FEDERAL COURT OF AUSTRALIA
Pearson v State of Queensland [2017] FCA 1096
File number: QUD 714 of 2016 Judge: MURPHY J Date of judgment: 14 September 2017 Catchwords: PRACTICE AND PROCEDURE - representative proceedings – application to open the class – application allowed – application for a common fund order – application allowed – whether notice of a common fund application must be given to class members before making such an order Legislation: Federal Court of Australia Act 1976 (Cth)
Aboriginals Preservation and Protection Act of 1939 (Qld)
Aboriginals Regulations of 1945 (Qld)
Aborigines’ and Torres Strait Islanders’ Affairs Act of 1965 (Qld)
Aborigines’ and Torres Strait Islanders’ Regulations of 1966 (Qld)
Islanders Regulations, 1946 (Qld)
Torres Strait Islanders Act of 1939 (Qld)
Explanatory Memorandum, Federal Court of Australia Amendment Bill 1991 (Cth)
Federal Court of Australia Amendment Bill 1991, Commonwealth, House of Representatives, 14 November 1991, Second Reading (M Duffy - Attorney-General)
Cases cited: Blairgowrie Trading Ltd v Allco Finance Group Ltd (Receivers & Managers Appointed) (In Liq) (No 3) (2017) 343 ALR 476; [2017] FCA 330
Earglow Pty Ltd v Newcrest Mining Limited [2016] FCA 1433
Farey v National Australia Bank Ltd [2014] FCA 1242
Money Max Int Pty Ltd (Trustee) v QBE Insurance Group Limited (2016) 245 FCR 191; [2016] FCAFC 148
Pathway Investments Pty Ltd v National Australia Bank Ltd (Supreme Court of Victoria proceeding SCI 2010 6249)
Australian Law Reform Commission, “Grouped Proceedings in the Federal Court”, Report No 46, 1988
Date of hearing: Heard on the papers Date of last submissions: 11 August 2017 Registry: Queensland Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 53 Counsel for the Applicant: Mr W A D Edwards Solicitor for the Applicant: Bottoms English Lawyers Counsel for the Respondent: Mr C Murdoch QC and Ms G Dann Solicitor for the Respondent: Crown Law ORDERS
QUD 714 of 2016 BETWEEN: HANS PEARSON
Applicant
AND: STATE OF QUEENSLAND
Respondent
JUDGE:
MURPHY J
DATE OF ORDER:
25 AUGUST 2017
THE COURT ORDERS THAT:
Class Opening
1.Pursuant to s 33K of the Federal Court of Australia Act 1976 (Cth) (FCAA), the Applicant have leave to amend the group definition in this proceeding by deletion of subparagraph 10 of the group definition in the Second Amended Originating Application filed 17 March 2017 and subparagraph 2(l) of the Amended Statement of Claim filed 17 March 2017.
Common Fund
2.Pursuant to ss 23 and 33ZF of the FCAA and rule 1.32 of the Federal Court Rules 2011 (Cth), the Applicant and Group Members shall pay from any amounts for which the claims are settled or judgment is given in favour of the Applicant and Group Members:
(a)the costs and expenses of the proceeding;
(b)20% of the amount for which the claims are settled or judgment is given (or such lower percentage as the Court considers reasonable at that time); and
(c)GST.
3.The Funding Terms (being Annexure A to these…
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- Case
- [2017] FCA 1096
- Decision Date
CaseChat Overview and Summary
The orders made by the court allowed the proceeding to proceed on an open class basis, which would enable finality to be brought to the “Stolen Wages” issue in one proceeding rather than through piecemeal wage reparation schemes. The court also made a common fund order, allowing the funding company to be reimbursed from the settlement or judgment sum, but set the funding commission rate at 20% or such lower percentage as the court considers reasonable at the time. The court declined to make a common fund order that set the funding commission rate at 20% because it wanted more complete information before making such an order. The court also ordered that notice of the common fund application be given to class members before making such an order. These orders provided for a funding commission rate of 20% or such lower percentage as the Court considers reasonable at that time. The funding commission rate will be approved at a later point when the Court has more complete information in that regard.
