Pathway Investments Pty Ltd v National Australia Bank Ltd (No 3)
[2012] VSC 625
•19 December 2012
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
No. 6249 of 2010
| PATHWAY INVESTMENTS PTY LTD (ACN 072 420 065) | First Plaintiff |
| DOYSTOY PTY LTD (ACN 130 593 609) | Second Plaintiff |
| v | |
| NATIONAL AUSTRALIA BANK LIMITED (ACN 004 044 937) | Defendant |
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JUDGE: | Pagone J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 12 December 2012 | |
DATE OF JUDGMENT: | 19 December 2012 | |
CASE MAY BE CITED AS: | Pathway Investments Pty Ltd & Anor v National Australia Bank Limited (No 3) | |
MEDIUM NEUTRAL CITATION: | [2012] VSC 625 | |
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PRACTICE AND PROCEDURE – Application to approve settlement of a group proceeding – Whether proposed settlement is fair, reasonable and adequate in the interests of group members – Settlement recommended by practitioners for the parties – Extent to which confidentiality should extend - Supreme Court Act 1986 (Vic) Part 4A.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr MBJ Lee S.C. with Ms F Forsyth and Mr WAD Edwards | Maurice Blackburn Lawyers |
| For the Defendant | Ms W Harris S.C. with Mr RG Craig | Herbert Smith Freehills |
HIS HONOUR:
The parties to this proceeding seek the Court’s approval of its settlement. The action was commenced as a group proceeding pursuant to Part 4A of the Supreme Court Act 1986 (Vic). A settlement deed dated 9 November 2012 was entered into by the Plaintiffs, the Defendant, the Plaintiffs’ solicitors (“Maurice Blackburn”) and International Litigation Funding Partners Pte Ltd (the litigation funder who provided litigation funding to each of the Plaintiffs). The parties now seek court approval of their settlement and for ancillary orders to give effect to the settlement of the group proceeding. Section 33V(1) of the Supreme Court Act 1986 (Vic) makes any settlement of a group proceeding dependant upon approval by the Court:
A group proceeding may not be settled or discontinued without the approval of the Court.
Sub-section 33V(2) permits the Court, upon giving approval, to make such orders as it thinks fit with respect to the distribution of any money, including interest, paid under a settlement or paid into court. Section 33Z empowers the Court to give judgment in group proceedings.
Section 33V identifies no criteria by reference to which the Court should approve, or should decline to approve, a settlement.[1] An important consideration when deciding whether or not to approve a settlement is whether the settlement “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”.[2] Within that context principles have been articulated to assist in determining whether a settlement should be approved. In Harrison v Sandhurst Trustees Ltd[3] Gordon J summarised the relevant principles as follows:
[1]Darwalla Milling Co Pty Ltd v F Hoffman-La Roche Ltd (No 2) (2006) 236 ALR 322, 334 [35] (Jessup J speaking of the comparable provision in the Federal Court of Australia Act 1976 (Cth)).
[2]Australian Competition and Consumer Commission v Chats House Investments Pty Ltd (1996) 71 FCR 250, 258 (Branson J); Darwalla Milling Co Pty Ltd v F Hoffman-La Roche Ltd (No 2) (2006) 236 ALR 322, 332 [30] (Jessup J).
[3][2011] FCA 541.
1.The court must be satisfied that any settlement has been undertaken in the interests of group members as a whole, and not just in the interests of the applicant and the respondent: ACCC v Chats House Investments (1996) 71 FCR 250 at 258;
2.The task of the court is an onerous one especially where the application is not opposed: Lopez v Star World Enterprises [1999] FCA 104 at [16];
3.The practical judicial approach is to identify any features of a settlement that are obviously unreasonable or unfair. Where some group members object to a settlement and state their reasons, those reasons will provide a convenient focus by reference to which the court will decide matters of reasonableness and fairness: Darwalla Milling Co Pty Ltd v F Hoffman-La Roche (No 2) (2006) 236 ALR 322 at [39];
4.It is not the court's function to second-guess the applicants' advisers as to the answer to the question whether the applicants ought to have accepted the respondent's offer; the court's function is, relevantly, confined to the question whether the settlement was fair and reasonable. There will rarely, if ever, be a case in which there is a unique outcome which should be regarded as the only fair and reasonable one: Darwalla at [50].[4]
Amongst the matters that may helpfully be considered are those factors articulated by Goldberg J in Williams v FAI Home Security Pty Ltd (No 4)[5] bearing in mind that a “checklist approach will not always be appropriate”.[6]
[4]Ibid [13].
[5](2000) 180 ALR 459, 465-466 [19].
[6]Darwalla Milling Co Pty Ltd v F Hoffman-La Roche Ltd (No 2) (2006) 236 ALR 322, 333 [34] (Jessup J).
An important consideration for a court asked to approve a settlement will frequently be the candid opinion which the practitioners for the parties, and particularly for the party representing the group members, give in recommending the settlement. The importance to the court of the candid opinions of the solicitors and barristers acting for the parties has frequently been remarked upon. In P Dawson Nominees Pty Ltd v Brookfield Multiplex Ltd (No 4)[7] Finklestein J observed:
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. A settlement proposal is, in reality, a proposal put up by both sides. So the respondent's lawyers should also bear some responsibility for ensuring that the court has all the information that objectively describes the merits of the case and brings to the court's attention the obstacles to recovery and the benefits to be derived from the proposed settlement.[8]
In Lopez v Star World Enterprises Pty Ltd[9] his Honour observed the difficulty which this might create for the lawyers acting for the parties:
With regard to the application under s 33V, my principal task is to assess whether the compromise is a fair and reasonable compromise of the claims made on behalf of the group members. I am not so much concerned with the position of Mr Lopez who, after all, has solicitors and counsel to advise him as to how his interests will best be served in the litigation. The group members are not protected in this way. It is true that any group member may opt out of the proceeding to avoid his or her rights being affected in any way (whether adversely or beneficially) by the outcome of this litigation. But, I have no doubt that many members of this group (and no doubt members of other large groups who are represented in proceedings in the court) will remain as represented parties (that is not opt out of the proceeding) without a real appreciation of what that entails. In particular, it is likely that many group members will not understand that any judgment given in a representative proceeding will be binding upon them: see s 33ZB. Even if the group members are provided with a summary of the law relating to matters such as issue estoppel and res judicata, it is unlikely to be instructive to most of them.
Accordingly, the 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.[10]
The Court will plainly be influenced by the considerations which the practitioners for the parties have taken into account in themselves recommending that a settlement should be made upon particular terms. It is the practitioners who will have the best appreciation of the issues upon which the proceeding should be settled. The practitioners will have had the benefit of detailed discussions with potential witnesses. The practitioners will have given informed and detailed consideration to how the respective causes of action may be established and will be keenly aware of the strengths and weaknesses of the case at every point. They will have met with witnesses of fact and of expert opinion. They will have had to evaluate the strength of the evidence and the strength of any legal argument upon which success will depend. They are likely to be aware of the different circumstances of the members of the group and whether their interests differ in a way relevant to the Court’s consideration of an application to approve a settlement. The Court, in approving a settlement, is not in that position and needs to look to the practitioners for their candid evaluation of the matters which the Court needs to consider to evaluate the proposed settlement meaningfully. The need for candour in the expression of opinions by the practitioners is in part the “necessary consequence of their client instituting a representative action”[11] and flows from the need to inform the Court of everything that may reasonably and probatively bear upon the task which the parties seek the Court to discharge. The position of the respective lawyers for the parties to a group proceeding is, to some extent, akin to that of expert witnesses whose opinions may more helpfully than submissions inform a court’s decision for approval. The need for candour is also in part occasioned by the duty of the practitioners to reveal to the Court matters concerning their position in relation to the proposed settlement which might reflect upon the weight which may be given by the Court to the opinions which the lawyers express. Thus, in the appropriate case, it will be both relevant and necessary for the practitioners to reveal particular benefits or advantages flowing to them of a financial or other kind from the settlement which they may be seeking the Court’s approval on behalf of their client.
