Downie v Spiral Foods Pty Ltd
[2015] VSC 190
•7 May 2015
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
S CI 2010 5318
| ERIN DOWNIE | Plaintiff |
| v | |
| SPIRAL FOODS PTY LTD (ACN 006 292 780) | First Defendant |
| and | |
| MUSO CO. LTD | Second Defendant |
| and | |
| MARUSAN-AI CO. LTD | Third Defendant |
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JUDGE: | J Forrest J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 25 February 2015 |
DATE OF JUDGMENT: | 7 May 2015 |
CASE MAY BE CITED AS: | Downie v Spiral Foods Pty Ltd & Ors |
MEDIUM NEUTRAL CITATION: | [2015] VSC 190 |
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PRACTICE AND PROCEDURE – Group proceeding – Application for approval of settlement of group proceeding – Whether Court should approve settlement of group proceeding – Relevant considerations – Directions as to assessment of costs of the trial and administration costs – Supreme Court Act 1986 (Vic), Part 4A.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr D Curtain QC with Ms L Nichols and Ms K Burke | Maurice Blackburn |
| For the First Defendant | No appearance | Hunt & Hunt |
| For the Second Defendant | No appearance | Corrs Chambers Westgarth |
| For the Third Defendant | No appearance | Wotton & Kearney |
HIS HONOUR:
Introduction and background to the claim
This is an application for the approval of the settlement of a class action[1] under s 33V of the Supreme Court Act 1986 (Vic).
[1]A class action brought under Part 4A of the Supreme Court Act 1986 (Vic).
Ms Erin Downie consumed Bonsoy Soy Milk (Bonsoy) between 2003 and 2009 which she alleges resulted in her developing a thyroid condition. This, it was said, was because of the unsafe levels of iodine in Bonsoy, following a reformulation in 2003.
In late 2009, another Bonsoy consumer, Kate Grono, gave birth to a daughter who was diagnosed with congenital hypothyroidism. The condition was reported to New South Wales health authorities, which tested the iodine levels in Bonsoy. On Christmas Eve 2009, the Victorian Chief Health Officer requested a recall of Bonsoy on the basis that it posed a danger to public health due to its high levels of iodine. The product was voluntarily recalled throughout Australia.
Ms Downie, represented by Maurice Blackburn, is the lead plaintiff on behalf of 496 others who also allege injury and loss as a result of consuming Bonsoy.[2] Ms Downie seeks damages for pain and suffering and economic loss arising out of consuming Bonsoy between 1 July 2004 and 24 December 2009. Her claims are founded in negligence and under ss 74B, 74D and 75AD of the Trade Practices Act 1974 (Cth) (TPA),[3] which respectively concern fitness for purpose, merchantable quality and defective goods.
[2]I have referred throughout these reasons to ‘group members’ meaning those who have registered as part of the group pursuant to the class closure orders of Cavanough J dated 12 May 2014.
[3]The TPA has been repealed, and replaced with Schedule 2 (the Australian Consumer Law) of the Competition and Consumer Act 2010 (Cth). However, as Ms Downie’s claim arose prior to the Competition and Consumer Act coming into force, her claim relates to breaches of the TPA, and I refer to those provisions in the course of these reasons.
Ms Downie sued:
(a) the first defendant, Spiral Foods Pty Ltd (Spiral), on the basis that it owned the Bonsoy brand and distributed it in this country;
(b) the second defendant, Muso Co Ltd (Muso), on the basis that it packaged and exported Bonsoy from Japan to Spiral; and
(c) the third defendant, Marusan-Ai Co Ltd (Marusan), on the basis that it manufactured Bonsoy.
Although the claims against each defendant are distinct (and I will set them out in more detail in a moment), in broad terms Ms Downie alleges that each defendant knew how much iodine was in Bonsoy, and failed to take reasonable steps to ensure that the product was fit for human consumption.
The claim against all defendants has now been settled for $25 million, inclusive of costs of the proceeding and the administration of the settlement. This will leave about $16.5 million[4] to be distributed amongst the group members if the settlement submitted by Maurice Blackburn is approved.
[4]I have in the course of these reasons set out as best I can the estimates of the deductions from the settlement sum. The administration expenses have been estimated at $1.6 to $1.8 million (which takes into account an offset against interest). I have chosen the lower of these figures in trying to estimate the pool available to the group members.
The question for the Court is whether the settlement, as provided for under the settlement deed and settlement scheme, is fair and reasonable.
I have decided that the resolution of the proceeding as proposed in the settlement deed and settlement scheme is in the interests of the group members as a whole and should be approved. My reasons now follow.
The relationship between Bonsoy and the thyroid dysfunction of group members
Ms Downie began consuming Bonsoy in or about June 2007. From around April 2008 until about December 2009, she drank approximately three to four glasses of Bonsoy per day. Since July 2008, Ms Downie has suffered from significant thyroid dysfunction, which she alleges is the result of Bonsoy consumption.
The claims of the group members as to Bonsoy consumption and the alleged effects upon them are broad and disparate and relate to different iodine-related thyroid conditions, falling into three categories:
(a) Thyroid conditions caused by excess iodine only: specifically iodine-induced hyperthyroidism, iodine-induced hypothyroidism, and iodine goitre. These conditions will commonly, although not always, spontaneously resolve upon cessation of excess iodine intake.
(b) Thyroid conditions that can have multiple causes: these are conditions that are known to be precipitated or exacerbated by iodine, but can have other causes. Persons suffering from these conditions have an underlying thyroid weakness or predisposition to thyroid illness. These relevantly include Graves’ disease, Hashimoto’s illness, toxic nodules with resulting hyperthyroidism, and painless thyroiditis.
(c) Chronic iodine toxicity/iodism: large doses of iodine can cause a chronic toxicity or sensitivity reaction which may result in inflammation of salivary glands and mucous membranes, skin eruptions and other consequences.
I should add that there are some thyroid conditions that are either known not to be caused by excess iodine, or in relation to which there is a lack of sufficient information to support a finding of causation, for example:
(a) Development of multinodular goitre;
(b) Thyroid cancer; and
(c) Genuine subacute thyroiditis.
Although excess iodine is not known to cause any other illness, thyroid illness caused by iodine can cause or exacerbate secondary illnesses, including, but not limited to, heart and psychiatric conditions.
There is also wide variability within the group in respect of the severity and nature of the conditions suffered, and the compensable loss said to have been sustained. It is estimated that:
(a) A majority of group members (50 to 60 per cent) suffered from illness consistent with iodine-induced hyperthyroidism, the severity of which ranged from unpleasant symptoms for a few weeks to many months of symptomatic, and sometimes incapacitating, illness. Almost all of these recovered fully following medical treatment and/or discontinuation of Bonsoy consumption.
(b) In a very small number of group members, existing heart conditions or psychiatric disturbances were exacerbated by the thyroid dysfunction.
(c) A significant minority (around 30 per cent) suffered from permanent or ongoing illness. These fell into the following categories:
(i) Permanent hypothyroidism due to Hashimoto’s thyroiditis or failure to regain normal thyroid function after iodine-induced hypothyroidism;
(ii) Permanent hypothyroidism following removal or destruction of thyroid to control Graves’ disease or toxic nodules;
(iii) Graves’ disease that remains active or has a significant chance of recurrence; and
(iv) Eye impairment due to Graves’ disease.
In the majority of group members who sustained permanent hypothyroidism, the condition is managed with medication that they will need to take for the rest of their lives.
Some of those with Graves’ disease will continue to be significantly affected by the condition.
The case against each of the defendants in relation to the group members and associated thyroid conditions is discussed in more detail at [11] and following.
Procedural background
The proceeding was issued on 30 September 2010 against Spiral alone.[5] At a directions hearing on 26 October 2012, Ms Downie sought, and was granted, leave to join Muso and Marusan as defendants.
[5]‘Open affidavit’ of Irina Lubomirska sworn 19 February 2015 (Open Affidavit of Irina Lubomirska), [5].
On 12 and 19 May 2014, the Court made orders closing the class. Group members were required to return a registration form by 11 July 2014, failing which they would remain a group member for all purposes of the proceeding but not be entitled to receive a distribution pursuant to any settlement, subject to further order. There were 487 group members who registered. Others subsequently attempted to, or expressed interest in, registering after the deadline. This is discussed below.
On 8 March 2013, the Court ordered that the proceeding be fixed for trial on 12 November 2013. The trial date was subsequently vacated and re-fixed on two occasions before it was ultimately fixed on 27 October 2014 before Cavanough J.
On 16 October 2014 the Court was advised that the parties were close to agreement on settlement.
Following further negotiation, the settlement deed was executed on 17 November 2014.
Trial preparation was substantially advanced when the proceeding resolved. I do not propose to delve into, or make findings concerning, the detail of materials filed with the Court; nor would it be appropriate for me to do so in the present application. However, I note that pleadings had closed, court books had been prepared, and the materials filed included nine reports by endocrinology experts.
On 24 November 2014, the Court listed the hearing of the present application for approval of settlement and made related orders, including the procedure for group members to object to the proposed settlement.
The settlement scheme was first circulated on 1 December 2014. An amended version was circulated on 16 February 2015 and considered at the approval hearing on 25 February 2015.
One group member, William Minson, filed a notice of objection which was subsequently withdrawn at the approval hearing.[6] There was therefore no contradictor opposing the approval of the settlement scheme.
[6]Confirmed in writing by his solicitor at the approval hearing.
Subsequently, there have been several revisions of the settlement scheme as a result of discussion between my chambers and counsel and solicitors for Ms Downie.
On 22 April a case management conference (CMC) was held to discuss amendments and revision of the settlement scheme. The final version is annexed as an annexure to these reasons.
Material provided by Maurice Blackburn on the application
On 24 November 2014, Cavanough J granted Maurice Blackburn leave to file material supporting the approval of the settlement. His Honour granted leave for the filing of a confidential affidavit in this matter, as follows:[7]
[7]Orders of Cavanough J made 24 November 2014, [5].
The plaintiff has leave to file any confidential affidavit in support of the Settlement Application by delivering it to the Court in a sealed envelope marked ‘Confidential Affidavit – Not to be Opened Except by Direction of a Judge of the Court’, and should any application be made to release the documents, notice of such application be first given to the plaintiff’s solicitors.
