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

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)	Plaintiffs
v
GREAT SOUTHERN FINANCE PTY LTD (Receivers and Managers Appointed) (In liquidation) & ORS	Defendants

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JUDGE:	CROFT J
WHERE HELD:	Melbourne
DATE OF HEARING:	17 November 2014
DATE OF RULING:	18 November 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 (Ruling No 3)
MEDIUM NEUTRAL CITATION:	[2014] VSC 584

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PRACTICE AND PROCEDURE - GROUP PROCEEDINGS – Judgment – Parties settling group proceeding before judgment delivered – Relevant factors to be considered – Whether Court to deliver reasons prior to application for approval of settlement of group proceeding – Supreme Court Act 1986 (Vic) s 33V.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs in the Group Proceedings and the Defendants in the Separate Proceedings	Mr G.T. Bigmore QC Mr M. Galvin	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 Ms P. Neskovcin 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
“DC Objectors”	Mr D. Bailey	DC Legal
“ERA Objectors”	Mr D. Anderson	ERA Legal
“Clamenz Objectors”	Mr T. Chalke-Clamenz

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:

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.

1. 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

1. 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.”

1. 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,[1] Amadio’s case,[2] 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[3] 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.

   [1]Garcia v National Australia Bank Ltd (1998) 194 CLR 395.

   [2]Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447.

   [3]Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589.

1. 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.

1. 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

1. 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.