[7][2010] FCA 1029.
[8]Ibid [4]; see also Pharm-a-Care Laboratories Pty Ltd v Commonwealth of Australia (No 6) [2011] FCA 277, [25] (Flick J).
[9] (1999) ATPR ¶ 41-678.
[10]Ibid [42670].
[11]Ibid.
The Plaintiffs rely primarily upon two affidavits by Mr Jacob Varghese and one affidavit of Mr Joseph Mazzeo in their application for approval of the settlement. One of the affidavits by Mr Varghese contained some paragraphs and exhibits over which confidentiality orders were sought and made. One of the confidential exhibits contained a confidential joint opinion signed by the three counsel retained for the Plaintiffs. That opinion was obtained for the Plaintiffs on the question of whether the “proposed settlement is fair, reasonable and adequate in the interests of group members” and was obtained upon the understanding that the opinion would be provided to the Court on a confidential basis in support of the application. The authors of the joint opinion took into account the authorities concerning the task of the Court in considering whether or not to approve the settlement and described counsels’ task as follows:
Our task is not to speculate as to the content or the terms of alternative settlements, which may also be regarded as “fair” and “reasonable”, but to reach a view on the proposed settlement that has been struck. In doing so we have sought to lay candidly bear for the judge determining the application the strengths and difficulties in aspects of the case, including in the evidence needed to establish the claims and the propositions of law upon which the case depends.
The joint opinion of counsel, and some confidential aspects of Mr Varghese’s affidavit, provide explanation of the methodology by which counsel concluded that the proposed settlement reflected a reasonable and fair compromise of the claims made by the Plaintiffs and the group members considered in the aggregate
The need for confidentiality is often essential to the process of informing the Court about matters affecting its decision about whether or not to approve a settlement, but gives rise to potential difficulties and should be kept to a minimum. A candid evaluation of a client’s case may require revealing facts or opinions of potential forensic value to other parties to the proceeding as well as to strangers to the proceeding and to potential litigants to other proceedings. Receipt of evidence confidentially assists the Court in its statutory duty of considering whether or not to approve the settlement by encouraging the practitioners to disclose to the Court fully and candidly the facts and opinions which are relevant, useful and desirable to be before the Court for consideration. However, the receipt of confidential material is in contrast to the general principle of justice being done, and being manifestly seen to be done, openly and in public.[12] In Dye v Commonwealth Securities Ltd (No 2)[13] it was said:
The principle of open justice operates on the premise that all the material placed in evidence before a court and on which, in open court, it is asked to act is open to public scrutiny. That is because publicity itself for the purpose of both informing the public of how judicial power is exercised and ensuring that the courts are accountable for the use of that power entrusted to them. Administrative power can be, and frequently is, exercised in secret. Judicial power almost never is and, when it is, the departure from the ordinary mode of trial must be demonstrated to be necessary in the interests of justice.[14]
It is therefore important to ensure that any confidence extend only as far as is strictly necessary for the furtherance of the administration of justice. The need to balance the confidential expression of facts and views with the need for justice to be seen and to be done openly is of particular significance in the case of class actions where some members of the group, but not all, may have the ability to access the confidential information. The parties affected by a judicial decision, as well as the public on whose behalf a decision is made, are entitled to know the reasons for the decision. The Court is obliged to express reasons for its conclusions, and it is generally undesirable for those reasons not to be stated openly and clearly.[15] The general formulations of conclusions may not meaningfully convey reasons. There may be some cases where the Court may be able to express its reasons confidentially to the parties in such a way that all group members may have access to the confidential reasons but that will not always be the case and that may not always be a satisfactory or desirable process to adopt. What must be conveyed in the reasons must be something which sufficiently explains why or how the Court has reached its conclusion about whether or not to approve the settlement. In this case the joint opinion of counsel is appropriate to be kept confidential except to the extent that its content is expressly referred to in these reasons. Counsel has expressed candid opinions about the strengths and weaknesses of the Plaintiffs’ case which are confidential to the parties for whom they act. It might be possible to restrict the confidentiality order to certain parts of the opinion but what that would permit to be made public is little more than what is already on the public record. Much of the confidential affidavit of Mr Varghese is also appropriate to remain confidential. Counsel identified at the hearing the passages and exhibits of Mr Varghese’s affidavit where confidentiality was maintained and the confidentially orders shall be limited to those passages and exhibits.
[12]Scott v Scott [1913] AC 417; R v Chief Registrar of Friendly Societies; Ex parte New Cross Building Society [1984] 2 WLR 370, 377 (Sir John Donaldson MR).
[13][2010] FCAFC 118.
[14]Ibid [121] (Marshall, Rares and Flick JJ); see also David Syme & Co Ltd v General Motors-Holden’s Ltd [1984] 2 NSWLR 294, 310 (Samuels JA).
[15]David Syme & Co Ltd v General Motors-Holden’s Ltd [1984] 2 NSWLR 294.
The Court has also had the benefit of an outline of submissions filed by the Defendant in which counsel for the Defendant submitted (as distinct from having expressed an opinion) that the proposed settlement was both fair and reasonable. The submissions have been helpful but the Court might have been better assisted by a confidential opinion from the Defendant’s counsel which included a candid evaluation of the strengths and weaknesses of its case. What will best assist the Court in any given application for approval of a settlement will obviously depend upon the particular case and the particular facts and issues upon which a settlement will depend in that case. A “simple” group proceeding may ultimately depend upon the likelihood of key factual findings upon contested evidence. In such a case it might be sufficient for a court being asked to approve a settlement to receive an opinion doing little more than expressing some doubt about whether the findings will be made with a recommendation about an appropriate discount to the quantum of the claim. More complex cases may require much more detailed and specific evaluation of facts and issues with expressions of opinions, or submissions, about each of them. It may be desirable for a court to give focussed directions, after hearing submissions from the parties, about the content of the material to be filed by each of the parties in support of an application for approval of a settlement. It will not often be possible, or appropriate, for the practitioners to prepare a joint advice for all parties without breaching client privilege and confidentiality or risk a client’s interest in the event that approval to a settlement is not given. However, it will frequently be possible for separate opinions to be prepared on a common template with agreed questions. That is not said by way of criticism of the submissions filed on behalf of the Bank in this case which were helpful in respect of the matters they covered.
