FEDERAL COURT OF AUSTRALIA Hodges v Waters (No 5) [2014] FCA 965 Citation: Hodges v Waters (No 5) [2014] FCA 965 Parties: CHARLES HODGES & MARK HODGES AS TRUSTEES OF THE CHARLES HODGES SUPERANNUATION FUND v ANDREA JANE WATERS, KPMG, WELLINGTON INVESTMENT MANAGEMENT LIMITED, OCTAVIAR LIMITED (ADMINISTRATOR APPOINTED), GUY HUTCHINGS, JOHN ARTHUR WHATELEY, JACK SIMON DIAMOND, CRAIG ROBERT WHITE, DEBORAH BEALE, STEVEN KRIS KYLING, STUART ROBERTSON PRICE, MICHAEL GORDON HISCOCK, MICHAEL CHRISTODOULOU KING, PAUL JOSEPH MANKA, FERNANDO ESTEBAN, RAYMOND KELLERMAN, DAVID MARK ANDERSON, OCTAVIAR LIMITED (IN LIQUIDATION) ACN 107 863 390 and OCTAVIAR ADMINISTRATION PTY LTD (IN LIQUIDATION) ACN 101 069 390 File number: NSD 324 of 2009 Judge: PERRAM J Date of judgment: 5 September 2014 Catchwords: PRACTICE AND PROCEDURE – representative proceeding – proposed settlement – application for Court approval of notices to group members and registration process Legislation: Federal Court of Australia Act 1976 (Cth) s 33V Cases cited: Inabu Pty Ltd v Leighton Holdings Limited [2014] FCA 622 McMullin v ICI Australia Operations Pty Ltd (1998) 84 FCR 1 Date of hearing: 22 August 2014 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 8 Counsel for the Applicants: Mr MBJ Lee SC and Mr WAD Edwards Solicitor for the Applicants: Johnson Winter & Slattery Lawyers Counsel for the First and Second Respondents: Mr JA Arnott Solicitor for the First and Second Respondents: Allens IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 324 of 2009 BETWEEN: CHARLES HODGES & MARK HODGES AS TRUSTEES OF THE CHARLES HODGES SUPERANNUATION FUND Applicant AND: ANDREA JANE WATERS First Respondent KPMG Second Respondent WELLINGTON INVESTMENT MANAGEMENT LIMITED Third Respondent OCTAVIAR LIMITED (ADMINISTRATOR APPOINTED) Fourth Respondent GUY HUTCHINGS Fifth Respondent JOHN ARTHUR WHATELEY Sixth Respondent JACK SIMON DIAMOND Seventh Respondent CRAIG ROBERT WHITE Eighth Respondent DEBORAH BEALE Ninth Respondent STEVEN KRIS KYLING Tenth Respondent STUART ROBERTSON PRICE Eleventh Respondent MICHAEL GORDON HISCOCK Twelfth Respondent MICHAEL CHRISTODOULOU KING Thirteenth Respondent PAUL JOSEPH MANKA Fourteenth Respondent FERNANDO ESTEBAN Sixteenth Respondent RAYMOND KELLERMAN Seventeenth Respondent DAVID MARK ANDERSON Eighteenth Respondent OCTAVIAR LIMITED (IN LIQUIDATION) ACN 107 863 390 Nineteenth Respondent OCTAVIAR ADMINISTRATION PTY LTD (IN LIQUIDATION) ACN 101 069 390 Twentieth Respondent JUDGE: PERRAM J DATE OF ORDER: 22 AUGUST 2014 WHERE MADE: SYDNEY THE COURT ORDERS THAT: Registration of Group Members 1. Pursuant to section 33ZF of the Federal Court of Australia Act 1976 (Cth) (the Act), any Group Member who wishes to participate in any distribution of any amount agreed in settlement of these proceedings (PIF Class Action) shall by no later than 4.00 pm on 1 October 2014 have delivered to Armstrong Registry Services Limited (Armstrong), as agent for the solicitors for the Applicants, a registration form in the form set out at Annexure C to these orders (the Registration Form). 2. The Registration Form may be completed on behalf of a Claimant by their solicitor or other agent. 3. Any person who is a Group Member (who has not opted out) and does not complete and return a Registration Form in accordance with order 1, above, by 4:00pm on 1 October 2014 will remain a Group Member for all purposes, and will be bound by any resolution of the proceedings, but shall not be entitled to receive a distribution from any amount agreed in settlement of the PIF Class Action or any damages awarded in the PIF Class Action. Giving Notice of the Registration Process 4. Pursuant to sections 33X and 33Y of the Act: 4.1 the terms of the Advertisement set out in Annexure A to these orders be approved (the Advertisement); 4.2 the terms of the Registration Notice set out in Annexure B to these orders be approved (the Notice); and 4.3 the terms of the Registration Form set out in Annexure C to these orders be approved. 