Gray v Cash Converters International Limited (No 2)
[2015] FCA 1109
•12 October 2015
FEDERAL COURT OF AUSTRALIA
Gray v Cash Converters International Limited (No 2) [2015] FCA 1109
Citation: Gray v Cash Converters International Limited (No 2) [2015] FCA 1109 Parties: JULIE GRAY v CASH CONVERTERS INTERNATIONAL LIMITED ACN 069 141 546, SAFROCK FINANCE CORPORATION (QLD) PTY LTD ACN 098 566 520 and CASH CONVERTERS PERSONAL FINANCE PTY LTD ACN 110 275 762
JULIE GRAY v CASH CONVERTERS INTERNATIONAL LTD ACN 069 141 546, CASH CONVERTERS PTY LTD ACN 009 288 804 and
JA-KE HOLDINGS PTY LTD ACN 072 118 720File numbers: NSD 2089 of 2013
NSD 2090 of 2013Judge: JAGOT J Date of judgment: 12 October 2015 Catchwords: PRACTICE AND PROCEDURE – whether Court should approve terms of settlement of representative proceeding under ss 33V and 33ZF of the Federal Court of Australia Act 1976 (Cth) – settlement approved Legislation: Federal Court of Australia Act 1976 (Cth) ss 33V, 33ZF Cases cited: Lopez v Star World Enterprises Pty Ltd [1999] FCA 104 Date of hearing: 12 October 2015 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 10 Counsel for the Plaintiff: Ms R Francois Solicitor for the Plaintiff: Maurice Blackburn Counsel for the Defendants: Mr AP Coleman SC and Ms ND Oreb Solicitor for the Defendants: Thomson Geer
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 2089 of 2013
BETWEEN: JULIE GRAY
PlaintiffAND: CASH CONVERTERS INTERNATIONAL LIMITED
ACN 069 141 546
First DefendantSAFROCK FINANCE CORPORATION (QLD) PTY LTD
ACN 098 566 520
Second DefendantCASH CONVERTERS PERSONAL FINANCE PTY LTD
ACN 110 275 762
Third Defendant
JUDGE:
JAGOT J
DATE OF ORDER:
12 OCTOBER 2015
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
Settlement Approval
1.Pursuant to sections 33V and 33ZF of the Federal Court of Australia Act 1976 (Cth) (the Act) the settlement of the proceeding between the Plaintiff and the Defendants (the Proceeding) be approved on the terms set out in the Deed of Settlement executed by the Plaintiff, Defendants, Cash Converters Pty Ltd, Ja-Ke Holdings Pty Ltd, Cash Converters (Cash Advance) Pty Ltd and Maurice Blackburn on 18 June 2015 (Deed of Settlement) being Annexure ‘BJS6-1’ to the affidavit of Ben Slade affirmed on 6 October 2015 as amended by the Variation of Settlement Deed executed on 21 July 2015 being Annexure ‘BJS6-3’ to the affidavit of Ben Slade affirmed on 6 October 2015 (Settlement Documents).
2.Pursuant to section 33ZF of the Act, the Court authorises the Plaintiff 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) to enter into and give effect to the Settlement Documents and the transactions contemplated for and on behalf of Group Members.
3.Pursuant to section 33ZF of the Act or otherwise, Maurice Blackburn Pty Ltd (Maurice Blackburn) be appointed Claims Administrator of the Settlement Distribution Scheme and to act in accordance with the Settlement Distribution Scheme as set out in the Settlement Distribution Scheme being Annexure ‘BJS6-2’ to the affidavit of Ben Slade affirmed on 6 October 2015.
4.Pursuant to section 33ZF of the Act, the amount of $5,000 be approved as the amount to be paid to the Plaintiff for the purposes of clause 2.1 of the Settlement Deed and clause 6.3 of the Settlement Distribution Scheme.
5.Pursuant to section 33ZF of the Act, the Plaintiff’s Costs and Disbursements up to and including 12 October 2015 in proceedings NSD 2089 and NSD 2090 of 2013 in the sum of $3million be approved.
6.Maurice Blackburn has liberty to apply for directions in connection with the Settlement Distribution Scheme.
