Luke v Aveo Group Ltd (No 3)

In the Federal Court, the applicants, represented by Levitt Robinson, sought approval of a proposed settlement agreement with Aveo Group Ltd in a representative proceeding. The applicants and sample group members, who are holders of pre-AWI interests, had commenced proceedings against Aveo alleging breaches of fiduciary duty and engaging in unconscionable or misleading and deceptive conduct. The applicants sought approval of the proposed settlement under section 33V of the Federal Court of Australia Act 1976 (Cth), which required the Court to consider whether the settlement was fair and reasonable in the interests of the group members, including as between group members. The Court also had to consider the role of the contradictor and the conduct of the applicants’ solicitors.

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.