Hobbs Anderson Investments Pty Limited v Oz Minerals Limited (No 2)
[2011] FCA 1506
•9 December 2011
FEDERAL COURT OF AUSTRALIA
Hobbs Anderson Investments Pty Limited v Oz Minerals Limited (No 2) [2011] FCA 1506
Citation: Hobbs Anderson Investments Pty Limited v Oz Minerals Limited (No 2) [2011] FCA 1506 Parties: HOBBS ANDERSON INVESTMENTS PTY LIMITED (ACN 115 787 052) v OZ MINERALS LIMITED (ACN 005 482 824) File number: NSD 1127 of 2009 Judge: EMMETT J Date of judgment: 9 December 2011 Legislation: Federal Court of Australia Act 1976 (Cth) s 33ZF Cases cited: Hobbs Anderson Investments Pty Limited v Oz Minerals Limited [2011] FCA 801 Date of hearing: 9 December 2011 Place: Sydney Division: GENERAL DIVISION Category: No catchwords Number of paragraphs: 14 Counsel for the plaintiff: P Brereton SC Solicitor for the plaintiff: Maurice Blackburn Counsel for the defendant: I Knott of Freehills
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 1127 of 2009
BETWEEN: HOBBS ANDERSON INVESTMENTS PTY LIMITED (ACN 115 787 052)
PlaintiffAND: OZ MINERALS LIMITED (ACN 005 482 824)
Defendant
JUDGE:
EMMETT J
DATE OF ORDER:
9 DECEMBER 2011
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.Pursuant to clauses 6 and 8 of the Settlement Distribution Scheme approved by the Court on 1 July 2011 (Scheme) and section 33ZF of the Federal Court of Australia Act 1976 (Cth), the application be approved of:
1.1$503,859.41 of the interest earned on the Settlement Reserve Fund and Settlement Distribution Fund to the payment of the Administration Costs incurred by Maurice Blackburn in connection with the administration of the Oz Minerals Class Action in the period 20 May 2011 to 22 November 2011; and
1.2An amount not exceeding $190,968.25 of the interest earned on the Settlement Distribution Fund for further Administration Costs incurred or estimated from 23 November 2011 up to the finalisation of the administration of the Scheme.
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 1127 of 2009
BETWEEN: HOBBS ANDERSON INVESTMENTS PTY LIMITED (ACN 115 787 052)
PlaintiffAND: OZ MINERALS LIMITED (ACN 005 482 824)
Defendant
JUDGE:
EMMETT J
DATE:
9 DECEMBER 2011
PLACE:
SYDNEY
REASONS FOR JUDGMENT
On 1 July 2011, the Court made orders (see Hobbs Anderson Investments Pty Limited v Oz Minerals Limited [2011] FCA 801) approving settlement of this proceeding on terms set out in a Deed of Settlement and a Settlement Distribution Scheme (the Scheme). Clause 2.1 of the Scheme provided that the Settlement Distribution Fund, as defined, was to be administered by Maurice Blackburn, a firm of solicitors, as Administrator. Clause 6.1 provided that the interest that accrued on the Settlement Sum, as defined, was to be applied in payment of Administration Costs, as defined, and in payment of the Applicant’s Reimbursement Payment, as defined, to the extent that those costs and payments are approved by the Court. The Applicant’s Reimbursement Payment was approved on 1 July 2011, and has been paid.
Clause 6.2 of the Scheme made payment of Administration Costs a condition precedent of the distribution of settlement moneys to group members. Clause 8.1 of the Scheme relevantly provided that, prior to any distribution from the Settlement Distribution Fund, certain payments were to be made, subject to approval from the Court, including an amount for Administration Costs. Administration Costs are defined in cl 1.1 as the costs and disbursements incurred by Maurice Blackburn, calculated at the rates given in the retainer between the applicant and Maurice Blackburn, in connection with the administration of the Scheme, including the identification of group members, the assessment of group members’ claims, and the administration of the Scheme.
Maurice Blackburn expects that, subject to Court approval of the amount of the Administration Costs, the distribution of funds to group members can be effected on 20 December 2011. In anticipation of making that distribution, Maurice Blackburn, as Administrator, has now applied, by interlocutory application of 6 December 2011, for orders pursuant to clauses 6 and 8 of the Scheme, as well as s 33ZF of the Federal Court of Australia Act 1976 (Cth) (the Act), approving the application of two sums of money, the particulars of which I shall mention shortly. Section 33ZF of the Federal Court of Australia Act (the Act) provides that, in any proceeding conducted under Part IVA of the Act, which deals with representative proceedings, the Court may make any order it thinks appropriate or necessary to ensure that justice is done in the proceeding.
I have read the affidavit of Mr Ben Slade of 7 December 2011 and affidavits of Mr Ian Ramsey-Stewart of 5 December 2011 and 8 December 2011. From those affidavits, it appears that the total amount of interest earned on the Settlement Reserve Fund, as defined, and the Settlement Distribution Fund, between 31 May 2011 and 30 November 2011, was $884,967.77. Of that sum, $11,724 was paid to the applicant in respect of the Applicant’s Reimbursement Payment. The orders now sought are, first, approval of the application of the sum of $503,859.41 of the interest earned on the Settlement Reserve Fund and the Settlement Distribution Fund to the payment of Administration Costs, incurred in the period 20 May 2011 to 22 November 2011, and, secondly, approval of the application of an amount not exceeding $190,968.25 of that interest for further administration costs incurred or to be incurred from 23 November 2011 up to the finalisation of the administration of the Scheme.
