FEDERAL COURT OF AUSTRALIA
Earglow Pty Ltd v Newcrest Mining Limited [2016] FCA 1433
File number: VID 406 of 2014 Judge: MURPHY J Date of judgment: 28 November 2016 Catchwords: REPRESENTATIVE PROCEEDINGS – Settlement approval pursuant to s 33V of Federal Court of Australia Act 1976 (Cth) (the Act) – whether the proposed settlement is fair and reasonable in the interests of class members to be bound to it – consideration of relevant factors in relation to reasonableness of settlement - whether the proposed settlement distribution scheme is fair and reasonable –whether the legal costs incurred are reasonable – whether the applicant should be reimbursed for expenses incurred for work done on behalf of class members – whether the settlement approval costs and administration costs are reasonable – whether the funding commission to be deducted is fair and reasonable in the interests of class members – whether the Court has power to approve the proposed settlement and to make orders under ss 33V, 33Z, 33ZF and 23 of the Act to reduce an excessive funding commission – conclusion that the Court has such power – relevant factors in relation to whether the litigation funding commission is fair and reasonable –whether funding commission rates between 26% and 30% and the aggregate funding commission are fair and reasonable – settlement approved Legislation: Corporations Act 2001 (Cth)
Federal Court of Australia Act 1976 (Cth)
Legal Profession Act 2004 (Vic)
Legal Profession Uniform Law, Schedule 1 to Legal Profession Uniform Law Application Act 2014 (Vic)
Supreme Court Rules 1970 (NSW)
Cases cited: Australian Securities and Investments Commission v Newcrest Mining Limited (2014) 101 ACSR 46; [2014] FCA 698
Australian Securities and Investments Commission v Richards [2013] FCAFC 89
Blairgowrie Trading Ltd v Allco Finance Group Ltd (2015) 325 ALR 539; [2015] FCA 811
Camilleri v The Trust Company (Nominees) Limited [2015] FCA 1468
Carnie v Esanda Finance Corporations Ltd (1995) 182 CLR 398; [1995] HCA 9
Courtney v Medtel Pty Limited (2002) 122 FCR 168; [2002] FCA 957
Courtney v Medtel Pty Limited (No 5) (2004) 212 ALR 311; [2004] FCA 1406
Darwalla Milling Co Pty Ltd v F Hoffman-La Roche Ltd (No 2) 236 ALR 322; [2006] FCA 1388
Earglow Pty Ltd v Newcrest Mining Ltd (2015) 230 FCR 469; [2015] FCA 328
Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540; [2002] HCA 54
Harris v Jones 41 FRD 70 (D Utah 1966)
Hypertouch Inc. v The Superior Court of San Mateo County, 128 Cal App 4th 1527 (Ct App 2005)
In Re General Motors Corporation Pick‑Up Truck Fuel Tank Products Liability Litigation 55 F3d 768 (3d Cir 1995)
Jarra Creek Central Packing Shed Pty Ltd v Amcor Limited [2011]…
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- Case
- [2016] FCA 1433
- Decision Date
CaseChat Overview and Summary
The Court considered various factors in relation to the reasonableness of the settlement, including the funding commission rate and the aggregate funding commission. The Court found that the funding commission rate and the aggregate funding commission in the present case were fair and reasonable in the interests of the class members. The Court also considered the effect of orders such as Order 9(b) on the interests of class members and whether the Court had the power to make orders that operated so that unregistered class members remained as class members but were precluded from making claims in the proceeding and receiving the benefit of any settlement or judgment. The Court concluded that it had the power to make such orders under sections 33ZF(1) and 23 of the Act.
In all the circumstances, the Court approved the proposed settlement. The Court found that the funding commission rate and the aggregate funding commission in the present case were fair and reasonable in the interests of the class members. The Court also found that the Court had the power to make orders that operated so that unregistered class members remained as class members but were precluded from making claims in the proceeding and receiving the benefit of any settlement or judgment. The Court concluded that the proposed settlement was fair and reasonable in the interests of the class members to be bound by it. The Court approved the proposed settlement and made orders under sections 33V, 33Z, 33ZF and 23 of the Act.
