Kamasaee v Commonwealth of Australia and Ors (Ruling on the settlement distribution)

[2018] VSC 138

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

MAJOR TORTS LIST

S CI 2014 06770

MAJID KARAMI KAMASAEE	Plaintiff
v
THE COMMONWEALTH OF AUSTRALIA & ORS (in accordance with the attached schedule)	Defendants and Third Parties

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JUDGE:	MACAULAY  J
WHERE HELD:	Melbourne
DATE OF HEARING:	23 March 2018
DATE OF RULING:	27 March 2018
CASE MAY BE CITED AS:	Kamasaee v Commonwealth of Australia & Ors (Ruling on the settlement distribution)
MEDIUM NEUTRAL CITATION:	[2018] VSC 138

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PRACTICE AND PROCEDURE — Group Proceeding — Supervision of settlement distribution scheme — Application for extension of time for payment of distribution sum— Extension granted — Application to admit late registrants to participate in settlement —Blairgowrie Trading Ltd & Anor v Allco Finance Group Ltd (recs and mgrs apptd) (in liq) & Ors (2017) 343 ALR 476, distinguished — Relevant considerations — Late registration refused.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Ms M Szydzik	Slater & Gordon Lawyers
For the First Defendant	Mr C M McDermott	Australian Government Solicitor
For the Second Defendant	Mr A Foster, Solicitor	Foster Nicholson Lawyers
For the Third Defendant	Ms M Norton	Corrs Chambers Westgarth
For the Second Third Party	Mr K Loxley	Herbert Smith Freehills
Late Registrants	Ms K Chow	Weighbridge Lawyers

HIS HONOUR:

1. Since approving the settlement in this group proceeding[1] I have continued to supervise the distribution of settlement monies pursuant to the Settlement Distribution Scheme (as amended), the latest version dated 2 November 2017 (Scheme). 

   [1]Kamasaee v Commonwealth of Australia & Ors (Approval of settlement) [2017] VSC 537.

1. The stage has been reached where, pursuant to the Scheme, the Registration Deadline (13 October 2017) has passed, and the First Distribution has taken place.  First Distribution is the date on which the first payment is made to a participating group member under the Scheme.  That occurred on 15 December 2017. 

1. Ahead of that First Distribution I made an order on 24 November 2017 (order 5) in these terms:

For the purposes of clause 8.4A of the Scheme, clauses 8.5 and 8.6 of the Scheme shall be operative and take effect from the date of this order.

Clause 8.5 of the Scheme provides:

If, as at the Registration Deadline, there are 1000 or more Participating Group Members:

(a)The entire Distribution Sum as at the date of the First Distribution will be allocated to the Participating Group Members …

1. Because there were more than 1000 Participating Group Members at the Registration Deadline, clause 8.5(a) was triggered.  In other words, the entire Distribution Sum ($70 million) was allocated to the Participating Group Members (then 1695 Group Members) on 15 December 2017.

1. The further clauses of the Scheme go on to provide what is to happen if the full amount of the Distribution Sum is not paid out to Participating Group Members within a specified period of time.  That period of time is 60 days, although it may be extended at the discretion of the Scheme Administrator exercised pursuant to clause 4.6(b) of the Scheme.  Prior to the expiration of the first period of 60 days on 13 February 2018, the Scheme Administrator chose to extend the period to 13 March 2018. 

1. Clause 8.5(e)(A) provides, in effect, that if at the expiration of the 60 days (as extended) payment has not been effected to all Participating Group Members, then, as long as the number of Participating Group Members to whom a distribution has been made is equal to or more than 1000 (which is the case), the Scheme Administrator may deal with the unpaid balance in one of two ways.  He may either pay the unpaid balance to the Participating Group Members (in accordance with their points allocation) or return the unclaimed amount to the defendants and second third party.  No other alternative is available.

1. As at 23 March 2018, the date of the most recent directions hearing, the Scheme Administrator had not formally elected to extend the 60 day period beyond 13 March 2018.  Nonetheless, the Scheme Administrator indicated (through counsel) that he did wish to provide for more time to process payments to the currently unpaid Participating Group Members.  As at 23 March 2018 there were 73 such persons.  Of that 73:

·three were persons for whom the Administrator was ready to send payment instructions to Macquarie Bank;

·four were still awaiting verification of payment instructions;

·55 were persons from whom more information had been requested and was pending;

·four were persons who had provided incomplete or inaccurate information; and

·seven were persons from whom no instructions had been received at all. 

1. On the day of hearing I was informed that of that last-mentioned seven, one had recently communicated with the Scheme Administrator and thus there was some prospect that instructions would shortly be received from that person. 

1. In any event, I was informed that there was a reasonable prospect that a good number of those 73 persons were likely to be paid if another extension of time was made.  Given that no further extension had been made before 13 March 2018 and there was  some doubt as to whether the Administrator was now able to extend time nunc pro tunc, the Court was asked to exercise its power under s 33V(2), alternatively s 33ZF, to order a further extension of 21 days for payment before clause 8(5)(e)(A) was activated.  All parties before the Court agreed that the Court had such power to extend time if it wished.