The task of the Court in dealing with an application of the kind now before me is to ensure that the relevant scheme has been, and is being, administered in accordance with the terms that have been approved by the Court. The Court, in performing that task, is entitled to place considerable reliance on the opinions of solicitors, who owe onerous obligations not only to their clients, but also to the Court. The application does not involve the Court, in effect, taxing a bill of costs. It therefore does not require that detailed attention be given to each and every item for which a fee has been charged. It may be appropriate to liken the task to that undertaken by the Court in fixing a gross sum for costs to be paid in respect of a particular matter.
Mr Slade, in his affidavit, has outlined in some detail the costs incurred in respect of which the present application is now made. Most of the administration work was conducted by a small team under the supervision of Mr Slade. The team consisted of a senior associate, a lawyer and a paralegal. Other paralegals provided assistance as required. Information technology assistance was also provided by Mr Stuart McCormack of ByteSmart Pty Limited (ByteSmart). Mr McCormack is experienced in the use of complicated loss assessment formulae in the administration of shareholder class actions. The services of ByteSmart were enlisted because of the complexity of the assessment process, and to assist in the task of communicating with group members.
I am satisfied, from the evidence, that there was appropriate delegation and allocation of work and responsibilities among the settlement administration team. The nature of the work arose out of the terms of the Scheme. For example, under cl 3.1, Maurice Blackburn was required to create and maintain a claimant database, and to use reasonable endeavours to ensure the accuracy of the data relating to trading and any other information contained in the data base. Under cl 3.2, Maurice Blackburn was required to deliver to each group member a statutory declaration listing the trading data pertaining to that member. Clause 3.3 provided that, if the group member did not provide a declaration within a 28-day period, the group member was not entitled to participate in the settlement or receive any distribution.
Under cl 3.5, Maurice Blackburn was authorised to require a group member to provide, and verify by statutory declaration, such further information as Maurice Blackburn might require. Clause 3.6 provided that Maurice Blackburn might use the trading data supplied by a group member to populate the claimant database. Clause 3.8 obliged Maurice Blackburn to use reasonable endeavours to ensure the accuracy of the trading data recorded in the claimant database. Clause 4.1 then provided that, as soon as practicable after the confirmation of the trading data, Maurice Blackburn was to calculate an assessment for each group member using the claimant database. As soon as practicable after making that calculation Maurice Blackburn were to send an assessment notice to each group member. Clause 5 of the Scheme provided that group members could request a review of an assessment notice.
The affidavit of Mr Slade outlines in some detail the steps that were taken in order to satisfy those provisions of the Scheme. Mr Slade has expressed the opinion that the work involved in discharging those functions was carried out on a reasonable and appropriate basis.
Mr Ramsey-Stewart is a solicitor of the Supreme Court of New South Wales, and has been in practice since December 1995. He is a costs lawyer and costs consultant, and has expertise in the area of legal costs assessment. Mr Ramsey-Stewart has given close consideration to a detailed statement of work prepared by Mr Slade in relation to the matters to which I have just referred. The detailed statement includes an estimate of the work that will be needed in order to finalise the Scheme. Mr Ramsey-Stewart has expressed the sworn opinion that the amount of $503,859.41 for actual costs incurred between 20 May 2011 and 22 November 2011 is appropriate and reasonable, and would be recovered on a practitioner and client basis in connection with the administration of the Scheme.
Mr Ramsey-Stewart has also expressed his sworn opinion that the amount of $190,968.25 for further expected costs from 23 November 2011 is appropriate and reasonable, and would be recovered on a practitioner and client basis in completing the administration of the Scheme. He qualifies that opinion by observing that, since those costs have not yet been incurred, the opinion is based on an estimate. To quantify the costs would require the analysis of a detailed, itemised bill, which of course cannot be prepared until the work has been done.
Mr Slade has indicated that it is unlikely that an amount significantly less than the amount of the estimated Administration Costs will be incurred, and that it is more likely that that amount will be exceeded. However, if the amount of Administration Costs incurred to the finalisation of the administration is below the estimate by $20,000 or more, Maurice Blackburn will apply to the Court for further orders. If the amount incurred to the finalisation of the administration is below the estimate by less than $20,000, the surplus funds will be dealt with in accordance with cl 8.8 of the Scheme.
This application has been brought shortly before the end of the Court’s sitting period for 2011, in an endeavour to ensure that the proposed distributions can be made to group members before Christmas. If the anticipated costs are not approved at this stage, it will be necessary for a preliminary payment to be made, followed by the preparation of a further application for the approval of Administration Costs, and then a subsequent payment. A staged payment approach would not be in the interests of group members, since it would involve substantial additional costs associated with recalculating loss amounts, posting cheques, and preparing a further application to the Court for the approval of Administration Costs. The sending of multiple cheques would also place an additional administrative burden on group members, for whom the processing of compensation amounts can be complicated and time-consuming.
In all of the circumstances, I consider that it is appropriate to accede to the application now before me, and I propose to make orders accordingly. If it is necessary to make a further application to the Court in connection with the final costs, that can be done by way of an approach to my associate in chambers.
I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. Associate:
Dated: 22 December 2011
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