Wepar Nominees Pty Ltd v Schofield (No 2) - [2014] FCA 225

FEDERAL COURT OF AUSTRALIA
Wepar Nominees Pty Ltd v Schofield (No 2) [2014] FCA 225

Citation: Wepar Nominees Pty Ltd v Schofield (No 2) [2014] FCA 225

Parties: WEPAR NOMINEES PTY LTD ACN 008 108 709 and IAN MCLEOD SMITH v DONALD WAYNE SCHOFIELD, ROGER CLARKE and JAYNE ELIZABETH STEELE

File number: SAD 234 of 2012

Judge: BESANKO J

Date of judgment: 14 March 2014

Catchwords:
PRACTICE AND PROCEDURE – representative proceeding – application for Court approval of settlement of representative proceeding under s 33V of the Federal Court Act 1976 (Cth) – whether notice of application given to group members – whether proposed settlement fair and reasonable – whether distribution of proposed settlement sum fair and reasonable – whether proposed settlement in the interests of the group members as well as interests of plaintiffs and defendants – where application not opposed by defendants – where closed group of 262 group members – where approximately 95% of group members in favour of settlement and no group members opposed settlement – where distribution to be made to litigation funder.

Held: Settlement approved.

Legislation: Australian Securities and Investments Commission Act 2001 (Cth) s 12DA
Corporations Act 2001 (Cth) ss 710, 728, 729, 731, 733, 1041H, 1041I, 1317S, Part 5.3A
Federal Court of Australia Act 1976 (Cth) ss 33V, 33X, 33ZB, 33ZF, Part IVA

Cases cited: Australian Securities and Investments Commission v Richards [2013] FCAFC 89
Courtney v Medtel Pty Limited (No 5) [2004] FCA 1406
Ingot Capital Investments Pty Ltd and Others v Macquarie Equity Capital Markets Ltd and Others (2008) 73 NSWLR 653
Lopez v Star World Enterprises Pty Ltd [1999] FCA 104
P Dawson Nominees Pty Ltd v Brookfield Multiplex Ltd (No 4) [2010] FCA 102
Richards v Macquarie Bank Limited (No 4) [2013] FCA 438
Wepar Nominees Pty Ltd v Schofield [2013] FCA 920
Williams and Another v FAI Home Security Pty Ltd and Another (No 4) (2000) 180 ALR 459
Wingecarribee Shire Council v Lehman Brothers Australia Ltd (In Liq) (No 9) [2013] FCA 1350

Date of hearing: 6 February 2014

Place: Adelaide

Division: GENERAL DIVISION

Category: Catchwords

Number of paragraphs: 49

Counsel for the Plaintiffs: Mr F Brohier

Solicitor for the Plaintiffs: Piper Alderman

Counsel for the Defendants: Mr M Steele

Solicitor for the First Defendant: Bartley Cohen

Solicitor for the Second Defendant: McCullough Robertson

Solicitor for the Third Defendant: Johnson Winter & Slattery

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY

GENERAL DIVISION

SAD 234 of 2012

BETWEEN:
WEPAR NOMINEES PTY LTD ACN 008 108 709
First Plaintiff

IAN MCLEOD SMITH
Second Plaintiff

AND:
DONALD WAYNE SCHOFIELD
First Defendant

ROGER CLARKE
Second Defendant

JAYNE ELIZABETH STEELE
Third Defendant

JUDGE:

BESANKO J

DATE OF ORDER:

14 MARCH 2014

WHERE MADE:

ADELAIDE

THE COURT ORDERS THAT:
1.Pursuant to ss 33V and 33ZF of the Federal Court of Australia Act 1976 (Cth) (“the Act”), the settlement of the proceeding (SAD 234 of 2012) between the plaintiffs and the defendants be approved in accordance with the terms set…

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: [2014] FCA 225
Decision Date: 14 March 2014

CaseChat Overview and Summary

Wepar Nominees Pty Ltd v Schofield (No 2) involved the approval of a settlement for a representative proceeding under the Federal Court Act 1976. The dispute arose from a closed group of 262 members who sought to resolve a class action against Schofield and others. The primary issue before the court was whether the settlement proposed was fair and reasonable and whether it was in the best interests of the group members. The court had to consider whether the notice of the application was adequately given to all group members, whether the distribution of the settlement funds was fair, and whether the settlement was advantageous for both the plaintiffs and the defendants.

The court found that the plaintiffs had not opposed the application, and approximately 95% of the group members supported the settlement, with none opposing it. The settlement included a distribution plan for the litigation funder, and the court needed to determine if this distribution was equitable. The court concluded that the settlement was fair and reasonable and that the plaintiffs would not gain any benefit that was not equally shared by the group members. The proposed settlement was deemed to be in the best interests of the group members.

In its decision, the court approved the settlement in accordance with the terms set out in the Deed of Settlement. The court authorised the plaintiffs to enter into the settlement on behalf of all group members and allowed the plaintiffs to distribute the settlement funds according to specified agreements. The court also approved a sum for the plaintiffs' costs and directed the distribution of the remaining settlement funds according to a prescribed scheme. The court further ordered that certain affidavits and exhibits be made confidential. All previous costs orders were vacated, and the plaintiffs were permitted to discontinue the proceeding. The final orders specified that the settlement and its terms were binding on the plaintiffs, defendants, and group members, and no order was made regarding the costs of the proceedings.

Orders

Orders of the court

1. Pursuant to ss 33V and 33ZF of the Federal Court of Australia Act 1976 (Cth) (“the Act”), the settlement of the proceeding (SAD 234 of 2012) between the plaintiffs and the defendants be approved in accordance with the terms set out in the Deed of Settlement executed by the parties to the proceedings and AIG Australia on 19 December 2013, being Exhibit LML-1 to the Affidavit of Lachlan McAllister Lamont sworn on 21 January 2014 (“Affidavit”).

