FEDERAL COURT OF AUSTRALIA
Hodges v Waters (No 4) [2014] FCA 472
Citation: Hodges v Waters (No 4) [2014] FCA 472 Parties: CHARLES HODGES & MARK HODGES AS TRUSTEES OF THE CHARLES HODGES SUPERANNUATION FUND v ANDREA JANE WATERS , KPMG, WELLINGTON INVESTMENT MANAGEMENT LIMITED, OCTAVIAR LIMITED (ADMINISTRATOR APPOINTED), GUY HUTCHINGS, JOHN ARTHUR WHATELEY, JACK SIMON DIAMOND, CRAIG ROBERT WHITE, DEBORAH BEALE, STEVEN KRIS KYLING, STUART ROBERTSON PRICE, MICHAEL GORDON HISCOCK, MICHAEL CHRISTODOULOU KING, PAUL JOSEPH MANKA, FERNANDO ESTEBAN, RAYMOND KELLERMAN, DAVID MARK ANDERSON, OCTAVIAR LTD (IN LIQUIDATION) ACN 107 863 390 and OCTAVIAR ADMINISTRATION PTY LTD (IN LIQUIDATION) ACN 101 069 390 File number: NSD 324 of 2009 Judge: GLEESON J Date of judgment: 13 May 2014 Catchwords: PRACTICE AND PROCEDURE – representative proceeding – Court approval of settlement – fairness and reasonableness of terms of settlement – no objections to settlement. Legislation: Corporations Act 2001 (Cth), ss 208, 601FC, 601FD, 601HG
Federal Court of Australia Act 1976 (Cth), s 33V
Wrongs Act 1958 (Vic), Pt IVAACases cited: Australian Competition and Consumer Commission v Chats House Investment Pty Limited (1996) 71 FCR 250; [1996] FCA 1119
BFSL 2007 Limited v Steigrad [2013] NZSC 156
Chubb Insurance Co of Australia Ltd v Moore (2013) 302 ALR 101; [2013] NSWCA 212
Lopez v Star World Enterprises (1999) ATPR 41-678; [1999] FCA 104
Mercedes Holdings Pty Limited v Waters (No 1) (2010) 77 ACSR 265; [2010] FCA 124
Mercedes Holdings Pty Ltd v Waters(No 6) [2012] FCA 1412
P Dawson Nominees Pty Ltd v Brookfield Multiplex Limited (No 4) [2010] FCA 1029
Tasfast Air Freight Pty Ltd v Mobil Oil Australia Ltd [2002] VSC 457
Taylor v Telstra Corporation Ltd [2007] FCA 2008
Wepar Nominees Pty Ltd v Schofield (No 2) [2014] FCA 225
Williams v FAI Home Security Ltd (2010) 77 ACSR 265; [2000] FCA 1925
Wotton v State of Queensland (2009) 109 ALD 534; [2009] FCA 758 at [37]Date of hearing: 7 May 2014 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 25 Counsel for the Applicants: Mr M B J Lee SC, Mr W A D Edwards Solicitor for the Applicants: Johnson, Winter & Slattery Counsel for the First and Second Respondents: Mr J R J Lockhart SC, Mr J A Arnott Solicitor for the First and Second Respondents: Allens Counsel for the Tenth Respondent: Mr T W Marskall Solicitor for the Tenth Respondent: Wotton + Kearney Counsel for the Eleventh Respondent: Mr S A Goodman Solicitor for the Eleventh Respondent: Kelly & Co Lawyers IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 324 of 2009
BETWEEN: CHARLES HODGES & MARK HODGES AS TRUSTEES OF THE CHARLES HODGES SUPERANNUATION FUND
ApplicantAND: ANDREA JANE WATERS
First RespondentKPMG
Second RespondentWELLINGTON INVESTMENT MANAGEMENT LIMITED
Third RespondentOCTAVIAR LIMITED (ADMINISTRATOR APPOINTED)
Fourth RespondentGUY HUTCHINGS
Fifth RespondentJOHN ARTHUR WHATELEY
Sixth RespondentJACK SIMON DIAMOND
Seventh RespondentCRAIG ROBERT WHITE
Eighth RespondentDEBORAH BEALE
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Details
- AGLC
- Hodges v Waters (No 4) [2014] FCA 472
- Case
- [2014] FCA 472
- Decision Date
CaseChat Overview and Summary
The case of Hodges v Waters (No 4) involved a dispute related to the approval of a settlement in a representative proceeding. The Federal Court of Australia was tasked with deciding whether to approve the proposed settlement. The main issue before the court was to determine if the settlement was fair and reasonable for the group members who would be bound by it. The court was required to consider several factors, including the amount offered to each group member, the prospects of success in the proceeding, the likelihood of group members obtaining a judgment for an amount significantly in excess of the settlement offer, the terms of any advice received from counsel and any independent experts, the likely duration and cost of the proceeding if continued to judgment, and the attitude of the group members to the settlement.
