE OF PARTIES
PETER CLARKE AS TRUSTEE OF THE CLARKE FAMILY TRUST
First Plaintiff
SAMANTHA BARBARA MURRAY
Second Plaintiff
RAYMOND CARL DRUMMOND
Third Plaintiff
-and-
GREAT SOUTHERN FINANCE PTY LTD (RECEIVERS & MANAGERS APPOINTED)(IN LIQUIDATION) (ACN 009 235 143)
First Defendant
BENDIGO AND ADELAIDE BANK LIMITED (ACN 068 049 178)
Second Defendant
ABL CUSTODIAN SERVICES PTY LTD
IN ITS CAPACITY AS TRUSTEE OF THE ABL PORTFOLIO
FUNDING TRUST 2007-1 (ACN 097 889 720)
Third Defendant
ABL NOMINEES PTY LTD (ACN 106 756 521)
IN ITS CAPACITY AS TRUSTEE OF THE LIGHTHOUSE TRUST NO 12
Fourth Defendant
PIRIE STREET HOLDINGS LIMITED (ACN 061 461 550)
(FORMERLY ADELAIDE BANK LIMITED)
Fifth Defendant
JAVELIN ASSET MANAGEMENT PTY LTD (ACN 136 367 194)
Sixth Defendant
GREAT SOUTHERN MANAGERS AUSTRALIA LIMITED
(RECEIVERS & MANAGERS APPOINTED) (IN LIQUIDATION)
(ACN 083 825 405)
Seventh Defendant
JOHN CARLTON YOUNG
Eighth Defendant
PETER JOHN PATRIKEOUS
Ninth Defendant
JEFFREY ARTHUR SYDNEY MEWS
Tenth Defendant
CAMERON ARTHUR RHODES
Eleventh Defendant
PHILLIP CHARLES BUTLIN
Twelfth Defendant
-and-
JEFFREY ARTHUR SYDNEY MEWS
First Third Party
PETER JOHN PATRIKEOS
Second Third Party
HIS HONOUR:
Application
This is an application for Court approval of a Deed of Settlement whereby the proceedings the subject of this judgment are settled. These proceedings are conveniently referred to as “the Great Southern proceedings”. Approval of the Court is required under the provisions of s 33V of the Supreme Court Act 1986 (“the Act”) to the extent that the proceedings are group proceedings to which the provisions of Part 4A – Group Proceeding - of that Act apply. For the reasons which follow, Court approval of the settlement is granted.
Background to trial
These proceedings were the subject of a trial which commenced on 29 October 2012 and which extended over 90 sitting days, concluding on 24 October 2013. Judgment was reserved and was listed for delivery on Friday 25 July 2014; the parties having been informed of this listing on 23 July 2014. Within hours of the parties being so informed, the Court was advised by M+K Lawyers, the solicitors for the plaintiffs in the Clarke Group proceeding, that the proceedings had settled.
As a result of advice of settlement of the Great Southern proceedings, the complete certified and sealed judgment which was to be delivered on 25 July 2014 has, as more recent press reports have noted, been locked away pending resolution of the application for approval of the settlement of the proceedings under s 33V of the Act. This judgment, which has not been delivered, is presently accurately described as the unpublished reasons for judgment in the Great Southern proceedings. It bears its original listing delivery date of 25 July 2014 and its medium neutral citation of [2014] VSC 334. For the reasons which follow in this judgment, these unpublished reasons for judgment dated 25 July 2014 are, for present purposes, referred to as the Great Southern reasons and are contained in the Annexure to these reasons for judgment. The Great Southern reasons are now published in this way for the reasons which follow in this judgment. They are not published as reasons for judgment – though they are, as explained below, published completely intact and in their judgment format.
In terms of background to the Great Southern proceedings themselves, it is convenient to set out the introductory paragraphs in this respect in the Great Southern reasons:[1]
[1]Great Southern reasons, [56]-[58].
56.These proceedings are comprised of 16 proceedings which are group proceedings under Part 4A of the Supreme Court Act 1986 and various separate proceedings, eight in all, which are not group proceedings but which raise issues in common with some or all of the group proceedings. Consequently it is desirable that the group proceedings and the separate proceedings be heard together for the purpose of determining issues common to all these proceedings.
57.The group proceedings and the separate proceedings by no means constitute the full range of proceedings arising out of the financial collapse of GSL and other companies such as GSF and GSMAL, all of which are now in liquidation. Many other proceedings have been issued arising out of the collapse, both by the growers and financiers, such as Bendigo and Adelaide Bank Limited, both in this Court, the County Court and courts in other States. Most of the proceedings issued in the County Court have been uplifted to this Court and stayed pending the outcome of these proceedings – or this stage of these proceedings. Other proceedings have also been stayed.
58.At the outset it is important to emphasise that that although it was agreed that many, if not most, common issues with respect to these proceedings will be determined in the present stage of these proceedings it does not necessarily follow that this determination will dispose of the proceedings. It has always been clear that this depends on the result of this determination so that to the extent the plaintiffs might succeed there would need to be further hearings and determination of particular matters arising with respect to the circumstances of individual plaintiffs which may sound in terms of liability or the nature and extent of relief granted, or a combination of both.
The Great Southern reasons, which span 2012 pages of detailed analysis and findings, are, it is hoped, made more accessible by a detailed Synopsis.[2] The position reached in the Great Southern proceedings is set out in summary form in that Synopsis, as follows:[3]
[2]Great Southern reasons, [1]-[55].
[3]Great Southern reasons, [1]-[12].
Introduction
1.The “Great Southern Proceedings” comprise a series of group and individual proceedings in which claims are advanced by, and on behalf of, persons who invested in the MISs promoted and operated by GSMAL.
2.The purpose of this Synopsis is to provide an overview and to aid the understanding of the detailed reasons which follow; reasons which are directed to a variety of claims, defences and counterclaims in the range of proceedings which comprise the Great Southern Proceedings. This Synopsis is not, however, intended to stand in the place of the detailed reasons which follow or in any way to compromise, qualify or expand upon those reasons. The Synopsis is merely an aid to understanding the detailed reasons which are, in the case of any perceived difference or conflict, to be preferred ahead of the Synopsis. Finally, it should be noted that this Synopsis is not, and is not intended to be, comprehensive.
Overall result
3.For the detailed reasons which follow, the plaintiffs’ various cases, whether they be by primary claim or counterclaim, must fail. Consequently, the third party claims made by some of the defendants also fall away.
4.It goes without saying, though it should be said, that the collapse of the Great Southern group of companies was a tragedy for many people – including investors, shareholders, officers and employees of the group, those associated with the group and agribusiness in Australia. Judges are not blind and unfeeling in these circumstances, but the role of the Courts is to assess the admissible evidence and apply the law accordingly, and the judges in our Courts will do so impartially and to the best of their ability.
5.It is also the role of the Court to ensure procedural fairness – the application of the rules of natural justice – for all parties and those interested in proceedings as group members. An aspect of so doing is ensuring that all concerned are fully informed of the case or cases they have to meet – whether by way of claim or defence or third party proceedings. It is important in this respect, particularly in a large or complex set of proceedings such as the Great Southern Proceedings, to insist that cases are conducted strictly according to the pleadings. It is the pleadings which define the relevant issues in the proceedings. Other matters must remain extraneous to the Court’s decision making, otherwise procedural fairness is compromised – natural justice not accorded. Finally, with respect to pleadings, it should be kept in mind that plaintiffs’ pleadings define the ambit of their case or cases, though its or their ultimate ambit may be affected by the defendant or third party pleadings. Nevertheless, a narrow case or cases will likely be the result of the way the plaintiffs pleaded their claim or claims. In this respect it should be observed that the cases as put by the plaintiffs are not about what anyone said or did not say to the plaintiffs, or what anyone advised or did not advise the plaintiffs – on behalf of Great Southern, by financial advisers or otherwise.
The plaintiffs’ cases
6.The principal claim made by the plaintiffs (and the plaintiffs by counterclaim in the Individual Proceedings set down for trial[4]) is that GSMAL issued PDSs relating to the offer of interests in its MISs which were “defective” by reason of the provisions contained in Part 7.9 of the Corporations Act, and that the plaintiffs have, as a result, suffered loss and damage.
[4]The lead plaintiffs in the Group Proceedings and the plaintiffs by counterclaim in the Individual Proceedings are described in this Executive Summary, and elsewhere, as “the plaintiffs”.
7.In order for the plaintiffs to succeed in their principal claim, they must establish the following elements:
(1)the relevant PDSs contained representations (described by the plaintiffs as “Misleading PDS Statements”) which were misleading or deceptive;
(2)the relevant PDSs omitted to include information (described by the plaintiffs as the “Relevant Matters”) that was required to be included in the PDSs pursuant to Division 2 of Part 7.9 of the Corporations Act;
(3)the Relevant Matters were “actually known” to the relevant persons under s 1013C(2) of the Corporations Act;
(4)the plaintiffs relied on the alleged “Misleading PDS Statements” in applying for interests in the relevant MISs or would not have invested in the relevant MIS had the “Relevant Matters” been disclosed;
(5)the plaintiffs have suffered loss and damage as a result of being given a “defective” PDS; and
(6)the defendants are liable for that loss and damage.
The first three elements might be described, generally, as going to liability, whereas the latter three go to causation and damage. It follows that even if liability were established, the plaintiffs would not succeed if the latter three elements were not established. Thus, for example, if no reliance were established or any loss and damage which occurred was not the result of the first three elements, then the plaintiffs would fail, in spite of suffering loss.
Findings
Overview
8.The plaintiffs also plead a variety of alternative claims which are substantially based on the same underlying factual allegations relevant to their principal claims. It follows that as the plaintiffs’ principal claims fail, the alternative claims also fall away.
9.For the detailed reasons which follow, the Court finds that none of the PDSs the subject of the proceedings were “defective” within the meaning of s 1022A of the Corporations Act by reason of the inclusion of the alleged “Misleading PDS Statements” or the omission of the alleged “Relevant Matters”.
10.In relation to the proceedings which are set down for trial on all issues, the Court finds that the relevant plaintiffs have not established:
(a)that they relied on the relevant PDSs;
(b)that they have suffered any loss or damage;
(c)nor, if it were established that any loss and damage had been suffered:
(i)that their loss or damage arose because of being given a “defective” PDS; or
(ii)that the defendants (or defendants by counterclaim) are liable for their loss or damage.