Orders
Orders of the court
Class Opening
1. Pursuant to s 33K of the Federal Court of Australia Act 1976 (Cth) (FCAA), the Applicant have leave to amend the group definition in this proceeding by deletion of subparagraph 10 of the group definition in the Second Amended Originating Application filed 17 March 2017 and subparagraph 2(l) of the Amended Statement of Claim filed 17 March 2017.
Common Fund
2. Pursuant to ss 23 and 33ZF of the FCAA and rule 1.32 of the Federal Court Rules 2011 (Cth), the Applicant and Group Members shall pay from any amounts for which the claims are settled or judgment is given in favour of the Applicant and Group Members:
(a) the costs and expenses of the proceeding;
(b) 20% of the amount for which the claims are settled or judgment is given (or such lower percentage as the Court considers reasonable at that time); and
(c) GST.
3. The Funding Terms (being Annexure A to these orders) further define and specify the amounts to be paid pursuant to Order 2.
4. Order 2 is subject to the provision of an undertaking by each of Litigation Lending Services Ltd, the Applicant and BE Law (Bottoms English Lawyers) to each other and to the Court that they will comply with their obligations under the Funding Terms (being those in Annexure A).
Notices
5. The parties shall file an agreed form of opt out notice, or competing versions of the opt out notice, in accordance with Orders 18 to 20 of the orders made on 24 May 2017 (24 May 2017 Orders). Following Court approval of the form of the opt out notice, the notice is to be sent to all claimants whose details are recorded in the electronic data base called “CPH Reparation” (Community and Personal Histories) held by the State of Queensland (being all persons who made application for compensation, whether or not such application was accepted).
6. The notice will be sent by the Respondent which will utilise a mail out service provider to conduct the mail out. The Respondent will advise the Applicant’s legal representatives of the identity of the mail out service provider by 8 September 2017. By 15 September 2017 the Applicant will provide to the mail out service provider details of all persons who have agreed to LLS’s funding terms to avoid duplication of notices in the mail out.
7. The Applicant will pay the cost of the mail out of the notices, and such costs will be costs in the cause.
8. Further to Orders 18 to 20 of the 24 May 2017 Orders:
(a) by 6 October 2017, at the time the Applicant provides a draft opt-out notice to the Respondent in accordance with Order 18 of the 24 May 2017 Orders, the Applicant shall also provide draft orders under s 33Y(3) as to how, in addition to the mail out provided in paragraphs 5 and 6 of this Order, the notice is to be given to Group Members;
(b) by 20 October 2017, at the time the Respondent responds to the draft opt-out notice in accordance with Order 19 of the 24 May 2017 Orders, the Respondent shall also provide a response to the draft orders under s 33Y(3); and
(c) by 3 November 2017, in the event that the parties are unable to agree on the form of the orders under s 33Y(3), they shall file and serve their competing versions and short submissions (no more than three pages) in support. Unless a party objects, the Court will decide the issue on the papers.
9. The parties have liberty to apply to the Court to vary the time for compliance with Orders 18 to 20 of the 24 May 2017 Orders, so as to ensure that the notices are published as soon as reasonably practicable.
