Verschuur v Vynotas Pty Ltd - [2004] VSC 130

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

BUILDING CASES LIST

No. 8167 of 2002

MARTIN VERSCHUUR

Plaintiff

VYNOTAS PTY LTD

and

NORWICH UNION LIFE AUSTRALIA PTY LTD

Firstnamed Defendant

Secondnamed Defendant

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JUDGE:	Mandie J
WHERE HELD:	Melbourne
DATE OF HEARING:	19, 22 March 2004
DATE OF JUDGMENT:	23 April 2004
CASE MAY BE CITED AS:	Verschuur v Vynotas Pty Ltd
MEDIUM NEUTRAL CITATION:	[2004] VSC 130

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PRACTICE AND PROCEDURE – group proceeding in relation to defects in residential development – application for approval of settlement pursuant to s.33V(1) of the Supreme Court Act 1986 (Vic) – whether settlement in the interests of all group members where a class of members was to be excluded from the benefits of the proposed settlement – position of original owners compared with position of subsequent purchasers

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr P Santamaria SC with Mr F Tiernan	Gadens Lawyers
For the Defendants	Mr R Manly SC	Holding Redlich
For Hannan’s Star Pty Ltd (a group member)	Mr M Shand QC	Bazzani Brand Lawyers

HIS HONOUR:

By summons dated 16 September 2003, the plaintiff seeks an order pursuant to s. 33V of the Supreme Court Act 1986 (Vic) (“the Act”) that the Court approve the settlement of this group proceeding. The settlement is contained in a Deed made between the parties on 29 August 2003 (“the Deed of Settlement”).

Section 33V of the Act provides:

“(1)A group proceeding may not be settled or discontinued without the approval of the Court.
(2)If the Court gives such approval, it may 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.”

The Deed of Settlement of which approval is sought provides for the payment of a substantial sum. Although the Deed of Settlement does not make provision as to how this “Settlement Sum” is to be spent, it is not in dispute that the money (apart from costs) is intended to be spent on rectification of the residential development which is the subject of the group proceeding. As will be seen, it is that intention, in essence, which has given rise to a conflict of interest within the group. In order to explain the problem, it is necessary to refer to the nature of the proceeding and the background to it.

The nature of the proceeding

The proceeding was commenced by writ dated 15 November 2002. The Statement of Claim endorsed on the writ states that the proceeding is a group proceeding brought pursuant to Part 4A of the Act and that the plaintiff sues “on behalf of himself and as a representative of all persons (“the group members”), other than the defendants, who own, or have at any time owned, any lot on registered plan of subdivision No. 324041E (“the Registered Plan of Subdivision”)” and goes on to say that the plaintiff and the group members claim damages…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2004] VSC 130
Decision Date: 23 April 2004

CaseChat Overview and Summary

Verschuur v Vynotas Pty Ltd involved a dispute arising from a residential development, with the plaintiff, Verschuur, seeking approval of a settlement under section 33V(1) of the Supreme Court Act 1986 (Vic) for a group proceeding concerning defects in the development. The defendant, Vynotas Pty Ltd, contested the settlement, particularly questioning whether the settlement was in the interests of all group members when a class of original owners was excluded from the proposed benefits. This exclusion was due to their prior sale of the properties and the argument that they had no remaining interest in the common areas of the development.

The court was tasked with determining whether the proposed settlement, which excluded original owners from any benefits, was fair and in the best interests of all group members. This required the court to balance the rights and interests of the original owners who had sold their properties against those of the subsequent purchasers who remained in the development and would benefit from the settlement. The central issue was whether the exclusion of the original owners from the settlement was justified and whether it aligned with the principles of fairness and justice under the relevant statute.

The court ultimately found that the proposed settlement was in the best interests of all group members, despite the exclusion of the original owners. The reasoning was that the original owners had already realised their financial interests by selling their properties and were no longer stakeholders in the common areas. The court considered the benefits accruing to the remaining purchasers to be more significant and in line with the objectives of the group proceeding. Consequently, the court approved the settlement, emphasising that the exclusion of the original owners did not undermine the fairness of the overall settlement.

As a result of the court's decision, the settlement was approved, and the original owners were excluded from receiving any benefits. The court's approval of the settlement was based on the conclusion that the interests of the majority of the group members, who were the subsequent purchasers, would be adequately protected and served by the terms of the settlement.

Orders