11.In general terms, it should be kept in mind that the cases pleaded by the plaintiffs are relatively narrow in the sense that they are not broadly “misleading or deceptive conduct” cases under the provisions of s 52 of the Trade Practices Act 1974 (Cth).[5] The cases are, rather, with a narrow exception relying on provisions in the ASIC Act, focussed on and reliant upon the contents of the relevant PDSs. In any event, as discussed in the detailed reasons, the ASIC Act provisions on which the plaintiffs rely are not applicable in the present circumstances – so it is the contents of the PDSs which remain decisive.
[5]See now s 18 of the Australian Consumer Law, Schedule 2 to the Competition and Consumer Act 2010 (Cth).
12.I turn now in this Synopsis to examine in some detail some of the deficiencies in the plaintiffs’ claims. Nevertheless, this detail remains in the nature of summary and overview and, as such, does not detract from or qualify the detailed reasons which follow, as indicated previously.
It is noted that the terminology, abbreviations and references to parties in this judgment are the same as those used in the Great Southern reasons, unless otherwise indicated.
In summary, the position I reached as a result of the trial of the Great Southern proceedings is, as set out in the Great Southern reasons, that the plaintiffs’ claims completely and comprehensively failed – in all proceedings and with respect to all managed investment schemes. The question of costs was reserved but, subject to possible amelioration as a result of offers of compromise or other matters – not known to the Court – serious adverse costs consequences might be expected to flow from the substantive result.
Background to application
On 6 August 2014, the plaintiffs filed a summons seeking the following orders:
1. Settlement of the Group Proceedings (being the proceedings referred to in Annexure A to this summons) in the terms contained in the deed of settlement executed by the parties on 23 July 2014 and to be exhibited and marked “SGW-1” to the affidavit of Stuart Graeme Walter to be sworn on 7 August 2014 (“deed of settlement”) is approved pursuant to section 33V(1) of the Supreme Court Act 1986 (“the Act”).
2. The plaintiffs in the Group Proceedings have the authority of the “Group Members” (as that term is defined in each of the Group Proceedings), nunc pro tunc, to enter into and give effect to the deed of settlement and the transactions contemplated thereby for and on behalf of the Group Members.
3. The form and content of the plaintiffs’ notice attached as Annexure A to this summons is approved and is to be sent to all Group Members.
4. Such further or other order as the Court thinks fit pursuant to section 33V(2) or section 33ZF of the Act.
On 14 August 2014, the parties appeared before Judd J at the first directions hearing of the plaintiffs’ summons. His Honour made the following orders:
1.Pursuant to section 33X(4) and 33Y(2) of the Supreme Court Act 1986, the Notice of Settlement to Group Members (“Notice of Settlement”) be given in the following way:
(a) by 4:00 pm on 26 August 2014, the Plaintiffs shall send a copy of the Notice of Settlement annexed as Annexure A to this order to each of the group members by posting it by ordinary prepaid post to the address of each of the group members identified from the scheme registers; and
(b) the Plaintiffs shall cause a copy of the advertisement annexed as Annexure B to this order (“Advertisement”) to be published in an edition of the following newspapers to be offered for sale no later than 26 August 2014;
(i) ‘The Herald Sun’;
(ii) ‘The Daily Telegraph’;
(iii) ‘The Courier Mail’;
(iv) ‘The Advertiser’ (Adelaide);
(v) ‘The West Australian’;
(vi) ‘The Mercury’ (Hobart); and
(vii) ‘The NT News’,
such copy of the Advertisement to be published in the said newspapers in a size not less than 260mm x 190 mm
2. Group Members must file any written notices of objection to the settlement of the Group Proceedings with the Supreme Court of Victoria in the form attached and marked Annexure C and provide a copy of their notice to the plaintiffs’ solicitors, M+K Lawyers, 40-42 Scott Street, Dandenong, Victoria, 3175 by no later than 4:00 pm on 15 September 2014.
3. The Plaintiffs are to provide a copy of any document received pursuant to paragraph 6 as soon as practicable to the other parties.
Date for Further Directions Hearing
4. The Group Proceedings be adjourned for a further directions hearing at 10:30 am on 17 September 2014.
5. Liberty to apply.
6. Costs are reserved.
…
On 17 September 2014, the parties appeared before Judd J at the second directions hearing. Following the hearing, his Honour made the following orders:
Section 33V Application
1. The Plaintiffs file and serve any evidence and submissions in support of the application for approval of the settlement by 3 October 2014.
2. In respect of paragraph 1, the solicitors for the plaintiffs are to file by 3 October 2014 an affidavit exhibiting as a sealed confidential exhibit:
(a) a memorandum summarising the written and oral advice given by M+K to clients of M+K as to whether the settlement is fair and reasonable to all Group Members; and
(b) an opinion of the lead plaintiffs’ solicitors and counsel as to whether the settlement is fair and reasonable for all Group Members.
3. The sealed confidential exhibit filed pursuant to Order 2 is only to be opened and reviewed by the Judge hearing the application for approval of the settlement, and shall afterwards be resealed and remain otherwise confidential except by further order of a Judge of this Honourable Court, and shall be marked as such.
4. The other parties file and serve any affidavit or affidavits upon which they intend to rely and any submissions by 4:00 pm on 3 October 2014.
5. The solicitors (if applicable) for each objector file and serve a list of the objectors for whom they act, including the grower numbers and relevant allotment number(s) of those objectors where available.
6. All objectors file and serve their affidavits, any affidavits upon which they intend to rely and any submissions by 4:00 pm on 13 October 2014.
7. The parties file and serve any responsible affidavits and submissions, including in response to any objections and to any evidence or submissions filed and served under Orders 6 and 10, by 4:00 pm on 23 October 2014.
8. The hearing of the approval application is adjourned to 10:30 am on 27 October 2014 on an estimated hearing time of 2 days.
Section 33KA or 33ZF Applications
9. Any application(s) by any group members to cease to be group members pursuant to sections 33KA or 33ZF of the Supreme Court Act 1986 (Vic) be made on notice to all parties by 26 September 2014.
10. Any group member making an application of the type contemplated by Order 9 file and serve any affidavits upon which they intend to rely and any submissions by 4:00 pm on 3 October 2014.
11. All application(s) of the type contemplated by Order 9 are made returnable at 10:30 am on 27 October 2014.
General
12. Costs are reserved.
13. Liberty apply.
…
The applications under ss 33KA and 33ZF of the Supreme Court Act were heard by Judd J on 28 October 2014. His Honour refused those applications, for reasons for judgment delivered 14 November 2014.[6] Prior to, and following the orders made on 17 September 2014, the following affidavits were filed on behalf of the plaintiffs in support of the application:
[6]Clarke v Great Southern Finance Pty Ltd (in liquidation) [2014] VSC 569.
(i) Affidavit of Stuart Walter, solicitor for the plaintiffs, sworn on 15 August 2014;
(ii) Affidavit of Stuart Walter, sworn on 16 September 2014, with exhibits;
(iii) Affidavit of Stuart Walter, sworn on 3 October 2014, with exhibits;
(iv) Affidavit of Matthew Watson, solicitor for the plaintiffs, sworn on 9 October 2014, with exhibits;
(v) Affidavit of Matthew Watson, sworn on 23 October 2014, with exhibits;
(vi) Affidavit of Matthew Watson, sworn on 24 October 2014, with exhibits;
(vii) Affidavit of Stuart Walter, sworn on 14 November 2014, with exhibits.
The following affidavits have been filed on behalf of the defendants in support of the application:
(i) Affidavit of Belinda Thompson, solicitor for the second to fifth defendants (the Bank Parties), sworn on 23 October 2014, with exhibits;
(ii) Affidavit of Karen Matthews, solicitor for the sixth defendant, sworn on 23 October 2014, with exhibits;
(iii) Affidavit of Darren Weaver, liquidator of the seventh defendant, sworn on 14 November 2014.
The following affidavits have been filed on behalf of objectors to the application:
(i) Affidavit of Daniel Clarke, solicitor for the Clamenz Objectors, sworn on 2 October 2014, with exhibit.
(ii) Affidavit of Daren Anderson, solicitor for the ERA Objectors, sworn on 3 October 2014, with exhibits;
(iii) Affidavit of Michael Hayes, group member and objector, sworn on 10 October 2014;
(iv) Affidavit of Judy Claire, group member and objector, sworn on 11 October 2014;[7]
[7]The affidavit of Judy Claire erroneously refers to her as a plaintiff.
(v) Affidavit of Daren Anderson, sworn on 13 October 2014, with exhibits;
(vi) Affidavit of Michelle Dennis, solicitor for the DC Legal Objectors, sworn on 13 October 2014;
(vii) Affidavit of Marijan and Grozdana Cvek, group members and objectors, sworn on 13 October 2014;[8]
[8]The affidavit of Marijan and Grozdana Cvek erroneously refers to them as a plaintiff
(viii) Affidavit of Daren Anderson, sworn on 23 October 2014, with exhibits;
(ix) Affidavit of Michelle Dennis, sworn on 27 October 2014, with exhibits.
On 27 October 2014, the parties appeared before Judd J for the hearing of the plaintiffs’ summons of 6 August 2014. In the early stages of that hearing, Judd J made some observations at the outset of the hearing, observations which it is helpful to set out for present purposes. His Honour said:[9]
[9]Transcript (27 October 2014), page 3, line 6 – page 6, line 20.
The parties will understand that the authorities make it clear that one important consideration for the court on an application such as this is the plaintiffs’ prospects of success. The relevance of such an assessment by the court is obvious on an application to bind group members. It informs the question of what is fair and reasonable when it comes to binding persons who did not participate directly in the decision to compromise a claim.
The advice tendered by counsel for the plaintiffs does not, it seems to me, address that question. Much of it seems irrelevant to the assessment I must make. The advice of the solicitors is a little more helpful but does not address directly the prospects at trial.
The oversight may be explained by the existence of a definitive judgment following a lengthy trial. The existence of the reasons for judgment was the topic of the memorandum circulated last week to practitioners by my associate. It would seem that the memorandum was misunderstood by some, if newspaper reports are any guide. I propose to read the short memorandum into the transcript for the edification of those who have not been privy to it.
The memorandum, of course, is sent under the hand of my associate so that you will make that adjustment when listening to its content.
