FEDERAL COURT OF AUSTRALIA
Vernon v Village Life Ltd [2009] FCA 516
PRACTICE AND PROCEDURE – application for approval of settlement of representative proceedings – applicant sought leave under s 33ZF of the Federal Court of Australia Act 1976 (Cth) to dispense with requirements for opt-out notices and notice of settlement pursuant to ss 33J, 33X(1)(a) and 33X(4) – group members notified of terms of settlement and of application for Court approval – group members given opportunity to opt out or object to settlement – application granted.
Federal Court of Australia Act 1976 (Cth) ss 33J, 33V, 33X, 33Y, 33ZB, 33ZF
Courtney v MedtelPty Ltd (2002) 122 FCR 168 referred to
DarwallaMilling Co Pty Ltd v F Hoffmann-La Roche Limited (No 2) (2007) 236 ALR 322 referred to
Dorajay Pty Ltd v Aristocrat Leisure Limited [2009] FCA 19 referred to
Johnstone v HIHLimited [2004] FCA 190 referred to
King v GIO Australia Holdings Ltd [2001] FCA 270 referred to
Lopez v Star World Enterprises Pty Ltd [1999] FCA 104 referred to
McMullen v ICI AustraliaOperations Pty Ltd (1998) 84 FCR 1 followed
Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd (2007) 164 FCR 275 followed
Taylor v TelstraCorporation Ltd [2007] FCA 2008 followed
Williams v FAI Home Security Pty Ltd (No 4) (2001) 180 ALR 459 referred toRICHARD VERNON v VILLAGE LIFE LTD, DAVID JEFFRIES, JOHN KRIMMER and ANTHONY ROBERTS
NSD 2049 of 2007
PETER HANNE & ASSOCIATES PTY LTD v VILLAGE LIFE LIMITED, DAVID JEFFRIES, JOHN KRIMMER and ANTHONY ROBERTS
NSD 2050 of 2007
JACOBSON J
12 MAY 2009
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD 2049 of 2007
BETWEEN: RICHARD VERNON
ApplicantAND: VILLAGE LIFE LTD
First RespondentDAVID JEFFRIES
Second RespondentJOHN KRIMMER
Third RespondentANTHONY ROBERTS
Fourth Respondent
JUDGE:
JACOBSON J
DATE OF ORDER:
12 MAY 2009
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.Pursuant to s 50 of the Federal Court of Australia Act 1976 (Cth) (the “Act”) the documents located at Tabs 1 and 16 of Ex VAM1 to the affidavit of Van Angelo Moulis filed on 5 May 2009 (the ‘Moulis Affidavit’) are to be sealed on the Court file and are not to be published or disclosed to any person without further order of the Court.
2.Pursuant to ss 33V and 33ZF of the Act, the Court hereby approves the settlement of this proceeding in accordance with the terms of a document titled “Agreement” dated 27 March 2009 (the “Agreement”, a copy of which is Annexure A to the Court’s orders) and on the basis of distribution of the settlement sum (referred to in paragraph 2(ii) of the Agreement) in accordance with the settlement scheme described in paragraphs 61 – 83 of the Moulis Affidavit.
3.Pursuant to s 33ZB(a) of the Act, the Court declares that the persons affected and bound by these orders are the applicant, the respondents and the group members as they are defined in…
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- Case
- [2009] FCA 516
- Decision Date
CaseChat Overview and Summary
The court's reasoning focused on the principle that the essential question in approving a settlement is whether it is fair and reasonable to the group members who will be bound by it. Given the significant legal costs that could be incurred if the case proceeded to a final hearing, the court determined that the settlement was indeed fair and reasonable. The court also highlighted the similarity between this case and Lopez, where the potential for a limited recovery in the event of insolvency made the settlement an attractive option for the group members.
Ultimately, the court approved the settlement based on the fairness and reasonableness to the group members, and the potential savings in legal costs. The court also noted that Village Life Ltd, while having limited assets, was not insolvent, and the settlement would not adversely affect the interests of unsecured creditors. The court dismissed the application with a verdict for the respondents and entered judgment in their favour. The court further ordered that the settlement sum be paid by the respondents within 28 days, and that certain documents be sealed and not disclosed without further order of the court.
Orders
Orders of the court
1. Pursuant to s 50 of the Federal Court of Australia Act 1976 (Cth) (the “Act”) the documents located at Tabs 1 and 16 of Ex VAM1 to the affidavit of Van Angelo Moulis filed on 5 May 2009 (the ‘Moulis Affidavit’) are to be sealed on the Court file and are not to be published or disclosed to any person without further order of the Court.
2. Pursuant to ss 33V and 33ZF of the Act, the Court hereby approves the settlement of this proceeding in accordance with the terms of a document titled “Agreement” dated 27 March 2009 (the “Agreement”, a copy of which is Annexure A to the Court’s orders) and on the basis of distribution of the settlement sum (referred to in paragraph 2(ii) of the Agreement) in accordance with the settlement scheme described in paragraphs 61 – 83 of the Moulis Affidavit.
3. Pursuant to s 33ZB(a) of the Act, the Court declares that the persons affected and bound by these orders are the applicant, the respondents and the group members as they are defined in sub-paragraph 1(d) of the Amended Statement of Claim filed on 30 June 2008.
