FEDERAL COURT OF AUSTRALIA Construction, Forestry, Mining and Energy Union v Contract Blinds Pty Ltd [2009] FCA 572 PRACTICE AND PROCEDURE – representative proceedings under Part IVA of the Federal Court of Australia Act 1976 (Cth) – whether Court should approve settlement of proceedings under s 33V – applicable principles – settlement fair and reasonable, and in the interest of all claimants including group members – settlement approved Federal Court of Australia Act 1976 (Cth) s 33V Australian Competition and Consumer Commission v Chats House Investments Pty Ltd (1996) 71 FCR 250 referred to Williams v FAI Home Security Pty Ltd (No 4) (2000) 180 ALR 459 referred to Neil v P & O Cruises Australia Ltd [2002] FCA 1325 cited Jarrama Pty Ltd v Caltex Australia Petroleum Pty Ltd [2004] FCA 1114 cited Courtney v Medtel Pty Ltd (No 5) (2004) 212 ALR 311 cited Crawford v Bank of Western Australia Ltd [2005] FCA 949 cited Georgiou v Old England Hotel Pty Ltd [2006] FCA 705 cited Darwalla Milling Co Pty Ltd v F Hoffman-La Roche Ltd (No 2) (2006) 236 ALR 322 cited Haslam v Money for Living (Aust) Pty Ltd (Administrators Appointed) [2007] FCA 897 cited CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION, WAI LEONG, PHILLIPE LAVAL AVICE, TIMOTHY BARNSEY, AARON BARTROP, SALLY BOUCHER, BA TUNG CHUNG, SOK CHEA (JASON) CHUON, THUC LIEN DUONG, SRUOY EAM, KANISTHA LADDA JUNGPRADIT, ARACELI KLOPPENBURG, LOY KONG, SUY LIU LAM, TONY LAM, OLGA LOAYZA, TERRY MAY, LE TRAN MING, MAURICE JAMES MOSS, VAN THAI (MATHEW) NGUYEN, PHIROM NHOR, NEARY PANN, AMPHONE PATHEPSINA, VANNY PRENG, AKHTER RASOOL, SRI RANJANY ROBERTS, MING MEI SABANDITH, NOI SABANDITH, DENISE SCHUMACHER, MANRIQUE SEXON, YOEUN TOUCH, THI NGA TRAN, SUI XIE, LETICIA ZYLSTRA, ADAM SPAULL, CHENG HEANG, KATRINA KING, LAY HANG LAO, LEILA SHING, LY HEIN PHUONG, MAY CHUN LI, SACHA LAY and XUAN LINH LA v CONTRACT BLINDS PTY LTD (ACN 005 830 517) VID 119/2008 KENNY J 28 MAY 2009 MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY BETWEEN: CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION First Applicant WAI LEONG Second Applicant NESTOR AGUDA Third Applicant PHILLIPE LAVAL AVICE Fourth Applicant TIMOTHY BARNSEY Fifth Applicant AARON BARTROP Sixth Applicant SALLY BOUCHER Seventh Applicant BA TUNG CHUNG Eighth Applicant SOK CHEA (JASON) CHUON Ninth Applicant THUC LIEN DUONG Tenth Applicant SRUOY EAM Eleventh Applicant KANISTHA LADDA JUNGPRADIT Twelfth Applicant ARACELI KLOPPENBURG Thirteenth Applicant LOY KONG Fourteenth Applicant SUY LIU LAM Fifteenth Applicant TONY LAM Sixteenth Applicant OLGA LOAYZA Seventeeth Applicant TERRY MAY Eighteenth Applicant LE TRAN MING Nineteenth Applicant MAURICE JAMES MOSS Twentieth Applicant VAN THAI (MATHEW) NGUYEN Twenty-First Applicant PHIROM NHOR Twenty-Second Applicant NEARY PANN Twenty-Third Applicant AMPHONE PATHEPSINA Twenty-Fourth Applicant VANNY PRENG Twenty-Fifth Applicant AKHTER RASOOL Twenty-Sixth Applicant SRI RANJANY ROBERTS Twenty-Seventh Applicant MING MEI SABANDITH Twenty-Eighth Applicant NOI SABANDITH Twenty-Ninth Applicant DENISE SCHUMACHER Thirtieth Applicant MANRIQUE SEXON Thirty First Applicant YOEUN TOUCH Thirty Second Applicant THI NGA TRAN Thirty Third Applicant SUI XIE Thirty Fourth Applicant LETICIA ZYLSTRA Thirty Fifth Applicant ADAM SPAULL Thirty Sixth Applicant CHENG HEANG Thirty Seventh Applicant KATRINA KING Thirty Eighth Applicant LAY HANG LAO Thirty Ninth Applicant LEILA SHING Fortieth Applicant LY HEIN PHUONG Forty First Applicant MAY CHUN LI Forty Second Applicant SACHA LAY Forty Third Applicant XUAN LINH LA Forty Fourth Applicant AND: CONTRACT BLINDS PTY LTD (ACN 005 830 517) Respondent JUDGE: KENNY J DATE OF ORDER: 28 MAY 2009 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. Pursuant to s 33V of the Federal Court of Australia Act 1976 (Cth), the settlement of this proceeding in accordance with the Deed of Settlement, a copy of which is exhibited as "KAR 1" to the affidavit of Kelvin Andrew Reidy affirmed on 23 April 2009, be approved. 2. The Settlement Sum referred to in clause 2 of the Deed of Settlement be distributed to the second applicant and the fourth to the forty-fourth named applicants (hereafter "the Group Members") as follows: (a) Half of the settlement entitlement of the second applicant and each of the Group Members be paid by the respondent to that person by 19 June 2009; and (b) The remaining half of the settlement entitlement of the second applicant and each of the Group Members be paid by the respondent to that person by 21 October 2009. 3. The additional amount of $40,000 referred to in clause 2.5 of the Deed of Settlement be paid to the first applicant by the respondent by 21 October 2009. 