2. Pursuant to ss 33V and 33ZF of the Act, the Court authorises the plaintiffs nunc pro tunc on behalf of all Group Members as defined in paragraph 1 of the Amended Statement of Claim filed in the proceeding (“Group Members”) to enter into and give effect to the Deed of Settlement and the transactions contemplated thereby for and on behalf of those Group Members.

3. Pursuant to ss 33V and 33ZF of the Act:

(a) The plaintiffs, by their solicitors, Piper Alderman, be at liberty to distribute the Settlement Sum received under the Settlement Deed in accordance with :

(i) the Litigation Funding and Management Agreement entered into by the Group Members and LCM Litigation Fund Pty Ltd (“LCM”), being Exhibit LML-6 to the Affidavit;

(ii) the Client Agreement between the Group Members and Piper Alderman, being Exhibit LML-5 to the Affidavit;

(iii) the Litigation Funding Agreement, between the plaintiffs and LCM, being Exhibit LML-10 to the Affidavit; and

(iv) the Retainer Agreement between the plaintiffs and Piper Alderman, being Exhibit LML-11 to the Affidavit.

(b) A sum of money no greater than $1,035,000 be approved as the costs for the plaintiffs to pursue and settle the proceeding, including all costs involved in the distribution of the settlement sum;

(c) The remainder of the settlement sum (sum after costs and fees are taken out pursuant to the agreements referred to in paragraph 3(a) above) be distributed in accordance with the scheme of distribution set out in Exhibit LML‑27 to the Affidavit of Lachlan McAllister Lamont sworn on 4 February 2014 and filed on 5 February 2014;

(d) The confidential affidavit of Brooke Tegan Wilshire sworn on 22 January 2014 and the Exhibits thereto be made confidential and be sealed on the Court file in an envelope marked “Not to be opened except by leave of the Court or a Judge”.

4. All costs orders made to date in the proceeding (including orders reserving costs) be vacated.

5. Pursuant to s 33V of the Act, the plaintiffs be at liberty to discontinue the proceeding by filing with the Court a Notice of Discontinuance by consent in the form of the Draft Notice of Discontinuance, being Exhibit LML-21 to the Affidavit.

6. Pursuant to ss 33ZB and 33ZF of the Act, the persons affected and bound by orders 1 to 5 are the plaintiffs, the defendants and the Group Members.

7. There be no order as to costs of the proceedings (including any cross-claims).

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

I am satisfied that the proposed settlement is in the interests of the Group Members, and that the plaintiffs gain no benefit or avoid no detriment that is not equally shared by the other Group Members.CONCLUSION Subject to the alteration I have identified, I will make the orders sought by the plaintiffs.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

Citation:		Wepar Nominees Pty Ltd v Schofield (No 2) [2014] FCA 225
Parties:		WEPAR NOMINEES PTY LTD ACN 008 108 709 and IAN MCLEOD SMITH v DONALD WAYNE SCHOFIELD, ROGER CLARKE and JAYNE ELIZABETH STEELE
File number:		SAD 234 of 2012
Judge:		BESANKO J
Date of judgment:		14 March 2014
Catchwords:		PRACTICE AND PROCEDURE – representative proceeding – application for Court approval of settlement of representative proceeding under s 33V of the Federal Court Act 1976 (Cth) – whether notice of application given to group members – whether proposed settlement fair and reasonable – whether distribution of proposed settlement sum fair and reasonable – whether proposed settlement in the interests of the group members as well as interests of plaintiffs and defendants – where application not opposed by defendants – where closed group of 262 group members – where approximately 95% of group members in favour of settlement and no group members opposed settlement – where distribution to be made to litigation funder. Held: Settlement approved.
Legislation:		Australian Securities and Investments Commission Act 2001 (Cth) s 12DA Corporations Act 2001 (Cth) ss 710, 728, 729, 731, 733, 1041H, 1041I, 1317S, Part 5.3A Federal Court of Australia Act 1976 (Cth) ss 33V, 33X, 33ZB, 33ZF, Part IVA
Cases cited:		Australian Securities and Investments Commission v Richards [2013] FCAFC 89 Courtney v Medtel Pty Limited (No 5) [2004] FCA 1406 Ingot Capital Investments Pty Ltd and Others v Macquarie Equity Capital Markets Ltd and Others (2008) 73 NSWLR 653 Lopez v Star World Enterprises Pty Ltd [1999] FCA 104 P Dawson Nominees Pty Ltd v Brookfield Multiplex Ltd (No 4) [2010] FCA 102 Richards v Macquarie Bank Limited (No 4) [2013] FCA 438 Wepar Nominees Pty Ltd v Schofield [2013] FCA 920 Williams and Another v FAI Home Security Pty Ltd and Another (No 4) (2000) 180 ALR 459 Wingecarribee Shire Council v Lehman Brothers Australia Ltd (In Liq) (No 9) [2013] FCA 1350
Date of hearing:	6 February 2014
Place:	Adelaide
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	49
Counsel for the Plaintiffs:	Mr F Brohier
Solicitor for the Plaintiffs:	Piper Alderman
Counsel for the Defendants:	Mr M Steele
Solicitor for the First Defendant:	Bartley Cohen
Solicitor for the Second Defendant:	McCullough Robertson
Solicitor for the Third Defendant:	Johnson Winter & Slattery

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION	SAD 234 of 2012

JUDGE:	BESANKO J
DATE OF ORDER:	14 MARCH 2014
WHERE MADE:	ADELAIDE