The material provided to the Court by Ms Downie on this application included:
(a) an ’open affidavit’ of Irina Lubomirska of 19 February 2015; and
(b) a ’confidential affidavit’ of Ms Lubomirska of 19 February 2015, filed pursuant to the aforementioned order of Cavanough J.
These exhibited key documents including:
(a) the settlement deed;
(b) the settlement scheme;
(c) a confidential advice of counsel of 19 February 2015; and
(d) an expert report of Ms Catherine Dealehr as to legal costs and disbursements incurred by Ms Downie in bringing the claim.
The open affidavit dealt with such matters as the history of the proceeding and the major features of the settlement scheme.
The ‘confidential affidavit’ included the following matters (expressed in the broad):
(a) Details of the composition of the group and the conditions caused by consumption of Bonsoy;
(b) The estimate of group loss, with details as to the information-gathering process undertaken by Maurice Blackburn, as well as the methodology of the modelling process of the likely total sum to be distributed to group members in the settlement. The procedures applied to late registrants are also set out;
(c) The progress of settlement negotiations, obstacles, impetus and alternatives to settlement, and the risks of recovery;
(d) An estimate of Maurice Blackburn’s costs, including the aforementioned costs report of Ms Dealehr;
(e) An estimate of the lead plaintiff’s reimbursement claim; and
(f) The opinion of counsel as to the adequacy of the settlement of the claim.
What parts of the ‘confidential affidavit’ should be kept confidential?
In the course of the approval hearing I expressed some disquiet at the breadth of the material which was sought to be kept confidential. The question of what parts should remain confidential was the subject of correspondence between my chambers and Maurice Blackburn and further discussion at the CMC.
My concerns as to the entire contents of the confidential affidavit remaining sealed are as follows.
First, that the group members are entitled to know as much as is practicable as to why the settlement has been approved.
Second, there is no basis upon which issues such as the costs of Maurice Blackburn in mounting the case or the potential administration costs should remain confidential. To the contrary, there should be full disclosure of the quantum of such costs and the manner in which they have been calculated. This is consistent with the usual practice of the filing of a bill of costs (which would be placed on the court file and available for inspection) and the open hearing of any taxation of costs. Indeed, it is especially important in a case (such as this one) involving the approval of a class action where the quantum of costs will eat into the settlement figure.
Third, once the material is filed with the court for the purpose of approving a compromise there is an implied waiver of any claim for privilege – at least in terms of disclosure to the court. The usual practice in the approval of a compromise under Order 15 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic) (Rules) is for the materials relevant to the settlement to be retained on the file but to be the subject of a confidentiality order. The purpose behind this, as I have understood it, is that there is no true public interest in why a compromise has been effected. Absent the need for approval, the basis upon which a party decides to settle a case is a matter solely for that party and his or her legal adviser.
Having said that, the settlement of a class action raises different issues. I accept, on the one hand, that there is no need for the general public, or the defendants and their lawyers, to know why the claim was settled. On the other hand, the group members are entitled to know exactly why the case has been resolved and, if so minded, the basis for the approval; and it is necessary to enter into this material to some extent in setting out adequate reasons for approval (or refusal) of the compromise.
Often (and this is so in this case) the judgment dealing with approval of a settlement will indicate to the group members, at least in outline, the matters that persuaded the judge to approve the settlement. But it will not tell the whole story.
In my view, taking into account the matters I have just mentioned, the confidential affidavit should not be sealed and should be available for inspection on the court file subject to the following redactions:
(a) those parts of the affidavit (and the exhibits, including that of counsel’s opinion) that relate to the merits and value of the claim and the reasons for acceptance of the offer made by the defendants;
(b) those parts of the affidavit that contain confidential information relating to Ms Downie or any other group member;
(c) those parts of the affidavit that relate to matters which have been agreed with the defendants to be kept confidential.
Consistent with the orders of Cavanough J, and as a result of discussions with Maurice Blackburn a redacted version of the confidential affidavit was prepared, which will be placed on the court file. Those parts which have been omitted are described above.
If a group member was sufficiently interested and wished to obtain access to that material, I would entertain such an application, but only on the basis of the provision of an undertaking as to confidentiality.
Principles applicable to the approval of a group settlement
Section 33V of the Supreme Court Act relevantly provides that a group proceeding ‘may not be settled or discontinued without the approval of the Court’.[8] Where the Court approves a settlement, 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’.[9] An application for approval under s 33V must not be determined unless notice has been given to group members, except where the Court is satisfied that is it just not to.[10]
[8]Supreme Court Act 1986 (Vic) s 33V(1).
[9]Supreme Court Act 1986 (Vic) s 33V(2).
[10]Supreme Court Act 1986 (Vic) s 33X(4).
Section 33V does not provide guidance as to the approach the Court is to take in exercising its power to approve settlements. However the principles (which might be said to be based on those of the Court’s protective jurisdiction)[11] relevant to such an application have been discussed in a series of decisions in this Court and the Federal Court.[12]
[11]Tasfast Air Freight v Mobil Oil Australia Ltd [2002] VSC 457, [4]; Australian and Securities and Investments Commission v Richards [2013] FCAFC 89 (Richards), [8].
[12]See for example: Matthews v AusNet Electricity Services Pty Ltd [2014] VSC 663 (Matthews), [33]–[45]. The approach of this Court closely tracks that of the Federal Court in respect of s 33V of the Federal Court of Australia Act 1976 (Cth) as to which see Richards [6]–[8].
The Court’s task is especially onerous where the application is not opposed;[13] it must be satisfied of the fairness of the proposed settlement independent of the prima facie reasonableness of the opinions expressed on behalf of the plaintiff’s legal advisors;[14] and the absence of objections to the proposed settlement will not relieve the court of its obligations to satisfy itself of the fairness and reasonableness of the settlement.[15]
[13]Lopez v Star World Enterprises Pty Ltd [1999] FCA 104, [16] cited with approval in this jurisdiction in Clarke (as trustee of the Clarke Family Trust) v Great Southern Finance Pty Ltd (Receivers and Managers appointed) (in liquidation) [2014] VSC 516 (Clarke), [38].
[14]Matthews [2014] VSC 663, [37].
[15]Ibid [38] and the authorities cited therein.
In a settlement application under s 33V, the court approaches its task by asking two ‘critical questions’:[16]
[16]Matthews [2014] VSC 663, [34] (citation omitted). See also A v Schulberg (No 2) [2014] VSC 258, [12]; Thomas v Powercor Australia Ltd [2011] VSC 614; Perry v Powercor Australia Ltd [2012] VSC 113, Mercieca v SPI Electricity Pty Ltd [2012] VSC 204 [2012] VSC 204 (Mercieca).
(a) whether the proposed settlement is fair and reasonable as between the parties having regard to the claims of the group members; and
(b) whether the proposed settlement is in the interests of group members as a whole and not just in the interests of the plaintiff and the defendants.
The first issue, consideration of whether the settlement of the plaintiff and the group members’ claims is fair and reasonable, is akin to the exercise carried out by a court in determining, under O 15 of the Rules whether the settlement of a claim brought by a person under a disability should be approved.
The underlying rationale for this protective role is reflected in part by the following observation of Osborn JA in Matthews:[17]
[17]Matthews [349] (citations omitted).
As Gordon J recognised in Modtech, the group members who are to share the liability for the fees and disbursements are limited in their capacity to act as contradictors to the claim for costs because the information available to them is limited. While the opt out notices distributed to the group members in 2011 specifically notified them of [some details]… [t]hey do not know how the sum was quantified and have not had access to the confidential affidavits of the costs consultants retained by Maurice Blackburn in support of this application. The process of analysis undertaken in the evidence before the Court is therefore integral to ensuring the costs sought are fair and reasonable.
These observations are apt in this case in which the group members received little information in the notice of the proposed settlement about the amount of administration and legal costs payable to Maurice Blackburn and how it will affect their entitlement.
In determining whether the proposed settlement of a class action falls within a range of fair and reasonable outcomes a court will consider the following matters:[18]
[18]See Williams v FAI Home Security Pty Ltd (2000) 180 ALR 459, 465 [19] (Williams).
(a) the complexity and duration of the litigation (both to date and into the future - particularly if the case is not settled and proceeds to verdict);
(b) the attitude of the group members to the settlement;
(c) the stage of the proceeding at which settlement is proposed;
(d) the relative risks of establishing liability;
(e) the relative risks of establishing loss and damage for both the plaintiff and the group members;
(f) whether the claim would be able to continue to judgment as a class action;
(g) the ability of the defendant(s) to withstand (i.e. to pay) a judgment that is greater than the settlement amount;
(h) the terms of any advice received from counsel and/or from any independent expert in relation to the issues which arise in the proceeding.[19]
[19]Matthews [43].
Of course, as Osborn JA remarked in Matthews in relation to the considerations arising on an application of this nature: ‘it is also well accepted that there is no checklist [of considerations] which necessarily identifies the indicia of fairness or its absence in a particular case’.[20]
[20]Ibid [42], citing Darwalla Milling Co Pty Ltd v F Hoffman La Roche Limited (No 2) (2006) 236 ALR 322, 335 (Darwalla); Wheelahan v City of Casey [2011] VSC 215, [62] (Wheelahan), which in turn were cited with approval in Matthews v SPI Electricity; SPI Electricity Pty Ltd v Utility Services Corporation Ltd (Ruling No 16) [2013] VSC 74, [36]; Thomas v Powercor Australia Limited [2012] VSC 113, [12]; Clarke [41]-[42].
In determining the second issue – fairness of the settlement as between all group members – the Court is required to examine the internal workings of the settlement and consider where there is any differentiation between the treatment of the individual group members and, in particular, their entitlement to an award.
In some cases, a settlement scheme will simply provide for a particular amount or percentage of an assessed amount to be paid to group members without any differentiation between those members.[21] Provided the settlement as a whole is fair and reasonable (the first question) then these cases present no difficulty.
[21]See eg Mercieca; Thomas v Powercor Australia Ltd [2011] VSC 614.
However, where there is an internal differentiation in the settlement scheme (which may relate to many disparate factors – the strength of the case of some group member, issues of causation, the effect of legislation on the claim of the independent group member and the nature of the damage sustained by the group member) then it will be necessary to determine whether that differentiation is fair and reasonable.
