FEDERAL COURT OF AUSTRALIA
Luke v Aveo Group Limited (No 3) [2023] FCA 1665
File number(s): VID 996 of 2017 Judgment of: MURPHY J Date of judgment: 22 December 2023 Catchwords: REPRESENTATIVE PROCEEDING – settlement approval application under s 33V of the Federal Court of Australia Act 1976 (Cth) – whether the proposed settlement is fair and reasonable in the interests of group members to be bound to it including as between group members – the role of a contradictor – serious lack of expedition and inefficiency on the part of the applicants’ solicitors – proposed settlement approved – applicants’ legal costs approved in a substantially reduced amount. Legislation: Federal Court of Australia Act 1976 (Cth) ss 33C, 33V, 37AF, 37AG Cases cited: Attorney-General v Mayas (1988) 14 NSWLR 342
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Division: General Division Registry: Victoria National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Number of paragraphs: 160 Date of hearing: 22 November 2023 Counsel for the Applicants: Mr N J Kidd SC and Mr D Meyerowitz-Katz Solicitor for the Applicants: Levitt Robinson Solicitors Counsel for the Respondent: Mr P D Crutchfield KC and Mr B A McLachlan Solicitor for the Respondent: Arnold Bloch Leibler The Contraveners: Mr L W L Armstrong KC and Mr K Loxley Counsel for Mr Stewart Levitt trading as Levitt Robinson Solicitors: Mr S Puttick Counsel for the Interveners: Mr J Adamopoulos ORDERS
VID 996 of 2017 BETWEEN: MICHAEL ROBERT LUKE (IN HIS CAPACITY AS THE CO-EXECUTOR OF THE ESTATE OF ROBERT COLIN LUKE, DECEASED)
First Applicant
MEREDITH ANNE LUKE (IN HER CAPACITY AS THE CO-EXECUTOR OF THE ESTATE OF ROBERT COLIN LUKE, DECEASED)
Second Applicant
ANN MARY STROUD (IN HER CAPACITY AS THE CO-EXECUTOR OF THE ESTATE OF JOAN MARY COLOMBARI, DECEASED) (and another named in the Schedule)
Third Applicant
AND: AVEO GROUP LIMITED (ACN 010 729 950)
Respondent
ORDER MADE BY:
MURPHY J
DATE OF ORDER:
22 DECEMBER 2023
THE COURT NOTES THAT:
A. Galactic Aveo LLC will not seek to recover a funding commission from the applicants and group members; and
UPON THE UNDERTAKINGS BY:
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- AGLC
- Luke v Aveo Group Limited (No 3) [2023] FCA 1665
- Case
- [2023] FCA 1665
- Decision Date
CaseChat Overview and Summary
The applicants argued that the proposed settlement was fair and reasonable in the interests of the group members. They submitted that the settlement avoided the uncertainty and delay associated with prosecuting the claims to judgment and that the prospects of establishing liability and loss or damage were low. The Court found that the applicants and their lawyers were in a good position to make an informed assessment as to whether the prospects of success of the applicants’ and sample group members’ claims were such that it was appropriate to effectively abandon their claims, and instead settle for legal costs only. The Court also found that the complexity and likely duration of the litigation would have been substantial and that the proposed settlement avoided these issues. The Court was satisfied that the applicants’ and sample group members’ prospects of establishing loss were very low and that it was more likely than not that their claims would have failed. The Court found that the proposed settlement was reasonable in light of the attendant risks of litigation and that it fell within the range of reasonable outcomes in the case.
The Court approved the proposed settlement agreement and approved the applicants’ legal costs and disbursements for the conduct of the proceeding up to the date of settlement in a substantially reduced amount. The Court also approved the applicants’ legal costs of the settlement approval process and the administration costs as defined in the Settlement Scheme. The Court ordered that the proceeding be dismissed with no further order as to costs and that the Administrator have liberty to apply with respect to any issues arising under the administration. The Court further ordered that certain material be kept confidential until further order or until after the expiry of all periods in which an appeal may be brought from the Court’s orders.
Orders
Orders of the court
Costs
1. Pursuant to s 33V(2) of the Federal Court of Australia Act 1976 (Cth);
(a) the Applicants’ legal costs and disbursements for the conduct of this proceeding up to the date of settlement be approved in the sum of $8,523,516;
(b) the Applicants’ legal costs of the settlement approval process be approved in the sum of $394,538; and
(c) the Administration Costs, as defined in the Settlement Scheme, be approved in the sum of $186,000 plus GST.
2. Stewart Levitt trading as Levitt Robinson pay the Contradictor’s reasonable fees within 21 days of receipt of an invoice.
Administration
3. Within seven (7) days after the distribution by the Administrator of the whole of the Settlement Sum, the Administrator is to apply to the Court for the proceeding to be dismissed with no further order as to costs.
4. The Administrator have liberty to apply with respect to any issues arising under the Administration.
5. The Applicants and the Respondent be excused from attendance in relation to any application brought by the Administrator pursuant to Order 4.