“This application arises in unusual circumstances. As the parties are aware, Justice Croft has finalised his reasons for judgment following a lengthy trial and was about to give judgment and publish his reasons when notified of the compromise between the parties. The parties will also be aware that the publication of reasons for judgment after litigation has been compromised is not without precedent. Nevertheless, Justice Croft has not done so.
As the judge hearing the application for approval, Justice Judd may be obliged to form a view as to the correlation between the amount individual group members will recover under the settlement distribution scheme and the amount they might recover after a trial. Similar but not identical formulations are to be found in numerous other cases and I mention some of those cases.
One factor uniformly regarded as relevant is the likelihood that group members might have obtained a judgment for an amount significantly in excess of the settlement offer. It is assumed that such an assessment can only be performed in a broad manner.
Typically, a court will receive advice from counsel on the prospects of group members had the dispute been litigated in court. The purpose of such advice is to assist in determining the fairness and reasonableness of the compromise. That approach to approval applications assumes that there has not been a trial, or at least the trial was never completed.
An unusual feature of this case is that a judge of this court has heard all of the evidence and submissions and reached a considered decision about the very matters that would ordinarily be considered by the judge hearing the approval application. Thus, there is a fully informed and definitive statement of the parties prospects to be found in the reasons for judgment.
Publication of the reasons of judgment would not, of course, change the binding effect of the compromise agreement although it may influence the approval process. Presumably, if the compromise is no (sic) approved, Justice Croft would deliver his judgment and publish his reasons.
In such circumstances, group members might reasonably ask why this court should not have access to the definitive assessment of the trial judge for the purpose of the approval application. Justice Judd has not read the reasons for judgment, nor is he privy to any of the conclusions reached by the trial judge. Such material could only be taken into account if available to the parties. Publication of the reasons is and remains a matter for Justice Croft.
Justice Judd is concerned that if the reasons which are known to exist are disregarded on this application the court may, rightly or wrongly, be subject to significant criticism. It might be argued that His Honour’s assessment of the group’s prospects at trial was not informed by all relevant material. His Honour would be assisted by submissions on Monday from the parties as to what course, if any, he should adopt.”
As I understand, there are more than a thousand objectors to the approval. There is a sub-group, at least one sub-group, making application to opt-out at this stage. As the parties are aware, the dividend to group members may be described as miniscule. The terms of settlement seek to bind group members in terms of their liability to third party bankers.
I am given little assistance in assessing the fairness and reasonableness of such a term, that is the term under which group members are bound to repay, which may be viewed as collateral to the issues at trial. The only assistance I have in understanding the issues between the parties is to be found in the memorandum from the plaintiff’s solicitors. I am given no assistance on the issues and risks relating to the money claims, which as presently advised seem to stand in quite a different category to other issues and risks.
I have, as did Judd J, read the advice tendered by counsel for the plaintiffs. With respect, I agree with the views expressed by Judd J in the passage set out above where his Honour says that the advice tendered neither addresses the critical question raised by the application or with respect to the relevant associated issues and risks.
For the reasons which are encapsulated in the Memorandum to which Judd J referred and read – in the passage set out above – his Honour, with my agreement, ordered that the application be adjourned to recommence before me on 17 November 2014.
The application for approval of the settlement was initially referred by me to another judge, as is the usual course. This is because if the settlement were not approved and the trial had to continue to completion and judgment, it is unlikely to be the position that the parties would agree to the original trial judge completing his process if he or she had become privy to the proposed terms of settlement as a result of being involved in the approval process. The most unusual feature of the present circumstances is, of course, that the trial and reasons for judgment, the Great Southern reasons, are completed, so the same difficulties may not have arisen. However, prudence dictates that care should be taken to avoid possible problems of this kind, given the absolutely vast private and public resources that have been consumed by the Great Southern proceedings.
Consequently, my agreement to hear the approval application was conditional upon all parties agreeing that if I did not approve the settlement, no objection would be taken to my publishing the reasons as the reasons for judgment, the Great Southern reasons, in the trial of the Great Southern proceedings. The parties did agree, as is noted in the judgment of Judd J in Clarke v Great Southern Finance (in liquidation):[10]
[10][2014] VSC 569 (14 November 2014), [7].
7.For reasons that do not require elaboration at this time, the applications for approval are to be heard and determined by the trial judge, Justice Croft. That course was proposed by some parties, and agreed to, or not opposed, by others. The parties acknowledge and accept that should Croft J decline to approve the compromise, he may proceed to deliver his judgment and publish his reasons. Applications may also be made to his Honour to publish his reasons, without giving judgment, to inform the approval process.
The principal issue for consideration when the hearing of the application resumed before me on 17 November 2014 was whether the Great Southern reasons should be published in the course of and as part of the settlement approval application. If this course were to have been adopted, it would have been necessary to adjourn the hearing of the application to allow parties and objectors the opportunity to consider the Great Southern reasons comprehensively in aid of their submissions in the application. For the reasons set out in my ruling, delivered on 18 November 2014, I decided that the Great Southern reasons should not be published as part of the settlement approval process for this purpose:[11]
[11]Clarke (as trustee of the Clarke Family Trust) v Great Southern Finance Pty Ltd (Receivers and Managers Appointed) (in liquidation) (Ruling No 3) [2014] VSC 584, [1]-[7].
Overview
1.The aspect of the Great Southern Proceedings settlement approval application which was considered yesterday, 17 November 2014, was whether my reasons for decision dated 25 July 2014 (“the reasons”) should be delivered now as part of the settlement approval process. Having considered the written and oral submissions by the parties and various objectors, the latter made on behalf of many objectors, and two in person, I have decided that the reasons should be published, but only in conjunction with my judgment approving or not approving the settlement. If the settlement is approved, they will be appended to the reasons for approval to provide as complete a picture as possible of the basis of and reasons for approval. If the settlement is not approved, the reasons will serve the same purpose in terms of the reasons for non-approval of the settlement and will also provide reasons for judgment for the purpose of disposition of the trial and of the proceedings.
2.I will publish more detailed and comprehensive reasons in this respect at a later date and in conjunction with my reasons dispositive of the settlement approval application. There are, however, a few matters that should be mentioned now.
Particular Matters
3.First, all parties and the group members represented seek or do not oppose publication of the reasons at some stage of the settlement approval application process. The difference between those seeking publication is only one of timing. Of the parties only the third parties, Mews and Patrikeos, seek to have the reasons published immediately. The objectors who were represented or spoke individually also sought immediate publication. Otherwise, the general view is that the reasons should be published – it is only a matter of “when.”
4.In broad terms, the main arguments in favour of immediate publication were to the effect that access to the reasons would assist the third parties and the objectors in their submissions with respect to the settlement approval application. It is not clear, however, how this would assist in relation to one of the critical factors cited by way of objection to approval – namely, the possible effect on the ability of objectors to maintain individual defences to enforcement of the loan deeds. Although no specific defences were identified – a matter the subject of criticism by the Bank parties – discussion ensued in hypothetical and in general terms, with respect to possible individual defences on the basis of Garcia’s case,[12] Amadio’s case,[13] or capacity. The representatives of the objectors were, however, unable to identify any way in which access to the reasons would advance their position with respect to possible individual defences. Moreover, they were unable to explain why recourse to the relevant pleadings would not indicate whether they would be able to raise individual defences of some kind without being prevented from doing so by Anshun[14] or issue estoppel or otherwise – and whether or not the settlement in providing for enforceability of the loan agreements would prevent reliance on defences of this kind.
[12]Garcia v National Australia Bank Ltd (1998) 194 CLR 395.
[13]Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447.
[14]Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589.
5.Secondly, the position is that parties and objectors would not in the ordinary course have access to confidential advice provided to the Court as part of and in support of the settlement approval process. It is true that legal professional privilege may stand in the way of such advice being made available to all parties and that this is not an obstacle with respect to the unpublished reasons. Nevertheless, this does not provide a positive reason for the publication of the reasons because the parties and objectors are in the same position as they would ordinarily be in when making submissions in a settlement approval application. The only difference is that the judge hearing the application is in possession of, what might be said to be, the most accurate “prediction” as to the trial outcome. This does not, however, provide any basis for departing from the usual manner in which settlement approval applications are conducted. Moreover, although the present proceedings are numerous and complex, there is no obstacle in my view to party or objector submissions addressing a variety of possible issue or trial outcomes in arguing for or against approval of the settlement.
6.Thirdly, and finally, there are arguments against publication of the reasons at this point in the approval process. The point was made that this would encourage something of a “quasi appeal” in that parties may seek to argue against the reasons, in whole or in part, in support of appeal points which it may be said should weigh in the balance in the approval process. This is clearly undesirable, both in terms of time and cost, and the integrity of court processes because there may not be any appeal even though the reasons have been brought into question in this way. This would then leave unresolved issues – or at least issues which may be perceived to be unresolved. Additionally, it was submitted by the Bank parties that publication of the reasons at this point may encourage parties to settle proceedings of this nature as late as possible in the hope of being able to rely on access to the judge’s reasons in similar circumstances. This is clearly undesirable as it would likely involve significant wasted costs and court resources.
Conclusion
7.In conclusion, as indicated, the reasons will not be published at this point in the settlement approval application process but will be published on some basis on its disposition – whether for reasons of transparency, the public interest or otherwise in the approval process or as the reasons for judgment in the trial.
Some aspects of this ruling are better addressed more fully in the context of more substantive matters going to whether the application should or should not be approved. There are, however, some matters more helpfully addressed at this point.
It was submitted in the course of the 17 November 2014 hearing that it might be possible to publish the Great Southern reasons in part. In substance, I think the reason for this suggested course was to reduce the size of the assessment of these reasons in order to expedite matters and to avoid the “quasi appeal” issues as far as possible. I was not, and am not, satisfied that this would have assisted as contemplated and, in any event, there are a variety of reasons which, in my view, make it both undesirable and impracticable to publish only part or parts of the Great Southern reasons at any stage of the settlement approval process – either during or at its conclusion on judgment.