In Australian Securities and Investments Commission v Richards,[22] for example, a settlement scheme was disallowed in its entirety because it was found, on appeal, that the primary judge had erred in finding that the distribution of the settlement sum was fair and reasonable as between all group members. The Court held that the distribution unfairly benefited group members who had paid to be legally represented, and were parties to agreements under which they would be reimbursed their legal costs. Under the scheme this class would receive a larger percentage of the quantum of their claims, at the expense of unrepresented group members, who were to recover a smaller percentage of their claims to lost equity. The difference in quantum of recovery between the two groups was referable to the existence of a ‘funders’ premium’, paid to the funded group members, but unavailable to those who were unrepresented. The existence of that premium had not been declared at the outset of the litigation, and was found by the Court to be excessive.
[22][2013] FCAFC 89.
The proposed settlement
The settlement deed provides for a settlement sum of $25 million. This sum is all-inclusive, and the following costs and expenses will be deducted from it:
(a) Ms Downie’s legal costs;
(b) the costs of reimbursing Ms Downie for her time and expenses; and
(c) the costs of administering the settlement scheme.
The remainder will be available for distribution among group members.
The amount available to group members is expected to be in the region of $16.5 million.
Who will be entitled to payment under the settlement scheme?
Entitlement of the group members is not assumed. Rather, the settlement scheme provides for the following matters to be considered in assessing whether a group member is entitled to an amount under the scheme:[23]
[23]Settlement scheme, cl 8.4.
(a) whether the group member fits the pleaded group definition;[24]
[24]That is, those who had consumed Bonsoy during the period from 1 July 2004 to 25 December 2009, and had suffered thyroid dysfunction, exacerbation of a pre-existing thyroid condition, or iodism as a result – including infants who suffered thyroid dysfunction as a result of maternal consumption.
(b) whether the injuries claimed were caused by consuming Bonsoy (with general propositions as to the role of iodine being taken as established);[25]
[25]Transcript of Proceedings, Downie v Spiral Foods Pty Ltd (Supreme Court of Victoria, S CI 2010 5318, J Forrest J, 25 February 2015) (Transcript) 16.
(c) whether the group member satisfies statutory thresholds for, and quantum of, general damages under the Wrongs Act 1958 and Competition and Consumer Act 2010 (Cth) (CCA);[26] and
[26]Competition and Consumer Act 2010 (Cth), Pt VIB, Div 3.
(d) whether the group members’ entitlement to and quantum of damages and for ‘special damages’ are limited by the Wrongs Act.
Therefore, a group member will not receive a distribution unless Maurice Blackburn concludes that he or she would have succeeded in establishing a causal link between the consumption of Bonsoy and thyroid dysfunction. If such a link is established, then his or her damages will be assessed by application of the provisions of the Wrongs Act and CCA.
I should say something briefly about the limitations imposed by the Wrongs Act and the CCA. Under the Wrongs Act, a person can only recover damages for non-economic loss (general damages) if they have suffered a significant (permanent) injury.[27] A significant injury, other than psychiatric injury, is one that involves an impairment of more than five per cent as confirmed by the AMA Guides.[28] A significant injury in respect of psychiatric injury is one that involves an impairment of more than ten per cent under the AMA Guides.[29]
[27]Wrongs Act 1958 ss 28LB, 28LE, 28F.
[28]Wrongs Act 1958 s 28LF.
[29]Wrongs Act 1958 s 28LF.
Under the CCA, a person can only recover damages for non-economic loss if their loss is more than 15 per cent of a most extreme case.[30]
[30]Competition and Consumer Act 2010 (Cth) s 87S.
The entitlement of group members to a distribution will depend upon their ability to satisfy these requirements.
The reference in the settlement scheme to ‘special damages’ is misleading. ‘Special damages’, as commonly understood, refers to an ascertainable claim for medical and like expenses. Claims for loss of earnings and loss of earning capacity are not special damages. However, as I apprehend the position, the reference to special damages here and, in particular, the expression ‘relevant limitations’, refers to limitations on claims for loss of earnings and loss of earning capacity as well as any claims under the principles of Griffiths v Kerkemeyer.[31] I have proceeded on that basis.
[31](1977) 139 CLR 161.
There is provision for interim distributions of no more than 60 per cent of the assessed value, once at least 30 per cent of the total number of group members have received final assessments.[32]
[32]Settlement scheme, cl 12.
Where a case is borderline as to whether the balance of probabilities is satisfied, there is scope for a reduced payout proportionate to the uncertainty.[33] Where a claim is less than borderline, it would be refused.
[33]Transcript 24-5.
What amount will eligible group members receive?
The likely amounts payable to claimants under the scheme has been estimated through modelling exercises undertaken by Maurice Blackburn. Two initial assessments were discarded due to concerns about the reliability of the underlying data. Ultimately, the modelling that was relied upon included an assessment of three sample groups.
In one group (the central sample group), a random sample of group members was selected by Maurice Blackburn and assessed on the basis of self-reported information and medical, tax and business records (the records providing a degree of verification of the self-reported information). Assessments were conducted or supervised by Ms Lubomirska, an experienced solicitor in this area of law; in accordance with the principles which would govern entitlement under the settlement scheme. Thus, the modelling process considered causation and the calculation of relevant heads of damages.[34]
[34]Past and future medical expenses, loss of earning capacity (including past loss of earnings), Griffiths v Kerkemeyer damages and general damages.
According to Maurice Blackburn, the methodology used to assess individual claims was deliberately generous, to avoid underestimation. The estimated damages of the central sample group were then scaled to the number of registrants to produce an estimate for the total group. Outlier claims were individually identified and allowances made for them, to ensure that the extrapolated figure was representative.
Based on the Maurice Blackburn modelling, the range of damages recoverable by group members is between (roughly) $22 million and $26 million.
Given that this process was carried out by an experienced solicitor, familiar with statutory thresholds, principles of causation and assessment of damages, it is fair to assume that there is a reasonable correlation with the potential damages recoverable by the group members.
As I mentioned earlier, a combination of legal fees and administration costs will reduce the pool available to group members to about $16.5 million clear. Inevitably, this will mean that group members will not receive the full assessment of their claim. I return to this matter when I consider the fairness of the settlement.
How will the proposed settlement operate?
Under the settlement scheme, each group members’ claim would be assessed against the criteria for entitlement (Assessment).[35] The Assessment is to be carried out by Maurice Blackburn as Administrator,[36] unless in its discretion it chooses to refer the Assessment to a barrister.[37]
[35]Settlement scheme, cl 8.
[36]Settlement scheme, cl 4.1.
[37]Settlement scheme, cl 8.11.
If Maurice Blackburn requires a registrant to undergo a medico-legal review, it may require the group member to pay the medico-legal costs.[38] It must first give the group member an opportunity to plead inability to pay, and must fairly consider any such material.
[38]Settlement scheme, cl 8.12.
Group members must provide information, documents and authorities, and attend meetings, amongst other requirements, upon Maurice Blackburn’s request.[39] Maurice Blackburn can discount the group member’s claim for non-compliance, even reducing it to zero.[40]
[39]Settlement scheme, cl 5.1.
[40]Settlement scheme, cl 5.2.
Group members can seek review of the Assessment by a barrister with at least eight years of post-admission experience, with no prior association with the case (Independent Review).[41] The request for a review must be made within 21 days, without fail, using a prescribed form.[42] Group members must pay a bond of up to $1,000 within 14 days if requested to do so by Maurice Blackburn. This amount will be refunded if the Independent Review produces an assessment value that is more than 110 per cent of that under the Assessment.[43] Otherwise, the group member must pay the further costs of the Independent Review up to a ceiling of $2,000, bringing it to a total of $3,000 forfeited; that is unless Maurice Blackburn exercises its discretion to waive the costs, which it may or may not do on compassionate grounds.[44] As with the Assessment stage, under the Independent Review, group members may be required to undergo a medico-legal review which they are liable to pay for, in the same circumstances.[45]
[41]Settlement scheme, cl 9.
[42]Settlement scheme, cl 9.1.
[43]Settlement scheme, cl 10.1.
[44]Settlement scheme, cl 10.2.
[45]Settlement scheme, cll 9.6(c), 9.7.
If a group member seeks an Independent Review, Maurice Blackburn would first have the opportunity to accept that the grounds for review are made out.[46] The rationale is that this would provide scope to correct any slips or errors in the initial Assessment without necessitating an Independent Review.[47] Any remaining disputed grounds would then be referred for Independent Review.
[46]Settlement scheme, cl 9.3(a).
[47]MB’s email of 10 April 2015 to the Court.
How will the assessment and review procedure for persons under disabilities operate?
The settlement scheme is to operate differently in respect of registrants who are under a disability within the meaning of O 15 of the Rules (O 15 registrants).[48] There are eight O 15 registrants, and one late group member who would be an O 15 Registrant if allowed to participate.[49]
[48]Settlement scheme, cl 11.
[49]Open Affidavit of Irina Lubomirska, [14].
Maurice Blackburn, as Administrator, is to appoint a personal representative for each O 15 registrant, who will represent them in the settlement process.[50]
[50]Settlement scheme, cl 11.1(a).
Under the settlement scheme, Maurice Blackburn will conduct an initial assessment of whether an O 15 registrant is a group member as per the pleaded group definition, just as it would do in the assessment of any group member. However, unlike standard assessments, if Maurice Blackburn were to determine that an O 15 registrants is a group member, then the remainder of the assessment is to be conducted by independent counsel.[51]
[51]Settlement scheme, cl 11.5(c).
An O 15 registrant can seek review by another independent member of counsel, in the same way that Independent Review is available for a standard registrant. However, the O 15 registrant must obtain leave from Maurice Blackburn before doing so, having already had his or her initial assessment conducted by independent counsel.[52] The leave requirement is not onerous: Maurice Blackburn need only be of the opinion that it is ‘on the cards’ that the other independent review might produce a higher assessment value.[53]
[52]Settlement scheme, cl 11.5(f).
[53]Settlement scheme, cl 11.5(g).
Where an O 15 registrant is found not to be a group member, that O 15 registrant is able to seek a review of Maurice Blackburn’s decision by independent counsel,[54] for which leave is not required.[55] No further review would be available to that O 15 group member if independent counsel finds them not to be a group member.[56]
[54]Settlement scheme, cl 11.5(d).
