FEDERAL COURT OF AUSTRALIA Haslam v Money for Living (No 3) [2007] FCA 2089 CONVEYANCING – Settlement of part of a representative proceeding – Relevant considerations in determining exercise of Court's power under s 33V of Federal Court of Australia Act 1976 (Cth) – Settlement fair reasonable and adequate and in the interests of the group members as a whole – Court approved settlement Federal Court of Australia Act 1976 (Cth) Haslam v Money for Living (Aust) Pty Ltd (Administrators Appointed) [2007] FCA 897 referred to MARY ANN HASLAM, BERNARD DICKENS, PHYLLIS LESLIE DICKENS, DELIA LEMON, ESTELLE SYLVIA SMITH, ELAINE MAVIS GAINSFORD, EDWARD JAMES GAINSFORD, YVONNE GRAY AND ATHOL EASTERBROOK v MONEY FOR LIVING (AUST) PTY LTD (RECEIVER & MANAGER APPOINTED) ACN 107 611 218, MFL PROPERTY HOLDINGS PTY LTD (RECEIVER & MANAGER APPOINTED) ACN 111 105 125, STEPHEN O'NEILL, GARY DENNIS O'NEILL, JOLANTA SIMONE OLSZEWSKI, PERMANENT MORTGAGES PTY LTD, PERPETUAL TRUSTEE COMPANY LIMITED, LATROBE INVESTMENT SERVICES AUSTRALIA PTY LTD ACN 007 416 211, CASH FLOW KING PTY LTD ACN 108 343 853, PATRICK O'DONNELL, BILL KAFALTIS, JASON TALEB, KERRILI PTY LTD ACN 097 980 222, REGISTRAR OF TITLES, MKM CAPITAL PTY LTD ACN 117 776 464, RECORDER OF TITLES, THE COMMISSIONER OF STATE REVENUE OF VICTORIA, THE COMMISSIONER OF STATE REVENUE OF TASMANIA AND STABLE TECHNOLOGIES PTY LTD ACN 062 528 545 VID 1468 OF 2005 TRACEY J 21 DECEMBER 2007 MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VID 1468 OF 2005 BETWEEN: MARY ANN HASLAM First Applicant BERNARD DICKENS Second Applicant PHYLLIS LESLIE DICKENS Third Applicant DELIA LEMON Fourth Applicant ESTELLE SYLVIA SMITH Fifth Applicant ELAINE MAVIS GAINSFORD Sixth Applicant EDWARD JAMES GAINSFORD Seventh Applicant YVONNE GRAY Eighth Applicant ATHOL EASTERBROOK Ninth Applicant AND: MONEY FOR LIVING (AUST) PTY LTD (RECEIVER & MANAGER APPOINTED) ACN 107 611 218 First Respondent MFL PROPERTY HOLDINGS PTY LTD (RECEIVER & MANAGER APPOINTED) ACN 111 105 125 Second Respondent STEPHEN O'NEILL Third Respondent GARY DENNIS O'NEILL Fourth Respondent JOLANTA SIMONE OLSZEWSKI Fifth Respondent PERMANENT MORTGAGES PTY LTD Sixth Respondent PERPETUAL TRUSTEE COMPANY LIMITED Seventh Respondent LATROBE INVESTMENT SERVICES AUSTRALIA PTY LTD ACN 007 416 211 Eighth Respondent CASH FLOW KING PTY LTD ACN 108 343 853 Ninth Respondent PATRICK O'DONNELL Tenth Respondent BILL KAFALTIS Eleventh Respondent JASON TALEB Twelfth Respondent KERRILI PTY LTD ACN 097 980 222 Thirteenth Respondent REGISTRAR OF TITLES Fourteenth Respondent MKM CAPITAL PTY LTD ACN 117 776 464 Fifteenth Respondent RECORDER OF TITLES Sixteenth Respondent THE COMMISSIONER OF STATE REVENUE OF VICTORIA Seventeenth Respondent THE COMMISSIONER OF STATE REVENUE OF TASMANIA Eighteenth Respondent STABLE TECHNOLOGIES PTY LTD ACN 062 528 545 Nineteenth Respondent JUDGE: TRACEY J DATE OF ORDER: 21 DECEMBER 2007 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. Pursuant to s 33V of the Federal Court of Australia Act 1976 (Cth) the settlement of the representative proceeding in the terms of the deed of settlement between the applicants named therein and the First and Second Respondents dated 13 November 2007, a copy of which is exhibited to the affidavit of Leonard Adrian Warren affirmed on 20 December 2007, being confidential exhibit LAW-2 is approved by the Court. 2. Pursuant to s 33ZF of the Act, the Court declares that the Applicants have the authority of the group members, identified in exhibit LAW-2 to the affidavit of Leonard Adrian Warren affirmed on 27 November 2007 ("the group members"), to enter into and give effect to the deed of settlement and of each of the covenants contained therein. 