The group members in the proceeding are those who acquired shares in the National Australia Bank between 1 January 2008 and 24 July 2008. Their case against the Bank is that the value of their shares was inflated because the Bank had not sufficiently disclosed to the market the Bank’s exposure to collateralised debt obligations (CDOs) held by the Bank through conduits. The Plaintiffs contend that the Bank was aware, or should have been aware, but did not sufficiently disclose to the market, of its exposure to the conduit notes, and of the fact that it was likely that almost the entirety of the portfolio would be written off such that the Bank would be required to make further and substantial provision. These allegations arise in the context of a program conducted by the Bank concerning asset backed commercial paper collateralised by assets held by the conduits. Three conduits owned various percentages of ten specified notes in CDOs. The total par value of the conduit notes when purchased by the Bank is alleged to have been $1.2 billion. The Bank’s conduits held the conduit notes as security against the asset backed commercialised paper issued by the conduits or other entities involved in the program. The conduit notes were ineligible to be used as security for the issue of asset backed commercialised paper. The Bank provided facilities described as “liquidity facilities” to the conduits under the terms of which the Bank was obliged to provide loans to the conduits in the event that the latter required finance to fund the repayment of maturing asset backed commercialised paper. The conduit notes contained extensive exposure to US sub-prime assets and, during 2007-2008, they suffered numerous ratings downgrades. By 1 January 2008 the market for the asset backed commercialised paper had become illiquid, the conduits required finance and the conduit liquidity facilities were substantially drawn down.
The Court’s role in considering whether or not to approve a settlement does not require the Court to make findings about contested facts or to reach conclusions about contested principles of law. It is, however, necessary for the Court to consider the facts, in particular those in dispute, and the relevant principles upon which the disputes about liability and quantum is likely to depend. Both the confidential memorandum from the Plaintiffs’ counsel and the submissions filed for the Defendant deal with the strengths and weaknesses of the liability and damages cases upon which the proceeding ultimately would depend if it went to trial. Each also say something about the expert evidence relied upon by the parties.
The Plaintiffs’ case on liability is that:
(a) the Bank knew, or ought to have known, that the conduit notes had been affected by material impairments or losses;
(b) it became probable that the conduit loans would not be repaid to the Bank in full;
(c) a reasonable estimate could be made of the shortfall between the amount of the conduit loans and the amount likely to be repaid; and
(d) the amount was materially in excess of the amount first provided for by the Bank.
The Plaintiffs then plead that this information was material and required to be disclosed pursuant to the relevant accounting standards but that it had not been disclosed in contravention of s 674(2)(c) of the Corporations Act 2001 (Cth). The Plaintiffs also plead that the Bank made representations which were misleading and deceptive, or representations which were likely to mislead or deceive, about the US sub-prime mortgage crisis, ratings, provisions, CDO performance and the 2008 half year performance.
The Bank takes issue with each of these claims and in its agreement to settle these proceedings makes no admissions of liability. Its pleaded case, supported by its counsel’s submissions in the approval application, puts in issue the Plaintiffs’ case on liability by contending that:
(a) there had been disclosed the material which was alleged not to have been disclosed and that it was otherwise not material to be disclosed;
(b) there were cogent reasons for assessing the materiality and content of the required disclosures in a manner consistent with the accounting rules that determined the Bank’s financial position; and
(c) the provision made by the Bank was reasonable and appropriate having regard to the accounting rules.
A principal area of dispute between the parties is whether each group member must prove reliance in order to establish a causal connection between the Bank’s alleged contraventions and the loss they maintained to have suffered. The Plaintiffs’ case relies to a significant extent upon the contested proposition that causation can be made out if it can be demonstrated that the alleged contraventions caused the market, as a whole, to inflate the price of the Bank’s shares. The Plaintiffs’ market-based causation contention is that group members suffered losses by acquiring shares at a higher price by reason of the market price of the NAB shares being artificially high as a result of the alleged misrepresentations and non-disclosures.
The confidential opinion of the Plaintiffs’ counsel, together with the submissions filed on behalf of the Bank, warrant the conclusion that the contested contentions upon which liability and causation depend are appropriate to be settled as between the parties. That is to say that neither case is so certain as to justify disregarding the possibility of success or failure. It would not be appropriate to disclose the matters in the confidential opinion of the Plaintiffs’ counsel which set out the details of the strengths and weaknesses of the Plaintiffs’ case on liability and causation beyond observing that counsel, as officers of the Court, have expressed opinions, and have given reasons and explanations, from which the Court itself is able to conclude that a settlement of the proceeding avoids the possibility of adverse findings on liability and causation and that settlement provides a significant advantage to group members which justifies a substantial discount against the total amount claimed. It also removes the possibility of substantial detrimental consequences to group members from the continuation of the proceeding including each separately having to prove individual reliance which, amongst other things, may require group members to face the possibility of discovery and cross-examination.
The quantum of the amount for which the proceeding is to be settled raises separate and different issues. The Defendant’s submissions say little by way of explanation in support of the quantum of the settlement amount. It is often the case that different, and inconsistent, reasons actuate the parties to reach an agreed amount, and in many cases the amount ultimately agreed to may depend little on science and reasoning. The Deed of Settlement provides for the payment of $115 million in respect of the proceedings inclusive of interest and costs. That amount has been paid into a settlement reserve fund to be paid to Maurice Blackburn after an approval order (if the application for approval is successful). Clause 11(c) of the Deed of Settlement provided that the terms of the settlement were to be kept confidential but that upon the filing of the application for court approval all public statements relating to the settlement sum could be expressed as one of the following:
(1) “AUD $85 million in respect of the settlement of the proceedings plus an allowance in respect of interest and costs”;
(2) “AUD $85 million in respect of the settlement of the proceedings plus an allowance of AUD $30 million in respect of interest and costs”; or
(3) “AUD $115 million in settlement of the proceedings, including interest and costs”.
The submissions for the Bank, and the confidential opinion of counsel, do not explain or deal with the details of these passages despite the precision of the amounts in them.
The confidential aspects of Mr Varghese’s affidavit, and the confidential opinion of the Plaintiffs’ counsel, do provide some principled basis upon which the amount may be accepted as fair, reasonable and appropriate. It reveals a consideration of different methodologies by which to calculate losses in circumstances in which a transaction to purchase property has been entered into under circumstances broadly comparable to the case against the Bank. In this case there has been a considerable amount of complex expert evidence obtained and filed in an endeavour to determine the quantum of damage. That expert opinion reveals substantial, and prima facie arguable, differences in detail, conclusions and amounts as between the parties. The Plaintiffs retained Dr Mark Zmijewski to conduct an “event study” to determine the measure of inflation in the security price caused by the Bank’s alleged actionable conduct. His report includes calculations of the inflation in the Bank’s shares on each trading day during the relevant period. The Bank obtained an expert report from Mr John Holzwarth whose evidence, if accepted, would have the effect of eliminating or materially reducing the claim of the Plaintiffs. It is not appropriate to decide between this expert testimony in an approval application. The evidence has not been tested and both parties accept that the contest between the experts is a live issue for resolution by a court if the matter went to trial. The expert opinions tendered are prima facie arguable and relevant to quantification and none is shown for the purpose of the approval application to be clearly wrong. It is possible, therefore, by reference to this material to conclude that the amount agreed to between the parties fairly and reasonably reflects the quantum of the claim discounted by appropriate risks of litigation and benefits of resolution of the proceeding without the need for a lengthy trial.