[55]Settlement scheme, cl 11.5(f).
[56]Settlement scheme, cl 11.5(e).
The time limits for O 15 group members are 42 days for each stage; longer than those for standard registrants.
No bond is required to be paid for O 15 registrants in respect of the review process.[57]
[57]Settlement scheme, cl 11.5(h).
For O 15 registrants, assessments are subject to approval by the Senior Master of the Court, who would have the benefit of any statement of reasons given in the assessment process and could require Maurice Blackburn to provide a report.[58]
[58]Settlement scheme, cl 11.6.
How will the claims of late registrants be treated?
As mentioned earlier, the class was closed pursuant to orders of 12 May 2014, which provided that group members who failed to register with Maurice Blackburn by 11 July 2014 would not be entitled to participate in any settlement.[59] Registration forms were submitted by 487 people within the specified timeframe.[60]
[59]Open Affidavit of Irina Lubomirska, [6.1].
[60]Open Affidavit of Irina Lubomirska, [6.12].
Nine people submitted registration forms after the deadline, but prior to the parties reaching agreement to settle, such that their claims were known to Maurice Blackburn in negotiating the settlement.[61] Maurice Blackburn proposes to permit these nine individuals to register.
[61]Open Affidavit of Irina Lubomirska, [15.1].
Eighty-two people sought to register following announcement of the settlement on 17 November 2014.[62]
[62]Open Affidavit of Irina Lubomirska, [15.2]-[15.3].
Under the settlement scheme, Maurice Blackburn has the power to decide whether to allow these late registrants to participate in the settlement.[63]
[63]Settlement scheme, cl 7.
In deciding so, Maurice Blackburn must have regard to circumstances including the length and reasons for delay, any likely prejudice to other group members, and the extent to which the late registrant acted promptly upon coming to know of his or her possible entitlement under the settlement, amongst other factors.
In the event that Maurice Blackburn refuses to permit a late registrant to join the class, it must give reasons as to why that decision was just and reasonable.
Upon refusal, a late registrant is able to seek review within 14 days, using a prescribed form and upon paying a $400 ‘bond’.[64] Once the ‘bond’ is paid, Maurice Blackburn (rather than the late registrant) is required to bring the review application before the Court, which would then conduct the review of Maurice Blackburn’s decision. Maurice Blackburn is not obliged to refund the bond unless the late registrant succeeds in the Court review.[65] There is otherwise no scope for Court supervision.
[64]Settlement scheme, cl 7.6.
[65]Settlement scheme, cll 7.10, 7.11.
Reimbursement of the lead plaintiff’s expenses?
The proposed settlement provides for Ms Downie to be paid $13,470.46 for part of her participation and expenditure in relation to the proceeding.[66] Under the settlement scheme, this amount is described as ‘the Plaintiff’s reasonable claims, subject to approval of the Court, for compensation for the time or expenses incurred in the interests of prosecuting the Proceeding on behalf of Group Members as a whole’.[67]
[66]Open Affidavit of Irina Lubomirska, [16].
[67]Settlement scheme, cl 2.1 (definition of ‘Plaintiff’s Reimbursement Claim’). See also the obligation to pay these: cll 1.3(f), 13.1(b).
The figure is calculated by reference to the multiple conferences between Maurice Blackburn and Ms Downie (by telephone and in person) and medico-legal appointments. Ms Downie is to be reimbursed at a commercial rate commensurate with her previous employment as a music teacher. An additional allowance is also made for travel expenses.
Is the settlement of the claim against the Defendants fair and reasonable?
The settlement sum and deductions
The total settlement sum is $25 million but, as discussed, this amount is to be subject to three reductions. Given that costs are assessed at approximately $7 million up to December 2014 (as discussed below), then the maximum sum available is approximately $18 million. From that figure, an estimate of just over $1.5 million in administration expenses is to be deducted[68] – leaving about $16.5 million for distribution among the group members.
[68]As calculated after taking into account the interest earned and offset on the amounts paid by the defendants, as noted below.
Amounts payable to individual group members
Because of the nature and diversity of the thyroid dysfunction, it is not possible to simply divide the net settlement sum (approximately $16.5 million) by the number of group members. As I mentioned earlier, some group members will not be entitled to a distribution as they do not fit the group description or cannot establish causation. Further, there are the statutory constraints of the Wrongs Act and the CCA upon general damages which I have set out. A more reliable, but necessarily imprecise, indicator is that produced by the sampling or modelling of claims, which I have described at [66] and following.
Based on the Maurice Blackburn modelling (discussed above), the amount of damages recoverable by group members at trial would have been in the region of $22 million and $27.5 million.
The estimate is admittedly uncertain because of limitations regarding the underlying data, the risks inherent in extrapolation and the deliberately generous methodology adopted. However, to paraphrase Osborn JA[69] and Emerton J[70] in other settlement approval applications, I am satisfied that Maurice Blackburn has made a serious and conscientious effort to accurately estimate the total damages and that it is not unreasonable to proceed to settlement on the basis of the estimate. Further, to the extent that the modelling errs on the side of generosity, that inaccuracy enhances rather than detracts from fairness and reasonableness to the group members.
[69]Matthews [54].
[70]Mercieca [36].
The end result is that on Maurice Blackburn’s best estimate the group members who establish causation and satisfy the statutory thresholds have a reasonable prospect of recovering roughly 60 to 70 per cent of their assessed claim value, free of any liability for trial costs and the costs of the administration of the assessment process.
Risks on liability
In Matthews, Osborn JA said as follows:[71]
[71]Matthews [40] (citations omitted).
In particular, the relative prospects of success can only be broadly gauged. In A v Schulberg, Beach JA described the role of the Court in determining whether or not to approve the settlement of group proceedings as follows:
The job of this Court is to determine whether or not the settlement is fair between the parties and between the plaintiff and group members. While, in making that assessment, it is necessary 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, necessarily any such comparison can only be performed in a broad manner.
These observations are all the more compelling where the evidence has not been heard and tested – as was the case in Matthews. The assessment of the prospects of success of a case by a judge hearing an application for approval of a compromise prior to the trial of the proceeding necessarily requires an element of guesswork and judicial intuition. The material upon which the judge relies is provided by the applicant’s lawyers, and the various defences proffered by the defendants have not been tested.
These observations should be borne in mind when considering the following analysis.
Background
Based on the material provided by Ms Downie for the purpose of this application, the following factual matters appeared to be either undisputed or likely to have withstood any putative challenge by the defendants:
(a) Marusan manufactured Bonsoy in Japan. Muso was responsible for its distribution from Japan to Australia. Spiral imported and distributed Bonsoy in Australia.
(b) In 2003, Bonsoy was reformulated to include a product known as kombu extract instead of kombu powder. This, in all likelihood, increased the iodine content of Bonsoy.
(c) Each of Marusan, Muso and Spiral were involved in discussions concerning the reformulation.
(d) As a result of the reformulation, from 2003 to December 2009 (when Bonsoy was recalled), the new recipe for Bonsoy replaced 0.54 kilograms of kombu powder and 1.5 kilograms of wet salt with 7 kilograms of kombu extract per 1,000 litres of product.
(e) In 2006 a Bonsoy consumer (on the advice of her doctor), contacted Spiral inquiring as to the iodine content in the reformulated Bonsoy. This inquiry (which was communicated to Muso and Marusan) resulted in the testing of the Bonsoy to determine its iodine content, which was measured at approximately 30,000ug of iodine per litre of Bonsoy. This is a high level of iodine intake (in Japan, the upper daily limit is 3,000ug per day, with a recommended daily intake of 150ug per day). Marusan, Muso and Spiral were all aware of the results of the testing.
(f) Testing carried out on behalf of the Victorian Department of Health on Bonsoy in December 2009 demonstrated an iodine content of between 27,580ug and 31,000ug per litre pack.
The claim against Spiral
The claim against Spiral alleged breach of its common law duty of care to Ms Downie and the group members and contravention of ss 74B, 74D and 75AD of the TPA.
Ms Downie argued that Spiral, as the distributor of the product, owed a duty of care to Ms Downie and the group members who consumed the product. That allegation was denied by Spiral.
On the material provided, I am satisfied that it is likely that Ms Downie and the group members would have established that Spiral owed a duty of care to consumers of Bonsoy between 2003 and 2009. Its knowledge of the reformulation, the likely presence of excessive amounts of iodine in the product and its relationship with its consumers underpins such a duty. Although not analogous, it is, in many respects, a case descendant of Donoghue v Stevenson.[72]
[72](1932) AC 562.
Any breach of that duty is to be determined by the application of Part X of the Wrongs Act.
It was necessary for Ms Downie and the group members to establish breach of duty as required by ss 48 and 49 of the Wrongs Act.
The relevant risk of harm to Ms Downie and the group members was that of an over-consumption of iodine by reason of the high levels of iodine contained in the reformulated Bonsoy. Such a level of iodine was a potential cause of thyroid disorders. I also think it likely that it would have been established that this risk of harm was reasonably foreseeable by Spiral, given the facts I have adverted to, and particularly after 2006 when the testing was carried out.
For the case in breach to be made out, it is necessary to establish that the defendant has failed to take reasonable precautions as stipulated by s 48(1)(c), having regard to the matters contained in ss 48(2) and 49 (which are not exclusionary).
The precautions which, it is said, Spiral should have undertaken and which would have averted or minimised the risk of high iodine levels and consequential thyroid dysfunction, were as follows:
(a) undertaking appropriate testing when reformulating the product in 2003;
(b) alternatively, in 2006, when it became aware after testing of the level of iodine within Bonsoy, to have asked Marusan and Muso reformulate the product.
(c) undertaking a proper analysis of food safety legislation and food standards, both federally and at a State level, which would have demonstrated to Spiral that Bonsoy had the potential to produce unsafe levels of iodine with consequential risks to health.
I am satisfied that Ms Downie and the group members had reasonably good prospects of success in the common law claim against Spiral.
The claim against Spiral was also brought under three separate provisions of the TPA, namely:
(a) Bonsoy was not fit for the purpose for which it was produced, namely, drinking or other human consumption, in contravention of s 74B;
(b) Bonsoy was not of merchantable quality, in contravention of s 74D; and
(c) Bonsoy was defective, in contravention of s 75AD.