The Court approved the proposed settlement and made orders under sections 33V, 33Z, 33ZF and 23 of the Act. The Court found that the funding commission rate and the aggregate funding commission in the present case were fair and reasonable in the interests of the class members. The Court also found that the Court had the power to make orders that operated so that unregistered class members remained as class members but were precluded from making claims in the proceeding and receiving the benefit of any settlement or judgment. The Court concluded that the proposed settlement was fair and reasonable in the interests of the class members to be bound by it.
Orders
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
In all the circumstances I would not refuse settlement approval on the basis that UCMs were not sent the Notice of Proposed Settlement.Consideration regarding unregistered class members Under the settlement deed UCMs are to be bound into the releases provided but will not receive any benefit of the settlement. This result essentially arose because of Order 9(b) and, on one view, I can assume that the factors justifying that order were considered at the time it was made. On that basis I could treat it as unnecessary to revisit the matters underpinning the order as part of settlement approval. However, I consider it better to give fresh attention to the matters underpinning the exclusion of UCMs as part of the settlement approval application because:(a)UCMs’ substantive rights will be finalised if the proposed settlement is approved: see Newstart 123 Pty Ltdv Billabong International Ltd [2016] FCA 1194 (Newstart) (Beach J) at [65];(b)the opt out and registration orders were made by consent and without a contradictor; and(c)the effect of orders such as Order 9(b) on the interests of class members may not be fully apparent to class members or the Court until a settlement is proposed: see for example Kelly at [37]. A number of considerations therefore arise. The first question is whether the Court has power to make orders which operate so that UCMs remain as class members and are bound by any settlement or judgment but are precluded from making claims in the proceeding and receiving the benefit of any settlement or judgment. I consider the Court has power to make such an order pursuant to ss 33ZF(1) and 23 of the Act. It is established that the power in s 33ZF(1) is very wide and not to be construed narrowly. In Money Max Int Pty Ltd v QBE Insurance Group Limited [2016] FCAFC 148 (Money Max) at [161]-[165] (Murphy, Gleeson and Beach JJ) the Full Court said:In terms of the text of s 33ZF(1), we largely agree with the observations of Beach J in Earglow Pty Ltd v Newcrest Mining Ltd (2015) 230 FCR 469 at [33] where his Honour said:… although in a general sense s 33ZF(1) has been described as a plenary power, nevertheless it is not unlimited. It is in one sense both trite and question begging to assert that the power must be exercised judicially. But let me pass to the language of s 33ZF(1) itself. It uses the language “make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding”. Grammatically, “thinks” is to be applied distributively, so that it reads “thinks appropriate” or “thinks necessary”; there is no “is” before “necessary”. But as applied distributively, “thinks appropriate” has a lower threshold than “thinks necessary”. But in the composite phrase, the concept is “thinks appropriate... to ensure that justice is done in the proceeding” [my emphasis]. In other words, although the words “thinks appropriate” have a lower threshold than “thinks necessary”, nevertheless the relevant element of necessity in another guise is enshrined in the coupling of the words “to ensure that”. In summary, the question becomes whether I think it is appropriate, to ensure that justice is done in the proceeding, to make the orders sought by Newcrest. It is not whether I think it to be merely convenient or useful per se. Section 33ZF(1) is not a licence for me to impose my own expansive case management philosophy. Rather, I must be satisfied that any order that is made satisfies the statutory test. Now I accept that s 33ZF(1) is a very wide power and ought not to be construed narrowly. Nevertheless, any exercise of power has to fit within the statutory formulation.However, the word “necessary” and similarly the phrase “to ensure” depend upon and must be construed in their context.…In our view, in context, there is less of a difference between “appropriate to ensure justice” and “necessary to ensure justice” than might initially appear. In s 33ZF “necessary” identifies a connection between the proposed order and an identified purpose as to which the Court must be satisfied before making an order. The expression “necessary to ensure that justice is done” has shades of meaning and admits of degrees of comparisons and in context the expression should not be given a narrow construction. The requirement that a proposed order be “necessary to ensure that justice is done in the proceeding” does not require that the Court be satisfied that unless the order is made the administration of justice will collapse or that justice in the proceeding will not be “ensured” in the sense of being certain. Section 33ZF provides a wide power directed at enabling the Court to make orders to deal with the novel problems that might arise through a new statutory procedure for representative proceedings, and the expression “necessary to ensure that justice is done” requires that the proposed order be reasonably adapted to the purpose of seeking or obtaining justice in the proceeding.(Citations omitted.)