The amount of the settlement sum available to the group members is about $103 million after payment of the Plaintiffs’ costs of about $11.8 million. Those costs were the subject of the affidavit by Mr Mazzeo upon which the Plaintiffs relied. Mr Mazzeo is a barrister and solicitor of this Court admitted to practice in 1986. He conducts a practice exclusively in the area of legal costs consultancy and has done so since 1992. He has prepared or supervised the preparation of in excess of 7000 bills of costs and assessments of costs in proceedings in the High Court, the Federal Court, this Court and the County Court. He is regularly retained by plaintiffs and defendants to advise and appear in relation to legal costs disputes. In particular, he has previously given opinions in connection with applications for approval of settlements in class action proceedings similar to this. Mr Mazzeo gave evidence of having carefully reviewed and considered the files and papers of Maurice Blackburn in relation to this proceeding and has listed the categories of the extensive materials to which he had regard. His assessment of the reasonable costs and disbursements chargeable in relation to the matter as at 31 October 2012 in accordance with the fee and retainer agreements was of $11,333,554.75. He also estimated an additional amount of just under $480,000 being incurred between 31 October 2012 and the approval application heard on 12 December 2012. Each of the amounts making up the total was explained in his affidavit and I have no reason not to accept his estimates.
The balance of the settlement sum (approximately $103 million) is to be available for distribution to the group pursuant to a proposed settlement scheme which, except for a confidential schedule, has been available for inspection on the Maurice Blackburn website since 30 November 2012. The confidential schedule to the proposed settlement scheme provides a calculation of loss per holding by reference to a formula taking into account acquisitions and disposal of shares in the Bank on a daily basis. The loss assessment formula in the confidential schedule is confidential as between group members and their legal representatives and was provided to some 107 group members who requested to see it and signed an undertaking to keep its contents confidential.
The proposed settlement schedule provides for the Plaintiffs to be paid reasonable claims for compensation for the time and expenses incurred in the interest of prosecuting the proceedings on behalf of the group as a whole. Clause 11.1 of the proposed settlement scheme provides for the payment to the Plaintiffs for the “Plaintiffs’ costs and disbursements” and to each Plaintiff for each “Plaintiff’s Reimbursement Payment”. Each of these is separately defined in the proposed settlement scheme. The former, which I considered above, is defined to mean the Plaintiffs’ reasonable legal costs and disbursements on a solicitor and a client basis incurred on their own behalf and on behalf of all group members in the proceeding. The latter is defined to mean the Plaintiffs’ reasonable claims for compensation for the time or expenses incurred in the interests of prosecuting the proceeding on behalf of the group members as a whole. Mr Varghese gave evidence of records having been kept by each of the Plaintiffs of the time that their directors spent in the capacity as representatives of the group members. Mr Varghese has reviewed the records and confirmed their appropriateness to claim that Mr George Vlachos and Mr Michael Doyland spent respectively 92.6 hours and 90.2 hours directly in the conduct of this case for the group members. Mr Varghese also expressed the opinion, which I have no reason to reject, that $170 per hour would represent a reasonable rate at which to remunerate the Plaintiffs for this time having regard to the skill and care applied to the matter by the two individuals.
The proposed settlement scheme otherwise sets up a process for assessment of claims by Maurice Blackburn as administrator of the scheme, with detailed provisions for reviews and court supervision. The proposed settlement scheme is attached to these reasons except for the confidential formula which remains confidential as between the group members and who may have access to it.
The amounts payable to the group members are subject to the payment of a “Funding Commission” to the litigation funder. Clause 11.3 contemplates the deduction of the Funding Commission from the allocation to each participant under the proposed settlement scheme. The Funding Commission is defined in cl 2.1 to mean the amount payable to the litigation funder by each original group member and by each registered group member. Each original group member is to pay the funding commission pursuant to the terms of the funding agreement with the litigation funder. The funding commission payable by the registered group members is that pursuant to the orders which were made on 24 August 2012.
The original group members had each entered into agreements with the litigation funder agreeing to pay to the litigation funder a certain percentage of any distribution by reference to the number of the bank shares which they held: 40 per cent if less than 1 million shares; 35 per cent if between 1 million shares and 10 million shares; and 30 per cent if more than 10 million shares. One of the orders made on 24 August 2012 provided for payments of comparable amounts by the registered group members (as defined). Group members potentially affected by this order have been on notice of its terms and none has objected. It is not for the Court to express a view about the commercial desirability of the quantum paid to the litigation funder under these arrangements, and there is no reason shown to withhold approval of the settlement because of the proportion of the settlement amount to be received by the litigation funder rather than by the group members themselves. In other cases it might be necessary for separate justification of the amounts paid to a litigation funder before the Court approves a settlement but that does not appear necessary in this instance. The amounts payable from the distribution to the original group members appear to have been agreed to between sophisticated parties with substantial means and neither they, nor the registered group members, have raised objection.
Accordingly I approve the settlement of this proceeding in accordance with the Deed of Settlement and proposed settlement scheme which I will attach to these reasons (except for the confidential schedule to the settlement scheme which is exhibit JINV-2 to the confidential affidavit of Mr Varghese affirmed on 6 December 2012) and will make the following orders pursuant to ss 33V and 33Z of the Supreme Court Act 1986 (Vic):
1. Pursuant to ss 33V and 33ZF of the Supreme Court Act1986 (Vic) (the Act), the settlement of the proceeding be approved on the terms set out in:
(a)the Settlement Deed executed by the parties, Maurice Blackburn and International Litigations Funding Partners Pte Ltd dated 9 November 2012, being exhibit JINV-1 to the open affidavit of Jacob Isaac Noozhumurry Varghese affirmed on 6 December 2012;
(b) the Settlement Scheme being exhibit JINV-4 to the open affidavit of Jacob Isaac Noozhumurry Varghese sworn on 6 December 2012,
(together, the Settlement Documents).
2. Pursuant to sections 33ZB and 33ZF of the Act, the persons affected and bound by the settlement of the proceeding be the Plaintiffs, the Defendant and the group members (as defined in the Amended Statement of Claim).
3. The Plaintiffs be authorised nunc pro tunc on behalf of the group members to enter into and give effect to the Settlement Documents and the transactions thereby contemplated for and on behalf of those group members.
4.Pursuant to s 33ZF of the Supreme Court Act1986 (Vic), the amount of $15,742.00 be approved as the amount of First Plaintiff’s Reimbursement Claim and the amount of $15,334.00 be approved as the Second Plaintiff’s Reimbursement Claim for the purpose of the Settlement Scheme.
5. The bank guarantee number G00411764 dated 4 April 2012 in the sum of AUD$6,212,962.00 held by the Court and provided by the Plaintiffs as security for the Defendant’s costs be surrendered to the Commonwealth Bank of Australia after payment of the Settlement Sum (as defined in the Settlement Deed) to Maurice Blackburn.
6.Paragraphs 15(b), 16 and 17 of the affidavit of Jacob Isaac Noozhumurry Varghese dated 6 December 2012 and the exhibits thereto are confidential and not be disclosed without further order and the affidavit and the exhibits placed in a sealed envelope marked “Not to be opened except by leave of the Court or a Judge”.