Spiral admitted that:
(a) it was a deemed manufacturer under the TPA;
(b) its conduct was in trade or commerce, and that it supplied Bonsoy for resupply to consumers.
It also admitted that consumers who purchased Bonsoy did so for the purpose of drinking or consuming it. It is clear that these provisions applied to Bonsoy.
Counsel for Ms Downie summarised the case under each of the provisions as having the same thread: ‘Bonsoy was not fit for its purpose, nor of merchantable quality, and was defective because it contained excessive amounts of iodine, such that consuming just a very small amount put consumers at material risk of harm which was realised in the case of group members’.
Based on the material provided, I am satisfied that Ms Downie had a relatively sound case for breach of each of the provisions of the TPA. Consumption of relatively modest amounts of Bonsoy could lead to an amount in excess of the recommended daily intake of iodine consumption and, indeed, to an amount in excess of the maximum recommended daily iodine consumption. In those circumstances, there was a reasonable case that the product was not fit for human consumption, not of merchantable quality and defective.
All in all, I am satisfied that Ms Downie and the group members possessed a reasonably good cause of action against Spiral and would have probably established liability under both common law and statute.
The claims against Muso and Marusan
Both Muso and Marusan were incorporated in Japan and carried on business in that country. Marusan manufactured the product and Muso purchased and distributed it to Spiral in Australia. Both the companies were involved in its reformulation in 2003 and testing in 2006.
The claims against the two companies are to be determined pursuant to Japanese choice of law principles.[73] The Japanese legal experts agreed that Japanese choice of law rules identified Australian law as the law governing the claim: it was also agreed that the law of the place where the victim received the product applied to any claim arising out of injuries sustained after 1 January 2007. Before that point in time the position was not as clear, but the prevailing view was that the same position applied prior to that date.
[73]See Regie Nationale des Usines Renault SA v Zhang (2002) 210 CLR 491, Neilsen v Overseas Project Corporations of Victoria Ltd (2005) 223 CLR 331.
It can be safely assumed, for the purposes of this determination, that Australian law applies and the principles relevant to determining whether Spiral owed a duty of care to Ms Downie and the group members hold good to the claims against Muso and Marusan.
Marusan was the manufacturer of Bonsoy. It is settled law that a manufacturer owes a duty of care to a consumer:
A duty of care owed by a manufacturer or produced to a consumer is a duty to take reasonable care toward injury to the consumer.[74]
[74]Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540, 585 [106].
As far as I am aware, that duty is not limited by any territorial boundaries and it follows that Marusan owed a duty of care to Ms Downie and the group members.
Apparently Marusan intended to contend at trial in relation to its contribution claim against Muso that, given the role played by Muso in the reformulation, it had no responsibility or control over the reformulation of the product.
This, in my view, could not have negated an established category of duty of care into which Marusan fitted. Rather, if its contentions as to the reformulation and its distribution were accepted, it would have been relevant to questions of scope and breach of duty.
In any event, whatever the role of Muso (or for that matter Spiral), Marusan – at least on the material provided to the Court – was involved in the reformulation of the Bonsoy, the testing of the new product and the printing of the new packaging of the product. Added to that is Marusan’s apparent knowledge from July 2006 of the excessive levels of iodine contained in the Bonsoy.
I reach a similar conclusion in relation to Muso, albeit that it was not the manufacturer. It can be accepted that Muso does not fall into an established category for the purpose of a duty of care. It can also be accepted that a ‘middle man’ who has no opportunity to inspect the product and is simply involved in passing the product from manufacturer to supplier may not owe a duty of care to the ultimate user of the product. However, as the New South Wales Court of Appeal explained in McPherson’s Ltd v Eaton,[75] J & V Pesl v Ray Smith Tractors Pty Ltd[76] and Baden Cranes Pty Ltd v Smith,[77] there may be circumstances where the involvement of the ‘middle man’ is such that it owes a duty of care to the end user. In Baden Crane, the Court of Appeal held that a distributor’s conduct in the supply of a crane (not manufactured by it) and its knowledge of the way in which the crane would be used was sufficient for it to owe a duty of care to the end user.
[75](2005) 65 NSWLR 187.
[76][2007] NSWCA 74.
[77][2013] NSWCA 136.
I think it likely that, given Muso’s apparent involvement with the other two companies that it would have been found to have taken an active role in the reformulation and testing of the product.
Whilst not free from doubt, and by no means as strong as the case on duty against Spiral and Marusan, there was, I think, a reasonable prospect of establishing the existence of a duty of care.
As Victorian law applies, the provisions of the Wrongs Act are applicable to the claims against each of the Japanese companies.
For the reasons set out in relation to Spiral, I think it likely that it would be established that there was a foreseeable risk of injury which was not insignificant. The remaining question then is what precautions, if any, should Marusan and Muso have taken.
Subject to one matter, it is distinctly arguable that their reaction should have been no different to that of Spiral – ensuring that there was not excessive iodine in the product, testing the product in relation to levels of iodine and reformulating the product once it was determined that there were excessive levels.
The exception I just mentioned is that contained in Marusan’s defence to the claim that recommended iodine daily intakes in Japan are far higher than Australia: in Japan the upper safe daily limit is 3000ug per day, as against the recommended daily intake in Australia of 150ug per day. At least at first glance, it may be thought that this defence misses the point. This product was being shipped to Australia for consumption by Australian consumers and it is reasonable to expect the manufacturer and distributor of a product with considerable sales in this country to be aware of food standards and, in particular, the safe levels of the components of the product.
I am satisfied that Ms Downie and the group members had reasonable prospects of success in the case against Marusan and Muso.
Enforcement and recovery risks on any award of damages
It would serve no useful purpose (and would be contrary to the spirit in which negotiations were entered into) to set out in any detail the financial position of Spiral and its entitlement (if any) to indemnities under a policy or policies of insurance. It suffices to say that there was, in the view of Maurice Blackburn and counsel retained by it, a real risk that Spiral would not be able to meet a judgment of the magnitude for which the case has been settled. The extent of its insurance cover was unclear and it is a company of limited assets.
Muso and Marusan are both incorporated in Japan. If enforcement of a judgment sum against Spiral produced recovery of less than that amount then the only recourse to make up the deficiency would have been by taking enforcement proceedings in Japan.
In addition to practical issues such as the need for translation of documents, this would have required the group members to confront both the general question of enforcing an Australian judgment in Japan, and also the question of whether an Australian judgment obtained in a group proceeding could be enforced in Japan at all and, if so, whether enforcement could be sought by the group or would instead need to be sought through individual proceedings.
It is not necessary to refer in detail to the expert opinion obtained by Maurice Blackburn in relation to enforcement of a class action judgment in Japan. It suffices to say that Japanese law would enable the enforcement of individual awards of damages – but that would have meant that each group member required a judgment in this Court which would have to be the subject of a discrete application in a Japanese court. One might add that the enforcement of foreign judgments by a local court, at least in this country, gives rise to a myriad of issues.[78]
[78]See, for example, my recent ruling of Doe v Howard [2015] VSC 75.
If there was any realistic prospect that Spiral would fall short in terms of payment of a judgment then this settlement is highly beneficial.
Risks on causation and assessment of damages
As with liability, the question of causation is governed by Part X of the Wrongs Act. Damages recoverable by individual group members are governed by Part VB.
In Wallace v Kam,[79] the High Court said of the factual causation test in respect of analogous New South Wales legislation:
[79]Wallace v Kam (2013) 250 CLR 375 (Wallace).
The determination of factual causation in accordance with s 5D(1)(a) involves nothing more or less than the application of a ‘but for’ test of causation. That is to say, a determination in accordance with s 5D(1)(a) that negligence was a necessary condition of the occurrence of harm is nothing more or less than a determination on the balance of probabilities that the harm that in fact occurred would not have occurred absent the negligence.[80]
[80]Wallace, 387 [16]. See also Strong v Woolworths Ltd (2012) 246 CLR 182 (Strong), 190 [17]; Adeels Palace Pty Ltd v Moubarak (2009) 239 CLR 420 (Adeels Palace), 639 [45].
The Court also said of the distinction between questions of factual causation and scope of liability:
The distinction now drawn by s 5D(1) between factual causation and scope of liability should not be obscured by judicial glosses. A determination in accordance with s 5D(1)(a) that negligence was a necessary condition of the occurrence of harm is entirely factual, turning on proof by the plaintiff of relevant facts on the balance of probabilities in accordance with s 5E. A determination in accordance with s 5D(1)(b) that it is appropriate for the scope of the negligent person’s liability to extend to the harm so caused is entirely normative, turning in accordance with s 5D(4) on consideration by a court of (among other relevant things) whether or not, and if so why, responsibility for the harm should be imposed on the negligent party.[81]
[81]Wallace 386—387 [14]. See also Adeels Palace, 440 [42]; Strong, 191 [19].
Here, the risks on causation and limitations on damages are, in practice, excluded from consideration of the appropriateness of the settlement sum. This is because the settlement scheme provides for those group members who fail either the causation test or the threshold on damages to be excluded from or limited in participation in a distribution.
I will consider this issue in more detail in a moment.
Advantages of assessment process over trial
The advantage of the non-adversarial approach to assessment taken under the settlement scheme is also significant and bears emphasis here because it is one of the main advantages of this settlement. The non-adversarial approach provided under the settlement scheme provides a simpler, faster, more cost-effective approach. To proceed to judgment in the group proceeding, and further, determination of individual claims, would have involved years of litigation, potential appeals and complex questions of law, including the application of Japanese law to the claims of the group members. This is true for both those who would have succeeded in claims under the settlement scheme and those who would have failed. As counsel for Ms Downie submitted, those who would fail to establish claims under the settlement scheme would also have failed at the trial, and the settlement scheme provides a better path to arriving at this outcome.
Costs
The trial, although said by the lawyers to be a four week trial, would have proceeded for at least six weeks. Experience dictates that such estimates are normally under rather than an overestimate. Indeed, the case may have gone for eight weeks with judgment reserved for a number of months, bearing in mind the number of issues to be considered by the trial judge.
Patently, the costs involved in the prosecution of the case over a lengthy period of time would have increased substantially. Even allowing that a proportion of those costs would have been recoverable, in the event of a favourable judgment, the indisputable fact is that the solicitor-client portion of the costs would have grown exponentially with the length of the trial. To put it another way, to pursue the trial to verdict would necessarily have depleted significantly any potential judgment and the moneys available for distribution.