4. All orders for costs previously made in the proceeding be set aside. 5. There be no order as to the costs of the applicants' motion notice of which is dated 23 April 2009. 6. Upon the filing of an affidavit of a solicitor for the Group Members deposing to completion of the distribution of the Settlement Sum referred to in paragraph 2 of these orders, the applicants have leave to discontinue this proceeding with no order as to costs, and the proceeding be discontinued forthwith. 7. The parties have liberty to apply. 8. The matter be listed for directions at 9.30am on 23 October 2009. 9. Pursuant to s 33ZF of the Federal Court of Australia Act 1976 (Cth), the Court declares that the first and second applicants have the authority of the Group Members to enter into and give effect to the Deed of Settlement and each of the covenants contained therein. 10. Pursuant to s 33ZB of the Federal Court of Australia Act 1976 (Cth), the judgment for approval is binding upon all Group Members. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using eSearch on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY BETWEEN: CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION First Applicant WAI LEONG Second Applicant NESTOR AGUDA Third Applicant PHILLIPE LAVAL AVICE Fourth Applicant TIMOTHY BARNSEY Fifth Applicant AARON BARTROP Sixth Applicant SALLY BOUCHER Seventh Applicant BA TUNG CHUNG Eighth Applicant SOK CHEA (JASON) CHUON Ninth Applicant THUC LIEN DUONG Tenth Applicant SRUOY EAM Eleventh Applicant KANISTHA LADDA JUNGPRADIT Twelfth Applicant ARACELI KLOPPENBURG Thirteenth Applicant LOY KONG Fourteenth Applicant SUY LIU LAM Fifteenth Applicant TONY LAM Sixteenth Applicant OLGA LOAYZA Seventeeth Applicant TERRY MAY Eighteenth Applicant LE TRAN MING Nineteenth Applicant MAURICE JAMES MOSS Twentieth Applicant VAN THAI (MATHEW) NGUYEN Twenty-First Applicant PHIROM NHOR Twenty-Second Applicant NEARY PANN Twenty-Third Applicant AMPHONE PATHEPSINA Twenty-Fourth Applicant VANNY PRENG Twenty-Fifth Applicant AKHTER RASOOL Twenty-Sixth Applicant SRI RANJANY ROBERTS Twenty-Seventh Applicant MING MEI SABANDITH Twenty-Eighth Applicant NOI SABANDITH Twenty-Ninth Applicant DENISE SCHUMACHER Thirtieth Applicant MANRIQUE SEXON Thirty First Applicant YOEUN TOUCH Thirty Second Applicant THI NGA TRAN Thirty Third Applicant SUI XIE Thirty Fourth Applicant LETICIA ZYLSTRA Thirty Fifth Applicant ADAM SPAULL Thirty Sixth Applicant CHENG HEANG Thirty Seventh Applicant KATRINA KING Thirty Eighth Applicant LAY HANG LAO Thirty Ninth Applicant LEILA SHING Fortieth Applicant LY HEIN PHUONG Forty First Applicant MAY CHUN LI Forty Second Applicant SACHA LAY Forty Third Applicant XUAN LINH LA Forty Fourth Applicant AND: CONTRACT BLINDS PTY LTD (ACN 005 830 517) Respondent JUDGE: KENNY J DATE: 28 MAY 2009 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 This is an application under s 33V of the Federal Court of Australia Act 1976 (Cth) for the Court to approve the settlement of this proceeding. The application is made by a notice of motion dated 23 April 2009 and supported principally by three affidavits of Kelvin Andrew Reidy affirmed on 23 April, 24 April and 19 May 2009 respectively. Mr Reidy is a solicitor employed by the first applicant, the Construction Forestry Mining and Energy Union. 2 The background to this proceeding is as follows. 3 The first and second applicants commenced the proceeding as a representative proceeding under Part IVA of the Federal Court of AustraliaAct by an application and statement of claim filed on 27 February 2008. The first and second applicants sued on their own behalf and as representative parties within the meaning of Part IVA of the Act on behalf of the persons named as the third to thirty-fifth applicants in the schedule attached to the application ("the group members"). 4 The statement of claim alleged that: · The Union and the respondent, Contract Blinds Pty Ltd, were parties to the Furnishing Industry National Award 2003. · The second applicant and the group members were employed by Contract Blinds pursuant to contracts of employment that were subject to the terms of the Award. · Contract Blinds had breached the Award and the contracts of employment by underpaying the entitlements of the second applicant and the group members, occasioning loss and damage to them. Specifically, Contract Blinds had not paid a shift loading of 30% on the ordinary rate of pay to persons working shifts finishing after midnight and at or before 8.00am, as it was required to do under the Award. Further, Contract Blinds was in breach of the contracts of employment as a result of a failure to pay the whole of the superannuation contributions to which the