7. Pursuant to s 33ZF of the Supreme Court Act1986 (Vic), the following amounts are recoverable by the Plaintiffs from the Settlement Amount:
(a) $150,000 being the amount paid by the Plaintiffs to the Defendant in satisfaction of the Defendant’s entitlement to 80% of its costs of and incidental to its application for security for its costs up to trial of the proceeding; and
(b) $20,115.33 being APRA’s costs of and in relation to its resistance of the subpoena issued by the Plaintiffs on 7 August 2012 to which they are entitled pursuant to the orders of 15 October 2012.
8.All outstanding costs orders made to date in the proceedings be vacated.
9.There be no order as to the costs of the proceeding.
10. The proceeding be dismissed on the basis that the dismissal is a defence and absolute bar to any claim or proceeding by any Plaintiff or group member in respect of matters arising out of or related to the proceedings.
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PROPOSED SETTLEMENT SCHEME – 30 November 2012
Pathway Investments Pty Ltd and Doystoy Pty Ltd v National Australia Bank Limited
Supreme Court of Victoria proceeding S CI 2010 6249
(NAB Class Action)
SETTLEMENT SCHEME
1. Background:
A.This Settlement Scheme establishes a procedure for verifying and distributing to Group Members the sum to be paid by National Australia Bank Limited pursuant to a settlement of the NAB Class Action approved by the Court.
B.This Settlement Scheme does not become operative until the Court has granted Settlement Approval.
C. This Settlement Scheme provides for the following major steps:
(i)Maurice Blackburn will be appointed as Administrator of this Scheme (clause 4);
(ii) Late Registrants must deliver to Maurice Blackburn a statutory declaration explaining the reason for their late registration. A process is established for determination of those registrations (clause 5);
(iii)Registrants must return a properly executed Participant Declaration (clause 6);
(iv)Maurice Blackburn will notify each Registrant that returns a Participant Declaration (thereafter referred to as “Participants”) of their estimated Distribution and give them an opportunity to notify any objections to it (clause 7) and for those objections to be referred to Independent Counsel (clause 8);
(v)Interest on the Settlement Distribution Fund shall be applied to the extent necessary to payment of Administration Costs (clause 9);
(vi)ILFP will notify Maurice Blackburn of the amount of the payment which each Participant is required to make to it pursuant to either the funding agreement between ILFP and that Participant or the Orders of the Court dated 24 August 2012 (clause 10.2);
(vii) Maurice Blackburn will deduct from the Settlement Distribution Fund the Plaintiff’s Costs and Disbursements, the Plaintiff’s Reimbursement Payments, any Administration costs outstanding and then from the balance shall distribute the Settlement Distribution Fund between Participants, after paying to ILFP the amounts payable out of each Participant’s allocation (clause 11).
2. Definitions
2.1In this Settlement Scheme, the following terms have the meanings defined below (clause references are references to the clauses of this document unless otherwise specified):
Act means the Supreme Court of Victoria Act 1986 (Cth).
Administrator means Maurice Blackburn Pty Ltd acting as the Court appointed administrator of the Settlement Scheme.
Administration Costs means the costs and disbursements incurred by Maurice Blackburn and approved by the Court at the current rates in Schedule A of the retainer between the Plaintiffs and Maurice Blackburn in connection with the applications under clause 7 of the Class Action Settlement Deed, the identification of Registrants, obtaining Settlement Approval or administering the Settlement Scheme, including without limitation, counsel’s and expert’s fees.
Amended Notice of Estimated Distribution means a notice issued pursuant to clause 7.4 of the Settlement Scheme.
Amended Statement of Claim means the amended statement of claim filed in the proceedings on 28 August 2012.
Assessment means the value of a Participant’s loss calculated in accordance with clause 7 of the Settlement Scheme, or as assessed by Independent Counsel in accordance with clause 8 of this Settlement Scheme.
ASX means the Australian Securities Exchange operated by ASX Limited.
Claims means any and all claims (present and future and including any claim for costs) of the Plaintiffs or any Group Member arising out of, or in connection with the Proceeding or the subject matter of the Proceeding.
Claim Data means the following information for each Registrant:
(a) the Registrant’s name;
(b) the Registrant’s address; and
(c) for each of the Registrant’s holdings of NAB Shares:(i)the balance of NAB Shares owned at 12.01 am on 1 January 2008; and
(ii)the transaction date and the number of securities acquired or disposed for all acquisitions and disposals of NAB Shares in the Relevant Period.
Claim Database means a database constructed by or on behalf of Maurice Blackburn Pty Ltd to contain the Claim Data for each Registrant.
Court means the Supreme Court of Victoria.
Distribution means an amount of money distributed to a Participant from the Settlement Distribution Fund.
Final Assessment means:
(a)where a Participant has not made a request for a Review pursuant to clause 8, the Assessment; or
(b)an Assessment contained in a Review Determination under clause 8.
Funding Agreement means the current funding agreement between ILFP and each individual Original Group Member relating to the Proceeding.
Funding Commission means the amount payable to ILFP by:
(a)each Original Group Member pursuant to the terms of each Original Group Member’s Funding Agreement with ILFP, as notified by ILFP to Maurice Blackburn Pty Ltd under clause 10.2 of this Settlement Scheme; and
(b)each Registered Group Member pursuant to paragraph 22 of the Orders of the Court dated 24 August 2012.
Group Member means a group member within the meaning of paragraph 1 of the Amended Statement of Claim.
ILFP means International Litigation Funding Partners Pte Ltd.
Independent Counsel means either Tim McEvoy of the Victorian Bar, Richard J Harris of the Victorian Bar, or nominee of Maurice Blackburn Pty Ltd who shall be an Australian barrister admitted to practice for 10 years with no previous involvement in the Proceeding.
Interest means interest accruing on the Nominated Account and/or the Settlement Distribution Fund.
Late Registrant means a person who delivered a Registration Form to Maurice Blackburn after 4.00 pm, Australian Eastern Daylight Savings Time on 12 October 2012.
Loss Assessment Formula means the formula by which losses are calculated as contained in the Confidential Schedule of this Settlement Scheme.
Maurice Blackburn Pty Ltd means Maurice Blackburn Pty Ltd (ABN 21 105 657 949).
NAB means National Australia Bank Limited (ACN 004 044 937).
NAB Shares means ordinary full-paid shares of NAB.
Notice of Claim Data means the notice required by clause 6.2 of this Settlement Scheme to be sent by the Administrator to each Registrant.
Notice of Estimated Distribution means the notice required by clause 7.3 of this Settlement Scheme to be sent by the Administrator to each Participant.
Notice to Late Registrants means a notice to Late Registrants informing them of the requirements of clause 5.2.
Original Group Member (or OGM) means each Group Member who or which had, as at the commencement of the Proceeding, entered a litigation funding agreement in respect of the Proceedings with ILFP.
Participant means a Registrant who has made and delivered to the Administrator a valid Participant Declaration within 21 days of a Notice of Claim Data being issued to that Registrant.Participant Declaration means a Statutory Declaration stating that the person making the declaration:
(a) is, or is authorised to represent, a Registrant;
(b) either:(i)confirms the Claim Data in the Notice of Claim Data pertaining to the Registrant; or
(ii)provides amended or corrected Claim Data pertaining to the Registrant; and
(c)confirms that, to the person’s knowledge, no other person has sought or will seek to receive a Distribution on the basis of the same acquisitions of NAB Shares as those listed in the Registrant’s Claim Data.