In reaching its decision, the court relied on several legal principles and previous cases. The court emphasised the importance of ensuring that the interests of class members are adequately protected and the role of the court in protecting those interests. The court noted that it places considerable reliance on the parties' lawyers to provide sufficient information to assess whether a proposed settlement is to be approved. The court also recognised that the task of approving a settlement is onerous, especially when the application is not opposed. The court considered evidence in support of the application and concluded that the settlement was fair and reasonable for the group members.
The Federal Court of Australia approved the discontinuance of the proceedings against the tenth and eleventh respondents, granted leave to the applicants to file a notice of discontinuance, and vacated all previous costs orders. The court's decision was based on the evidence presented and the principles outlined in the legal authorities. The final orders included approving the discontinuance of the proceedings, granting leave to file a notice of discontinuance, and vacating all previous costs orders between the applicants and the tenth and eleventh respondents.
In reaching its decision, the court relied on several legal principles and previous cases. The court emphasised the importance of ensuring that the interests of class members are adequately protected and the role of the court in protecting those interests. The court noted that it places considerable reliance on the parties' lawyers to provide sufficient information to assess whether a proposed settlement is to be approved. The court also recognised that the task of approving a settlement is onerous, especially when the application is not opposed. The court considered evidence in support of the application and concluded that the settlement was fair and reasonable for the group members.
The Federal Court of Australia approved the discontinuance of the proceedings against the tenth and eleventh respondents, granted leave to the applicants to file a notice of discontinuance, and vacated all previous costs orders. The court's decision was based on the evidence presented and the principles outlined in the legal authorities. The final orders included approving the discontinuance of the proceedings, granting leave to file a notice of discontinuance, and vacating all previous costs orders between the applicants and the tenth and eleventh respondents.
Orders
Orders of the court
1. Pursuant to s 33V(1) of the Federal Court of Australia Act 1976 (Cth), the Court approves the discontinuance of the proceedings against the tenth and eleventh respondents.
2. Pursuant to r 26.12(4) of the Federal Court Rules 2011 (Cth), leave be granted to the applicants to file a notice of discontinuance of their claims against the tenth and eleventh respondents on or after 7 days from the date of these orders.
3. As between the applicants and the tenth and eleventh respondents:
(a) all previous costs orders be vacated; and
(b) otherwise, there be no order as to costs.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
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Evidence
Evidence Before The Court
The Court’s role in considering whether to approve a settlement pursuant to s 33V has been described in the following ways: · Ordinarily the task of a court upon an application such as this, is to determine whether the proposed settlement or compromise is fair and reasonable, having regard to the claims made on behalf of the group members who will be bound by the settlement. Ordinarily in such circumstances the Court will take into account the amount offered to each group member, the prospects of success in the proceeding, the likelihood of the group members obtaining judgment for an amount significantly in excess of the settlement offer, the terms of any advice received from counsel and from any independent expert in relation to the issues which arise in the proceeding, the likely duration and cost of the proceeding if continued to judgment, and the attitude of the group members to the settlement: Williams v FAI Home Security Ltd (2010) 77 ACSR 265; [2000] FCA 1925 at [19] per Goldberg J.· It is appropriate for the Court to be satisfied that any settlement or discontinuance of representative proceedings has been undertaken in the interests of the group members as a whole, and not just in the interests of the applicant and the respondent: Australian Competition and Consumer Commission v Chats House Investment Pty Limited (1996) 71 FCR 250 at 258 per Branson J. · Despite the obvious advantages of settling class actions, there remains the need to ensure that the interests of class members are adequately looked after. In the trial preparation, and the conduct of the trial itself, their protection depends, in no small measure, on the capacity of the named applicant to monitor the actions of the lawyers who have been retained to run the case. When it comes to a settlement it is the court that assumes responsibility for protecting the interests of the class members. In that task the court necessarily places considerable reliance on the parties’ lawyers. I say “parties’ lawyers” to make clear that I do not think that it is just the applicant’s lawyers that carry the burden of ensuring that the court is given sufficient information to assess whether a proposed settlement is to be approved: P Dawson Nominees Pty Ltd v Brookfield Multiplex Limited (No 4) [2010] FCA 1029 at [4] per Finkelstein J.· [T]he 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: Lopez at [16].· The principles upon which s 33V is based might be said to be those of the protective jurisdiction of the Court, not unlike the principles which lead the Court to require compromises on behalf of infants or persons under a disability to be approved. In a group proceeding, ex hypothesi, there may be persons, in the community who can be affected by such settlement but know nothing of it … : Tasfast Air Freight Pty Ltd v Mobil Oil Australia Ltd [2002] VSC 457 per Bongiorno J. See also Taylor v Telstra Corporation Ltd [2007] FCA 2008 at [56]–[66] and Wepar Nominees Pty Ltd v Schofield (No 2) [2014] FCA 225 at [13]–[14].Evidence in support of the application
Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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