Evidence
7.Pursuant to s 37AF of the Act, the affidavit of Ben Slade affirmed on 2 October 2015 and marked “Confidential Affidavit” is to remain confidential on the Court file and be sealed on the Court file in an envelope marked “NOT TO BE OPENED EXCEPT BY DIRECTION OF THE COURT OR A JUDGE” and it and any of its contents are not to be disclosed to any persons other than the authorised legal representatives of the Plaintiff in this proceeding and are not to be published.
8.Pursuant to section 37AG of the Act, the order in 7 above is made on the ground that the order is necessary to prevent prejudice to the proper administration of justice because the material in the affidavit contains material subject to client legal privilege which has not been waived.
9.The period for which order 7 operates is 10 years from the date of this order, which may be varied and in respect of which there is liberty to apply generally.
THE COURT NOTES:
1.As of the orders made today, Maurice Blackburn ceases to act as solicitor for the plaintiff.
2.The Undertakings of Cash Converters International Limited to the Court as follows:
A.The GM Information (as defined in the Settlement Deed) was captured as at 8 July 2015.
B.Pursuant to the systems operated by Cash Converters International Limited and/or its subsidiaries (Cash Converters), any payment made after 8 July 2015 by a Group Member (as defined in the Settlement Deed) will have a component of the deferred establishment fee (DEF) automatically allocated to it.
C.Cash Converters anticipates that 37 loans have been, or may be, charged DEF in this manner after 8 July 2015 (Active DEF Loans). In addition, Cash Converters anticipates it is possible that recoveries may be made on some loans that have been classified as “failed”, that include a DEF component.
D.Cash Converters intends not to retain any DEF paid by a Group Member after 8 July 2015 and will make refunds directly to Group Members of any DEF received after 8 July 2015, on either Active DEF Loans or any other loans, including “failed” loans.
E.Cash Converters has agreed to advise the Plaintiff’s solicitors of any such refunds every 2 months.
Cash Converters International Limited UNDERTAKES to the Court on its own behalf and on behalf of each of its wholly owned entities, that it will:
1.Discount any amount still owing on an Active DEF Loan, by the amount of any outstanding DEF as at 8 July 2015;
2.Effect a full refund of any DEF received (whether by Cash Converters on its own behalf or on behalf of a NSW Franchisee) after 8 July 2015, to the Group Member, within 60 days of it receiving the DEF.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 2090 of 2013
BETWEEN: JULIE GRAY
PlaintiffAND: CASH CONVERTERS INTERNATIONAL LTD
ACN 069 141 546
First DefendantCASH CONVERTERS PTY LTD ACN 009 288 804
Second DefendantJA-KE HOLDINGS PTY LTD ACN 072 118 720
Third Defendant
JUDGE:
JAGOT J
DATE OF ORDER:
12 OCTOBER 2015
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
Settlement Approval
1.Pursuant to sections 33V and 33ZF of the Federal Court of Australia Act 1976 (Cth) (the Act) the settlement of the proceeding between the Plaintiff and the Defendants (the Proceeding) be approved on the terms set out in the Deed of Settlement executed by the Plaintiff, Defendants, Safrock Finance Corporation (Qld) Pty Ltd, Cash Converters Personal Finance Pty Ltd, Cash Converters (Cash Advance) Pty Ltd and Maurice Blackburn on 18 June 2015 (Deed of Settlement) being Annexure ‘BJS6-1’ to the affidavit of Ben Slade affirmed on 6 October 2015 as amended by the Variation of Settlement Deed executed on 21 July 2015 being Annexure ‘BJS6-3’ to the affidavit of Ben Slade affirmed on 6 October 2015 (Settlement Documents).
2.Pursuant to section 33ZF of the Act, the Court authorises the Plaintiff nunc pro tunc for and on behalf of the Group Members (being those persons who meet the definition of “Group Member” in the Third Further Amended Statement of Claim) to enter into and give effect to the Settlement Documents and the transactions contemplated for and on behalf of Group Members.