Partial publication is impracticable because the relevant background, issues and analysis and assessment of evidence is so intertwined – and through multiple group and individual proceedings – as to make selective publication unhelpful and, in all probability, misleading. Thus, partial publication would involve extensive rewriting if it were to be meaningful, and this is simply not possible in any reasonable time. Moreover, there are, in my view, strong reasons why it is more than desirable that the Great Southern reasons be published intact and in the form in which they would have been published. It is the case that some of the proceedings are not group proceedings but, again, their treatment is intertwined in the Great Southern reasons with respect to the group proceedings and their extraction is not practicable. In any event, if any non-group proceedings are settled and do not require approval, the publication of these reasons is, with respect to those non-group proceedings, at worst superfluous. Moreover, the publication of the Great Southern reasons cannot affect the binding nature of the settlement of the group proceedings. The settlement is binding subject only to the Court’s approval, so publication of the reasons does not enable any party to withdraw from the settlement in favour of what might be considered a better option on the basis of the published reasons.
There are a number of other reasons why the Great Southern reasons should be published intact. First, it is important that all parties and objectors have confidence that these reasons have not been influenced in any way by the extensive publicity in relation to the settlement of the Great Southern proceedings and in relation to the various schemes and Great Southern’s operations more generally. All can have confidence in this respect as the Great Southern reasons are intact and will be published in the form in which they would have been published on 25 July 2014. Secondly, these reasons need to be viewed as a whole and in context, so partial publication would be likely to be misleading for this reason alone. Thirdly, reputations have been impugned in the trial proceedings – in a public open Court environment – and it is desirable that the Court’s assessment of these allegations be known publicly – in fairness to all concerned.
More generally, there has been a great deal of public speculation in relation to the proceedings, both in relation to the substance of the proceedings and, more broadly, in relation to managed investment schemes of this nature, the role of financial advisers and the regulation of these schemes and advisers more generally. Consequently, it is in the public interest that the reasons be published to inform the public discussion and understanding of the nature of the Great Southern proceedings. These issues have been addressed in a number of decisions in the United Kingdom, [15] including in the recent decision of the Court of Appeal (Civil Division) in Barclays Bank PLC v Nylon Capital LLP,[16] where Lord Neuberger MR, and Thomas and Etherton LJJ said:[17]
[15]Prudential Assurance Co Limited v McBains Cooper [2000] 1 WLR 2000; F&C Investments (Holdings) Limited v Barthelemy & Ors [2012] Bus LR 884; Greenwich Inc Limited v Dowling & Ors [2014] EWHC 2451 (Ch)
[16]Barclays Bank PLC v Nylon Capital LLP [2011] EWCA Civ 826.
[17][2011] EWCA Civ 826, [74].
Where a case has been fully argued, whether at first instance or on appeal, and it then settles or is withdrawn or is in some other way disposed of, the court retains the right to decide whether or not to proceed to give judgment. Where the case raised a point which it is in the public interest to ventilate in a judgment, that would be a powerful reason for proceeding to give judgment despite the matter having been disposed of between the parties. Obvious examples of such cases are where the case raises a point of law of some potential general interest, where an appellate court is differing from the court below, where some wrongdoing or other activity should be exposed, or where the case has attracted some other legitimate public interest.
That the Court retains a discretion whether or not to proceed to give judgment, notwithstanding that the parties have settled the proceeding has also been recognised by courts in Queensland[18] and New Zealand.[19]
[18]Voss & Davidson [2003] QCA 252.
[19]Osborne v Auckland Council [2014] 1 NZLR 766.
Finally, and most importantly, with respect to the present application the publication of the Great Southern reasons provides the basis upon which the criteria for the settlement approval application can be assessed. Moreover, it would leave all concerned in a most unsatisfactory and unacceptable position for the approval application to be determined in the absence of access to the most considered assessment of the issues raised in the proceedings in favour of acceptance or rejection of the application on some necessarily more superficial and speculative basis; a basis which, as indicated, has not been provided to the Court in any event.
Statutory requirements with respect to approval of a settlement in Group Proceedings
Class action legislation is a relatively new development, however, provisions for representative procedures have existed in English rules of court since 1883.[20] These rules were originally given a broad application: they provided simply that “to justify a person suing in a representative character it is enough that he has a common interest with those whom he claims to represent.” [21] However, the provisions soon fell into disuse.[22] Representative procedure provisions also found expression in an earlier version of the Victorian Supreme Court Rules,[23] but again, were rarely utilised.
[20]See Rules of the Supreme Court 1883 (Eng) O 16 r 9, which provided that ‘where there are numerous persons having the same interest in one course or matter, one or more of such persons may sue or be sued…on behalf or for the benefit of all persons so interested’, as cited in Bernard Murphy and Camille Cameron, ‘Access to Justice and the Evolution of Class Action Litigation in Australia’, (2006) 30 Melbourne University Law Review 399.
[21]Duke of Bedford v Ellis [1901] AC 1.
[22]Bernard Murphy and Camille Cameron, ‘Access to Justice and the Evolution of Class Action Litigation in Australia’, (2006) 30 Melbourne University Law Review 399.
[23]Supreme Court Rules 1957, O 16 r 9.
The first class action regime in Australia came into effect in 1992, when the Federal Court of Australia Amendment Act 1991 (Cth) introduced Part IVA of the Federal Court Act. Of particular relevance for present purposes, is s 33V of the amended Federal Court Act, which provided:
33V(1) A representative proceeding may not be settled or discontinued without the approval of the Court.
(2) If the Court gives such an approval, it may make such orders as are just with respect to the distribution of any money paid under a settlement or paid into the Court.
The policy and purposes underlying these amendments were identified in the second reading speech for the bill on their introduction:
The Bill gives the Federal Court an efficient and effective procedure to deal with multiple claims. Such a procedure is needed for two purposes. The first is to provide a real remedy where, although many people are affected and the total amount in issue is significant, each person’s loss is small and not economically viable to recover in individual actions. It will thus give access to the courts to those in the community who have been effectively denied justice because of the high cost of taking action.
The second purpose of the Bill is to deal efficiently with the situation where the damages sought by each claimant are large enough to justify individual actions and a large number of persons wish to sue the respondent. The new procedure will mean that groups of persons, whether they be shareholders or investors, or people pursuing consumer claims, will be able to obtain redress and do so more cheaply and efficiently than would be the case with individual actions.
In 2000, Victorian Parliament followed the model established under the Commonwealth legislation, and through the enactment of the Courts and Tribunals Legislation (Miscellaneous Amendments) Act 2000, introduced s 33V into the Supreme Court Act 1986, in almost identical terms to that of the counterpart Commonwealth provision.
Under s 33V of the Act, approval of the Court is required before any settlement or discontinuance of a group proceeding can occur. Section 33V provides:
33V Settlement and discontinuance
(1)A group proceeding may not be settled or discontinued without the approval of the Court.
(2)If the Court gives such approval, it may make such orders as it thinks fit with respect to the distribution of any money, including interest, paid under a settlement or paid into court.
For present purposes, the other relevant statutory provisions contain in the Act are:
33X When notice to be given
(1)Notice must be given to group members of the following matters in relation to a group proceeding—
(a)the commencement of the proceeding and the right of the group members to opt out of the proceeding before a specified date, being the date fixed under section 33J(1);
(b)an application by the defendant for the dismissal of the proceeding on the ground of want of prosecution;
(c)an application by the plaintiff seeking leave under section 33W.
(2)The Court may dispense with compliance with any or all of the requirements of subsection (1) if the relief sought in a proceeding does not include any claim for damages.
(3)If the Court so orders, notice must be given to group members of any offer to compromise the proceeding.
(4)Unless the Court is satisfied that it is just to do so, an application for approval under section 33V must not be determined unless notice has been given to group members.
(5)The Court may, at any stage, order that notice of any matter be given to a group member or group members.
(6)Notice under this section must be given as soon as practicable after the happening of the event to which the notice relates.
…
33Y Notices under section 33X
(1)The form and content of a notice under section 33X must be approved by the Court.
(2)The Court must, by order, specify—
(a)who is to give the notice; and
(b)the manner in which the notice is to be given—
and the order may include provision—
(c)directing a party to provide information relevant to the giving of the notice; and
(d)relating to the costs of the notice.
(3)An order under subsection (2) may require that notice be given by means of press advertisement, radio or television broadcast, or by any other means.
(4)The Court must not order that notice be given personally to each group member unless it is satisfied that it is reasonably practicable, and not unduly expensive, to do so.
(5)A notice that concerns a matter for which the Court's leave is required must specify the period within which a group member or other person may apply to the Court, or take some other step, in relation to the matter.
(6)A notice that includes or concerns conditions must specify the conditions and the period, if any, for compliance.
(7)The failure of a group member to receive or respond to a notice does not affect a step taken, an order made, or a judgment given, in a proceeding.
33ZF General power of court to make orders
In any proceeding (including an appeal) conducted under this Part the Court may, of its own motion or on application by a party, make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding.
Application of statutory provisions
While the wording of s 33V provides little assistance as to the considerations a court must take into account when deciding a settlement approval application, a considerable body of case law has developed, at both the Commonwealth and State level, which provides guidance as to the factors a court should consider, as well as to the role which the court must play in applying the legislation.[24]
[24]See for example Australian Competition and Consumer Commission v Chats House Investments Pty Ltd (1996) 71 FCR 250; Lopez v Star World Enterprises Pty Ltd (1999) ATPR 41-678; Williams v FAI Home Security Pty Ltd (No 4) (2000) 180 ALR 459; Darwalla Milling Co Pty Ltd v F Hoffman La Roche Limited (No 2) (2006) 236 ALR 322; Taylor v Telstra Corporation Limited [2007] FCA 2008; Rod Investments Pty Ltd v Abeyratne [2010] VSC 457; Wheelahan v City of Casey [2011] VSC 215 and Thomas v Powercor [2011] VSC 614.
It has been said that the role of the court in the settlement approval process reflects the “protective jurisdiction of the Court, not unlike the principles which lead the Court to require compromises on behalf of infants or persons under a disability to be approved.”[25] It is also clear from the authorities that this protection must extend to all group members.
[25]Tasfast Air Freight Pty Ltd v Mobil Oil Australia Ltd [2002] VSC 457, [4] (Bongiorno J); and see Verschuur v Vynotas Pty Ltd [2004] VSC 130, [73] – [79] (Mandie J).
The starting point for many of the cases in which a court has dealt with settlement approval applications is the decision of Branson J in Australian Competition and Consumer Commission v Chats House Investments Pty Ltd v Ors.[26] There, the ACCC had filed an application on behalf of former clients of the respondent investment company, Chats House Investments.