Other
10. Liberty to apply on at least 3 days’ notice.
11. Costs be reserved.
Annexure A
Funding Terms
A. Definitions
1. The following definitions apply in these Funding Terms:
(a) “Administration Expenses” means the cost of the administration of any scheme for the distribution of any Resolution Sum, including fees charged by and expenses paid by the administrator (being the person or entity appointed to administrate a scheme for the distribution of any Resolution Sum), including court fees, barristers’ fees, external photocopying fees, IT project management fees, data processing fees, process service fees, expert report fees, external costs consultants fees, interstate agents’ fees, travel and accommodation fees;
(b) “Adverse Costs Order” means any Costs Order made in favour of the Respondent against the Applicant in the Proceeding or in any subsequent proceeding brought by any Group Member against the Respondent in reliance on the findings made in any judgment in the Proceeding, in respect of costs of the Respondent incurred during the Funding Period;
(c) “Applicant” means Hans Pearson, and any other person who is a lead applicant or representative party in the Proceeding;
(d) “Claims” means the claims the Applicant and/or Group Members have or may have against the Respondent, primarily the State of Queensland, for relief in relation to the State’s withholding of wages from the Applicant and/or Group Members;
(e) “Costs Order” means an order made by a court requiring one or more parties to the Proceeding to pay the costs incurred by another party or parties to the Proceeding;
(f) “Funder” means Litigation Lending Services Limited of Level 26, 1 Bligh Street, Sydney NSW 2000 (the address for service of which will be above, or sprice@litlend.com.au);
(g) “Funding Agreements” means the funding agreement between the Funder and the Applicant and any funding agreements between the Funder and Other Funded Persons in relation to the Claims;
(h) “Funding Limit” means the amount stipulated in the Funding Agreements;
(i) “Funding Period” means the period commencing on the date of these orders and ending on the date of the judgment in respect of any Settlement approval application or judgment in the initial trial of the Applicant’s claim and the common issues, whichever is first to occur;
(j) “Group Members” means all persons who are identified as group members in the Proceeding, and who do not opt out of the Proceeding by the time specified by the Court for doing so;
(k) “GST” means goods and services tax;
(l) “Independent Counsel” means a barrister with at least fifteen (15) years of experience in litigation similar to the Proceeding and who is not affiliated in any way with the Applicant, the Lawyers or the Funder;
(m) “Lawyers” means the lawyers, BE Law (Bottoms English Lawyers Pty Ltd) (ACN 158 295 768), or any firm of lawyers appointed in their place by the Applicant after consultation with the Funder;
(n) “Legal Costs Agreement” means the agreement or agreements entered into between the Lawyers and the Applicant and Other Funded Persons for the Lawyers to act as lawyers to investigate and prosecute the Claims.
(o) “Legal Costs and Disbursements” means fees and disbursements charged by the Lawyers under the Legal Costs Agreement and “Terms of Engagement” (the latter being schedule 1 to the Funding Agreements).
(p) “Legal Work” means such advice, legal and administrative services which the Lawyers consider reasonably necessary to investigate and prosecute the Proceeding, as defined in the Legal Costs Agreement;
(q) “Other Claims” means claims Other Funded Persons have or may have against the Respondent for loss and damage caused to those Other Funded Persons by the conduct of the Respondent which claims are the same, similar, or related to the Claims;
(r) “Other Funded Person” means any person who has entered into a Funding Agreement, and whose Funding Agreement has not been terminated;
(s) “Proceeding” means the representative proceeding, Hans Pearson v State of Queensland (QUD714/2016) filed on 22 September 2016 in the Queensland Registry of the Federal Court of Australia;
(t) “Project” means the Project Investigation and the conduct of the Proceeding in order to achieve Resolution of the Claims and the Other Claims;
(u) “Project Costs” means those costs and expenses incurred at any time prior to the conclusion of the Funding Period, being:
(i) the Legal Costs and Disbursements charged by the Lawyers for all Legal Work;
(ii) the costs involved in the provision by the Funder of any security for costs;
(iii) any Adverse Costs Order paid by the Funder;
(iv) all of the Funder’s out of pocket costs and expenses paid or incurred in relation to the Project (including in relation to any consultants engaged by the Funder other than those already referred to in this definition);
(v) any costs associated with any scheme for the distribution of any Resolution Sum, including the costs of any Administrator which is appointed;
(vi) the costs of any subsequent proceeding brought by any Group Member against the Respondent in reliance on the findings made in any judgment in the Proceeding;
(vii) any GST payable on any taxable supply made by any entity as a result of the above costs or expense being incurred.
(v) “Project Investigation” means:
(i) the Lawyers’ Legal Work performed in connection with the investigation of the Proceeding, the Claims and the Other Claims, and includes without limitation the Lawyers’ investigation into whether the Proceeding may be brought, its strengths and weaknesses and prospects of success, and;
(ii) work done by the Funder in obtaining access to material documents and statements concerning the Claims and the Proceeding from the Lawyers, including any documents obtained by way of discovery, subpoena or any other coercive power of the Court which may lawfully be accessed by the Funder for the purpose of investigating the evidentiary basis for the Claims (documentary and oral), collating the material documents and statements, monitoring the progress of the Proceeding, evaluating any Settlement offer, investigating, designing and implementing any Alternative Dispute Resolution Process for the resolution of the Claims and the Other Claims, other than through legal proceedings, investigating any other matter that the Funder determines is relevant to its financial interest in the Claims and the Proceeding; and investigating the capacity of the Respondents to meet any award or order made against them relating to the Claims and or Proceeding;
(w) “Resolution” means when all or any part of the Resolution Sum is received and, where the Resolution Sum is received in parts, a “Resolution” occurs each time a part is received;
(x) “Resolution Sum” means the amount or amounts of money or the value of benefits for which (a) the Claims are Settled, or (b) for which judgment is given in favour of the Applicant in the Proceeding or (c) any subsequent proceeding brought by any Group Member against the Respondent in reliance on the findings made in any judgment in the Proceeding is Settled or for which judgment is given in favour of the Group Member and including (but not limited to): (A) any interest and costs recovered pursuant to a Costs Order or by agreement; (B) any ex gratia payments and (C) any payments in respect of the Claims where any Respondent (or any property, assets or liabilities of any Respondent) is, or comes under, the control of an external controller.