3.Pursuant to section 33ZF of the Act or otherwise, Maurice Blackburn Pty Ltd (Maurice Blackburn) be appointed Claims Administrator of the Settlement Distribution Scheme and to act in accordance with the Settlement Distribution Scheme as set out in the Settlement Distribution Scheme being Annexure ‘BJS6-2’ to the affidavit of Ben Slade affirmed on 6 October 2015.
4.Pursuant to section 33ZF of the Act, the amount of $5,000 be approved as the amount to be paid to the Plaintiff for the purposes of clause 2.1(b) of the Deed of Settlement and clause 6.3 of the Settlement Distribution Scheme.
5.Pursuant to section 33ZF of the Act, the Plaintiff’s Costs and Disbursements up to and including 12 October 2015 in proceedings NSD 2089 and NSD 2090 of 2013 in the sum of $3million be approved.
6.Maurice Blackburn has liberty to apply for directions in connection with the Settlement Distribution Scheme.
Evidence
7.Pursuant to s 37AF of the Act, the affidavit of Ben Slade affirmed on 2 October 2015 and marked “Confidential Affidavit” is to remain confidential on the Court file and be sealed on the Court file in an envelope marked “NOT TO BE OPENED EXCEPT BY DIRECTION OF THE COURT OR A JUDGE” and it and any of its contents are not to be disclosed to any persons other than the authorised legal representatives of the Plaintiff in this proceeding and are not to be published.
8.Pursuant to section 37AG of the Act, the order in 7 above is made on the ground that the order is necessary to prevent prejudice to the proper administration of justice because the material in the affidavit contains material subject to client legal privilege which has not been waived.
9.The period for which order 7 operates is 10 years from the date of this order, which may be varied and in respect of which there is liberty to apply generally.
THE COURT NOTES:
1.As of the orders made today, Maurice Blackburn ceases to act as solicitor for the Plaintiff.
2.The Undertakings of Cash Converters International Limited to the Court as follows:
A.The GM Information (as defined in the Deed of Settlement) was captured as at 8 July 2015.
B.Pursuant to the systems operated by Cash Converters International Limited and/or its subsidiaries (Cash Converters), any payment made after 8 July 2015 by a Group Member (as defined in the Deed of Settlement) will have a component of the deferred establishment fee (DEF) automatically allocated to it.
C.Cash Converters anticipates that 37 loans have been, or may be, charged DEF in this manner after 8 July 2015 (Active DEF Loans). In addition, Cash Converters anticipates it is possible that recoveries may be made on some loans that have been classified as “failed”, that include a DEF component.
D.Cash Converters intends not to retain any DEF paid by a Group Member after 8 July 2015 and will make refunds directly to Group Members of any DEF received after 8 July 2015, on either Active DEF Loans or any other loans, including “failed” loans.
E.Cash Converters has agreed to advise the Claims Administrator of any such refunds every 2 months.
Cash Converters International Limited UNDERTAKES to the Court on its own behalf and on behalf of each of its wholly owned entities, that it will:
1.Discount any amount still owing on an Active DEF Loan, by the amount of any outstanding DEF as at 8 July 2015;
2.Effect a full refund of any DEF received (whether by Cash Converters on its own behalf or on behalf of a NSW Franchisee) after 8 July 2015, to the Group Member, within 60 days of it receiving the DEF.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 2089 of 2013
BETWEEN: JULIE GRAY
PlaintiffAND: CASH CONVERTERS INTERNATIONAL LIMITED
ACN 069 141 546
First DefendantSAFROCK FINANCE CORPORATION (QLD) PTY LTD
ACN 098 566 520
Second DefendantCASH CONVERTERS PERSONAL FINANCE PTY LTD
ACN 110 275 762
Third Defendant
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 2090 of 2013
BETWEEN: JULIE GRAY
PlaintiffAND: CASH CONVERTERS INTERNATIONAL LTD
ACN 069 141 546
First DefendantCASH CONVERTERS PTY LTD ACN 009 288 804
Second DefendantJA-KE HOLDINGS PTY LTD ACN 072 118 720
Third Defendant
JUDGE:
JAGOT J
DATE:
12 OCTOBER 2015
PLACE:
SYDNEY
REASONS FOR JUDGMENT
This is an application by the parties to two related proceedings for approval of the settlement of those proceedings pursuant to ss 33V and 33ZF of the Federal Court of Australia Act 1976 (Cth).