[26]Australian Competition and Consumer Commission v Chats House Investments Pty Ltd (1996) 71 FCR 250.
In commenting on the purpose to which s 33V is directed, his Honour said:[27]
[27](1996) 71 FCR 250 at 256.
The purpose intended to be served by s 33V(1) is obvious. It is appropriate for the court to be satisfied that any settlement or discontinuance of representative proceedings has been undertaken in the interests of group members as whole, and not just in the interests of the applicant and the respondent.
[emphasis added]
In Lopez v Star World Enterprises Pty Ltd,[28] an action was brought on behalf of 800 group members who had consumed food products supplied by the respondent. Finkelstein J considered an application under s 33V of the Federal Court Act, and found that the principal task for the court is to assess whether the compromise is a fair and reasonable compromise of the claims made on behalf of the group members, especially those group members who did not have solicitors and counsel to advise them as to how their best interests would be served. His Honour said:[29]
[28]Lopez v Star World Enterprises Pty Ltd [1999] FCA 104.
[29][1999] FCA 104.
It is true that any group member may opt out of the proceeding to avoid his or her rights being affected in any way (whether adversely or beneficially) by the outcome of this litigation. But I have no doubt that many members of this group (and no doubt members of other large groups who are represented in proceedings in the court) will remain as represented parties (that is not opt out of the proceeding) without a real appreciation of what that entails. In particular, it is likely that many group members will not understand that any judgment given in a representative proceeding will be binding upon them: see 33ZB. Even if the group members are provided with a summary of the law relating to matters such as issue estoppel and res judicata, it is unlikely to be instructive to most of them.
Concerns such as these raised by Finkelstein J engender further considerations of the important responsibility of the courts in safeguarding the interests of the group members as a whole. In considering the purpose of s 33V of the Federal Court Act in Wotton v State of Queensland,[30] Rares J said:
[30](2009) 109 ALD 534, [40]
There is a danger that when a settlement is reached or a discontinuance is agreed, the interests of the actual parties to the proceedings may receive their paramount consideration while the impact on group members may not be fully or properly addressed. That is why in exercising the power under s 33V(1) to approve a settlement or discontinuance the Court must scrutinise with great care the way in which any order is formulated. In the decided cases the Courts have approached settlements with a keen eye to ensuring that the interests of group members are vouched safe: see eg Australian Competition and Consumer Commission v Chats House Investments Pty Ltd [1996] FCA 1119; (1996) 71 FCR 250 at 258B-C per Branson J; McMullin v ICI Australia Operations Pty Ltd (1998) 84 FCR 1 at 3C-E per Wilcox J; Courtney 122 FCR at 181 [45] per Sackville J and Vernon v Village Life Ltd[2009] FCA 516 at [64]- [68] per Jacobson J.
Further, in Mercedes Holding Pty Ltd v Waters (No 1),[31] Perram J said that:[32]
[31]Mercedes Holding Pty Ltd v Waters (No 1) (2010) 77 ACSR 265.
[32](2010) 77 ACSR 265, [9] (Perram J).
as has often enough been pointed out, the opt-out nature of class actions in this Court gives rise to the possibility not only of class members who are disengaged from the litigation but perhaps ignorant of it altogether. More importantly, since the representative parties and their lawyers are at the coalface of the suit where time, stress and money are being consumed in the furnace of litigation, it is natural that their inclination towards settlement may be affected by a just appreciation of their own positions. Those positions, and the allied interests accompanying them, may not wholly coincide with those of the members of the class. It is to superintend that inherent tension that s 33V erects a requirement for court approval of settlements and discontinuances.
The task before the court in the approval of a settlement application is no doubt an onerous one;[33] a task made all the more difficult when the number of group members is extensive, as it is in these proceedings. In many respects, the court must undertake a balancing exercise of the many varied interests; assessing these interests as well as it is able on the basis of the material before the court.
[33]Lopez v Star World Enterprises Pty Ltd [1999] FCA 104, [16]; Hobbs Anderson Investments Pty Limited v OZ Minerals Limited [2011] FCA 801, Harrison v Sandhurst [2011] FCA 541, [13].
In Williams v FAI Home Security Pty Ltd (No 4),[34] an application was made in the Federal Court for the approval of an offer of settlement which had not been made - and which would not apply - to all group members; rather, it would apply only to those group members who had fee and retainer agreements with a particular solicitor firm.
[34]Williams v FAI Home Security Pty Ltd (No 4)(2000) 180 ALR 459.
In dismissing the application, Goldberg J turned his mind to whether a settlement could be considered “fair and reasonable”. After referring to the “nine-factor test” which had been set down by the United States Court of Appeals for the Third Circuit in Re General Motors Corp Pick-Up Truck Fuel Tank Products Liability Litigation,[35] his Honour outlined those matters a court should consider:
[35]Re General Motors Corp Pick-Up Truck Fuel Tank Products Liability Litigation 55 F 3d 768.
Ordinarily the task of a court upon an application such as this, is to determine whether the proposed settlement or compromise is fair and reasonable, having regard to the claims made on behalf of the group members who will be bound by the settlement. Ordinarily in such circumstances the court will take into account the amount offered to each group member, the prospects of success in the proceeding, the likelihood of the group members obtaining judgment for an amount significantly in excess of the settlement offer, the terms of any advice received from counsel and from any independent expert in relation to the issues which arise in the proceeding, the likely duration and cost of the proceeding if continued to judgment, and the attitude of group members to the settlement.
While these comments in Williams can be seen as laying down a systematic approach to the way in which a court should approach the task,[36] subsequent decisions in both the Federal Court and this Court have seen the development of an approach that focuses on the specific problems and issues before the court, rather than any strict adherence to any predetermined list of factors.
[36]A number of the factors which were identified in Williams have been incorporated into s 11 of Practice Note 9 of 2010 – Conduct of Group Proceedings, as matters which the Court will take into account when considering an application under s 33V of the Act. The matters listed in the Practice Note are used as a guide only and, in line with the authorities discussed at [42] – [45], are not applied mechanically as necessarily definitive considerations.
In Darwalla Milling Co Pty Ltd & ors v F Hoffman La Roche & ors (No 2),[37] Jessup J made a number of similar comments to those of Goldberg J in Williams in relation to “the need to protect the interests of the group members as a whole, and to ensure that those interests are not subordinated to those of the actual parties in the proceeding.”[38] However, preferring an approach which deals with every case on its merits, as opposed to developing a set of strict guidelines which must be followed, his Honour went on to say:[39]
[37](2006) 236 ALR 322.
[38](2006) 236 ALR 322 at 332 [30] (Jessup J).
[39](2006) 236 ALR 322 at 333 [33] (Jessup J).
It is true that the judgment of Goldberg J in Williams has been referred to on a number of occasions by members of the court when exercising jurisdiction under s 33V. To the instances referred by the applicants as set out above may be added the judgment of Young J in Georgiou v Old England Hotel Pty Ltd [2006] FCA 705 at [18]. In none of these cases (including the two Victorian ones referred to), however, does one find a practical elaboration of what it is about a particular settlement, or about settlements in general that make it, or them, “fair and reasonable”. Further, although Goldberg J referred to a series of matters which the court would ordinarily take into account, subsequent judgments of the court under s 33V do not disclose any pattern of systematic consideration of such matters in the way, for example, of a checklist. In practice, every case is dealt with on its own merits, and by reference to specific factors which might raise serious doubts as to fairness and the like.
Recently, in this Court, two decisions have followed the approach of Jessup J in viewing the factors listed in Williams as useful guidelines which provide the Court assistance in the balancing exercise to be undertaken in determining applications of this nature, rather than any determinative list which must be followed.
In Wheelahan v City of Casey,[40] Emerton J considered the authorities with respect to s 33V, before summarising the approach taken by Goldberg J in Williams and Jessup J in Darwalla. Her Honour then went on to say:[41]
[40]Wheelahan v City of Casey [2011] VSC 215.
[41][2011] VSC 215, [9].
It is true that in practice every case must be dealt with on its own merits, and by reference to specific factors which might raise serious doubts as to fairness and the like. However, although in the present matter the ‘inter se issues’ – that is, the way in which the settlement sum is to be distributed among group members – is one of the principle issues of concern, the Williams factors provide useful guidance, and I propose to assess the reasonableness and fairness of the settlement by those factors, although I do not propose to use them as a checklist.
A similar approach was taken by Beach J (as his Honour then was) in Thomas v Powercor,[42] where, after summarising the principles to be applied in relation to s 33V, his Honour said:
[42]Thomas v Powercor [2011] VSC 614.
The Williams factors are a useful guide, but the application for approval must involve consideration of the specific factors relevant to this proceeding which might raise issues as to the fairness or appropriateness of the proposed compromise – either between the parties, or between the plaintiff and the individual group members.
These comments by both Emerton J and Beach J, in my opinion, do, with respect, set out the correct approach which a court must take when determining the approval or otherwise of a settlement application.
As I have said previously in the Synopsis to the Great Southern reasons, the events the subject of these proceedings were a tragedy for many people. But again, I emphasise that the role of the Court is to apply the law impartially. All of the particular circumstances of the settlement approval application must be critically evaluated to determine whether the settlement is fair and reasonable.
In a number of the proceedings which have come before the courts and which have dealt with applications under s 33V of both the Commonwealth and Victorian legislation, the approval application has not been met with any formal objections from group members. This is not the case in this proceeding. Where there have been formal objections to the approval of the terms of settlement, it is appropriate for the court to take these into consideration.
The importance that these objections hold in the balancing exercise is a matter which was addressed by Jessup J in Darwalla. In doing so, his Honour also raised a concern which is critical in these proceeding. His Honour said:[43]
[43](2006) 236 ALR 322 at 355; and see Hobbs Anderson Investments Pty Limited v Oz Minerals Limited [2011] FCA 801 (Emmet J).
The practical judicial approach has been, or so it appears to me, to identify any features of a settlement that are obviously unreasonable or unfair, a task which comes more easily to a court than the obverse one of assessing the reasonableness and fairness of a settlement in an environment generally devoid of negative indications. Where some group members object to a settlement and state their reasons thereof, their reasons will provide a convenient focus by reference to which the court will decide matters of fairness and reasonableness. They may, at the same time, distract the court from its task of critically evaluating the settlement in other respects.