Plaintiffs means Pathway Investments Pty Ltd (ACN 072 420 065) and Doystoy Pty Ltd (ACN 130 593 609).
Plaintiffs’ Costs and Disbursements means the Plaintiffs’ reasonable legal costs and disbursements on a solicitor and own client basis (calculated in accordance with each of the Plaintiffs’ retainer of Maurice Blackburn) incurred on their own behalf and on behalf of all Group Members in the Proceeding.
Plaintiffs’ Reimbursement Claims means the Plaintiffs’ reasonable claims, subject to approval of the Court, for compensation for the time or expenses incurred in the interests of prosecuting the Proceeding on behalf of Group Members as a whole.
Preliminary Payment means the payments made in accordance with clause 11.4.
Proceeding means Pathway Investments Pty Ltd & Doystoy Pty Ltd v National Australia Bank Limited, Supreme Court of Victoria proceeding number S CI 2010 6249.
Registrant means:
(a) an Original Group Member; or
(b) a Registered Group Member.
Registered Group Member (or RGM) means a group member who or which returned a Registration Form to Maurice Blackburn Pty Ltd by 4.00 pm Australian Eastern Daylight Savings Time, on 12 October 2012 pursuant to the Orders of the Court dated 24 August 2012.
Registration Form means a Registration Form within the meaning of paragraph 3 of the orders of the Court dated 24 August 2012.
Related Parties means the related bodies corporate of a party as define in the Corporations Act 2001 (Cth) and the present and former directors, officers, partners, servants, contractors, insurers and agents of a party.
Relevant Period means the period from 1 January 2008 to 24 July 2008 inclusive.
Residual Settlement Amount means the amount of the Settlement Amount after deduction of the Plaintiffs’ Costs and Disbursements, the Plaintiffs’ Reimbursement Costs and Administration Costs.
Review means the procedure provided in the Settlement Scheme for Independent Counsel to finally determine any objection to a Notice of Estimated Distribution.
Review Determination means written determination of Independent Counsel providing notice to the Participant and the Administrator of the calculation and the result of the Review.
Settlement Amount means the amount of $115,000,000.00.
Settlement Approval means the approval of the terms of settlement of the Proceeding and the Settlement Scheme by the Court pursuant to section 33V of the Act.
Settlement Approval Date means the date on which orders are made in the Proceeding granting Settlement Approval.
Settlement Deed means the deed of settlement executed on 9 November 2012 between the Plaintiffs, Maurice Blackburn Pty Ltd, International Litigation Funding Pte Ltd and NAB.
Settlement Distribution Fund has the meaning defined in clause 1.2 of the Settlement Deed.
Settlement Scheme means the terms of this Settlement Scheme as approved by the Court, including any annexures.
Settlement Reserve Fund has the meaning defined in clause 1.2 of the Settlement Deed.
Statutory Declaration means either:
(a)a statutory declaration made pursuant to the Statutory Declarations Act 1959 (Cth); or
(b) a declaration made by a person outside of Australia:
i.which contains an acknowledgement that it is true and correct and is made in the belief that a person making a false declaration is liable for a penalty; and
ii.for which, under the law of the place it is made, the person would be liable for a penalty if the person knowingly made a false declaration.
3. Interpretation
3.1Headings are for convenience only and do not affect interpretation. The following rules apply unless the context requires otherwise:
(i) the singular includes the plural, and the converse also applies;
(ii) a gender includes all genders;
(iii)if a word or phrase is defined, its other grammatical forms have a corresponding meaning;
(iv) a reference to a person includes a corporation, trust, partnership,
unincorporated body or other entity, whether or not it comprises a separate legal entity;
(v) a reference to dollars and $ is to Australian currency;
(vi)a reference to any thing done by any person includes a reference to the thing as done by a director, officer, servant, agent, personal representative or legal representative if permitted to be so done by law or by any provision of the Settlement Deed or this Settlement Scheme.
4. Scheme Administrator
4.1The Settlement Distribution Fund shall be administered and applied by Maurice Blackburn as Administrator.
4.2In acting as Administrator (including any incidental functions) Maurice Blackburn will be lawyers working as the Administrator with an obligation to do so properly on behalf of the Group Members as a whole, and shall not act as the lawyer for any individual Group Member (or sub-group of Group Members) in relation to his, her or its claim.
4.3Following Settlement Approval and payment of the Settlement Sum into the Settlement Distribution Fund, the Administrator shall hold the monies standing from time to time in the Settlement Distribution Fund on trust for Participants subject to and in accordance with the terms of this Settlement Scheme.
4.4In consideration of the provisions made by the Settlement Deed and this Settlement Scheme regarding the payment of Administration Costs, Maurice Blackburn undertakes not to seek to recover from the Settlement Sum, the Settlement Distribution Fund or from any individual Group Member any costs incurred in connection with the Claims of the individual Group Member, except as otherwise provided in this Settlement Scheme. All such costs whether incurred prior to Settlement Approval or after Settlement Approval shall form part of the Administration Costs.
4.5Notwithstanding anything elsewhere contained in this Settlement Scheme, the Administrator may at any time correct any error, slip or omission occurring in the course of its administration of the Settlement Scheme.
5. Late Registrants
5.1As a soon as practicable after the Settlement Approval Date, the Administrator shall issue a Notice to Late Registrants to each Late Registrant.
5.2Each Late Registrant wishing to receive a Distribution must, within 14 days of the Notice to Late Registrants, deliver to the Administrator a Statutory Declaration stating the reasons that the Late Registrant did not submit a Registration Form by 4.00 pm, 12 October 2012.
5.3Upon receipt of a Statutory Declaration from a Late Registrant referred to in clause 5.2, the Administrator must review the Statutory Declaration and if the Administrator decides that it would not be just and reasonable to allow the Late Registrant to receive a Distribution, must notify the Late Registrant of that decision, the reasons for that decision and of the process for determination of the question by the Court provided by clause 5.4.
5.4If, within 14 days of being notified of the decision referred to in clause 5.3, a Late Registrant notifies the Administrator that it wishes to have the issue of its eligibility to receive a Distribution determined by the Court, the Administrator must:
(a)apply to the Court for orders that the Late Registrant not receive a Distribution;
(b) file an affidavit exhibiting the Statutory Declaration received from that Late Registrant (in addition to any other material the Administrator considers necessary to include in such affidavit);
(c)provide a copy to the Late Registrant of any material it files in support of the application; and
(d)if the Court determines to conduct a hearing on the application, within one business day of being informed of date, time and place of the hearing, notify the Late Registrant of that date, time and place.
5.5For the avoidance of doubt, for the purposes of the process provided by clause 5.4, the Administrator may apply for orders and file material relating to more than one Late Registrant at a time.
5.6Any of the Administrator’s costs in relation to the process provided by clause 5.4, including preparation for and attendance at any hearing or appeal, shall be Administration Costs.
