FEDERAL COURT OF AUSTRALIA
Mitic v OZ Minerals Limited (No 2) [2017] FCA 409
File number: VID 114 of 2014 Judge: MIDDLETON J Date of judgment: 21 April 2017 Catchwords: PRACTICE AND PROCEDURE – representative proceedings – approval of settlement – s 33V(1) of Federal Court of Australia Act1976 (Cth) (the Act) – whether proposed settlement is fair and reasonable as between group members and the respondent – whether proposed distribution scheme is fair and reasonable as between group members – power to modify litigation funding agreement – scope of ss 33V(2), 33Z and 33ZF of the Act – settlement approved Legislation: Federal Court of Australia Act 1976 (Cth) Cases cited: Camilleri v The Trust Company (Nominees) Ltd [2015] FCA 1468
Earglow Pty Ltd v Newcrest Mining Ltd [2016] FCA 1433
Harrison v Sandhurst Trustees Ltd [2011] FCA 541
Newstart 123 Pty Ltd v Billabong International Ltd [2016] FCA 1194
Thomas v Powercor Australia Ltd [2011] VSC 614
Williams v FAI Home Security Pty Ltd (No 4) (2000) 180 ALR 459
Date of hearing: 18 July 2016 Registry: Victoria Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 46 Counsel for Tobias Mitic: Mr MBJ Lee SC with Mr C Conde Solicitor for Tobias Mitic: ACA Lawyers Counsel for OZ Minerals Limited: Mr MC Garner with Mr R Craig Solicitor for Oz Minerals Limited: Herbert Smith Freehills Counsel for the Objector: Mr TG Hauff appeared in person Counsel for Grant Samuel & Associates Pty Ltd Ms KA Brazenor Solicitor for Grant Samuel & Associates Pty Ltd Arnold Bloch Leibler Counsel for KPMG & KPMG TS Pty Limited: Ms EA Bennett Solicitor for KPMG & KPMG TS Pty Limited: Corrs Chambers Westgarth Counsel for Allens (a firm): Mr A Muller Solicitor for Allens (a firm): Colin Biggers & Paisley Counsel for Mr Anthony Barnes: Mr SB Rosewarne Solicitor for Mr Anthony Barnes: Maddocks Lawyers Counsel for OZ Minerals Holdings Pty Ltd: Ms F Shand Solicitor for OZ Minerals Holdings Pty Ltd: K&L Gates Counsel for Mr Owen Hegarty & Ors: Ms E Murphy Solicitor for Mr Owen Hegarty & Ors: Minter Ellison Lawyers Solicitor for Mr Anthony Larkin, Mr Dean Pritchard and Mr Richard Knight: Ms K Hall of Holding Redlich REASONS FOR JUDGMENT
VID 114 of 2014 BETWEEN: TOBIAS MITIC
Applicant
AND: OZ MINERALS LIMITED (ACN 005 482 824)
Respondent
MIDDLETON J:
INTRODUCTION
In this representative proceeding, the applicant (Mr Tobias Mitic) represents former shareholders of Zinifex Limited (‘Zinifex’) who acquired shares in the respondent (‘Oxiana’ before 23 July 2008; ‘OZ Minerals’ after that date) as a result of the merger between Oxiana and Zinifex that was first announced to the Australian Securities Exchange on 3 March 2008 and that was implemented by way of court-approved scheme of arrangement on 1 July…
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- Case
- [2017] FCA 409
- Decision Date
CaseChat Overview and Summary
The court found that the proposed settlement was fair and reasonable considering the prospects of success and the risks involved in proceeding to trial. It was noted that the settlement amount, approximately 4% of the purported claim value of around $250 million, was adequate given the uncertainties and potential costs associated with litigation. Furthermore, the distribution of the settlement funds, with the majority going to the group members and a portion to the legal representatives and litigation funder, was deemed appropriate given the complexity of the case and the legal costs incurred. The court also considered an objection by Mr Hauff, who argued that the settlement amount was inadequate and that the settlement concealed the alleged misconduct from the public. However, the court held that settlements are generally encouraged as a means of achieving efficient resolution and that the settlement did not contravene public policy.
The court concluded that the settlement was fair and reasonable and approved it, making the associated orders sought by Mr Mitic. This decision underscores the court's role in ensuring that settlements in representative proceedings are equitable and in the best interests of all parties involved.
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
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Ratio Decidendi
Legal Principle Established
Therefore, I was satisfied that the settlement was fair and reasonable as between the group members.CONSIDERATION OF THE OBJECTOR’S POSITION Mr Hauff says that he has suffered a loss of $489,012, calculated as the value of his Zinifex shares as at 1 July 2008 ($623,200) less the value received through sales of OZ Minerals shares after 1 July 2008 ($134,188). In respect of the proposed settlement, Mr Hauff made the following submissions: First, Mr Hauff contended that the sum received by group members ($11 million) is inadequate because it is only approximately 4% of the purported value of the claim of around $250 million. Mr Hauff argued that the case against OZ Minerals was a good one, and that the settlement outcome did not reflect this – nor was it appropriate compensation for the wrongs allegedly committed. He suggested that either the settlement was too low or the risks associated with this litigation were not properly assessed by Mr Mitic’s legal representatives. I do not accept that the claim value can be reliably placed at $250 million, a number which appears to have been attributed to Mr Mitic’s legal representatives in a newspaper article. Nor do I accept the contention that the settlement proceeds to be recovered by the group members is inadequate in respect of the prospects of success. Rather, based on the contents of the confidential joint opinion and Mr Mitic and OZ Minerals’ submissions, I am satisfied that the quantum of settlement proceeds is adequate having regard to Mr Mitic’s prospects of success. Secondly, Mr Hauff contended that the sum received by group members is also inadequate as it is only approximately 33% of the actual settlement amount (with the remainder being distributed to the legal representatives and litigation funder). In support of this contention, he argued that the case was not particularly complex and was thus undeserving of such high legal costs. I accept that significant legal costs were incurred in preparing this representative proceeding for trial. I reiterate what I have said above about the legal costs and the litigation funder’s fee in these proceedings. I am satisfied that the proportion of proceeds being received by the legal representatives and the litigation funder is appropriate. Thirdly, Mr Hauff contended that the settlement on the first day of trial meant that the misleading and deceptive conduct of OZ Minerals was concealed from the public, and that the settlement was reached without any of the rigour of cross-examination. I understand the frustration that a settlement might cause to a group member in Mr Hauff’s position, especially if the group member was seeking vindication of their position at trial. Nevertheless, the reaching of settlements is not at all contrary to public policy; in fact, settlements are generally encouraged as a process for achieving efficient, mutually acceptable resolutions between parties. Although Mr Hauff may wish for the opportunity to “clear the air” in relation to this matter, his desire for a final judgment does not render the terms of this settlement either unreasonable or unfair.