second applicant and the group members were entitled, because Contract Blinds had calculated superannuation contributions by reference to the underpaid wages. · Further, after the Union notified Contract Blinds of its failure to pay the 30% shift loading, in breach of the contracts of employment and s 792 of the Workplace Relations Act 1996 (Cth), Contract Blinds reduced the ordinary rate of pay of the second applicant and the group members and commenced to pay 30% shift loading on the reduced rate of pay. · Further, in breach of the contracts of employment and s 792 of the Workplace Relations Act, Contract Blinds unilaterally altered the shift arrangements worked by the second applicant and the group members. By way of relief, the applicants sought, amongst other things, orders for compensation under s 807(1)(b) of the Workplace Relations Act, orders for payments under s 719(6) of that Act, penalties under ss 807(1)(a) and 719(1), and injunctive relief under 807(1)(c). 5 The respondent filed a defence dated 2 May 2008, which was subsequently amended. Particulars of pleadings and alleged loss and damage were given. Discovery was completed. 6 On 14 November 2008, pursuant to ss 33J and 33X of the Federal Court of Australia Act, the Court approved the form of the Opt-Out Notice that was to be given to the group members in accordance with the process set out in the affidavits of Mr Reidy of 24 October 2008 and 12 November 2008. These affidavits contemplated a process whereby the Opt-Out Notice was translated into certain languages for the benefit of the group members with first languages other than English. A copy of the Opt-Out Notice (with an appropriate translation) was to be given to the group members at a meeting called for this purpose. Interpreters were to be present to ensure that questions raised by the group members were conveyed to a solicitor also present at the meeting. Any of the group members not attending the meeting was to receive the Opt-Out Notice (with an appropriate translation) by personal service. In an affidavit of 10 December 2008, Mr Reidy confirmed that these steps had been taken. The solicitor and interpreters in attendance at the meeting of group members also deposed to the course of that meeting. 7 On 2 December 2008, one of the group members, Nestor Aguda, opted out of the representative proceeding. 8 Subsequently, in an affidavit of 26 March 2009, Mr Reidy stated that there were nine additional persons not included in the proceeding who were members of the Union and employees of Contract Blinds with claims like those of the group members. By agreement between the parties, the claims of these nine persons were included in a mediation conducted on 25 February 2009, as a result of which the dispute was resolved and a deed of settlement executed. This deed was expressed to be subject to Court approval. 9 Steps were taken removing Nestor Aguda as a group member from the representative proceeding and adding the nine additional individuals to the group members. It is unnecessary to rehearse these steps here. 10 On 24 April 2009, the Court approved the form of the Notice of Proposed Settlement to be given to the group members as required by ss 33X(4) and 33Y(2) of the Federal Court of Australia Act. For the purpose of giving the Notice of Proposed Settlement, the Court approved a process similar to that previously used for giving the Opt-Out Notice. In an affidavit of 19 May 2009, Mr Reidy stated that each of the group members had been given a Notice of Proposed Settlement appropriately and in conformity with the Court's order. The Notice of Proposed Settlement allowed any of the group members to object to the settlement or the terms of settlement by filing a Notice of Objection with the Court by 19 May 2009. No objection was filed. 11 In an earlier affidavit of 23 April 2009, Mr Reidy informed the Court that the Union would not look to the second applicant or any of the group members for any amount as contribution towards its costs and would not seek an order under s 33ZJ of the Federal Court of Australia Act for reimbursement of its costs. Mr Reidy further said that the deed of settlement provided that: (a) Contract Blinds would pay a total of $280,000 by way of wages in settlement of the claims of the second applicant and the group members; and (b) Contract Blinds would pay an additional $40,000 to the Union on account of its costs of the proceedings. Mr Reidy also set out the mechanism pursuant to which the $280,000 was to be distributed, including that Contract Blinds would pay half of the $280,000, less applicable taxes, within 24 days of the Court approving the settlement, and the balance within 4 months of the first payment. 