5.7 If, in relation to a Late Registrant:
(a)the Administrator decides, in its absolute discretion, upon review of a Statutory Declaration referred to in clause 5.2 that it is just and reasonable to allow the Late Registrant to receive a Distribution; or
(b)the Court declines to make orders of the kind referred to in clause 5.4(a) that Late Registrant shall be taken thereafter to be a Registered Group Member for all the purposes of this Settlement Scheme.
5.8 If, in relation to a Late Registrant:
(a)the Late Registrant does not provide a Statutory Declaration within 14 days of the Notice to Late Registrants;
(b)the Late Registrant does not, within 14 days of being notified of the decision referred to in clause 5.3, notify the Administrator that it wishes to have the issue of its eligibility to receive a Distribution determined by the Court; or
(c)the Court orders that the Late Registrant not receive a Distribution the Late Registrant shall not be entitled to receive a Distribution and shall not be required to receive any further notices under this Settlement Scheme.
6. Confirmation of Claim Data
6.1As soon as practicable after the Settlement Approval Date, the Administrator shall create and subsequently maintain the Claim Database. At all times, the Administrator must use reasonable endeavours to ensure the accuracy of the Claim Database including, to the extent necessary, requesting further information or documents from a Registrant or requesting further information or documents from NAB.
6.2As soon as practicable after the completion of the process in relation to Late Registrants described in clauses 5.7 and 5.8, the Administrator will issue to each Registrant a Notice of Claim Data which will list all the Claim Data pertaining to that Registrant that is contained in the Claim Database.
6.3Each Registrant wishing to receive a distribution of the Settlement Distribution Fund must provide to the Administrator within 21 days of the Notice of Claim Data an executed Participant Declaration which either:
(a)declares that the information in the Notice of Claim Data is true and correct; or
(b)provides amended or corrected Claim Data and declares that such amended or corrected Claim Data is true and correct.
6.4Any Registrant that does not make and deliver to the Administrator a valid Participant Declaration within 21 days of the Notice of Claim Data shall not be entitled to receive a Distribution and shall not be required to receive any further notices under this Settlement Scheme.
6.5Subject to clause 6.6, for the purpose of the administration of this Settlement Scheme, Claim Data confirmed by a Participant Declaration may be relied upon as accurate by the Administrator, in its absolute discretion, when administering the Settlement Scheme.
6.6Notwithstanding clause 6.4 if in the Administrator’s opinion a Participant Declaration:
(a)contains insufficient information to substantiate the claim made by a Registrant or is not a valid Participant Declaration, the Administrator may in its absolute discretion by written notice require the Registrant to provide and verify by a Statutory Declaration such further information as the Administrator may require or to make and deliver a new and valid Participant Declaration. If the Registrant does not provide the further information or new Participant Declaration within 14 days of such a request being made, the Administrator may determine, in its absolute discretion, that the person is not entitled to receive a Distribution and, save for notice of that determination, shall not be required to receive any further notices under this Settlement Scheme; or
(b)contains sufficient information notwithstanding that some information may not be included, the Administrator may in its absolute discretion accept the Claim Data as complete.
7. Assessment of Claims and provision of Notice of Estimated Distribution
7.1As soon as practicable following the confirmation of the Claim Data as provided for in clause 6, the Administrator shall calculate the Assessment of each Participant’s Claim using the Claim Data in the Claim Database.
7.2The Assessment for each Participant shall be calculated by applying the Loss Assessment Formula to that Participant’s Claim Data.
7.3As soon as practicable after calculating the Assessment for each Participant, the Administrator will send a Notice of Estimated Distribution to each Participant notifying the person of:
(a) the Claim Data relating the Participant;
(b)the Administrator’s reasonable estimate of the Participant’s Distribution;
(c)the applicable rate of Funding Commission payable by the Participant;
(d) the terms of clauses 7.4 and 7.5 below;
(e)the availability and terms of the Review procedure in clause 8; and
(f)any other information that the Administrator considers would assist Participants in determining whether to seek a Review.
7.4If, within 21 days of the Notice of Estimated Distribution, a Participant notifies the Administrator of any error, slip or omission in the Notice of Estimated Distribution, the Administrator may, in its absolute discretion, correct the Claim Database and issue to that Participant, and any other Participant affected by the correction if that other Participant’s estimated Distribution is reduced by more than 5 per cent, an Amended Notice of Estimated Distribution.
7.5The accuracy of a Notice of Estimated Distribution or Amended Notice of Estimated Distribution shall be deemed to be accepted by a Participant unless the Participant:
(a)within 21 days of the date of a Notice of Estimated Distribution, or
(b)within 14 days of the date of an Amended Notice of Estimated Distribution, delivers to the Administrator a written request for a Review together with copies of all documents on which the Participant relies for the purposes of the Review, including any statement of reasons for seeking the Review.
8. Review
8.1If a Participant requests a Review of a Notice of Estimated Distribution or an Amended Notice of Estimated Distribution, the Administrator shall refer the request to Independent Counsel or the Court as the Administrator considers appropriate.
8.2If a request for a Review is referred to the Independent Counsel, the Independent Counsel may by written notice direct the Participant to submit such further documentation in support of the Review as the Independent Counsel may consider appropriate. Such documentation must be submitted within 14 days after the date of any such written notice, failing which the request for Review shall be deemed never to have been made and the accuracy of the Notice of Estimated Distribution or the Amended Notice of Estimated Distribution shall be deemed to be accepted by the Participant.
8.3Independent Counsel shall, within 14 days after either the receipt by the Administrator of the request for the Review or the last date for receipt of documentation required pursuant to any direction given by Independent Counsel under clause 8.2 above, whichever is later:
(a)calculate the Assessment of the Participant according to the methodology prescribed in clause 7.2 above; and
(b)in writing notify the Participant and the Administrator of the calculation and the result of the Review.
8.4A Review Determination is final and binding, save that, prior to the expiry of 7 days after notice is given of the Review Determination, the Participant has liberty to apply to the Court on a question of law arising from the Review Determination.
8.5The Participant requesting a Review shall pay the costs of the Review calculated at $800 exclusive of GST for the first 2 hours’ attendance by Independent Counsel (or any part thereof) and $450 per hour exclusive of GST for each subsequent hour.
8.6Independent Counsel may require a Participant to provide to the Administrator security for the costs of a Review, in such amount as Independent Counsel reasonably estimates will be the cost of the review. If security is not provided as required within 10 days of the date on which written notice requiring provision of security was sent to the Participant requesting the Review, Independent Counsel shall issue a Review Determination confirming the Participant’s Notice of Estimated
Distribution or Amended Notice of Expected Distribution, noting that the security has not been provided as required.
8.7If any costs of a Review have not been paid by the Participant before any distribution to that Participant, the Administrator shall deduct those costs from any sum which otherwise would be distributed to the Participant in priority to all other entitlements. That Participant shall remain liable for any costs not recovered by a deduction pursuant to this clause and the Administrator, in administering the Settlement Scheme, may apply to the Court for an order requiring the Participant to pay those costs.
9. Application Of Interest
9.1Interest earned on the Settlement Distribution Fund will be applied to Payment of Administration Costs if and to the extent that such costs:
(a) are not paid by NAB pursuant to the Settlement Deed; and
(b) are approved by the Court.9.2Subject to clause 9.1, the Plaintiffs’ Costs, the Administration Costs and the Plaintiffs’ Reimbursement Payment shall be paid from the Settlement Distribution Fund before the final distribution of the Settlement Distribution Fund.
