FEDERAL COURT OF AUSTRALIA
Simonetta v Spotless Group Holdings Limited [2017] FCA 1071
File number: NSD 268 of 2017 Judge: YATES J Date of judgment: 8 September 2017 Catchwords: PRACTICE AND PROCEDURE – application for approval to discontinue representative proceeding commenced under Pt IVA of the Federal Court of Australia Act 1976 (Cth) – whether notice required to be given to group members of the application – discontinuance approved Legislation: Federal Court of Australia Act 1976 (Cth) ss 33V, 33X, 33Y
Corporations Act 2001 (Cth) ss 674, 1041H
Australian Securities and Investment Commission Act 2001 (Cth) s 12DA
Australian Consumer Law (NSW) s 18
Australian Consumer Law (Vic) s 18
Supreme Court Act 1986 (Vic) s 33X
Cases cited: Mercedes Holdings Pty Limited v Waters (No 1) [2010] FCA 124
Laine v Thiess Pty Ltd; Beetson v SunWater Limited [2016] VSC 689
Date of hearing: 4 August 2017 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 31 Counsel for the Applicants: Mr G Donnellan with Mr A H Edwards Solicitor for the Applicants: William Roberts Lawyers Counsel for the Respondent: Mr R A Dick SC Solicitor for the Respondent: Herbert Smith Freehills ORDERS
NSD 268 of 2017 BETWEEN: ANTONY LEONARD SIMONETTA
First Applicant
JOANNE LOUISE SIMONETTA
Second Applicant
AND: SPOTLESS GROUP HOLDINGS LIMITED
ABN 27 154 229 562
Respondent
JUDGE:
YATES J
DATE OF ORDER:
8 SEPTEMBER 2017
THE COURT ORDERS THAT:
1.The discontinuance of this proceeding be approved pursuant to s 33V(1) of the Federal Court of Australia Act 1976 (Cth) (the Act).
2.Leave be granted to the applicants to discontinue the proceeding by filing a notice of discontinuance.
3.Pursuant to s 37AF(1) of the Act, and on the ground that it is necessary to prevent prejudice to the proper administration of justice, the documents exhibited to the affidavit of Bill Petrovski sworn 21 July 2017 and marked “BP-2” be kept confidential and not be disclosed to any person without the leave of the Court.
4.There be no order as to the costs of the proceeding.
THE COURT DECLARES THAT:
5.Orders 1 and 2 do not affect any rights of the applicants or any group member in the proceeding to pursue the claims that are the subject of this proceeding in another proceeding.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
YATES J:
INTRODUCTION
The applicants seek the Court’s approval, pursuant to s 33V(1) of the Federal Court of Australia Act 1976 (Cth) (the Act), to discontinue this proceeding.
The proceeding is a representative proceeding commenced under Pt IVA of the Act in which orders for compensation have been sought against the respondent, Spotless Group Holdings Limited, in relation to alleged contraventions of its continuous disclosure obligations under s 674(2) of the Corporations Act 2001 (Cth) (the Corporations…
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- Case
- [2017] FCA 1071
- Decision Date
CaseChat Overview and Summary
The legal issues before the Court included whether the applicants were required to give notice to the group members of the application to discontinue the proceeding. The Court considered whether the notice provisions in Part IVA of the Act applied to the present proceeding, given that the proceeding had been commenced by the applicants on behalf of the group members, and that the group members were not parties to the proceeding. The Court also considered the effect of the funding agreements between the applicants and IMF, and the retainer agreements between the applicants and their solicitors, on the applicants’ entitlement to discontinue the proceeding.
The Court held that the notice provisions in Part IVA of the Act did not apply to the present proceeding, as the proceeding had not been commenced by the group members, but by the applicants on their behalf. The Court held that the applicants had the right to discontinue the proceeding without giving notice to the group members, as the funding agreements and retainer agreements did not confer any rights on the group members to participate in the proceeding or to object to its discontinuance. The Court held that the discontinuance of the proceeding would not prejudice the proper administration of justice, and that there was no need to order the costs of the proceeding.