In short, a representative proceeding such as the present proceedings may not be settled or discontinued without the approval of the court (s 33V(1)). If such approval is given the court may make such orders as are just with respect to the distribution of any money paid under a settlement or paid into the court (s 33V(2)).
In the present case, given the nature of the proceeding, the observations of Finkelstein J in Lopez v Star World Enterprises Pty Ltd [1999] FCA 104 at [16] are apt and have significance:
Accordingly, the task of the court in considering an application under s 33V is indeed an onerous one especially where the application is not opposed. It is a task in which the court inevitably must rely heavily on the solicitor retained by, and counsel who appears for, the applicant to put before it all matters relevant to the court's consideration of the matter. In this regard there would be few cases where the court can properly exercise its power under s 33V without evidence from the solicitor supported by counsel that the proposed compromise is in the interests of the group members. I appreciate that, on occasion, this will place the solicitor and counsel in a difficult position. The interests of their client will not always be coincident with the interests of the members of the group. But, in my view, that is no more than a necessary consequence of their client instituting a representative action.
The settlement in the present case represents a global settlement of the two proceedings. The facts are that the group which had taken loans from the relevant defendants and were the subject of the disputed deferred establishment fee is estimated to involve over 38,000 people. The group members are unlikely to have a real appreciation of the nature of representative proceedings. In particular, the group members are unlikely to have any real appreciation of the binding nature of the proceedings on them unless they have exercised their capacity to opt out of the proceedings, despite the notices which have been published. The evidence from the plaintiff’s legal representatives, accordingly, is critical.
In the present matter, there is sufficient evidence to satisfy me that the settlement which has been proposed is a fair and reasonable compromise of the claims made on behalf of the group members. This is so, having regard to each of the relevant considerations set out in the Federal Court’s Practice Note CM 17 (Representative proceedings commenced under Part IVA of the Federal Court of Australia Act 1976 (Cth)). There is no doubt that this litigation was both complex and would have taken a great deal of time to resolve. I have also been taken to evidence of the reaction of the group to the settlement, as well the reasonableness of the settlement in light of the best potential recovery and the risks of litigation. As to that latter issue, of particular relevance is the evidence before me relating to the total amount of deferred establishment fees paid by all group members, compared to the total settlement sum of $20 million, as well as evidence of the likely recovery based on competing assumptions about the capacity for group members to be paid their proportion of the deferred establishment fees for which they were liable.
In addition, I have been taken to evidence about the way in which the settlement distribution scheme will operate, including the estimated costs of the administration of that scheme, currently in the range of $1.7 million to $2 million. I am satisfied that the estimate is not unreasonable given the potential work involved over the next 12 months, and that the provisions and arrangements which have been put in place are adequate to protect the potential recovery of group members.
My attention has also been drawn to the proposed order providing for a payment to the plaintiff, Ms Gray, of a total of $10,000 ($5000 in each proceeding). Based on the evidence about the time and effort that Ms Gray has taken and the toll of the proceedings on her, I consider that the payment of a total of $10,000 is appropriate in the circumstances of this case.
The other matter to which I have been taken to is the costs and disbursements in the sum of $3 million. While this sounds an extraordinarily large amount, this must be assessed in light of the length and complexity of the proceedings and the time which it has taken to get to settlement. The amount is supported by evidence of an independent costs assessor to the effect that the total professional fees and disbursements which have been charged to September 2015 of $3.366 million is a reasonable amount, having regard to the nature of these proceedings, the extensive work which had to be carried out, the difficulty and complexity of the issues involved, and the many steps which have had to be taken to bring these proceedings to the point where this settlement is in a position to be approved by the court. I should also note that the total fees and charges being approved by the court, in fact, is less than that amount (being the sum of $3 million).
Given the evidence, I have no doubt that the settlement is one that is fair and reasonable and that the role of the court, in ensuring that the interests of group members who are not present today and do not have the benefit of the representation which the plaintiff has had are protected, has been discharged.
For these reasons, I am satisfied that the court should exercise its power to make orders approving the settlement and I make orders accordingly.
I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot. Associate:
Dated: 20 October 2015
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