Earglow Pty Limited v Sigma Pharmaceuticals Limited
[2012] FCA 1496
•19 December 2012
FEDERAL COURT OF AUSTRALIA
Earglow Pty Limited v Sigma Pharmaceuticals Limited [2012] FCA 1496
Citation: Earglow Pty Limited v Sigma Pharmaceuticals Limited [2012] FCA 1496 Parties: EARGLOW PTY LIMITED (ACN 055 664 769) v SIGMA PHARMACEUTICALS LIMITED (ACN 088 417 403) File number(s): VID 933 of 2010 Judge: MIDDLETON J Date of judgment: 19 December 2012 Legislation: Federal Court of Australia Act 1976 (Cth) Date of hearing: 19 December 2012 Place: Melbourne Division: GENERAL DIVISION Category: No catchwords Number of paragraphs: 9 Counsel for the Applicant: L Armstrong Solicitor for the Applicant: Slater & Gordon Counsel for the Respondent: S Maiden Solicitor for the Respondent: Minter Ellison Counsel for the Objector: S Batten Solicitor for the Objector: Batten Sacks Harvey Bruce
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 933 of 2010
BETWEEN: EARGLOW PTY LIMITED (ACN 055 664 769)
Applicant
AND: SIGMA PHARMACEUTICALS LIMITED (ACN 088 417 403)
Respondent
JUDGE:
MIDDLETON J
DATE OF ORDER:
19 DECEMBER 2012
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
1.Subject to further order, pursuant to section 37AF of the Federal Court of Australia Act 1976 (Cth) (the Act), the following evidence be forbidden from publication and be sealed on the Court file in envelopes marked “Not to be opened except by direction of the Court or a Judge”:
(a)the confidential affidavit of James Michael Higgins sworn 5 December 2012 and its annexures (First Confidential Higgins Affidavit);
(b)the affidavit of Paul Linsdell sworn 5 December 2012 and its annexure;
(c)the confidential affidavit of James Michael Higgins sworn 7 December 2012 and its annexures (Second Confidential Higgins Affidavit);
(d)the confidential affidavit of James Michael Higgins sworn 18 December 2012 and its annexures (Third Confidential Higgins Affidavit);
This order is made on the ground that it is necessary to prevent prejudice to the proper administration of justice.
Approval of proposed settlement
2.Pursuant to section 33ZF of the Act, compliance with sections 33J and 33X(1)(a) of the Act be dispensed with.
3.Pursuant to section 33ZF of the Act, the Court authorizes the Applicant nunc pro tunc for and on behalf of the Group Members (as defined in the Third Amended Application) to enter into and give effect to the Settlement Agreement (as described in paragraph 4(a) below) and the covenants contained in that agreement.
4.Pursuant to sections 33V, 33ZF and 33ZJ of the Act, settlement of the proceedings upon the terms set out in:
(a)the Settlement Agreement, being exhibits JMH-03, JMH-04 and JMH-05 to the Open Affidavit of James Michael Higgins dated 5 December 2012, and
(b)the Settlement Distribution Scheme, being Exhibit JMH-17 to the Confidential Affidavit of James Michael Higgins dated 18 December 2012,
(together “the Settlement”) be approved.
5.Pursuant to section 33ZB and section 33ZF of the Act, the persons affected and bound by the Settlement and by these orders be the Applicant, the Respondent and the group members (as defined in the Third Amended Application).
Settlement Distribution Scheme
6.Pursuant to section 33ZF of the Act, Slater & Gordon Limited (S&G) be appointed Administrators of the Settlement Distribution Scheme.
7.Pursuant to sections 33X and 33Y of the Act, the form and content of the notice being Exhibit JMH-08 to the Open Affidavit of James Michael Higgins dated 5 December 2012 informing group members of the orders referred to in paragraph 4 and 5above (the Notice) be approved.
8.The Notice be given to group members in the following way:
(a)By 21 December 2012 the Applicant shall cause the Notice to be sent by pre-paid ordinary post and/or by email to the last known mailing or email addresses held by the Applicant’s solicitors in respect of each group member;
(b)by 21 December 2012 the Applicant’s solicitors post a copy of the Notice on their website.
Inter partes costs and security for costs
9.All costs orders made to date in the proceedings be vacated.
10.The amount of $1,000,000.00 lodged as security in the proceedings be released to the Applicant’s solicitors, or as they direct.
11.There be no order as to costs as between the Applicant and the Respondent.
12.Pursuant to section 33ZF of the Act, the Applicant’s expenses incurred for the purposes of determining common questions in the proceeding be approved in the sum of $27,762.63.
13.Each party, and S&G in its capacity as Scheme Administrators, have liberty to apply on not less than 3 clear business days’ notice to each party to the proceeding, including any application for approval of Administration Costs.
Adjournment
14.The Applicant have liberty to apply to re-list the proceeding as soon as practicable after completion of the distribution of the Settlement Sum (within the meaning of the Settlement Distribution Scheme) (and must in any event do so no later than thirty days after such completion) so that final orders can be made, including orders that the proceeding be dismissed without any order as to costs.
Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 933 of 2010
BETWEEN: EARGLOW PTY LIMITED (ACN 055 664 769)
Applicant
AND: SIGMA PHARMACEUTICALS LIMITED (ACN 088 417 403)
Respondent
JUDGE:
MIDDLETON J
DATE:
19 DECEMBER 2012
PLACE:
MELBOURNE
REASONS FOR JUDGMENT
I have before me a representative proceeding, where ‘settlement in principle’ has been reached between the parties. Approval is sought under s 33V and s 33ZF of the Federal Court of Australia Act 1976 (Cth).