3. Pursuant to s 33ZB of the Act, the judgment for approval is binding upon the group members. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VID 1468 OF 2005 BETWEEN: MARY ANN HASLAM First Applicant BERNARD DICKENS Second Applicant PHYLLIS LESLIE DICKENS Third Applicant DELIA LEMON Fourth Applicant ESTELLE SYLVIA SMITH Fifth Applicant ELAINE MAVIS GAINSFORD Sixth Applicant EDWARD JAMES GAINSFORD Seventh Applicant YVONNE GRAY Eighth Applicant ATHOL EASTERBROOK Ninth Applicant AND: MONEY FOR LIVING (AUST) PTY LTD (RECEIVER & MANAGER APPOINTED) ACN 107 611 218 First Respondent MFL PROPERTY HOLDINGS PTY LTD (RECEIVER & MANAGER APPOINTED) ACN 111 105 125 Second Respondent STEPHEN O'NEILL Third Respondent GARY DENNIS O'NEILL Fourth Respondent JOLANTA SIMONE OLSZEWSKI Fifth Respondent PERMANENT MORTGAGES PTY LTD Sixth Respondent PERPETUAL TRUSTEE COMPANY LIMITED Seventh Respondent LATROBE INVESTMENT SERVICES AUSTRALIA PTY LTD ACN 007 416 211 Eighth Respondent CASH FLOW KING PTY LTD ACN 108 343 853 Ninth Respondent PATRICK O'DONNELL Tenth Respondent BILL KAFALTIS Eleventh Respondent JASON TALEB Twelfth Respondent KERRILI PTY LTD ACN 097 980 222 Thirteenth Respondent REGISTRAR OF TITLES Fourteenth Respondent MKM CAPITAL PTY LTD ACN 117 776 464 Fifteenth Respondent RECORDER OF TITLES Sixteenth Respondent THE COMMISSIONER OF STATE REVENUE OF VICTORIA Seventeenth Respondent THE COMMISSIONER OF STATE REVENUE OF TASMANIA Eighteenth Respondent STABLE TECHNOLOGIES PTY LTD ACN 062 528 545 Nineteenth Respondent JUDGE: TRACEY J DATE: 21 DECEMBER 2007 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 This is an application, under s 33V of the Federal Court of Australia Act 1976 (Cth) ("the Act"), for the Court to approve a settlement of part of a representative proceeding. The details of the proceeding in which the application is made are summarised in the judgment of Gordon J in Haslam v Money for Living (Aust) Pty Ltd (Administrators Appointed) [2007] FCA 897 at [2]-[4]. The settlement has been reached between certain of the applicants, acting on behalf of all group members, and the first and second respondents. It will be convenient to refer to it as "the MFL settlement". The terms of the settlement were contained in a deed dated 13 November 2007. The deed was a confidential exhibit in the proceeding. 2 By order dated 30 November 2007 (as varied by a further order which I made this morning) I ordered that: "1… 2… 3 On or before 3 December 2007 the Applicant's solicitors shall post by ordinary mail to all group members in the representative proceeding: a a notice of proposed settlement in a form approved by the Court in respect of settlement of the representative proceeding in terms of the Deed of Settlement between the Applicant's and the first and second Respondents dated 13 November 2007 ("the Deed of Settlement"); and b an opt out notice pursuant to s 33J of the Federal Court of Australia Act 1976 (Cth) ("the Act") in a form approved by the Court; 3A any group member who wishes to exercise their right to opt out of this representative proceeding shall on or before 4.00 pm on 18 December 2007 file with the Court a completed opt-out notice. 4 Any group member, who pursuant to s 33Y of the Act, wishes to object to approval of the settlement of the representative proceeding in terms of the Deed of Settlement shall, on or before 4.00 pm on 18 December, file a notice of objection setting out the reasons for their objection."… 3 I fixed the hearing of the application for approval of the MFL settlement for hearing this morning. 