1. I was persuaded in the circumstances that it would be appropriate to extend time for a further 21 days to maximise the opportunity for payments to be made to the remaining 73 Participating Group Members.  Time to distribute the Distribution Sum has therefore been extended to 13 April 2018.  

1. If at the end of that period there still remains a group of persons who have not been paid, and no further extensions are made or granted, clause 8.5(e)(A) will come into effect (as described above).  In addition, the Participating Group Members will also be paid their pro rata share of interest (net of tax), the aggregate of which will be in the order of $345,000, together with their pro rata share of a small sum of money which has become a surplus due to a circumstance which has been properly explained in evidence before me.

1. But, rather than having the unpaid money paid pursuant to clause 8.5(e)(A), I have been invited to consider approving a different course.  Ms Chow appeared for three Group Members who did not register to become Participating Group Members either before the Registration Deadline or before the First Distribution.  Their circumstances and the reasons for them not having registered before the times I have mentioned are described in an affidavit filed on their behalves.  In addition to those three people, there are another 61 persons who have communicated with the Scheme Administrator’s solicitors to indicate their desire to be included in the Scheme as ‘late registrants’, or to be allowed to be reinstated as Group Members having previously opted out of the proceeding. 

1. In the past I have allowed the inclusion of certain late registrants and the reinstatement of a number of persons who had previously opted out from the proceeding. Significantly, orders permitting those additions to the class of Participating Group Members took place earlier in the settlement distribution process, before the First Distribution occurred.  None of the parties to the proceeding, nor the Scheme Administrator, expressed a view whether I should allow any of the 64 group members to be included as Participating Group Members.

1. In my view, the First Distribution has changed the situation significantly.  On that date, pursuant to clause 8.5(a) of the Scheme, the entire Distribution Sum was allocated to those group members who, by that time, had registered or been deemed to be included as Participating Group Members.  In my view, on that day they each collectively became possessed of the Distribution Sum, subject only to disentitlement should they not provide payment details to enable payment of their shares within the 60 day period (as extended). 

1. To allow the ‘late registrants’ now to take an entitlement to unpaid monies which are otherwise to be paid to the Participating Group Members pursuant to clause 8.5(e)(A) would involve a departure from the terms of the Scheme. More importantly, in my view it would involve a disposition of property which properly belongs to Participating Group Members. It is one thing to enlarge the pool of recipients before the Distribution Sum is allocated to the pool; it is quite a different thing to enlarge that pool once the property has been allocated and rights have been crystallised, as I consider they were.

1. Ms Chow helpfully referred me to Blairgowrie Trading Ltd & Anor v Allco Finance Group Ltd (recs and mgrs apptd) (in liq) & Ors[2], particularly at [161]–[177]. The circumstances facing the Court in Blairgowrie and the time at which it was asked to permit further group members to share in the Second Tier Distribution in that case are materially different from the circumstances in this case.  First, the settlement had not been approved at all and, of course, there had been no crystallisation of entitlement to the distribution sum among specific individuals under the terms of the settlement scheme.   

   [2](2017) 343 ALR 476 (‘Blairgowrie’).

1. Due to the nature of the Scheme and the urgency with which it was carried out there has always been a risk that because of flaws in the notification system, difficulties in communication and language, and other reasons, some persons might not obtain an entitlement under the Scheme yet have their rights foreclosed by the approval of the settlement.  Regrettably, there may be some, perhaps many, in the group of 64 persons who now wish to be included, including the three for whom Ms Chow appeared, who may not have received notice at all or who through communication difficulties might not have had a practicable opportunity to respond. Of course, despite those difficulties, an extraordinarily high proportion of group members were able to do so, and a period of something like 18 weeks elapsed after extensive notification by publication in the media (and to group members directly) before the order was made on 24 November 2017 triggering the clause 8.5 distribution process.   

1. I take account of the fact that the amount of money which might be lost to the 1695 existing Participating Group Members, should unpaid monies not be redistributed to them, would be a significantly less sum on average than the average sums which each late registrant might gain should they be permitted to share in that money instead. On average, the sum which each of the 64 applicants might receive would probably be in the order of $3,900 if only the six persons I mentioned above remain unpaid after the further 21 days.    

1. However, I think the Court should take particular care not to fracture the integrity of the Scheme as it has been crafted.  It has worked well to date.  Further, it is misguided to think that ‘fairness’ is achieved by paying money out to a number of apparently deserving people when in fact such payment would occur at the cost of disruption to the legal framework designed to fairly and equitably balance risks and entitlements upon which Participating Group Members chose to participate, and by redistributing money away from those who probably have a proprietary right to it.

1. In all the circumstances, I must refuse the application of the three persons for whom Ms Chow appeared to be included as Participating Group Members.  Similarly I must decline the requests of the other 61 persons who have communicated with the Scheme Administrator’s solicitors, either by letter or telephone, to be included within the Scheme.

1. It follows that I will make the orders that were submitted by the Scheme Administrator numbered 1–11 and decline to make the orders numbered 12–19.