Confidentiality Application
6. Pursuant to ss 37AF and 37AG(1)(a) of the Federal Court of Australia Act 1976 (Cth) (the Act), on the ground that the order is necessary to prevent prejudice to the proper administration of justice, the material set out in Annexure A (Confidential Material A) is, until further order or until after the expiry of all periods in which an appeal may be brought from this Court’s orders made on 22 November 2023 (as specified in Annexure A), not to be published or disclosed without prior leave of the Court to any person other than: (a) the Court; (b) the Applicants; (c) the Applicants’ legal representatives; (d) group members who have provided an appropriate acknowledgment of their obligations under this order; (e) counsel appointed as Contradictor; (f) counsel for Levitt Robinson; (g) Galactic Aveo LLC; and (h) Galactic Aveo LLC’s legal representatives, with such permitted disclosures to be on terms that none of those persons or entities disclose the Confidential Material A or any part of it to any person or entity other than those listed in this order.
7. Pursuant to ss 37AF and 37AG(1)(a) of the Act, on the ground that the order is necessary to prevent prejudice to the proper administration of justice and until further order, the material set out in Annexure B (Confidential Material B) is not to be published or disclosed without prior leave of the Court to any person other than: (a) the Court; (b) the Applicants; (c) the Applicants’ legal representatives; (d) counsel appointed as Contradictor; (e) counsel for Levitt Robinson; (f) Galactic Aveo LLC; and (g) Galactic Aveo LLC’s legal representatives, with such permitted disclosures to be on terms that none of those persons or entities disclose the Confidential Material B or any part of it to any person or entity other than those listed in this order.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Annexure A
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2.
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Confidential Affidavit of Stewart Alan Levitt 29 September 2023
Exhibit SAL-10 Confidential Opinion (whole)
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11
Contradictors’ Confidential Outline of Submissions dated 16 October 2023
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[23]
content of footnote 30.
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Applicants’ Confidential submissions in reply dated 31 October 2023
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Confidential Affidavit of Stewart Alan Levitt sworn 2 November 2023
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Costs Referee’s first report dated 26 July 2023
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July 2020
15 June 2022 (first sentence only)
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Annexure B
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Evidence/ Submissions
Document /Section over which Confidentiality claimed
Claimant
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Confidential Affidavit of Stewart Alan Levitt 28 September 2023
[11]–[21], whole
Stewart Levitt
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
There had been six days of trial at the point the parties reached the proposed settlement, and the applicants and their lawyers were therefore in a good position to make an informed assessment as to whether prospects of success of the applicants’ and sample group members’ claims were such that it was appropriate to effectively abandon their claims, and instead settle for legal costs only. The complexity and likely duration of the litigation The case is both factually and legally complex and had the proposed settlement not been reached the initial trial would have run for approximately 4 additional weeks. The proposed settlement avoids the uncertainty and delay associated with prosecuting the claims to judgment. The risks of establishing liability and loss or damage The applicants’ prospects of establishing that Aveo engaged in unconscionable conduct or misleading or deceptive conduct essentially turns on their ability to establish that the introduction of the Aveo Way Programme caused loss to the holders of pre-AWI interests. Having regard to the evidence in the approval application I am satisfied that the applicants’ and sample group members’ prospects of establishing loss were very low. In my view it is more likely than not that their claims would have failed. This points strongly in favour of approving the proposed settlement.The range of reasonableness of the settlement in light of the best recovery The proposed settlement represents a negligible percentage of the potential best-case outcome for the applicants and group members. Indeed, once the proposed deductions for legal costs are applied, they will receive nothing.The reasonableness of the proposed settlement in light of the attendant litigation risks The proposed settlement is a very disappointing result for the applicants and group members, and no doubt also for the applicants’ lawyers. But as I have said, the prospects of the applicants’ and sample group members’ succeeding in establishing loss were low. Based on the materials in the approval application it is more likely that than not that their claims would have failed had the initial trial continued to judgment. I therefore consider that the proposed settlement is reasonable in light of the attendant risks of litigation and that it falls within the range of reasonable outcomes in the case. I note in this regard that Levitt Robinson’s evidence is redolent with complaint in relation to the trial judge’s refusal of the applicants’ two applications to vacate the trial (which had the result that the applicants did not receive Aveo’s expert evidence until the eve of trial) and his Honour’s finding that the applicants’ claim of breach of fiduciary duty by ARE, and of Aveo’s involvement in that breach fell outside the pleadings. Those matters are said to have been important to the decision to accept the proposed settlement. Of course, instead of deciding to recommend acceptance of a costs-only settlement the applicants (or more accurately their lawyers) might have chosen to continue to judgment and, if unsuccessful, to then appeal the trial judge’s rulings and judgment. Different lawyers or a different funder, with different appetites for risk, might have made such a decision. But it is not my role in a settlement approval application to second-guess the applicants’ lawyers to such an extent. It is clear that the decision to settle was a reasonable option in light of all the circumstances. In any event Mr Shulman stated that Galactic would not have funded an appeal. There is nothing to show that Levitt Robinson would have been prepared to conduct an appeal without litigation funding, or that the applicants would have been prepared to take on the risk of an adverse costs order in any appeal.The reaction of the class