(y) “Respondent” means the State of Queensland and any other person or entity which the Lawyers recommend be joined as respondent to the Proceeding and in respect of whom the Funder accepts, in its absolute discretion and in writing, exposure to an Adverse Costs Order;
(z) “Settlement” means any settlement, compromise, discontinuance or waiver, except where approval of the Court is required, in which case it means any settlement, compromise, discontinuance or waiver with the approval of the court and "Settle," “Settles” or “Settled” shall be construed accordingly.
B. Obligations of the Funder
2. The Funder must fund the Project Costs of the Applicant and Group Members, by:
(a) paying to the Lawyers the Legal Costs and Disbursements charged by the Lawyers for all Legal Work (whether incurred before or during the Funding Period), up to the Funding Limit;
(b) paying the costs of any insurance covering an Adverse Costs Order;
(c) paying any Costs Order which the Court makes in the Proceeding against the Applicant or other Group Member in favour of the Respondent, in so far as those costs were incurred either before or during the Funding Period; and
(d) providing any security for costs in the Proceeding, in the form that the Court orders, or in the absence of any order, in such other form as the Funder determines and the Respondent accepts.
C. Receipt and Application of Resolution Sum
3. Any Resolution Sum will be received by the Lawyers and paid immediately into a trust account kept for that purpose.
4. If the Applicant or any Group Member obtains any Settlement or obtains any judgment in respect of the Claims, it will:
(a) treat any money, other asset or benefit received from the Respondent in connection with the Settlement or judgment as the Resolution Sum; and
(b) cause the money, or an amount being the reasonable market value of the asset or benefit, to be delivered to the Lawyers to be dealt with as part of the Resolution Sum.
5. Subject to any Court order, the Lawyers will:
(a) first, pay to the Funder out of the account referred to in paragraph 3 above all payments referred to in paragraph 6 below;
(b) second, pay to themselves any unpaid portion of the Legal Costs and Disbursements (including any uplift fee payable on “Lawyers Professional Fees” pursuant to the Legal Costs Agreement) and any amounts in relation to GST;
(c) third, pay all Administration Expenses; and
(d) fourth, distribute the balance to the Group Members on a pro rata basis by reference to the Claims of all Group Members in accordance with any distribution scheme approved by the Court.
D. Costs and Commission
6. Upon Resolution, the Funder or its nominee shall be paid the following amounts from any Resolution Sum, prior to any distributions to Group Members:
(a) an amount equal to the Project Costs (including the monies paid, or payable by the Funder pursuant to paragraph 2 above); and
(b) an amount, as consideration for the funding of the Proceeding, being 20% of any Resolution Sum, or such other lower percentage as the Court considers reasonable.
(c) an additional amount, on account of GST, being the amount obtained by multiplying the prevailing rate of GST (currently 10%) by an amount equal to the consideration to be received by the Funder for any taxable supply by the Funder under or in connection with these Funding Terms.
7. The amounts referred to in paragraph 6 above will not become due or owing by the Group Members to the Funder unless and until Resolution.
E. Relationship Between the Applicant, Lawyers and Funder
8. The Lawyers’ professional duties are owed to the Applicant and not to the Funder.
9. Subject to paragraphs 10 and 11, the Funder will give the Lawyers day-to day instructions in respect of all matters concerning the Claims.
10. The Applicant has the right at any time to give instructions concerning the Claims which override any instructions given by the Funder.