While there is no doubt the objections that may be put forward by members of a group who feel that they have not benefitted from any proposed settlement agreement may be powerful and persuasive, and must be given full consideration by the court, they are, nevertheless, only a factor that the court must consider when deciding to approve or reject a settlement agreement.
The usual approach in settlement approval applications is that the court will receive advice from counsel on the prospects of the group members in order to assist the task of determining the fairness and reasonableness of the settlement. This approach, of course, assumes that the trial has not been run or, at least, has not concluded. In those circumstances, the court “must rely heavily on counsel to put before it all matters relevant to the court’s considerations of the matter.”[44]
[44]Lopez v Star World Enterprises Pty Ltd [1999] FCA 104, [16].
Where the court is reliant on the advice of counsel in this manner, it has been said that the court must be careful not to substitute its own view for that of counsel in circumstances where the court is not fully cognisant of all the issues. In Darwalla, Jessup J said:[45]
[45](2006) 236 ALR 322, [50] (Jessup J).
It is not, I consider, the court’s function under s 33V of the Federal Court Act to second-guess the applicants’ advisers as to the answer to the question whether the applicants ought to have accepted the respondents’ offer; the court’s function is, relevantly, confined to the question whether the settlement was fair and reasonable. There will rarely, if ever, be a case in which there is a unique outcome which should be regarded as the only fair and reasonable one. In settlement negotiations, some parties, and some advisers, tend to be more risk-averse than others. There is nothing unreasonable involved in either such position and, under s 33V, the court should, up to a point at least, take the applicants and their advisers as it finds them. Neither should the court consider that it knows more about the group members’ business than the applicants, or more about the actual risks of the litigation that their advisers. So long as the agreed settlement falls within the range of fair and reasonable outcomes, taking everything into account, it should be regard as qualifying for approval under s 33V.
The utility, or indeed necessity, of reliance on the views of counsel is most relevant in regard to the chances of success that the plaintiffs have in securing a favourable outcome should the proceeding go to trial, or in the event that the trial has commenced, be brought to conclusion.
In an application before this Court for the approval of terms of compromise brought under r 06.01(4) of the Supreme Court (General Civil Procedure) Rules 2005 in five separate proceedings referred to collectively as In re Timbercorp Securities Ltd (In Liq) (Applications for the approval of compromises),[46] Judd J said that, notwithstanding some material difference, the authorities relating to approvals under s 33V can offer assistance for similar applications under r 16.01(4).[47]
[46][2012] VSC 590.
[47][2012] VSC 590, [64].
Justice Judd, relying on the judgment of Habersberger J in ExxonMobil Superannuation Plan Pty Ltd v Esso Australia Pty Ltd,[48] noted that as the role of the court is limited in assessing the prospects of success of litigation in usual circumstances, there is an element of reliance on the views of counsel. This, of course, is not an issue that comes into question in the current proceedings because, as noted previously, no material or assistance in this respect has been provided to the Court.[49]
[48][2010] VSC 357.
[49]See above, [14].
In Exxon, Habersberger J considered that the proper test for approval of a compromise under r 16.01(4), involves a weighing of the benefit received by settlement, against the prospects of success should the matter proceed to trial.[50] His Honour went on to say:[51]
[50][2010] VSC 357 [56].
[51][2010] VSC 357 [63].
The court looks to whether the amount falls within a range that may be considered reasonable having regard to the respective strengths and weaknesses of the parties position in the litigation, rather than deciding for itself whether the settlement provides what the Court itself considers to be the most fair and reasonable outcome.
While it is correct to say that the court should not “second-guess” the plaintiffs’ advisers and proceed as if it knows more about the group members business than the advisers, the fact that a full trial of the common issues has been heard, and a comprehensive and detailed judgment prepared, places the Court in these proceedings in the unique position of holding the most informed view on the respective strengths and weaknesses of the parties’ positions in the litigation.
Deed of settlement
For present purposes, the following provisions of the deed of settlement are of particular relevance to the issues raised in this application:
1. DEFINITIONS AND INTERPRETATION
Definitions
1.1 In this Deed of Settlement the following definitions apply:
…
‘Claim’ means any claim, demand, action, suit or proceeding for damages, debt, restitution, equitable compensation, account, injunctive relief, specific performance, declaratory relief or any other remedy, whether by original claim, cross-claim, claim for contribution or otherwise whether presently known or unknown and whether arising at common law, in equity, under statute or otherwise and whether involving a third party or party to this Agreement and all liabilities, losses, damages, costs (including legal costs on a full indemnity basis), interest, fees, and penalties of whatever description (whether actual, contingent or prospective) arising out of, or in connection with the contents of or the facts giving rise to, the PDSs, the Loan Agreements and or the allegations made in or the facts giving rise to each of the Proceedings.
…
‘Loan Agreements’ means the loan agreements under which monies were advanced to Scheme Members to finance their interest in managed investment schemes of which GSMAL, and (in the case of the Great Southern 2008 Future Forestry Investment Scheme) GSMAL and Rural Funds Management Limited (formerly Great Southern Funds Management Limited), is or was the responsible entity.
…
‘Loan Deeds’ means the Loan Agreements the subject of the Group Proceedings and the M+K Counterclaim Proceedings entered into between:
a)the Lead Plaintiffs, Group Members or M+K Counterclaim Claimants and GSF, which were subsequently assigned by GSF to one or more of the BEN Parties or Javelin; or
b)the Lead Plaintiffs, Group Members or M+K Counterclaim Claimants and ABL Nominees Pty Ltd, which were subsequently assigned by ABL Nominees to one or more of the BEN Parties.
…
2. CONDITIONS PRECEDENT
2.1Settlement as between all parties to this Agreement is subject to and conditional upon each of the following conditions precedent being satisfied:
2.1.1the Supreme Court of Victoria making an order pursuant to section 33ZF of the Supreme Court Act 1986 (Vic) nunc pro tunc to the effect that the Lead Plaintiffs have the authority of the Group Members to enter into and give effect to the Deed of Settlement and the transactions contemplated thereby for and on behalf of the Group Members;
2.1.2the Supreme Court of Victoria making an order pursuant to section 477(2A) and/or section 477(2B) of the Act approving nunc pro tunc the entry into of this Deed by the Liquidators; and
2.1.3Settlement Approval.
2.2In addition to the conditions precedent set out in sub-clauses 2.1.1 to 2.1.3, the provisions of clause 6 is subject to and conditional upon the following further conditions precedent being satisfied:
2.2.1The Liquidators receiving such other approvals as they consider necessary under s 477 of the Act and directions under s 479(3) of the Act;
2.2.2a Scheme of Arrangement being approved by the Court on terms which contain the key features described in clause 3 below of this Deed or such other terms as are agreed by the parties to this Deed, other than the BEN Parties and Javelin.
2.3The Liquidators may waive the conditions precedent set out in sub-clauses 2.1.2 and 2.2.1 in their absolute discretion.
…
3. SCHEME OF ARRANGEMENT
3.1 The Liquidators shall propose a Scheme of Arrangement under Part 5.1 of the Act, which shall include the following key features:
…
4.SETTLEMENT OF CLAIMS INVOLVING BEN PARTIES AND JAVELIN
4.1On and from the Approval Date, all Claims against the BEN Parties and Javelin and any of their respective Related Bodies Corporate, Related Entities or Related Persons will be settled as follows.
4.1.1The BEN Parties agree to waive Interest Relating to Overdue Amounts accrued and unpaid as at the Approval Date, in respect of the Loan Deeds of:
4.1.1.1the Lead Plaintiffs;
4.1.1.2Group Members; and
4.1.1.3M+K Counterclaim Claimants,
Insofar as those loans are between those persons and the BEN Parties.
4.1.2The BEN Parties agree not to commence or continue debt recovery proceedings against M+K Clients until at least 30 days after the Approval Date.
4.1.3Javelin will agree to vary the terms of the Loan Deeds of the Lead Plaintiffs and Group Members whose Loan Deeds were assigned to Javelin (collectively, Javelin Borrowers) in accordance with clause 5, whether or not a Javelin Borrower has ceased making repayments.
4.1.4The Lead Plaintiffs for and on behalf of themselves and all Group Members acknowledge and admit the validity and enforceability of the Lead Plaintiffs’ Loan Deeds and the Group Members’ Loan Deeds.
4.1.5The M+K Counterclaim Claimants acknowledge and admit the validity and enforceability of their Loan Deeds.
4.1.6Each of the Lead Plaintiffs acknowledges and admits their liability to the BEN Parties to pay the Loan Balance under their Loan Deed.
4.1.7Subject to the operation of clauses 5.1 to 5.19, Raymond Drummond acknowledges and admits his liability to Javelin to pay the Money Payable under his Loan Deed.
4.1.8Each of the M+K Counterclaim Claimants acknowledges and admits their liability to the BEN Parties to pay the Loan Balance under their Loan Deed.
4.1.9Each of the plaintiffs by counterclaim to the Uplifted Proceedings acknowledges and admits their liability to the BEN Parties to pay the Loan Balance under their Loan Deed.[52]
[52]These provisions are then followed by a series of releases and procedural provisions.
…
6.SETTLEMENT OF CLAIMS INVOLVING GREAT SOUTHERN COMPANIES AND DIRECTORS
6.1The parties to this Deed agree that, subject to clause 10, upon Settlement Approval and the Scheme of Arrangement becoming effective, all Claims against the Great Southern Companies, GSMAL, GSF, the Directors, the Non-Executive Directors and any of their respective Insurers, Related Bodies Corporate, Related Entities or Related Persons will be settled as follows:
6.1.1Insurers of GSMAL will pay:
6.1.1.1$20,250,000 to the M+K Trust Account to be disbursed by M+K as follows:
(a)$20 million to the M+K Clients with each M+K Client receiving the sum calculated pro rata to the amount paid by each M+K Client to M+K;
(b)$250,000 to Javelin;
6.1.1.2$3,550,000 to the Scheme Administrators to be dispersed to PDS Claimants in accordance with the terms of the Scheme of Arrangement; and
6.1.1.3the costs, fees and disbursements of the Scheme Administrators in accordance with clause 3.1.2 of this Deed.
6.1.2Each of the payments in clause 6.1.1 will be made by the Insurers of GSMAL on behalf of GSMAL.[53]
[53]These provisions are then followed by a series of releases and procedural provisions.