Then there is another issue. It was inevitable in this case that the trial judge would have ordered separate assessments of each group member’s claim. Those assessments would have examined questions of causation and damage, presumably in a curial setting, i.e. determined by a judge or an Associate Justice of this Court. This in turn would have produced significant costs for each group member eating into the judgment sum. This is avoided by the simple assessment process provided by the scheme.
No opposition by group members
It is significant in a class of this size (over 490 persons) that no group member opposed the approval of the settlement.
Negotiations
On the basis of counsel’s advice at the CMC I am satisfied that it is highly likely that no greater offer could have been extracted from the defendants prior to the trial commencing.
It suffices to say, given the protracted course of negotiations, this was an appropriate time for the offer to be accepted subject to the approval of the Court.
Advice of counsel
An opinion of counsel (senior and two junior counsel) running to 66 pages was annexed to Ms Lubomirska’s confidential affidavit. Counsel, having taken into account the matters to which I have adverted in these reasons, concluded that the settlement was fair and reasonable. It is to be remembered that in reaching this opinion, counsel owed a duty not only to the plaintiff but also to the group members as well as the Court. I am therefore fortified in my conclusion that the settlement is fair and reasonable by the opinion of counsel experienced in this area and very familiar with the issues in the case.
Certainty
In my opinion, one of the matters that counts powerfully towards the settlement is the certainty that it provides participating group members in relation to their claims.
By approval of the settlement scheme, any doubt as to the ultimate success of the proceeding is removed, as is the prospect of any appeal. This advantage should not be discounted notwithstanding my views as to the viability of the claim. Class actions are fraught with procedural issues and the application of Part VB of the Wrongs Act and of the CCA could have led to considerable legal jousting on questions of liability. In addition, the claims of individual group members would, in all likelihood, have been assessed separately subsequent to any findings on duty, and breach (common law and statutory). This would have required separate hearings of each group member’s claim (thus requiring the attendance of medical practitioners, lay witnesses and perhaps expert witnesses). The whole process may have taken years and could only have been commenced after judgment in the primary proceeding. I think this scenario was close to inevitable, absent settlement.
The course which is now adopted means that the resolution of these issues is far less cumbersome and will be expeditious.
Second, any anxiety or worry concerning the outcome of the trial is now assuaged. There is no need for Ms Downie or any other group member to give evidence and be cross-examined. Settlement entails a reduction in stress and anxiety for group members and witnesses, and payment to group members at a much earlier stage than if the matter had proceeded to judgment.
Synthesis of these considerations
Whilst it is clear the group members will not receive the full amount of the assessment of their individual claims, this does not mean that the settlement is not fair and reasonable. Although I have concluded that Ms Downie and the group members had reasonable grounds to expect to succeed in the claim, that is not the only consideration. The prospect of endeavouring to recover some (or perhaps a large part) of the judgment by taking action in Japan would have been costly and time-consuming – assuming it was even practicable. It was also inevitable that group members would be liable for a significant deduction by way of payment of costs out of the judgment amount – even allowing for a favourable order from the court. Unfortunately an inevitable consequence of civil litigation in this day and age is that ‘solicitor-client’ costs eat up a sizeable portion of the fruits of any judgment – particularly if the case proceeds to judgment. The costs are contained by the assessment and review process. The certainty of a settlement at a fixed sum, even if not the perfect result, is a powerful factor in the resolution of any proceeding. Notwithstanding that the group members did not have the detail of the deductions and the likely distribution figures, I am comfortably persuaded that the settlement is in the best interests of Ms Downie and the group members. I am reinforced in reaching this conclusion by the opinion of counsel.
Is the settlement fair and reasonable amongst group members?
Fairness of the settlement scheme
The settlement scheme and its method of operation is set out at [58] and following. It is noteworthy that in this proceeding, the entitlement of group members is not assumed. As set out at [58], the general principles as to the role iodine plays in thyroid conditions are assumed. Beyond that, questions of causation and the satisfaction of statutory thresholds (under the Wrongs Act and CCA) must be assessed for each group member. Thus, this proposed settlement differs from others, such as that in Matthews, where settlement had the added advantage to group members of avoiding the risk of some failing on causation.[82]
[82]Matthews [294].
The fact that some group members will not qualify for a payment under the scheme is not inequitable provided the scheme works as it is intended.[83] As senior counsel for Ms Downie pointed out, such a group member is not losing anything as, inevitably, that person would have failed at trial either on the question of causation or on the failure to meet the statutory threshold. In other words, at some point of time, if the matter had proceeded to judgment and then analysis of questions of causation and the assessment of damages, that group member would have been required to prove his or her case at that time. In fact, given the manner in which the scheme is to be administered, the group member has a greater prospect of success under this scheme than a judicial assessment of the issues. The settlement scheme provides for a degree of elasticity and discretion on the part of Maurice Blackburn, and in particular Ms Lubomirska, who will carry out this process.
[83]See Darwalla [94].
Similar schemes have been approved in other class actions. In Matthews, Osborn JA approved a settlement scheme under which the initial assessment of group members’ claims was conducted by the former solicitor for the lead plaintiff. Likewise, in Pathway Investments Pty Ltd v National Australia Bank Ltd (No 3),[84] Pagone J approved a settlement under which the scheme administrator assessed participants’ claims.
[84][2012] VSC 625. See [7.1] of the settlement scheme annexed to these reasons for judgment.
The review process (to which I will return in a moment) will accommodate any mistakes that may be made by Maurice Blackburn in the assessment process. Overall, I am satisfied that the manner in which the scheme operates (and particularly the scope for review), protects the interests of the group members. It allows the group members to have individual assessments of their claims and those who do not receive an entitlement are no worse off than they would have been had their cases proceeded to judgment.
Review mechanisms
After discussion with counsel at the approval hearing and the CMC, the in-house ‘Re-Assessment’ stage was dispensed with. If a group member is dissatisfied with an assessment he or she will go directly to Independent Review, as described at [75] to [76].
The Scheme now contemplates a single review stage, being Independent Review, but provides an opportunity for Maurice Blackburn to concede a ground or grounds of review beforehand. I am satisfied that this strikes a balance that is fair and reasonable in the interest of group members between enabling Maurice Blackburn to correct errors or otherwise uncontroversial review grounds in a cost-effective manner on the one hand, and promoting confidence in access to independent review on the other.
The scheme in Matthews provided for a first review by the scheme administrator, and a second independent review stage with a $3,000 ‘bond’ imposed on personal injury group members[85] – a broadly similar process to this scheme.
[85]Exhibit ‘ED-2’ on the application for approval of settlement, ‘Kilmore case settlement distribution scheme’.
I accept senior counsel’s argument that it is desirable to impose a bond to discourage hopeless Independent Reviews. These would incur administration costs and reduce the pool, against the interest of group members as a whole. There was considerable discussion in the course of the hearing and the CMC about the level of the bond that should be provided by a group member seeking review of the initial decision. Ultimately I was persuaded that the amount prescribed by the scheme ($1,000 with a subsequent additional payment of up to $2,000) was appropriate. In the circumstances of this proposed settlement, I am persuaded that it is fair and reasonable in the interests of group members to require these to forfeit up to $3,000 in seeking review, as it was in Matthews. I have concluded that the bond and fee proposed in this case strike an appropriate balance between the interest of the group as a whole in not having the fund depleted, and the need to spread the administrative costs of the assessment process fairly between the group members.
Persons under disabilities
As detailed above at [77] to [84], the present version of the settlement scheme would provide for assessment of O 15 registrants’ claims to be conducted independently of Maurice Blackburn, other than in assessing group membership, which is a fairly black and white question, and independent review is available for both group membership determinations and Assessments.
I am satisfied that the Scheme contains sufficient measures to address the vulnerabilities that O 15 registrants may have, such as the more extensive use of independent barristers, longer timeframes and the scheme for provision of materials to the Senior Master. I am also satisfied that these measures are not excessive as against the interests of other registrants: they are balanced, for instance, by the requirement that O 15 registrants must obtain Maurice Blackburn’s leave to obtain Independent Review, albeit at an appropriately low bar.
Late registrants
I have set out the scheme for late registrants at [85] to [91]. I am satisfied that the Scheme appropriately balances the potential desirability of permitting group members who failed to register by the deadline to participate in the settlement on the one hand, as against the interest of group members who registered in a timely fashion in not having the amount available to them reduced without proper reason. It might be said that the $400 ‘bond’, along with the fact that reviews of denials of participation are to be brought before the Court by Maurice Blackburn, rather than the late registrant, present hurdles for late registrants. However, in my view the provisions for late registration strike a balance that is appropriate between late registrants and other group members, and are fair and reasonable in the interests of group members as a whole.
Reimbursement of Ms Downie
As noted above, the proposed settlement provides for Ms Downie to be paid $13,470.46. The plaintiff describes this amount as ‘incurred in a representative capacity in bringing the proceedings in the interests of group members’.[86]
[86]Open Affidavit of Irina Lubomirska, [16].
The notice to group members of proposed settlement stated that there would be a payment of this nature:
The proposed Settlement Scheme provides for the distribution of the monies in the Settlement Distribution Fund to the Claimants. It also provides for payment of the plaintiff’s costs and disbursements and re-imbursement of the Plaintiff’s reasonable time and expenses incurred in the litigation.[87]
[87]Orders of Cavanough J made 24 November 2014, Annexure A, ‘Notice of Proposed Settlement’.
Schemes involving payments of this nature have been approved in a number of cases.[88] That is not to say that such payments are routine, nor that they will routinely be approved. In Darwalla, Jessup J said:
[88]See for example Darwalla; Jarra Creek Central Packaging Shed Pty Ltd v Amcor [2011] FCA 671 (Jarra Creek); Modtech (No 2) [2013] FCA 1163; Matthews.