11. Subject to paragraph 12 below, if the Lawyers notify the Funder and the Applicant that the Lawyers believe that circumstances have arisen such that they may be in a position of conflict with respect to any obligations they owe to the Applicant and those they owe to the Funder, then the Lawyers’ obligations to the Applicant prevail (and for the avoidance of doubt, the Lawyers can continue to offer advice to and take instructions from the Applicant in such circumstances).
12. The Lawyers will:
(a) keep the Funder fully informed of all matters concerning the Claims and the Project, including any mediation and settlement discussions (and, for the avoidance of doubt shall immediately inform the Funder of all Settlement offers or offers to engage in any alternative dispute resolution process received from the Respondent and allow the Funder the opportunity to attend any such alternative dispute resolution process agreed with any Respondent);
(b) promptly provide to the Funder any document or information reasonably requested by the Funder;
(c) ensure that the Applicant and the Funder are given all necessary information in order to facilitate informed instructions (including, for the avoidance of doubt any information which has or may have a material impact on the Claims, the Proceeding, or the potential for any judgment sum to be recovered);
(d) unless specifically prohibited by the terms of a Court order or another professional obligation, provide to the Funder a copy of any document obtained in any Proceeding by way of discovery, subpoena or any other coercive power of the Court, subject to the Funder’s, its officers and employees’, implied undertaking given to the Court.
13. The Funder will:
(a) implement its Conflicts Management Policy so as to comply with the Corporations Amendment Regulation 2012 (No. 6) (Cth);
(b) provide the Applicant with timely and clear disclosure of any material breach of the Corporations Amendment Regulation 2012 (No. 6) (Cth);
(c) not retain the Lawyers as their solicitors for any purpose connected with the Proceeding.
F. Confidentiality
14. The Funder shall strictly maintain the confidentiality of any information provided to the Funder by the Applicant or the Lawyers for a purpose connected to the Proceeding, and shall adopt proper and effective procedures for maintaining the confidentiality and safe custody of the information.
15. Where any information is provided to the Funder, the Funder shall:
(a) adopt proper and effective procedures for maintaining the confidentiality and safe custody of the information;
(b) ensure that access to the information is only provided to the Funder’s staff who are engaged in the functions for which the information was provided to the Funder;
(c) only use the information for purposes for which the information was provided; and
(d) not disclose the information contained therein to any person other than the Lawyers or counsel retained in the Proceeding.
Dispute Resolution
16. If there is a disagreement between the Funder and the Applicant as to whether the Proceeding should be Settled, or the appropriate terms for Settlement of the Proceeding the dispute will be referred to counsel for advice on whether, in counsel’s opinion, Settlement of the Proceeding or Claims on the terms and in the circumstances identified by the Applicant, the Funder or both, is reasonable in the circumstances, for the purposes of which:
(a) the Applicant must provide notice of any objection to the proposed Settlement within 5 business days of receiving advice from the Lawyers about a proposed Settlement, and:
(i) upon receiving the objection referred to in sub-clause, the Lawyers shall brief counsel within 5 business days of receiving the objection;
(ii) in the first instance counsel will be the most senior counsel of those retained by the Lawyers in respect of the Proceeding and/or Claims concerned (or, if no counsel has been retained, then Independent Counsel appointed and suitably briefed by the Lawyers);
(iii) counsel may proceed as he or she sees fit to inform himself or herself before forming and delivering his or her opinion, and shall have regard to the matters set out in the Schedule. Counsel may give his or her opinion orally or in writing;
(iv) if counsel’s opinion is that the Settlement is reasonable then the Applicant agrees that the Lawyers will be instructed to do all that is necessary to settle the Proceeding, provided that any necessary approvals from the Court to the Settlement are sought and obtained;
(v) the costs of counsel in providing an opinion under this sub-clause will be paid by the Funder and will form part of the Project Costs;
(b) if the Applicant does not provide notice of objection to the proposed Settlement within the time specified in sub-clause (b), the Lawyers shall take all action necessary to implement the Settlement.