4. The respondents are to pay the settlement sum the subject of Order 2 within 28 days of the making of that Order.
5. The Application dated 15 October 2007 is dismissed with a verdict for the respondents and with judgment entered for the respondents.
6. There is no further order as to costs of the proceeding (and the Court notes the agreement between the parties as to previous costs orders in this and other proceedings referred to in the Agreement).
7. Pursuant to s 33ZF of the Act, the requirements to give notice to group members of the matters referred to in ss 33J and 33X(1)(a) of the Act be dispensed with.
8. Slater & Gordon may approach the Court, following 7 days’ notice to the respondents, to seek any necessary extension of time to complete any of the steps provided for in the settlement scheme referred to in paragraphs 61 – 83 of the Moulis Affidavit.
Note: A copy of the Annexure A is attached to the original orders on the Court file and is available for inspection in the Federal Court Registry.
Note:
1. Pursuant to s 50 of the Federal Court of Australia Act 1976 (Cth) (the “Act”) the documents located at Tabs 1 and 16 of Ex VAM1 to the affidavit of Van Angelo Moulis filed on 5 May 2009 (the ‘Moulis Affidavit’) are to be sealed on the Court file and are not to be published or disclosed to any person without further order of the Court.
2. Pursuant to ss 33V and 33ZF of the Act, the Court hereby approves the settlement of this proceeding in accordance with the terms of a document titled “Agreement” dated 27 March 2009 (the “Agreement”, a copy of which is Annexure A to the Court’s orders) and on the basis of distribution of the settlement sum (referred to in paragraph 2(ii) of the Agreement) in accordance with the settlement scheme described in paragraphs 61 – 83 of the Moulis Affidavit.
3. Pursuant to s 33ZB(a) of the Act, the Court declares that the persons affected and bound by these orders are the applicant, the respondents and the group members as they are defined in sub-paragraph 1(d) of the Amended Statement of Claim filed on 30 June 2008.
4. The respondents are to pay the settlement sum the subject of Order 2 within 28 days of the making of that Order.
5. The Application dated 15 October 2007 is dismissed with a verdict for the respondents and with judgment entered for the respondents.
6. There is no further order as to costs of the proceeding (and the Court notes the agreement between the parties as to previous costs orders in this and other proceedings referred to in the Agreement).
7. Pursuant to s 33ZF of the Act, the requirements to give notice to group members of the matters referred to in ss 33J and 33X(1)(a) of the Act be dispensed with.
8. Slater & Gordon may approach the Court, following 7 days’ notice to the respondents, to seek any necessary extension of time to complete any of the steps provided for in the settlement scheme referred to in paragraphs 61 – 83 of the Moulis Affidavit.
Note: A copy of the Annexure A is attached to the original orders on the Court file and is available for inspection in the Federal Court Registry.s
Note:
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
Established by: JACOBSON J
As I have said, no group member has come forward to express any objection. This includes group members who have been advised that they will not receive any funds from the settlement sum. Nor has any group member come forward seeking to opt out of the proceedings or to be given an opportunity to do so. CONSIDERATION OF THE AUTHORITIES In Taylor v TelstraCorporation Ltd [2007] FCA 2008 at [56] to [66], I endeavoured to set out the principles which apply to the exercise of the power under s 33V to approve a settlement. The principles to which I referred were applied by Stone J in Dorajay Pty Ltd v Aristocrat Leisure Limited [2009] FCA 19 at [10]. I will apply those principles in considering the present application. It seems that the authorities to which I referred in Taylor v Telstra suggest that there might be some slight difference of emphasis between the approach taken by Goldberg J in Williams v FAI Home Security Pty Ltd (No 4) (2001) 180 ALR 459 and DarwallaMilling Co Pty Ltd v F Hoffmann-La Roche Limited (No 2) (2007) 236 ALR 322. However, both of these approaches indicate that the essential question is whether the settlement is fair and reasonable having regard to the claims made by group members who will be bound by the settlement. In Lopez, Finkelstein J referred at [16] to the onerous task involved in the consideration of an application. As I mentioned earlier, the application in Lopez has some striking similarities to the situation which arises in the present matter. That is because, in Lopez, there was a very real likelihood that if the case went to a final hearing, the group members would not receive anything like the amount they will receive upon the approval of the compromise. The reason for this was that the company was hopelessly insolvent and success in the proceeding would have left group members in a position where their claim would be reduced to the ability to prove in a winding up. As his Honour remarked at [19], “that is hardly an enticing position”. A further similarity in Lopez was that there was an insurance fund which was available. His Honour referred at [23] to the effect of s 562 of the then Corporations Law which had the effect that the approval of the settlement and the application of the insurance funds would not, in any way, adversely affect the interests of unsecured creditors of the company. Whilst Village Life is conceded to have limited assets, what I have said about Lopez is not to suggest in any way that the company is insolvent. SUBMISSIONS OF THE PARTIES In this case, as Mr Abadee submitted, the stark consequences of the Court withholding its approval to the settlement would be that any successful judgment that may be obtained by the applicants and subsequently by group members would be wiped out by the legal costs which would be incurred in pursuing the proceedings to final judgment. The estimate of those costs provided in Mr Moulis’s affidavit, is in an amount of approximately $4.8 million. Mr Moulis is an experienced practitioner in this field, and I accept his estimate as being within the range in this type of matter. It seems to me to be likely that the individual respondents, who would be entitled to indemnity from the insurer, would incur costs of that order in defending the proceedings.