FEDERAL COURT OF AUSTRALIA
Webb v GetSwift Limited (No 7) [2023] FCA 90
File number(s): NSD 580 of 2018 Judgment of: MURPHY J Date of judgment: 2 February 2023 Catchwords: REPRESENTATIVE PROCEEDINGS – application for approval of settlement pursuant to s 33V of the Federal Court of Australia Act 1976 (Cth) – whether proposed settlement is fair and reasonable in the interests of group members and as between group members – heavily discounted settlement because of respondents’ insolvency – settlement approved Legislation: Australian Securities and Investments Commission Act 2001 (Cth)
Corporations Act 2000 (Cth) ss 563A, 674, 1041E, 1041H
Federal Court of Australia Act 1976 (Cth) ss 33V, 33ZF
Cases cited: Australian Securities and Investments Commission v GetSwift (Liability Hearing) [2021] FCA 1384
Australian Securities and Investments Commission v Richards [2013] FCAFC 89
Caason Investments Pty Ltd v Cao (No 2) [2018] FCA 527
Camilleri v The Trust Company (Nominees) Ltd [2015] FCA 1468
Davison v Commissioner of Police, NSW Police Force [2021] FCA 1324
Kelly v Willmott Forests Ltd (in liquidation) (No 4) [2016] FCA 323; 335 ALR 439
Matthews v SPI Electricity Pty Ltd (Ruling No 13) [2013] VSC 17; (2013) 39 VR 255
McKenzie v Cash Converters International Ltd (No 3) [2019] FCA 10
Parkin v Boral Limited (Class Closure) [2022] FCAFC 47; 291 FCR 116
Prygodicz v Commonwealth of Australia (No 2) [2021] FCA 634
Smith v Commonwealth of Australia (No 2) [2020] FCA 837
State of New South Wales v Kable [2013] HCA 26; 252 CLR 118
Timbercorp Finance Pty Ltd (in liq) v Collins [2016] HCA 44; (2016) 259 CLR 212
Williams v FAI Home Security Pty Ltd (No 4) (2000) 180 ALR 459
Division: General Division Registry: Victoria National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Number of paragraphs: 61 Date of hearing: 2 February 2023 Counsel for the Applicant: Mr O Bigos KC and Mr E Olivier Solicitor for the Applicant: Phi Finney Macdonald ORDERS
NSD 580 of 2018 BETWEEN: RAFAELLE WEBB
Applicant
AND: GETSWIFT LIMITED (ACN 604 611 556)
First Respondent
JOEL MACDONALD
Second Respondent
ORDER MADE BY:
MURPHY J
DATE OF ORDER:
2 FEBRUARY 2023
OTHER MATTERS:
The Court notes that Order 9 of the orders made on 19 November 2021, which reads as follows:
9.Subject to any further order of the Court, pursuant to s 33V of the [Federal Court of Australia Act 1975 (Cth)], any Group Member who by the Class Deadline has not registered in accordance with the manner provided for in these orders and is not otherwise deemed to be a Registered Group Member (Unregistered Group Member):
(a)will remain a Group Member for the purposes of this proceeding, including for the purpose of being bound by any judgment in this proceeding (save for any person who has opted out of the proceeding); and
(b)shall not,…
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- AGLC
- Webb v GetSwift Limited (No 7) [2023] FCA 90
- Case
- [2023] FCA 90
- Decision Date
CaseChat Overview and Summary
The primary legal issue was whether the proposed settlement was fair and reasonable for the group members, considering the respondents' insolvency and the minimal chance of recovering more than the $1 million currently held on trust. The court had to balance the interests of the group members and decide if the settlement was in their best interests, including as between themselves.
In approving the settlement, the court noted that the chances of group members recovering more than the $1 million currently held on trust were minimal. Given that only a fraction of the legal costs and litigation funding charges would be paid out of the settlement, the court concluded that the proposed settlement was fair and reasonable. The court was satisfied that the settlement was in the best interests of the group members, including as between themselves. The court's decision was based on the substantial discount due to GetSwift's insolvency and the negligible prospects of obtaining greater compensation.
The court approved the settlement and made orders for its implementation, including the distribution of funds for legal costs and expenses, and dismissed the proceeding with no order as to costs. The orders also included provisions for confidentiality and the appointment of an administrator for the settlement distribution scheme.
Orders
Orders of the court
Confidentiality
1. Until further order, pursuant to ss 37AF and 37AG(1)(a) of the Federal Court of Australia Act 1976 (Cth) (Act), and in order and to prevent prejudice to the proper administration of justice, the material identified in the Schedule of Confidential Material annexed to these orders and marked “Annexure A” is:
(a) to be treated as confidential;
(b) to be sealed on the Court file in envelopes marked “Not to be opened except by leave of the Court or a Judge”;
(c) not to be published or made available and any electronic version thereof is to be treated in an analogous fashion;
(d) not to be disclosed to any person other than:
(i) the Court;
(ii) the Applicant and its legal representatives; and
(iii) Therium Litigation Finance A IC (Therium) and its legal representatives; and
(iv) not to be disclosed to the Respondents or their legal representatives, other than to the extent that the material identified in Annexure A has previously been disclosed to them in the course of the proceeding.