As the authorities have made clear, my principal task is to determine whether the proposed compromise of the claims made on behalf of the group members is fair and reasonable.
There are a number of matters which I have considered in undertaking this task. These matters have included the complexity and duration of the litigation, reaction to the proposed compromise by group members, the stage of the proceedings, the risks involved in the litigation, the range of reasons for the compromise amount, and the ability of the relevant party to satisfy the amount ordered to be paid, both now and in the future.
This is a ‘closed’ class action in which the group members are all clients of the applicant’s solicitor and the applicant’s litigation funder. The terms of settlement were agreed between the applicant and respondent at a Court-ordered mediation in October 2012. The settlement contemplates payment of a lump sum by the respondent. A scheme for distributing that lump sum between the applicant group members was prepared by the applicant’s legal representatives. Notice of the proposed settlement and the proposed settlement distribution scheme (SDS) was approved by the Court and circulated among the group members.
Prior to the hearing of the first application for Court approval, one group of related group members objected to the settlement in principle, on the basis that the loss assessment formula in the SDS was not fair and reasonable. The Court adjourned the hearing to enable the parties an opportunity to resolve that objection and to further consider and assess a reasonable method of loss assessment, taking into account the objectors’ views.
The applicant and the objectors have now agreed upon the terms of a revised SDS. The objectors no longer object to the Court approval of a settlement which incorporates the revised SDS.
It is not necessary for me to go into any detail in relation to this revision other than to say that I am satisfied that the revisions do not, other than in a minimal way, impact upon the balance of the group members. I do not think, therefore, that any further notice of revision needs to be given to the public or to any group members. The applicant has already notified the group members of the proposed revisions to the SDS by letter sent to them. It is to be recalled this is a ‘closed’ class action in which the group members are all clients of the applicant’s solicitor and the applicant’s litigation funder.
Based upon the material that is before the Court, I am of the view that the proposed ‘settlement in principle’ put forward to the Court to settle this proceeding is fair and reasonable. I propose to make the orders that have been formulated by the parties in the form discussed with Counsel.
These orders are as follows:
1.Subject to further order, pursuant to section 37AF of the Federal Court of Australia Act 1976 (Cth) (the Act), the following evidence be forbidden from publication and be sealed on the Court file in envelopes marked “Not to be opened except by direction of the Court or a Judge”:
(a)the confidential affidavit of James Michael Higgins sworn 5 December 2012 and its annexures (First Confidential Higgins Affidavit);
(b)the affidavit of Paul Linsdell sworn 5 December 2012 and its annexure;
(c)the confidential affidavit of James Michael Higgins sworn 7 December 2012 and its annexures (Second Confidential Higgins Affidavit);
(d)the confidential affidavit of James Michael Higgins sworn 18 December 2012 and its annexures (Third Confidential Higgins Affidavit);
This order is made on the ground that it is necessary to prevent prejudice to the proper administration of justice.
Approval of proposed settlement
2.Pursuant to section 33ZF of the Act, compliance with sections 33J and 33X(1)(a) of the Act be dispensed with.
3.Pursuant to section 33ZF of the Act, the Court authorizes the Applicant nunc pro tunc for and on behalf of the Group Members (as defined in the Third Amended Application) to enter into and give effect to the Settlement Agreement (as described in paragraph 4(a) below) and the covenants contained in that agreement.
4.Pursuant to sections 33V, 33ZF and 33ZJ of the Act, settlement of the proceedings upon the terms set out in:
(a)the Settlement Agreement, being exhibits JMH-03, JMH-04 and JMH-05 to the Open Affidavit of James Michael Higgins dated 5 December 2012, and
(b)the Settlement Distribution Scheme, being Exhibit JMH-17 to the Confidential Affidavit of James Michael Higgins dated 18 December 2012,
(together “the Settlement”) be approved.
5.Pursuant to section 33ZB and section 33ZF of the Act, the persons affected and bound by the Settlement and by these orders be the Applicant, the Respondent and the group members (as defined in the Third Amended Application).
Settlement Distribution Scheme
6.Pursuant to section 33ZF of the Act, Slater & Gordon Limited (S&G) be appointed Administrators of the Settlement Distribution Scheme.
7.Pursuant to sections 33X and 33Y of the Act, the form and content of the notice being Exhibit JMH-08 to the Open Affidavit of James Michael Higgins dated 5 December 2012 informing group members of the orders referred to in paragraph 4 and 5above (the Notice) be approved.
8.The Notice be given to group members in the following way:
(a)By 21 December 2012 the Applicant shall cause the Notice to be sent by pre-paid ordinary post and/or by email to the last known mailing or email addresses held by the Applicant’s solicitors in respect of each group member;
(b)by 21 December 2012 the Applicant’s solicitors post a copy of the Notice on their website.
Inter partes costs and security for costs
9.All costs orders made to date in the proceedings be vacated.
10.The amount of $1,000,000.00 lodged as security in the proceedings be released to the Applicant’s solicitors, or as they direct.
11.There be no order as to costs as between the Applicant and the Respondent.
12.Pursuant to section 33ZF of the Act, the Applicant’s expenses incurred for the purposes of determining common questions in the proceeding be approved in the sum of $27,762.63.
13.Each party, and S&G in its capacity as Scheme Administrators, have liberty to apply on not less than 3 clear business days’ notice to each party to the proceeding, including any application for approval of Administration Costs.
Adjournment
14.The Applicant have liberty to apply to re-list the proceeding as soon as practicable after completion of the distribution of the Settlement Sum (within the meaning of the Settlement Distribution Scheme) (and must in any event do so no later than thirty days after such completion) so that final orders can be made, including orders that the proceeding be dismissed without any order as to costs.
I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Middleton. Associate:
Dated: 21 December 2012
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