Submissions with respect to approval
A number of submissions have been provided to the Court in writing – and addressed orally – both in support of and in opposition to the application to approve the settlement. The plaintiffs, the Bank Parties[54] and Javelin Asset Management Pty Ltd (“Javelin”), provided and addressed submissions in support of the proposed settlement, whereas groups of objectors and an individual objector provided and addressed submissions in opposition.[55]
[54]See below, [73].
[55]Outline of Submissions of the Plaintiffs in support of proposed settlement (“the Plaintiffs’ submissions”) (3 October 2014); Outline of Submissions of ERA Legal Objectors in opposition to the proposed settlement (“the ERA submissions”) (3 October 2014); Outline of Submissions of Clamenz Objectors in opposition to the proposed settlement (“the Clamenz submissions”) (13 October 2014); Outline of Submissions of Cohalan & Mitchell Roofing (“the Cohalan & Mitchell Roofing submissions”) (13 October 2014); Outline of Submissions of ERA Legal Objectors in support of objections (“the Second ERA submissions”) (13 October 2014); Outline of Submissions of DC Legal Objectors in opposition to proposed settlement (“the DC Legal submissions”) (13 October 2014); Responsive Outline of Submissions of Plaintiffs in support of proposed settlement (“the plaintiffs’ responsive submissions”) (23 October 2014); Outline of Submissions of Bendigo and Adelaide Bank Parties in support of proposed settlement (“the Bank parties’ submissions”) (23 October 2014); Outline of Submissions of Javelin Asset Management Pty Ltd in support of proposed settlement (“the Javelin submissions”) (23 October 2014); Outline of Submissions of Rhodes and Butlin (“the Rhodes and Butlin submissions”) (23 October 2014).
It is likely that sometime after the GFC started to impact upon the Great Southern Group it became ascertainable that the plaintiffs’ investments had become loss-making investments. However, as the defendants have not adduced evidence as to the precise point at which it was ascertainable that the investments were loss-making, I cannot reach a conclusion as to when the plaintiffs first suffered loss and damage.
In the circumstances of this case, the defendants bear the onus of establishing when the plaintiff first suffered actual loss and damage. They have not done so. Consequently, their limitations defence fails.
X. ORDERS, COSTS AND COMPENSATION
The parties are to bring in orders to give effect to these reasons.
The question of costs (and whether payable on a standard or some other basis) and the question whether compensation may be payable by any person or persons by reason of the operation of the provisions of the Civil Procedure Act 2010[6283] is reserved.
[6283]And see (2014) 88 ALJ 380-382.
Also reserved for final determination as may be necessary is the possible application of the excusing provisions of ss 1317S and 1318 of the Corporations Act with respect to the proceedings the subject of these reasons for judgment, or any of them.[6284]
[6284]See above, [1729] to [1734].
Finally, I note that proceedings by the Ben Parties and Javelin to recover any outstanding principal and interest due and payable on various loans to investors in the Great Southern managed investment schemes will be heard separately. Directions will be made for the conduct of these proceedings in due course.
SCHEDULE OF PROCEEDINGS
SCHEDULE 1:
GROUP PROCEEDINGS SET DOWN FOR TRIAL
The BEN Parties are defendants in proceedings numbered 1-9, 11, 13, 15-16 in the table below.
| Proceeding No. | Proceeding Title | Scheme | Funding/Loan Type | |
| 1. | S CI 2010 02882 | “Clarke 2005 and 2006 Plantation Group Proceeding”: Peter Clarke and Ors v Great Southern Finance Pty Ltd & Ors | 2005 and 2006 Plantation Schemes | Self-funded/Purchased Loans |
| 2. | S CI 2011 03616 | "Williams 2005 Organic Olive Group Proceeding": Adrian Williams v Great Southern Finance Pty Ltd & Ors | 2005 Organic Olive Scheme | Self-funded/Purchased Loans |
| 3. | S CI 2011 03431 | “Williams 2005 Vineyards No. 2 Group Proceeding”: Adrian Williams v Great Southern Finance Pty Ltd & Ors | 2005 Vineyards No 2 Scheme | Self-funded/Purchased Loans |
| 4. | S CI 2011 05049 | “Murray 2006 and 2007 Organic Olive Group Proceeding”: Samantha Murray v Great Southern Finance Pty Ltd & Ors | 2006 and 2007 Organic Olive Schemes | Self-funded/Purchased Loans |
| 5. | S CI 2011 05062 | “Murray 2006 and 2007 Beef Cattle Proceeding”: Samantha Murray v Great Southern Finance Pty Ltd & Ors | 2006 and 2007 Beef Cattle Schemes | Self-funded/Purchased Loans |
| 6. | S CI 2011 04862 | “Murray 2006 and 2007 Wine Grape Originated Loans Group Proceeding”: Samantha Murray v Great Southern Managers Australia Limited & Ors | 2006 and 2007 Wine Grape Schemes | Originated Loans |
| 7. | S CI 2011 04916 | “Murray 2006 and 2007 Wine Grape Self-funded/Purchased Loans Group Proceeding”: Samantha Murray v Great Southern Finance Pty Ltd & Ors | 2006 and 2007 Wine Grape Schemes | Self-funded/Purchased Loans |
| 8. | S CI 2011 04476 | “Murray 2007 Plantation Group Proceeding”: Samantha Murray v Great Southern Managers Australia Limited & Ors | 2007 Plantation Scheme | Originated Loans |
| 9. | S CI 2011 04071 | “Murray and Prasad 2007 and 2008 High Value Timber Group Proceeding”: Samantha Murray and Mohetishwar Prasad v Great Southern Managers Australia Limited & Ors | 2007 and 2008 High Value Timber Schemes | Originated Loans |
| 10. | S CI 2011 04207 | “Ford 2007 and 2008 High Value Timber Group Proceeding”: Glenn Ford v Great Southern Finance Pty Ltd & Ors | 2007 and 2008 High Value Timber Schemes | Self-funded or Javelin Loans |
| 11. | S CI 2011 04001 | “Prasad and Micallef 2007 and 2008 Olive Group Proceeding”: Mohetishwar Prasad and Janet Micallef v Great Southern Managers Australia Limited & Ors | 2007 and 2008 Olive Schemes | Originated Loans |
| 12. | S CI 2011 04135 | “Drummond 2007 and 2008 Olive Group Proceeding”: Raymond Drummond v Great Southern Finance Pty Ltd & Ors | 2007 and 2008 Olive Schemes | Self-funded or Javelin Loans |
| 13. | S CI 2011 03513 | “Micallef 2008 Almond Group Proceeding”: Janet Micallef v Great Southern Managers Australia Limited & Ors | 2008 Almond Scheme | Originated Loans |
| 14. | S CI 2011 03993 | “Ford 2008 Almond Group Proceeding”: Glenn Ford v Great Southern Managers Australia Limited & Ors | 2008 Almond Scheme | Self-funded or Javelin Loans |
| 15. | S CI 2011 03614 | “Micallef 2008 Wine Grape Group Proceeding”: Janet Micallef v Great Southern Managers Australia Limited & Ors | 2008 Wine Grape Scheme | Originated Loans |
| 16. | S CI 2011 03390 | “Prasad 2008 Renewable Fibre Group Proceeding”: Mohetishwar Prasad v Great Southern Managers Australia Limited & Ors | 2008 Renewable Fibre Scheme | Originated Loans |
SCHEDULE 2:
INDIVIDUAL PROCEEDINGS SET DOWN FOR TRIAL
The BEN Parties are plaintiffs in proceedings numbered 1-25 and 27-28 in the table below.