17. If there is a disagreement between the Funder and the Applicant about any appeal of the Proceeding, the addition or removal of Respondents to or from the Proceeding, the termination of the Lawyers’ appointment, or the appointment of alternative Lawyers:
(a) a party will give the other notice of the existence of that dispute. Within 7 days of the receipt of that notice, each party, either personally or through their nominated representative, will meet and discuss the dispute with a view to agreeing a resolution to it;
(b) So long as the dispute does not give rise to a conflict between the interests of the Applicant and the interests of other Group Members, the Lawyers may act as representatives for the Applicant, but under no circumstances will the Lawyers act as representatives for the Funder;
(c) If, within 14 days of receipt of the notice of a dispute issued under sub-clause (a), that dispute has not been resolved, either party may refer that dispute to mediation, to be conducted by a mediator agreed by both parties or, failing agreement, a person nominated by the President of the Queensland Law Society;
(d) The mediation will be conducted in a manner and at a place specified by the person appointed as mediator, and must be completed within 14 days of the appointment of the mediator, or one month from the date on which the dispute was referred to mediation (whichever is later). The costs of the mediator will be shared by the parties equally;
(e) If the dispute is not resolved within the time specified above, then, within 40 days of the date on which the dispute was referred to mediation, either party to the dispute may issue a notice referring the dispute to an independent third party for determination, and the independent third party will be a person agreed between the Applicant and the Funder, or failing agreement, a person nominated by the President of the Queensland Law Society;
(f) the determination by the independent person will be final and binding, and the parties to the dispute will pay, in equal shares, the costs of the Determination.
18. If there is a disagreement between the Funder and the Applicant regarding the Claims and/or Proceeding other than in respect of matters the subject of clauses 16 and 17, the dispute will be referred to counsel, who will issue a binding Determination of the dispute, and:
(a) the Lawyers shall brief counsel within 5 business days of receiving notice of the dispute from any party;
(b) in the first instance counsel will be the most senior counsel of those retained by the Lawyers in respect of the Proceeding and/or Claims concerned. If no counsel has been retained, then independent counsel will be appointed and suitably briefed by the Lawyers;
(c) the determination will be final and binding; and
(d) the parties to the dispute will pay, in equal shares, the costs of the Determination.
Termination
19. The funding arrangements under these Funding Terms may only be terminated by order of the Court, granted on application made by the Applicant, the Funder or a Group Member, upon notice given to the Applicant, the Funder and such other persons as ordered by the Court.
20. If an application is made by the Funder under paragraph 19 above, and the Court grants that application, then (subject to any contrary order of the Court):
(a) the Funder will not be entitled to receive any payment from any Resolution Sum pursuant to paragraph 6(b) above;
(b) the Funder will continue to be entitled to receive payment from any Resolution Sum pursuant to paragraph 6(a) and 6(c) above;
(c) all obligations of the Funder under these Funding Terms will cease on the date the Funder’s termination becomes effective, save for the following obligations accrued to the date of termination:
(i) payment of any outstanding Project Costs incurred up to the date of termination;
(ii) indemnification of the Applicant and Group Members for any Legal Costs and Disbursements reasonably incurred and payable to the Lawyers up to the date of termination; and
(iii) payment of any quantified Costs Order against the Applicant and any Group Members in the Proceeding in respect of costs which arise in, or are attributed to, the period ending on the date the Funder’s termination becomes effective.
21. If an application is made by the Applicant or a Group Member under paragraph 19 above, and the Court grants that application, then (subject to any contrary order of the Court):
(a) the Funder will continue to be entitled to receive payment from any Resolution Sum pursuant to paragraph 6 above;
(b) all obligations of the Funder under these Funding Terms will cease on the date the Funder’s termination becomes effective, save for the following obligations accrued to the date of termination:
(i) payment of any outstanding costs pursuant to paragraph 2 above incurred up to the date of termination;
(ii) indemnification of the Applicant and Group Members for any Legal Costs and Disbursements reasonably incurred and payable to the Lawyers up to the date of termination; and
(iii) payment of any quantified Costs Order against the Applicant and any Group Members in the Proceeding in respect of costs which arise in, or are attributed to, the period ending on the date the Funder’s termination becomes effective.
Funding Agreements and Legal Costs Agreements
22. These Funding Terms prevail over any inconsistent provision in the Funding Agreements.
23. These Funding Terms prevail over the terms of the Legal Costs Agreements to the extent of any inconsistency.
SCHEDULE
Criteria to be applied by Counsel in giving an Opinion on a Proposed Settlement
1. In reviewing a proposed Settlement pursuant to sub-clauses 14(a) of the Funding Terms, counsel must be satisfied that the Settlement will be fair and reasonable, taking into account the Claims that will be the subject of the Settlement and any potential conflicts of interest between the Funder, the Lawyers and the group members whose Claims and are subject to the proposed Settlement.