There are … reasons why the court should pause before approving payments of this kind. First, although the claimants are not fiduciaries apropos the generality of group members, they have chosen to remunerate themselves, albeit modestly, ahead of the distribution to group members of a sum which has been calculated by reference to the estimated loss and damage suffered by the latter. The sensitivity of the position in which the claimants find themselves in these circumstances is obvious. Secondly, although courts have long-established procedures, and scales, by reference to which to assess the propriety and quantification of parties’ claims to be compensated for the legal costs and expenses made necessary by successful litigation, the same cannot be said of the payments with which I am presently concerned. I am denied the advantage of court scales and taxation procedures. I have only the claimants’ own evidence on the matter of the reasonableness of the payments, and of the necessity for the work and outlays to which they relate. Thirdly, the court is denied the benefit of the contribution of a contradictor in relation to these payments. Although the same may be said of the settlement distribution scheme as a whole, the problem is particularly acute where the court has only the say-so of those who claim these benefits with respect, for example, to the time occupied on the work to which their claims relate and the hourly rates by reference to which particular categories of personnel should be compensated.[89]
[89]Darwalla, 346–7 [75] cited with approval in Modtech Engineering Pty Ltd v GPT Management Holdings Ltd [2013] FCA 626, [69] (Modtech (No 1)).
That is so even where the amounts involved are relatively small in the context of the settlement as a whole.[90]
[90]See for example Darwalla 346 [75].
In Darwalla, Jessup J approached the task by considering whether it would be ‘fair and reasonable in the interests of group members as a whole for [the lead plaintiffs] to be so compensated.’[91] In other words, it requires asking ‘whether it would be fair and reasonable for one of the “passive” group members in the present case to deny the claimants an appropriately but conservatively measured degree of compensation for the time input’.[92] The compensation is for time actually input; it is not an ‘incentive payment’ for taking on the role of lead plaintiff as has been adopted in the US class actions system.[93]
[91]Darwalla 351 [85].
[92]Ibid [88].
[93]Ibid 347 [76]. See also 351–2 [86].
A primary consideration in assessing the fairness and reasonableness of compensating the lead plaintiff from the settlement sum is what the sum claimed relates to. In Darwalla, Jessup J only allowed the lead plaintiffs amounts for time and expenditure spent ‘in a truly representative capacity’ – but not for that spent pursuing individual aspects of their claims.[94] This required looking not just to the purpose for which particular work was done but also whether the result of the work done was in fact representative.[95]
[94]Ibid 348 [81].
[95]Ibid 351 [85].
The role of the lead plaintiff should not be underestimated. Having seen at first hand, both as counsel and trial judge, the work put in by a lead plaintiff and the stress and anxiety occasioned by the fulfilment of their role in court, it is only fair and reasonable that he or she be compensated for their time and effort.
However, that said, there must be a reasonable attempt to endeavour to quantify the expenses incurred by the lead plaintiff.[96]
[96]Further, the amounts claimed should not be reconstructed after the event but should be contemporaneously recorded: Modtech (No 2) [2013] FCA 1163, [10].
Whilst there are some failings in the methodology employed by Maurice Blackburn in calculating the figure of $13,470.46, on balance I am satisfied that the amount is appropriate. Looking at the sum itself, the figure appears plausible and unlikely to be an overstatement considering the scale, complexity and history of this proceeding. It should be allowed in full.
Conclusion
In my opinion, the settlement scheme operates fairly as between group members.
Court review of costs and administration expenses
Costs of the proceeding
The proceeding has been settled on an ‘all in’ or ‘inclusive’ of costs basis. Given that the group members as a whole benefit from the legal costs incurred, Ms Downie’s solicitor, Maurice Blackburn, is entitled to its costs out of the settlement amount.[97] However the Court, in the exercise of its protective role under s 33V of the Supreme Court Act will scrutinise, at times closely, the quantum of those costs and any other deductions from the amount available to group members.
[97]Modtech (No 1) [24].
This is important for two reasons. First, as the costs are deducted from the settlement sum, it has the potential to affect the reasonableness of the settlement.[98] Secondly, the group members lack detailed information about the legal costs incurred so as to be able to challenge the plaintiff’s solicitor’s claimed costs.[99]
[98]Matthews [347].
[99]Matthews [349]; Modtech (No 1) [27].
The Notice of Assessment must contain the following information:8.10
(a)the Assessment Value;
(b)disclosure of the information and documents relied on by the Administrator in the Assessment;
(c)a brief statement of reasons disclosing:
(i)any material assumptions made by the Administrator in the Assessment;
(ii)the determinations made under clauses 8.3 and 8.4 and the grounds for those determinations;
(iii)if applicable, any reduction in damages made pursuant to clause 8.6;
(d)the availability and terms of Independent Review pursuant to clause 9;
(e)a notice explaining any statutory compensation scheme, Centrelink and insurance issues which might arise as a consequence of payment to the Registrant;
(f)a brief statement explaining that the Assessment Value may not be the total amount payable to the Registrant under the Scheme in light of the operation of clause 13.2.
The Administrator may, in its absolute discretion, refer or direct:8.11
(a)that an Assessment, in part or in whole, be conducted by a member of the Victorian Bar;
(b)that a Registrant attend a medico-legal assessment.
If a Registrant is referred by the Administrator to a medico-legal assessment pursuant to clause 8.12 8.11(b), the Administrator may, in its discretion:
(a)pay the costs of the medico-legal assessment (medico-legal costs), which shall in that case be deemed as Administration Costs; or
(b)require the Registrant to pay the medico-legal costs, subject only to the following requirements:
(i)it must inform the Registrant that it intends to require the Registrant to pay the medico-legal costs and that the Registrant may seek a waiver of the requirement to pay those costs by providing evidence of the Registrant’s inability to pay those costs, in the form of a statutory declaration and any relevant supporting documents;
(ii)it must fairly consider any material provided pursuant to (i) but need not inform the Registrant of the reasons for its decision whether or not to require the Registrant to pay the medico-legal costs.
Where a medico-legal determination is made pursuant to clause 8.13 8.11(b), that determination is final and binding on the Registrant for the purposes of Assessment and may not be subject to Independent Review.
Independent Review
9.1A Registrant who wishes to obtain a review of any part of a Notice of Assessment may request the review by delivering a Request for Review, in the form prescribed by the Administrator, to the Administrator within 21 days of the date of the Notice of Assessment, failing which:
(a)the Registrant shall be deemed to have accepted the Notice of Assessment; and
(b)the Assessment Value in the Notice of Assessment shall stand as the Final Assessment for the Registrant.
9.2A Registrant must in any Request for Review state with precision the grounds for seeking the review.
9.3The Administrator may, in its absolute discretion:
(a)accept that the grounds for review are made out and issue the Registrant with a revised Notice of Assessment or accept that part of the grounds for review are made out and refer the balance of the Request for Review to Independent Counsel; or
(b)require any Registrant seeking a review to pay to the Administrator, within 14 days, a bond not exceeding $1000 for the cost of the Independent Review; and
(c)treat as void and of no effect any Request for Review where the required bond has not been paid within 14 days.
9.4Where a Registrant makes a Request for Review in respect of a part of a Notice of Assessment, the Administrator shall after receipt of the Request for Review:
(a)refer the Request for Review to Independent Counsel; and
(b)give written notice to the Registrant seeking the review that:
(i)the Request for Review has been referred to Independent Counsel; and
(ii)the provisions set out in clauses 9.6 to 9.11 below will apply to the Registrant in respect of the review.
9.5After completion of the steps set out in clause 9.4, the Administrator will deliver to the Independent Counsel:
(a)the Registrant’s claim file;
(b)the Notice of Assessment; and
(c)the Registrant’s Request for Review.
9.6The Independent Counsel:
(a)may, via the Administrator, require the production of additional documents by the Registrant;
(b)may, after receipt of the papers referred to in clause 9.5 and clause 9.6(a), confer with the Registrant (together with any representative of the Registrant);
(c)may require the Registrant to attend a medico-legal assessment;
(d)shall conduct the Independent Review:
(i)by reference to the papers provided pursuant to clause 9.5 and clause 9.6(a); and
(ii)as at the date of the original Assessment;
(e)may stipulate a deadline for compliance with any direction given by the Independent Counsel and failing compliance with the deadline shall proceed to make a determination on the basis of evidence and submissions already received.
9.7If a Registrant is referred by Independent Counsel to a medico-legal assessment pursuant to clause 9.6(c), the Administrator may, in its absolute discretion:
(a)pay the costs of the medico-legal assessment (medico-legal costs), which shall in that case be deemed as Administration Costs; or
(b)require the Registrant to pay the medico-legal costs, subject only to the following requirements:
(i)it must inform the Registrant that it intends to require the Registrant to pay the medico-legal costs and that the Registrant may seek a waiver of the requirement to pay those costs by providing evidence of the Registrant’s inability to pay those costs, in the form of a statutory declaration with any relevant supporting documents;
(ii)it must fairly consider any material provided pursuant to (i) but need not inform the Registrant of the reasons for its decision whether or not to require the Registrant to pay the medico-legal costs.
9.8Where a medico-legal determination is made pursuant to clause 9.6(c), that determination is final and binding on the Registrant for the purposes of the Independent Review.
9.9After completing the Independent Review, the Independent Counsel shall deliver to the Administrator a Notice of Review including a statement of reasons disclosing the bases (including any calculations) for the conclusions reached by Independent Counsel, and the Administrator shall deliver the Notice of Review and statement of reasons to the Registrant.
9.10The decision of Independent Counsel shall be final and binding upon the Administrator and the Registrant in respect of the matters the subject of the Notice of Review, and no appeal shall lie to any court or tribunal in respect of any error or alleged error of jurisdiction, fact or law attaching to Independent Counsel’s decision.
9.11Where an Independent Review has been made, the Assessment Value reported in the Notice of Review shall stand as the Final Assessment (net of interest) of the claims of the Registrant.
Costs of an Independent Review
Where an 10.1 Independent Review has been undertaken pursuant to clause 9 and the Assessment Value reported in the Notice of Review is less than or equal to 110% of the Assessment Value reported in the Notice of Assessment, the Registrant shall pay the Administrator’s costs of engaging the Independent Review of up to $3000 in respect of each Independent Review.
10.2The Administrator may in its absolute discretion waive the costs referred to in clause 10.1 where the Administrator considers that the circumstances of the Registrant disclose special compassionate grounds for the waiver.
10.3Any costs payable to the Administrator pursuant to clause 10.1 shall be deducted from any bond paid pursuant to clause 9.3(a) and thereafter from any amount otherwise payable to the Registrant pursuant to this Settlement Scheme.
