FEDERAL COURT OF AUSTRALIA
Endeavour River Pty Ltd v MG Responsible Entity Limited (No 2) [2020] FCA 968
File number: VID 1010 of 2018 Judge: MURPHY J Date of judgment: 9 July 2020 Catchwords: REPRESENTATIVE PROCEEDINGS – application for approval of settlement under s 33V of the Federal Court of Australia Act 1976 (Cth) – where Court previously not satisfied that the proposed litigation funding commission was fair and reasonable – where litigation funder reduced the funding commission sought – settlement approved Legislation: Federal Court of Australia Act 1976 (Cth) ss 33V, 33ZB, 33ZF, 37AE, 37AF, 37AG(1)(a) Cases cited: Blairgowrie Trading Ltd v Allco Finance Group Ltd (Recs & Mgrs Apptd) (In Liq) (No 3) [2017] FCA 330; (2017) 343 ALR 476
Bolitho v Banksia Securities Ltd (No 6) [2019] VSC 653
Earglow Pty Ltd v Newcrest Mining Limited [2016] FCA 1433
Endeavour River Pty Ltd v MG Responsible Entity Limited [2019] FCA 1719
Hogan v Australian Crime Commission [2010] HCA 21; (2010) 240 CLR 651
Kuterba v Sirtex Medical Limited (No 3) [2019] FCA 1374
Liverpool City Council v McGraw-Hill Financial, Inc (now known as S&P Global Inc) [2018] FCA 1289
Mitic v OZ Minerals Limited(No 2) [2017] FCA 409
Money Max Int Pty Ltd v QBE Insurance Group Ltd [2016] FCAFC 148; (2016) 245 FCR 191
Santa Trade Concerns Pty Limited v Robinson (No 2) [2018] FCA 1491
Date of hearing: 1 November 2019, 6 December 2019, 20 December 2019 Date of last submissions: 24 January 2020 Registry: Victoria Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 51 Counsel for the Applicant: Mr B Quinn QC and Mr D Fahey Solicitor for the Applicant: Slater & Gordon Lawyers Counsel for the Respondents on 1 November 2019 and 6 December 2019: Ms F L Shand Counsel for the Respondents on 20 December 2019: Mr J Kirkwood Solicitor for the Respondents: Herbert Smith Freehills Counsel for the Contradictor: Mr P Jopling AM QC and Ms J Collins Counsel for the Intervener: Mr D Sulan Solicitor for the Intervener: Arnold Bloch Leibler ORDERS
VID 1010 of 2018 BETWEEN: ENDEAVOUR RIVER PTY LTD
Applicant
AND: MG RESPONSIBLE ENTITY LIMITED
First Respondent
MURRAY GOULBURN CO-OPERATIVE CO. LIMITED
Second Respondent
JUDGE:
MURPHY J
DATE OF ORDER:
9 JULY 2020
THE COURT ORDERS THAT:
1.Order 1 of the orders made on 20 December 2019 be varied so that:
(a)the affidavit of Clive Norman Bowman (#1) sworn on 2 December 2019 and each of its exhibits be treated as confidential, not be published or made available and not be disclosed to any person or entity except to the docket Judge, his or her personal staff, any officer of the Court authorised by the docket Judge, the Contradictor, the Applicants (who have received a redacted version of this affidavit), and their legal representatives (who have a received redacted version of this affidavit), and such disclosures to be upon terms that none of…
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- Case
- [2020] FCA 968
- Decision Date
CaseChat Overview and Summary
The key legal issues the court needed to address included the admissibility and necessity of expert evidence to determine the fairness of the funding commission, the implications of an open offer by the funder to reduce the commission rate, the applicant's request for an interim partial distribution to class members, and the funder's application for an interim part-payment of the funding commission. The court had to evaluate whether the reduced commission rate was fair and reasonable, considering the financial risks involved and the market rates of return for comparable investments.
The court found that the proposed reduction in the funding commission to 28% was fair and reasonable, considering the market rates of return for comparable investments. The court was initially inclined to allow expert evidence to assist in determining the reasonableness of the commission rate but was cautious about the proportionality of the costs involved. The court decided against the need for expert evidence after the funder reduced the commission rate. The court approved the settlement based on the revised terms, which included the reduced commission rate and the proposed distribution scheme. The court also authorised the applicant to act on behalf of the group members and approved the distributions from the settlement funds. The settlement was approved subject to conditions, including the dismissal of the proceeding upon completion of the distribution and the filing of an affidavit regarding the settlement distribution process.