4 The applicant's solicitors complied with order number three which I made on 30 November 2007. On 3 December 2007 the applicant's solicitors sent to each group member a notice of proposed settlement in the form approved by the Court on 30 November 2007 and an opt-out notice in a form approved by the Court. The group members were each advised of his or her right to object to the approval of the MFL settlement by notice filed in the Court. 5 No opt-out notices and no notices of objection to the settlement have been filed by any group member. 6 Counsel for the applicants submitted that the MFL settlement was fair, reasonable and adequate, in the interests of the group members as a whole and should, therefore, be approved. This submission was supported by counsel appearing for the first and second respondents. 7 The principles which guide the exercise of the Court's power under s 33V and the considerations which are, or may be, relevant in the exercise of the power have been identified in a series of cases. Those authorities have, conveniently, been collected by Gordon J in Haslam at [17]-[20]. I have had regard to those principles and considerations which arise in the present application in dealing with it. 8 The application is supported by an affidavit of Mr Leonard Adrian Warren, a principal of Russell Kennedy, the solicitors for the applicant. He deposed to the following relevant matters: · His communications with group members had led him to the belief that they are "broadly in favour of the proposed settlement." · Most of the group members had attended the mediation at which the settlement was negotiated. A broad outline of the settlement was explained to them and all of them were in favour of the settlement. · He had explained to each of the group members the strength and weaknesses of their legal position on various legal issues and had concluded "that the proposed settlement is fair and reasonable, having regard, in particular, to the possibility that a worse result may have been achieved at trial." · Approval of the settlement will save the group members substantial costs and anxiety associated with a trial at which they were not assured of success. 9 As is already noted the terms of the MFL settlement are confidential. It is sufficient for present purposes to note that it provides for measures by which title to their properties will be restored to group members. 10 It is clear from the material exhibited to Mr Warren's affidavit that the applicants' legal advisers have dealt with the considerations that were identified in the authorities, which bear on the exercise of the Court's discretion under s 33V of the Act. Having examined that material I am satisfied that the MFL settlement was fair, reasonable and adequate, in the interests of the group members as a whole and that it should be approved. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice TRACEY. Associate: Dated: 21 December 2007 Counsel for the Applicant: Mr P Marzella Solicitor for the Applicant: Russell Kennedy Counsel for the First and Second Respondents: Mr I Waller SC Solicitor for the First and Second Respondents: Arnold Bloch Leibler Counsel for the Thirteenth Respondent: Ms S Burchell Solicitor for the Thirteenth Respondent: Monahan and Rowell Counsel for the Fourteenth Respondent: Mr W Rimmer Solicitor for the Fourteenth Respondent: Victorian Government Solicitor Counsel for the Fifteenth Respondent: Mr M Sifris and Mr S Maiden Solicitor for the Fifteenth Respondent: Gadens Date of Hearing: 21 December 2007 Date of Judgment: 21 December 2007