2. In satisfying himself or herself that the proposed Settlement is fair and reasonable, counsel should take into account, among other things, the following factors:
(a) the amount offered to each group member;
(b) the prospects of success in the Proceeding (i.e. the weaknesses, substantial or procedural, in the case advanced by the Representative);
(c) the likelihood of the group members obtaining judgment for an amount significantly in excess of the proposed Settlement sum;
(d) whether the proposed Settlement sum falls within a realistic range of likely outcomes;
(e) the attitude of the group members to the proposed Settlement;
(f) the likely duration and cost of the Proceeding if continued to judgment;
(g) the terms of the Funding Terms about the procedure to be applied in reviewing and deciding whether to accept any Settlement offer, including any factors that will and will not be taken into account in deciding to Settle;
(h) whether the Funder might refuse to continue to fund the Proceeding if the proposed Settlement does not take place; and
(i) whether the proposed Settlement involves any unfairness to any group member or any categories of group members for the benefit of others.
3. Counsel should also take into account the potential for conflicts of interest between group members in accordance with the test applied by Jessup J in Darwalla Milling Co Pty Ltd v F Hoffman-La Roche Ltd (No 2) (2006) 236 ALR 322 at [41], which relevantly states:
“I propose to turn then to the question whether the settlement, including the distribution scheme, involves any actual or potential unfairness to any group members, or categories of group members, having regard to all relevant matters, including whether the overall settlement sum, even if reasonable as such, involves unfair compromises by some members, or categories of members, for the benefit of others, and whether the distribution scheme fairly reflects the apparent or assumed relative losses suffered by particular members, or categories of members. Any consideration of the fairness and reasonableness of the settlement in the present case must take into account not only the overall settlement sum and its relationship with the amount that might be considered a best possible outcome after a successful trial, but also the structure and workings of the scheme by which that sum is proposed to be distributed amongst group members. The fairness and reasonableness of the settlement, from the point of view of any one group member, will necessarily depend on both of these factors.”
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
There was a dispute as to whether Mr Pearson’s legal representative should have access to the contact details of Aboriginal and Islander claimants held by the State on the Community and Personal Histories electronic database (CPH Reparation database). The database records information about Aboriginal and Islander persons who submitted a Claimant Application Form under several State reparation schemes relating to the control legislation. Mr Pearson sought an order under s 33Y(3)(c) of the Act directing the State to supply the identity and contact details of all claimants on the database to his solicitors. He argued that such information is the best data available and there is no good reason for it not to be used in providing notice to class members. In response to requests from Mr Pearson’s solicitors, the State said it was prepared to develop a list of possible class members based on the CPH Reparation database, and to send a notice to them which has been agreed by the parties and approved by the Court, with the cost of distribution being paid in the first instance by Mr Pearson. In light of its offer the State said that claimants had not given permission for their identity and contact details to be so disclosed and contended that orders should not be made for it to provide the claimants’ contact details to Mr Pearson’s solicitors. The purpose of s 33X is to give notice to class members “in the most efficient and effective way”: Explanatory Memorandum, Federal Court of Australia Amendment Bill 1991 (Cth) at [33]. The CPH Reparation database contains the contact details of what is likely to be most class members, those details can readily and inexpensively be downloaded, and the identity and contact details of class members is otherwise largely unknown. It is plain that the database should be used to notify class members. An expansive view should be taken in preparing a list of possible class members from the database as the most important consideration is to maximise the reach of any notice. It is unnecessary to decide whether to order that a list of claimants be provided to Mr Pearson’s solicitors. They would prefer to have such a list, but counsel accepted that it suffices if notice under s 33X is sent by a commercial mail house, on a confidential basis, to all claimants whose details are recorded in the database. The State also indicated agreement to that course. Any such notice should not appear to come from the State because it is the applicant’s notice, albeit Court approved, and because correspondence from the government may cause anxiety or confusion for some class members. I will deal with any residual issues in relation to the manner in which the opt out notice is provided to class members in accordance with the timetable ordered.