10. Notification of ILFP Payments
10.1Not later than 14 days prior to any Distribution, the Administrator shall notify ILFP of:
(a) the intended date of the Distribution;
(b)the allocation to be made in respect of each Participant in accordance with clause 11.3 below; and
(c)the total number of NAB Shares acquired by each Participant according to the Claim Database.
10.2Not later than 7 days prior to the intended date of the distribution, ILFP will notify the Administrator of the Funding Commission payable to ILFP by each Participant pursuant to:
(a)for Original Group Members, the Original Group Member’s funding agreement with ILFP; and
(b)for Registered Group Members, paragraph 22 of orders of the Court dated 24 August 2012.
10.3The Administrator shall be bound for all purposes at law and in equity to act in accordance with the notification given by ILFP under this clause 10.
10.4The Administrator is immune from any demand, claim or suit, at law or in equity, by Participants in respect of any loss or damage arising as a result of any payment made by the Administrator to ILFP in accordance with a notification or direction from ILFP made pursuant to clause 10.
11. Distribution
11.1Subject to clause 11.4, prior to any distribution from the Settlement Distribution Fund to Participants the following payments shall be made from the Settlement Distribution Fund:
(a)an amount to the Plaintiffs for the Plaintiffs’ Costs and Disbursements;
(b)an amount to each Plaintiff for each Plaintiff’s Reimbursement Payment; and
(c)an amount to the Administrator for Administration Costs incurred by the Administrator subject to clause 9.
11.2Once the payments referred to in clause 11.1 are made, the amount in the Settlement Distribution Fund, referred to as the Residual Settlement Amount, shall then be distributed in accordance with this clause 11.
11.3The Residual Settlement Amount shall be distributed to Participants as follows:
(a)the Residual Settlement Amount shall be allocated between Participants in the proportion which the Final Assessment of each Participant bears to the aggregate of the Final Assessments for all Participants;
(b)the relevant Funding Commission shall be deducted from the allocations for each Participant and paid to ILFP; and
(c)following confirmation from ILFP that it has received the Funding Commission the balance of each Participant’s allocation will be distributed to each Participant.
11.4Notwithstanding clause 11.1 above, if at any time in respect of the Participant:
(a)no Review has been requested, or all Review Determinations have been issued; or
(b)the highest reasonable estimate of the value of the Assessments still awaiting the determination of Final Assessment is less than 20% of the amount total of all Participants Assessments available for distribution to the Participants;
the Administrator in its absolute discretion may make a Preliminary Payment to Participants by distribution from the Settlement Distribution Fund, but shall hold back an amount not less than double the highest reasonable estimate of the Assessments still awaiting the determination of Final Assessment, plus its highest reasonable estimate of the Administration Costs likely to be incurred prior to the final distribution of the Settlement Distribution Fund. For the avoidance of doubt, any such Preliminary Payment:
(a)may be made prior to the determination of the Final Assessments of all Participants; but
(b)may not be made to a Participant until the determination of the Final Assessment of that Participant’s claim and ILFP has been paid the ILFP Payment in respect of the Participant.
11.5Subject to clause 11.1, other than a Preliminary Payment made under the proceeding clause, no distribution shall be made from the Settlement Distribution Fund until the Final Assessment of every Participant has been determined and the Administration Costs and the ILFP Payment has been paid in full.
11.6If a Preliminary Payment has been made, any Administration Costs incurred after the date of the Preliminary Payment shall be paid to the Administrator prior to the final distribution of the remaining amount in the Settlement Distribution Fund.
11.7If, after the final distribution of the Settlement Distribution Fund to Participants, any amount remains or is held in the Settlement Distribution Fund, such as further interest amounts accrued prior to the final distribution but received after the final distribution, the amount shall be distributed pro rata amongst the Participants, subject to clause 11.8.
11.8At the Administrator’s absolute discretion, the following amounts required to be distributed under clause 11.7 may instead be paid to the Australian Shareholders’ Association:
(a) if the total amount is less than $20,000, the total amount; or
(b)if the amount to be distributed to any individual Participant is less than $100, that amount.
12. Immunity From Claims
12.1The completion of distributions made pursuant to clause 11 (including distributions made by cheques that remain unrepresented for 120 days) shall satisfy any and all rights, claims or entitlements of all Group Members in or arising out of the Proceeding.
12.2Upon the release of the Settlement Amount and Interest from the Settlement Reserve Fund into the Settlement Distribution Fund, NAB and its Related Parties will be immune from all the Claims by all Group Members. NAB may plead this Settlement Scheme and the Settlement Deed to bar any claim or action (including a claim for costs) brought by any Group Member relating to the Claims.
13. Supervision By The Court
13.1The Administrator may refer any issues arising in relation to the Settlement Scheme or the administration of the Settlement Scheme to the Court for determination.
13.2Any costs incurred in any such reference to the Court made by the Administrator or the Administrator shall be deemed to be Administration Costs.
14. Notice
14.1Any notice to be given pursuant to the Settlement Scheme shall be deemed given and received for all purposes associated with this Settlement Scheme if it is:
(a) addressed to the person to whom it is to be given; and
(b) either:(i)delivered, or sent by pre-paid mail, to that person’s postal address (being, in respect of any Group Member, the current postal address recorded in the Administrator’s Group Member records, as obtained from the Group Member’s Registration Form, Group Member’s retainer or funding agreement or directly from the Group Member);
(ii)sent by fax to that person’s fax number (being, in respect of any Group Member, the current fax number recorded in the Administrator’s Group Member records, as obtained from the Group Member’s Registration Form, the Group Member’s retainer or funding agreement or directly from the Group member) and the machine from which it is sent produces a report that states that it was sent in full; or
(iii)sent by email to that person’s email address (being, in respect of any Group Member, the current email address recorded in the Administrator’s Group Member records, as obtained from the Group Member’s Registration Form, the Group Member’s retainer or funding agreement or directly from the Group Member) and a server through which it is transmitted produces a report that states that the email has been delivered to the inbox of that person.
14.2A notice that complies with this clause 14 will be deemed to have been given and received:
(a)if it was sent by mail to an addressee in Australia, two clear business days after being sent;
(b)if it is sent by mail to an addressee overseas, five clear business days after being sent;
(c)if it is delivered or sent by fax, at the time stated on the report that is produced by the machine from which it is sent; and
(d) if it is sent by email, at the time it is sent.
14.3Where a Group Member is not a natural person and where one person has been nominated as the contact in respect of several Group Members, it is sufficient for the purpose of giving notice that any of the provisions of clause 14.2 are complied with in relation to that nominated person.
14.4Maurice Blackburn Pty Ltd’s address, fax number and email address shall be as set out below unless and until Maurice Blackburn Pty Ltd notifies the sender otherwise:
NAB Class Action
Maurice Blackburn Pty Ltd
PO Box 13094
Law Courts VIC 8010
Email [email protected]
15. Time
15.1The time for doing any act or thing under the Settlement Scheme may be extended by the Administrator in its absolute discretion.
15.2The time for doing any act or thing under the Settlement Scheme may be extended by order of the Court.
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