10.4Where an Independent Review has been undertaken and the Assessment Value reported in the Notice of Review is greater than 110% of the Assessment Value reported in the Notice of Assessment, any bond paid pursuant to clause 10.1 shall be refunded to the Registrant.
Persons under disability
Personal Representative
11.1Where a Registrant is an Order 15 Registrant the operation of this Settlement Scheme shall be modified as follows:
(a)each Registrant under a disability will have a personal representative appointed in relation to the operation of the Settlement Scheme;
(b)except where otherwise provided by this Settlement Scheme or by the Administrator anything that is required by the Settlement Scheme or the Administrator to be done by a Registrant, shall if the Registrant is under a disability, be done by his or her personal representative;
(c)any notices, correspondence or information required by this Settlement Scheme to be given to a Registrant shall in the case of an Order 15 Registrant be given to the personal representative of the Registrant; and
(d)any request for review of an assessment which may be given by a Registrant pursuant to this Settlement Scheme will in the case of an Order 15 Registrant be given by the personal representative of the Registrant.
11.2A person may be appointed by the Administrator as personal representative of an Order 15 Registrant if that person is not a person under disability. The Administrator shall inform the person in writing of their appointment as a personal representative of the Registrant under this clause.
11.3Where the interests of an Order 15 Registrant so require, the Court, may:
(a)appoint or remove a personal representative of that Registrant; or
(b)substitute another person as personal representative of that Registrant.
Senior Master’s Office
11.4Where the Administrator believes that a Registrant is an Order 15 Registrant the Administrator shall:
(a)identify the Registrant in a notice filed with the Senior Master’s Office;
(b)identify the personal representative of the Registrant in a notice filed with the Senior Master’s Office; and
(c)send to the registered address of the Registrant a notice informing the Registrant that, pursuant to this Settlement Scheme and pending further order from the Senior Master, the Senior Master’s Office will supervise any final application of this Settlement Scheme to the Registrant’s claims.
11.5Where a Registrant is an Order 15 Registrant the operation of this Settlement Scheme shall be modified as follows:
(a)the deadlines set by this Settlement Scheme in clauses 7.3, 7.5, 7.12, 9.1 and 9.3 are extended to 42 days in respect of the claims of that Registrant, but no deadline set by this Settlement Scheme shall apply to or confine any direction or enquiry made by the Senior Master;
(b)any interim or final Distributions paid in respect of that Registrant will be paid in accordance with directions given by the Senior Master;
(c)if an Order 15 Registrant is determined to be a Group Member pursuant to clause 8.4(a), the Administrator will refer the remainder of the Assessment of the Order 15 Registrant to be conducted by Independent Counsel;
(d)if pursuant to clause 8.4(a) an Order 15 Registrant is determined not to be a Group Member, the Order 15 Registrant may request a review of that decision by Independent Counsel, using the form prescribed by the Administrator, within 42 days of the date of notice of the decision, failing which the Order 15 Registrant shall be deemed to have accepted the decision under clause 8.4(a) that he or she is not a Group Member;
(e)a decision upon review under clause 11.5(d) as to whether an Order 15 Registrant is a Group Member shall be final and binding on the Order 15 Registrant;
(f)an Order 15 Registrant must obtain leave from the Administrator to seek Independent Review of an Assessment determined under clause 11.5(c) (not being a review of whether the Order 15 Registrant is a Group Member, pursuant to clause 11.5(d)), using the form prescribed by the Administrator, within 42 days of the Notice of Assessment;
(g)the Administrator shall grant leave pursuant to clause 11.5(f) if, in the Administrator’s opinion, it is ‘on the cards’ that Independent Review might produce a higher Assessment Value than under the Assessment; and
(h)clauses 9.3(b) and 9.3(c) and clause 10 do not apply to Independent Review, or to a review pursuant to clause 11.5(d), in respect of any Order 15 Registrant.
Procedure facilitating Order 15 approval
11.6Where a Registrant is an Order 15 Registrant, the Administrator upon receipt or completion of all Assessments required for the Registrant’s claims shall deliver to the Senior Master’s Office:
(a)the Assessments including any applicable statements of reasons;
(b)a report by the Administrator detailing such background or other matters as the Senior Master may require;
(c)confirmation that:
(i)the personal representative of the Order 15 Registrant has been given notice of the assessments and any review rights in respect of the assessments in accordance with this Settlement Scheme;
(ii)the time for making any request for review has expired; and
(iii)any review of an assessment requested by the personal representative of the Order 15 Registrant has been completed in accordance with this Settlement Scheme;
(d)a proposed form of order, if applicable, including orders to the effect that:
(i)pursuant to Order 15 of the Rules, approval be granted for a compromise of the Registrant’s claims by the Final Assessment of the claims being included for pro rata Distributions pursuant to this Settlement Scheme; and
(ii)any Distribution in respect of the Registrant pursuant to this Settlement Scheme be paid into Court.
(e)Upon the making by the Senior Master of orders to the effect of clause 11.6(d) above, the claim values approved by the Senior Master shall be pro-rated against the Final Assessments of all Registrants in accordance with clause 13.1.
Interim Distribution
Upon resolution of the Final Assessments of at least 30% (by number) of Registrants, the Administrator may at its absolute discretion make interim Distributions from the Settlement Distribution Fund to those Registrants with completed Assessments12.1 .
The Administrator:12.2
(a)may make interim Distributions progressively as claims are resolved, or in tranches; and
(b)may vary the proportions at which interim Distributions are paid, for all Registrants or for particular groups of Registrants;
as the Administrator deems appropriate.
The proportion at which interim Distributions may be paid pursuant to clause 12.3 12.1:
(a)shall be determined by the Administrator having regard to the imperative to retain sufficient funds to pay pending Assessments, Administration Costs and indemnities; and
(b)shall, for any Registrant, not exceed 60% of the Registrant’s Assessment Value.
Final Distribution
Prior to any final Distribution from the Settlement Distribution Fund to Registrants, the following payments shall be made from the Settlement Distribution Fund:13.1
(a)an amount to the Plaintiff for the Plaintiff’s Costs and Disbursements;
(b)an amount to the Plaintiff for the Plaintiff’s Reimbursement Payment;
(c)any amount payable to any agency or government department pursuant to clause 6.4 of the Settlement Scheme;
(d)an amount to the Administrator for Administration Costs incurred by the Administrator and approved by the Court.
Once the payments referred to in clause 13.2 13.1 are made, the amount in the Settlement Distribution Fund, referred to as the Residual Settlement Amount, shall then be distributed to Registrants as follows:
(a)the Residual Settlement Amount shall be allocated between Registrants in the proportion which the Final Assessment of each Registrant bears to the aggregate of the Final Assessment for all Registrants;
(b)each Registrant’s allocation will be distributed to each Registrant.
13.3If, 180 days after the distribution of the Residual Settlement Amount to Registrants, any amount remains or is held in the Settlement Distribution Fund, including:
(a)interest accrued prior to the final Distribution but received after the final Distribution, or
(b)an amount representing moneys distributed to Registrants by cheques that have not been presented within 180 days of the final Distribution, the amount shall be distributed pro rata amongst the Registrants, subject to clause 13.4.
13.4At the Administrator’s discretion, the following amounts required to be distributed under clause 13.3 may instead be paid to the Australian Thyroid Foundation:
(a)if the total amount is less than $20,000, the total amount; or
(b)if the amount to be distributed to any individual Registrant is less than $100, that amount.
Immunity From Claims
14.1The completion of Distributions made pursuant to clause 13 (including Distributions made by cheques that remain unrepresented for 180 days) shall satisfy any and all rights, claims or entitlements of all Group Members in or arising out of the Proceeding.
14.2Upon the release of the Settlement Amount and Interest from the Settlement Reserve Fund into the Settlement Distribution Fund, the Defendants will be immune from all the Claims by all Group Members. The Defendants may plead this Settlement Scheme and the Settlement Deed to bar any claim or action (including a claim for costs) brought by any Group Member relating to the Claims.
Supervision By The Court
15.1The Administrator may refer any issues arising in relation to the Settlement Scheme or the administration of the Settlement Scheme to the Court for determination.
15.2Any costs incurred by the Administrator in any reference to the Court made pursuant to clause 15.1 shall be deemed to be Administration Costs.
Notice
16.1Any notice to be given pursuant to the Settlement Scheme shall be deemed given and received for all purposes associated with this Settlement Scheme if it is:
(a)addressed to the person to whom it is to be given; and
(b)either:
(i)delivered, or sent by pre-paid mail, to that person’s postal address (being, in respect of any Group Member, the current postal address recorded in the Administrator’s Group Member records, as obtained from the Group Member’s Registration Form, Group Member’s retainer or funding agreement or directly from the Group Member);
(ii)sent by fax to that person’s fax number (being, in respect of any Group Member, the current fax number recorded in the Administrator’s Group Member records, as obtained from the Group Member’s Registration Form, the Group Member’s retainer or funding agreement or directly from the Group member) and the machine from which it is sent produces a report that states that it was sent in full; or
(iii)sent by email to that person’s email address (being, in respect of any Group Member, the current email address recorded in the Administrator’s Group Member records, as obtained from the Group Member’s Registration Form, the Group Member’s retainer or funding agreement or directly from the Group Member) and a server through which it is transmitted produces a report that states that the email has been delivered to the inbox of that person.
16.2A notice that complies with this clause 16 will be deemed to have been given and received:
(a)if it was sent by mail to an addressee in Australia, two clear business days after being sent;
(b)if it is sent by mail to an addressee overseas, five clear business days after being sent;
(c)if it is delivered or sent by fax, at the time stated on the report that is produced by the machine from which it is sent; and
(d)if it is sent by email, at the time it is sent.
16.3Where a Group Member is not a natural person and where one person has been nominated as the contact in respect of several Group Members, it is sufficient for the purpose of giving notice that any of the provisions of clause 16.2 are complied with in relation to that nominated person.
16.4The Administrator’s address, fax number and email address shall be as set out below unless and until the Administrator notifies the sender otherwise:
Bonsoy Class Action
Maurice Blackburn Pty Ltd
PO Box 13094
Law Courts VIC 8010Email [email protected]
Time
17.1The time for doing any act or thing under the Settlement Scheme may be extended by the Administrator in its absolute discretion.
17.2The time for doing any act or thing under the Settlement Scheme may be extended by order of the Court.
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