12 I turn now to consider whether settlement of the proceeding ought to be approved under s 33V of the Federal Court of Australia Act. The relevant principles are now well settled: see, for example, Australian Competition and Consumer Commission v Chats House Investments Pty Ltd (1996) 71 FCR 250 at 258 per Branson J; Williams v FAI Home Security Pty Ltd (No 4) (2000) 180 ALR 459 at 465-6 [19] per Goldberg J; Neil v P & O Cruises Australia Ltd [2002] FCA 1325 at [6]-[7] per Weinberg J; Jarrama Pty Ltd v Caltex Australia Petroleum Pty Ltd [2004] FCA 1114 at [10] per Crennan J; Courtney v Medtel Pty Ltd (No 5) (2004) 212 ALR 311 at 317-8 [37]-[42] per Sackville J; Crawford v Bank of Western Australia Ltd [2005] FCA 949 at [16]-[21] per Lee J; Georgiou v Old England Hotel Pty Ltd [2006] FCA 705 at [18] per Young J; Darwalla Milling Co Pty Ltd v F Hoffman-La Roche Ltd (No 2) (2006) 236 ALR 322 at 332 [30] and [31] per Jessup J; and Haslam v Money for Living (Aust) Pty Ltd (Administrators Appointed) [2007] FCA 897 at [17] – [20] per Gordon J. 13 The Court must assess whether the proposed settlement is fair and reasonable, having regard to the claims made on behalf of the group members who will be bound by the settlement. In making this assessment, the Court may, and ordinarily will, take into account the amount offered to the group members, the prospects of success in the proceeding, the likelihood of the group members obtaining judgment for an amount significantly in excess of the amount nominated in the settlement offer, the terms of any advice from counsel and any independent expert, the likely duration and cost of the proceeding if continued to judgment, and the attitude of the group members to the settlement: see Williams v FAI Home Security 180 ALR 459 at [19]. The Court must also be satisfied that the settlement has been made in the interests of the group members as a whole, and not merely the interests of the first and second applicants and the respondent: see ACCC v Chats House 71 FCR at 258. 14 Counsel for the applicants has submitted that the proposed settlement is fair and reasonable, having regard to the claims made on behalf of the group members, and should therefore be approved. The respondent indicated its agreement with the orders proposed by the applicants. 15 In his affidavit of 23 April 2009, Mr Reidy deposed that, based on the agreed amount of settlement, the second applicant and the group members would recover 85.15% of their claims. An opinion of senior and junior counsel concerning the settlement was exhibited to Mr Reidy's affidavit as a confidential exhibit. This opinion was supportive of the settlement. 16 All group members have been appropriately notified of the settlement and none have made an objection to it. Mr Reidy deposed to having answered a query raised by the group members with the second applicant (who is shop steward for the Union at Contract Blinds), noting that no further query had been forthcoming. 17 I have considered various factors bearing on the settlement, including: (1) the claims made by the applicants for themselves and on behalf of the group members, including the quantum of the claim made on behalf of each of the group members; (2) the prospects of success as best they may be divined, particularly from the nature of the claims and the pleadings; (3) the opinion of counsel and the affidavits of Mr Reidy; (4) the likely complexity, duration and cost of proceeding to trial plus the anxiety for all concerned; (5) the usual risks and delay associated with proceeding to trial and judgment; (6) the settlement mechanism for claim quantification and the absence of any objection by any group member; and (7) the favourable settlement amount against the total sum claimed, being about 85.15%. This last-mentioned factor is a most important one, and weighs heavily in favour of the approval of the settlement. Some other considerations also support the settlement; and others might be thought neutral. None can be said to weigh very much against the settlement. I am satisfied that the settlement is fair and reasonable and in the interest of all claimants, including the group members as a whole. The settlement should therefore be approved. Accordingly, I approve the settlement of this proceeding pursuant to s 33V of the Federal Court of Australia Act. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny. Associate: Dated: 28 May 2009 Counsel for the Applicants: Dr Hanscombe SC and Mr S Moore Solicitor for the Applicants: Constructions Forestry Mining and Energy Union Solicitor for the Respondent: Ms V Sadler of Cornwall Stodart Date of Hearing: 28 May 2009 Date of Judgment: 28 May 2009