In summary, the court approved the settlement, acknowledging the reduced funding commission as fair and reasonable, and authorised the applicant to act on behalf of the group members. The settlement distribution scheme was also approved, subject to conditions for final orders and the filing of an affidavit regarding the distribution process.
Orders
Orders of the court
Settlement Approval Orders
Confidentiality
1. Except to the extent that the Court considers it appropriate to provide reasons for judgment, and subject to further order, pursuant to ss 37AF and 37AG(1)(a) of the Federal Court of Australia Act 1976 (Cth) (the Act) until further order of the Court, in order to prevent prejudice to the proper administration of justice, the confidential affidavit of Andrew Paull affirmed on 28 November 2019 and its annexures and the two confidential affidavits of Clive Norman Bowman sworn on 2 December 2019 and their exhibits be treated as confidential, not be published or made available and not be disclosed to any person or entity except to the docket Judge, his or her personal staff, any officer of the Court authorised by the docket Judge, the Applicants (who have received redacted versions of these affidavits), and their legal representatives (who have received redacted versions of these affidavits), and such disclosures to be upon terms that none of those parties or persons disclose that material or any part thereof to any person or entity.
Approval of Settlement
2. Pursuant to sections 33V(1) of the Act, settlement of the proceeding upon the terms set out in the settlement agreement executed by the Applicant, the Respondents, Slater and Gordon and IMF dated 24 June 2019 and annexed as EPC-1 to the affidavit of Emma Pelka-Caven affirmed on 28 June 2019 (Settlement Agreement) be approved.
3. Pursuant to section 33ZF of the Act or otherwise, the Court authorises the Applicant nunc pro tunc for and on behalf of the Group Members (being those persons who meet the definition of “Group Member” in the Amended Statement of Claim and who did not file an opt out notice) to enter into and give effect to the Settlement Agreement on behalf of Group Members.
4. Pursuant to section 33ZB and section 33ZF of the Act, the persons affected and bound by the settlement of the proceedings be the Applicant, the Respondents and Group Members.
Settlement Distributions
5. Pursuant to section 33ZF of the Act:
(a) the Settlement Distribution Scheme (and any annexures thereto) in the form annexed to these orders at Annexure A be approved; and
(b) Mr Benedict Tobin Hardwick be appointed Administrator of the Settlement Distribution Scheme and is to act in accordance with the rules of the Settlement Distribution Scheme.
6. Pursuant to section 33ZF and section 33V(2) of the Act, the following distributions from monies paid under the settlement be approved:
(a) $10,700,865 being 25% of the Settlement Sum plus GST to IMF as Funding Commission as referred to in clause 4.1(f) of the Settlement Distribution Scheme;
(b) $130,000 for the costs and disbursements of the administration of the Settlement Distribution Scheme from the date of the approval of the Settlement Documents to the date of completion of distribution of the Settlement Sum (as contemplated in 4.1(d) of the Settlement Distribution Scheme);
(c) $2,562,393.10 for the Applicant’s legal costs and disbursements on a solicitor and own client basis incurred in connection with the proceeding on its own behalf and on behalf of all Group Members in the proceeding (as contemplated in 4.1(a) and (b) of the Settlement Distribution Scheme);
(d) $19,310.10 for the costs of the special reference to Ms Elizabeth Harris (as contemplated by 4.1(e) of the Settlement Distribution Scheme);
(e) $5,717.94 for disbursement invoices paid directly by IMF Bentham as ‘Project Costs’ pursuant to the terms of the Funding Agreement; and
(f) $12,500 for the Applicant’s reasonable claim for compensation for time spent and/or expenses incurred in the interests of prosecuting the proceeding on behalf of Group Members as a whole.
Other
7. The Applicant has liberty to apply to re-list the proceeding as soon as practicable after completion of the distribution of the Settlement Sum (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:
(a) the proceeding be dismissed on the basis that the dismissal is a defence and absolute bar to any claim (either directly or indirectly) or proceeding by the Applicant or any Group Member in respect of, or relating to, the subject matter of the proceeding, without prejudice to:
(i) the right of any party to the Settlement Agreement to make an application to enforce the Settlement Agreement in a new proceeding; or
(ii) the right of any Registered Group Member to make application to the Court in accordance with the terms of the Settlement Distribution Scheme; or
(iii) the right of the Administrator of the Settlement Distribution Scheme to refer any issues relating to the Settlement Distribution Scheme to the Court for direction or determination in accordance with the terms of the Settlement Distribution Scheme.
(b) there be no order as to costs as between the Applicant and the Respondents.
8. As soon as practicable after completion of the distribution of the Settlement Sum, the Applicant file an affidavit regarding the steps undertaken and outcomes of the settlement distribution process.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Annexure A
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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