| Proceeding No. | Proceeding Title | Scheme | Loan Type(s) | |
| 1. | S CI 2010 00758 | Bendigo and Adelaide Bank Limited v Paul Anthony Lathouras | 2005 Plantation Scheme | Purchased Loan |
| 2. | S CI 2010 00759 | Bendigo and Adelaide Bank Limited v Peter Clarke as trustee for the Clarke Family Trust | 2005 Plantation Scheme | Purchased Loan |
| 3. | S CI 2010 00761 | Bendigo and Adelaide Bank Limited v Nicole Catherine Lathouras | 2005 Plantation Scheme | Purchased Loan |
| 4. | S CI 2011 06321 | Bendigo and Adelaide Bank Limited & ABL Nominees Pty Ltd v Marcella Wells | 2006 Plantation Scheme | Originated Loan |
| 5. | S CI 2011 06331 | Bendigo and Adelaide Bank Limited & ABL Nominees Pty Ltd v Jayarajesh Sugumaran & Anor | 2006 Plantation Scheme | Originated Loan |
| 6. | S CI 2011 06332 | Bendigo and Adelaide Bank Limited & ABL Nominees Pty Ltd v Michael Liddle | 2006 Plantation Scheme | Originated Loan |
| 7. | S CI 2011 06335 | Bendigo and Adelaide Bank Limited & ABL Nominees Pty Ltd v Sivakumar Rajalingapandian | 2006 Plantation Scheme | Originated Loan |
| 8. | S CI 2010 00757 | Bendigo and Adelaide Bank Limited & ABL Nominees Pty Ltd v Mark Wilson | 2005 and 2006 Plantation Schemes | Purchased Loan (2005 Plantation Scheme) Originated Loan (2006 Plantation Scheme) |
| 9. | S CI 2011 05665 | Bendigo and Adelaide Bank Limited & Ors v Cannon | 2004 Plantation Scheme | Purchased Loan |
| 10. | S CI 2011 06341 | ABL Custodian Service Pty Ltd in its capacity as trustee of the ABL Portfolio Funding Trust 2007-1 & Ors v Carey James Nichol & Anor | 2004 Plantation Scheme | Purchased Loan |
| 11. | S CI 2011 06344 | Bendigo and Adelaide Bank Limited v Michael Jonathan Kenny | 2004 Plantation Scheme | Purchased Loan |
| 12. | S CI 2011 06359 | Bendigo and Adelaide Bank Limited & ABL Nominees Pty Ltd v Ann Cook | 2004 Plantation Scheme | Purchased Loan |
| 13. | S CI 2011 06368 | Bendigo and Adelaide Bank Limited & ABL Nominees Pty Ltd v Ian Cook | 2004 Plantation Scheme | Purchased Loan |
| 14. | S CI 2011 06807 | Bendigo and Adelaide Bank Limited v Diana Elizabeth Van Schilt | 2004 Plantation Scheme | Purchased Loan |
| 15. | S CI 2011 06825 | Bendigo and Adelaide Bank Limited v Frans Van Schilt | 2004 Plantation Scheme | Purchased Loan |
| 16. | S CI 2011 06834 | ABL Custodian Services Pty Ltd in its capacity as trustee of the ABL Portfolio Funding Trust 2007-1 & Ors v Thirty Third Jaf Pty Ltd & Ors | 2004 Plantation Scheme | Purchased Loan |
| 17. | S CI 2010 00760 | ABL Custodian Pty Ltd in its capacity as trustee of the ABL Portfolio Funding Trust 2007-1 & Bendigo and Adelaide Bank Limited v Stephen George Adams | 2004 and 2005 Vineyards Schemes | Purchased Loans |
| 18. | S CI 2012 05470 | ABL Custodian Services Pty Ltd & Ors v Sajkov | 2005 Vineyards Scheme | Purchased Loan |
| 19. | S CI 2011 06324 | Bendigo and Adelaide Bank Limited & ABL Nominees Pty Ltd v Bathurst | 2006 Organic Olives Scheme | Originated Loan |
| 20. | S CI 2011 06354 | Bendigo and Adelaide Bank Limited & ABL Nominees Pty Ltd v Noel Seymour | 2006 Organic Olives Scheme | Originated Loan |
| 21. | S CI 2011 06320 | Bendigo and Adelaide Bank Limited & ABL Nominees Pty Ltd v Ian John Weightman & Anor | 2007 Plantation Scheme | Purchased Loan |
| 22. | S CI 2012 01769 | Bendigo and Adelaide Bank Ltd & Ors v Proweir Pty Ltd & Ors | 2007 Plantation Scheme | Purchased Loan |
| 23. | S CI 2012 03772 | Bendigo and Adelaide Bank Ltd & Ors v Gordon | 2007 Plantation Scheme and 2004 Vineyards Scheme | Purchased Loans |
| 24. | S CI 2011 06322 | Bendigo and Adelaide Bank Limited & ABL Nominees Pty Ltd v Robert Graham Vickery & Anor | 2007 Plantation Scheme, 2007 Olive Scheme and 2007 High Value Timber Scheme | Purchased Loan |
| 25. | S CI 2010 04763 | ABL Nominees Pty Ltd v Scott Wynd Enterprises Pty Ltd | 2007 High Value Timber Scheme | Purchased Loan |
| 26. | S CI 2011 05932 | Javelin Asset Management Pty Ltd v Glenn Ford | 2007 and 2008 High Value Timber Schemes, 2008 Almond Scheme | Javelin Loans |
| 27. | S CI 2012 00544 | ABL Nominees Pty Ltd & Ors v Rudolph Lopes & Ors | 2008 Renewable Fibre Scheme and 2008 High Value Timber Scheme | Purchased Loans |
| 28. | S CI 2012 04592 | Bendigo and Adelaide Bank Ltd & ABL Nominees Pty Ltd v Twenty Sixth Taljan Pty Ltd & Ors | 2008 Renewable Fibre Scheme | Purchased Loan |
SCHEDULE 7:
SUMMARY OF REPRESENTATIONS AND OMISSIONS - INDIVIDUAL PROCEEDINGS
Part A – Individual Proceedings where scheme is not covered by a Group Proceeding
The tables in Part A compare representations and omissions pleaded in Individual Proceedings relating to the 2004 Plantation, 2004 Vineyards and 2005 Vineyards Schemes to the representations and omissions pleaded in the Group Proceeding relating to the most similar scheme in terms of type and time. That is:
individual proceedings relating to the 2004 Plantation Scheme have been compared to the Clarke 2005 and 2006 Plantation Group Proceeding, which concerns the 2005 and 2006 Plantation Scheme;
individual proceedings relating to the 2004 Vineyards Scheme have been compared to the Williams 2005 Vineyards No. 2 Group Proceeding; and
individual proceedings relating to the 2005 Vineyards Schemes have been compared to the Williams 2005 Vineyards No. 2 Group Proceeding.
Where additional representations and/or omissions are pleaded in the Individual Proceedings, these have been included at the bottom of each table.
Part B – Individual Proceedings where scheme is the subject of a Group Proceeding but loan type (purchased or originated) is not, and therefore investors are not group members
The tables in Part B relate to Individual Proceedings where the relevant Scheme is the subject of a Group Proceeding but the loan type is not. The tables identify the extent to which representations and omissions pleaded in such Individual Proceedings are consistent with the representations and omissions pleaded in thee Group Proceedings relating to the relevant Scheme.
Part C – Individual Proceedings wholly covered by Group Proceeding
The table in Part C identifies those Individual Proceedings which are wholly covered by a Group Proceeding and in which the defendant/plaintiff by counterclaim refers to and relies upon the pleading (including the representations and omissions) in the relevant Group Proceeding. It is therefore not necessary to consider the questions in issue in those proceedings separately.
French CJ: You say you have got to know the facts and have a consciousness of the risk.
Mr Archibald: Yes, because the whole reason for disclosure is not the fact. It is the circumstance of the fact flowing from the fact there is a risk and if you are ignorant of the risk presumably you disclose every fact about the business. The reason for disclosure is to apprise the putative investor of the risk and fact without risk has no reason for disclosure.
French CJ: Even if it flows from your own incompetence or lack of consideration?
Mr Archibald: Well, no, you need to know it and, of course, if you turn – I think actual knowledge probably does set the bar pretty high but you could not turn your face away from the obvious and claim you did not have knowledge of it.
“154. All Great Southern Forestry Schemes were designed so that investors were able to claim a tax deduction for their application fee in the financial year in which it was paid by taking advantage of the Prepayment Rule.
155. The Prepayment Rule was first introduced by the Federal Government in about May 1987 and allowed an investor to claim an expense as a tax deduction in the same financial year in which the expense had been incurred provided the service for which the expense related was provided within 13 months of the expense being incurred.
156. For example, if an investor paid GSMAL an application fee of $3,000 on 29 June 2000, the investor was able to claim that full $3,000 as a tax deduction against income earned in the financial year ending 30 June 2000 provided Great Southern provided the service (i.e. established the relevant plantation) within 13 months (i.e. by 31 July 2001).
157. The Prepayment Rule made investments in forestry managed investment schemes very attractive to investors who wished to obtain an immediate, up-front tax deduction for the amount invested. It also meant that most investors invested in Great Southern’s schemes in the lead up to the end of the financial year prior to 30 June so that they could claim the tax deduction immediately on making the investment.
158. In 2000, as a result of the Ralph Review of Business Taxation, the Federal Government abolished the Prepayment Rule. This meant that application fees would only be tax deductible in the financial year invested if the service for which the fees related was provided within the same financial year of the expense being incurred.
159. Using the same example as above, if an investor paid GSMAL an application fee of $3,000 on 29 June 2000, the investor would only be able to claim that $3,000 as a tax deduction against income earned in the 2000 financial year if Great Southern was able to establish the relevant plantation by 30 June 2000.
160. This created substantial difficulties for GSMAL as it meant that in order to maintain the ability for investors to claim upfront tax deductions for investments made in the lead up to the end of the financial year, Great Southern would need to take all steps necessary to establish the plantation including acquiring the land and planting the trees within a very short space of time.
161. The abolition of the Prepayment Rule in 2000 had a negative impact on sales of interests in Great Southern’s schemes, highlighting the importance of the tax treatment of application fees to sales. Total sales of interests in the 2000 Plantation Scheme came to around $70 million whereas total sales of interests in the 2001 Plantations Scheme came to around $40 million.
162. In February 2002, the Federal Government re-introduced the Prepayment Rule for forestry schemes. The new Prepayment Rule generally operated in the same way as the previous rule except that Great Southern now had to provide the relevant service within 12 months of an investor investing, rather than 13 months as had been the case under the previous rule.
163. The legislation introducing the new Prepayment Rule included a sunset clause which provided that the new rule would only apply until 30 June 2006. This date was later extended to 30 June 2008.”
Young’s evidence was: “If Shearwood had said to you that as a result of his investigations regarding Mews’s complaint which he made on 3 August 2005 that you ought to issue a supplementary PDS, what would you have done?---Issued a supplementary PDS.
Would you have taken whatever steps were required to ensure that GSMAL did so?---Yes.” (TRA.001.044.0001 at 0028, lines 12 to 18).
Rhodes’ evidence was: “If he had said that a supplementary PDS ought be issued, would you have followed that advice?---Absolutely.
Would you have done that because it affected the issue of disclosure, which Great Southern took seriously?---That’s correct”. (TRA.001.051.0001 at 0020, line 31 to 0021, line 4).
“… The passage that I took you to refers to an expectation that is actually delivered by a pool that includes HPE reserve?---Yes.
That’s Mr Ellis’ understanding as expressed to you?---Yes.
I suggest to you that that understanding is exactly what was in the mind of yourself as an officer of Great Southern Limited; namely, that in respect of the 2004 plantations scheme right from the start there would be a requirement for HPE reserve?---I certainly didn’t at this point in time think it was a fait accompli that there would be HPE reserve. I took that we couldn’t determine that until we had actually bought the land, and it was around this time or perhaps a tad later that we were starting to buy land in Tasmania that was of considerably higher productivity assessment. So that was going to have an impact as well. So I and perhaps – you know, I just always at this point in time knew we had the concept, the safeguard, if you like, that if it fell below we had a mechanism for dealing with it; but it wasn’t certain until we actually acquired the land and assessed its productivity.
The point between us, Mr Rhodes, seemed to be that I suggest that from the start of the marketing of the 2004 project there was a probability that HPE Reserve would be required, whereas you say it was a mere possibility?---Yes, I think that’s correct.
I suggest to you that communications like these from Mr Ellis indicate that it was more in the probability department than the possibility department?---Certainly the wording of that, I agree, suggests that Mr Ellis had a view that it was perhaps more probable than possible. But, as I said, my view at the time was possible, not necessarily probable”. (TRA.001.053.0001 at 0117, lines 5 to 31 and 0118, lines 1 to 5).
“You think you didn’t read the draft that was attached to this email?---Yes
But in relation to the PDS that was actually issued, the final version, you think you didn’t read that as well; is that right?---Correct. (TRA.001.055.0001_c at 0088, lines 27 to 31).
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