Settlement approval
2. Pursuant to ss 33V and 33ZF of the Act, settlement of the proceeding upon the terms set out in the Settlement Deed dated 19 August 2021 executed by the Applicant, the Respondents, GetSwift Technologies Limited (GTL), Therium, and Phi Finney McDonald Pty Ltd (PFM) (Settlement Deed), and the Settlement Distribution Scheme (and any annexures thereto) exhibited to the affidavit of Timothy Michael Luke Finney dated 20 December 2022 (Settlement Distribution Scheme) (together, the Settlement Documents) be approved.
3. Pursuant to s 33ZF of the Act, the Court authorises the Applicant nunc pro tunc for and on behalf of persons who meet the definition of “Group Member” in the third further amended statement of claim filed on 19 February 2021 and who have not opted out of the proceeding (Group Members) to enter into and give effect to the Settlement Documents and the transactions contemplated for and on behalf of Group Members.
4. Pursuant to ss 33ZB and 33ZF of the Act, the persons affected and bound by the settlement of the proceedings be the Applicant, the Respondents, and the Group Members.
5. Pursuant to s 33ZF of the Act, the Group Members identified as Late Registrants 1 to 12 in the affidavit of Timothy Michael Luke Finney affirmed 20 December 2022 to be treated as Registered Group Members.
6. Pursuant to ss 33V(2) and 33ZF of the Act, Mr Paul Zawa of PFM be appointed administrator of the Settlement Distribution Scheme (Administrator) and is to act in accordance with the rules of the Settlement Distribution Scheme, subject to any direction of the Court.
7. Pursuant to ss 33V and 33ZF of the Act, and for the purposes of the Settlement Distribution Scheme, the following distributions from the settlement sum be approved:
(a) $100,000 to PFM for the Applicant’s legal costs and disbursements on a solicitor and own client basis, incurred in connection with the conduct of the proceeding on its own behalf and on behalf of all Group Members, including the costs of obtaining settlement approval and administering the Settlement Distribution Scheme;
(b) $6,130 to the Applicant for his time and expenses incurred in prosecuting the proceeding in the interests of Group Members; and
(c) $393,870 to Therium for part of the contingent component of the insurance premium for after-the event adverse costs insurance to be paid to AmTrust.
8. Upon the making of the distributions as set out in Order 7 above, the proceeding be dismissed with no order as to costs.
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
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Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
The proceeding alleges that during the Claim Period, GetSwift made a series of public announcements concerning agreements that it had entered into with customers which contained representations that were misleading or deceptive and omitted material information relating to these agreements in breach of s 1041H of the Corporations Act 2000 (Cth) (Corporations Act), equivalent provisions of the Australian Securities and Investments Commission Act 2001 (Cth), and the Australian Consumer Law. It is also alleged that the conduct constituted the making of false statements or dissemination of misleading information in breach of s 1041E of the Corporations Act. It is alleged that Mr Macdonald engaged in equivalent misleading or deceptive conduct in the making of false statements, including by approving the misleading announcements that were lodged with the ASX. The same conduct is said to give rise to a breach of GetSwift’s continuous disclosure obligations under s 674 of the Corporations Act. It is alleged that Mr Macdonald knowingly participated in GetSwift’s breaches of the continuous disclosure regime in contravention of s 674(2A) of the Corporations Act. Broadly, the key allegations of misconduct are that:(a)GetSwift’s announcements of new contracts with “enterprise clients” were misleading in that they did not disclose that, in most instances, those contracts were subject to initial free trial or “proof of concept” periods;(b)further, by GetSwift describing the above contracts as “exclusive” or “multi-year” (or by the use of similar terms), GetSwift misrepresented that the customer was obliged to use the GetSwift software platform and did not disclose that the contracts could be terminated for convenience at any stage (or in the alternative, simply not used); (c)GetSwift’s inclusion of estimated delivery numbers of revenue projections in certain announcements lacked any reasonable basis; and(d)during the Claim Period, GetSwift failed to disclose certain matters which impacted on the likelihood of certain contracts resulting the generation of any material benefit for GetSwift, including but not limited to the termination of certain customer contractual matters going to the likelihood of a customer making any extensive use of the GetSwift platform. THE PROPOSED SETTLEMENT The parties to the Settlement Deed are GetSwift, Mr Macdonald, GTL, Therium and PFM. Under the Settlement Deed, GetSwift, Mr Macdonald and GetSwift’s Canadian-domiciled parent company GTL, jointly and severally agreed to make an initial settlement payment of $1.5 million in three instalments of $500,000 each, with further settlement payments to be made over the following three years to be calculated as a portion of the capital raised by GTL and/or the revenue generated by GTL and its subsidiaries over that period, doing so in full and final settlement of the applicant’s and group members’ claims. Non-compliance with the Settlement Deed The first two $500,000 instalments of the initial settlement payment, totalling $1 million, were paid into the trust account of Quinn Emanuel, GetSwift’s then solicitors, on 10 September 2021 and on or around 11 October 2021, to be held on trust for the applicant and group members pending settlement approval. The third instalment of $500,000 was not paid, nor were the instalment payments that were to be generated from GTL’s capital raisings.