The Court approved the discontinuance of the proceeding, granted leave to the applicants to discontinue the proceeding by filing a notice of discontinuance, and declared that the orders did not affect any rights of the applicants or any group member in the proceeding to pursue the claims that were the subject of the proceeding in another proceeding. The Court also ordered that certain documents exhibited to the affidavit of the applicants’ solicitor be kept confidential and not be disclosed to any person without the leave of the Court.
Orders
Orders of the court
1. The discontinuance of this proceeding be approved pursuant to s 33V(1) of the Federal Court of Australia Act 1976 (Cth) (the Act).
2. Leave be granted to the applicants to discontinue the proceeding by filing a notice of discontinuance.
3. Pursuant to s 37AF(1) of the Act, and on the ground that it is necessary to prevent prejudice to the proper administration of justice, the documents exhibited to the affidavit of Bill Petrovski sworn 21 July 2017 and marked “BP-2” be kept confidential and not be disclosed to any person without the leave of the Court.
4. There be no order as to the costs of the proceeding.
THE COURT DECLARES THAT:
5. Orders 1 and 2 do not affect any rights of the applicants or any group member in the proceeding to pursue the claims that are the subject of this proceeding in another proceeding.
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
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
The proceeding is a representative proceeding commenced under Pt IVA of the Act in which orders for compensation have been sought against the respondent, Spotless Group Holdings Limited, in relation to alleged contraventions of its continuous disclosure obligations under s 674(2) of the Corporations Act 2001 (Cth) (the Corporations Act), and for misleading or deceptive conduct in contravention of s 1041H of the Corporations Act, s 12DA(1) of the Australian Securities and Investment Commission Act 2001 (Cth) and/or s 18(1) of the Australian Consumer Law (NSW) and the Australian Consumer Law (Vic). In essence, the applicants allege that, at a certain time, the respondent changed its accounting policy in a particular respect and failed to disclose that change to the detriment of the applicants and the group members. The group members are persons who or which:·obtained an interest in ordinary shares in the respondent in the period from 25 August 2015 to 9.30 am on 2 December 2015 (inclusive) by the purchase of those shares on the financial market operated by the Australian Securities Exchange Limited (the ASX); ·suffered loss or damage by reason of the contraventions alleged; and·are not a “related party”, a “related body corporate”, an “associated entity” or an “officer” or a “close associate”, within the meaning of the Corporations Act. The applicants and 21 group members have entered into funding agreements with IMF Bentham Limited (IMF) and retainer agreements with the applicants’ solicitors, William Roberts Lawyers. The proceeding was commenced on 24 February 2017. The first case management hearing was listed on 10 April 2017. I was asked to vacate that hearing. A further case management hearing was listed on 8 May 2017. On that day, I made orders that the respondent provide certain documents to the applicants by 19 May 2017. At that case management hearing, the respondent made clear its view that the applicants’ claims were based on mistaken facts. The respondent said that there had been no change in its accounting policy, as alleged. The documents produced by the respondent were given to IMF. On 20 June 2017, IMF made an announcement to the ASX in which it stated: IMF announces that following consideration of information that became available after the proceedings commenced, it has decided that, subject to the court’s approval of the terms of the discontinuance of the proceedings, it will cease funding the claims against Spotless and will write off the investment to date. IMF anticipates that this will result in a loss on the investment not exceeding $510,000 and that any such loss would be recognised in FY17. IMF’s investment portfolio will be adjusted in the next quarterly update to reflect the withdrawal. On 3 July 2017, the applicants filed the present interlocutory application seeking the Court’s approval to discontinue the proceeding. The application is supported by two affidavits made on 21 July 2017 by Mr Petrovski, the applicants’ solicitor. One of the affidavits has been filed as a confidential affidavit.