5. The solicitors for the Applicants are to give notice to Group Members of the registration process via the following procedure at the Applicants' cost: 5.1 By no later than 29 August 2014 publishing the Advertisement in the legal notices or equivalent section in one weekday edition of each of: 5.1.1 The Australian Financial Review; and 5.1.2 The Australian. 5.2 By no later than 29 August 2014 causing a copy of the Notice to be made available to Group Members for download on a website hosted by JWS with a web address www.pifclaims.com.au. 5.3 Instructing Armstrong to, by no later than 29 August 2014, transmit the Notice and Registration Form to the postal address of each of the Group Members (who has not opted out) at: 5.3.1 either the postal address recorded in the Premium Income Fund (PIF)'s register of unitholders as at 31 January 2008; or 5.3.2 where a more recent postal address has been provided to Bentham IMF Limited, to that postal address. 5.4 Where the Applicants' solicitors have identified that a Group Member is deceased, the Notice and Registration Form will be addressed to the estate of that Group Member and care of his or her executor or administrator where the identity of that administrator or executor is available to the Applicants' solicitors. 6. The Notice, Advertisement and Registration Form in Annexure A, B and C may be amended by the solicitors for the Applicants before they are posted or published in order to correct any postal, website, telephone number or other non-substantive error. List of Registered Group Members 7. By 4.00pm on 17 October 2014 the Applicants will: 7.1 deliver to the Respondents a list (in electronic form) of all persons who returned a completed Registration Form, which list shall contain: 7.1.1 the information in the Registration Form; 7.1.2 any amendments to the information in the Registration Form as notified to the solicitors for the Applicants by that date (List of Registered Group Members); and with such information to be kept confidential by the Respondents. 7.2 file with the Court, in a sealed envelope marked "Confidential List of Registered Group Members – Not to be opened without leave of the Court or a Judge", a copy of the List of Registered Group Members. 8. The Applicants' solicitors may delegate the function of receiving completed Registration Forms and preparing the List of Registered Group Members to Armstrong. 9. Liberty is reserved to the Applicants' solicitors to apply for the addition, deletion or amendment of persons or details to or from the List of Registered Group Members if it appears that the omission or inclusion of a person or details was the result of an error by the solicitors or otherwise. 10. The cost of and incidental to the procedure set out in orders 4 to 9 above shall be costs in the proceeding. For the avoidance of doubt, answering enquiries from unitholders and members of the public in relation to the Notice, Registration Form or Advertisement is work incidental to orders 5 to 9 above. 11. Until further order and on the ground that it is necessary to prevent prejudice to the proper administration of justice, Confidential Exhibit RGJ 5 to the affidavit of Robert Johnston sworn 21 August 2014 (being a copy of the Settlement Deed) and the contents thereof (including the value of the Settlement Sum) be the subject of a non-publication order under section 37AF of the Act and be ordered confidential within the meaning of r 2.32(1)(b) of the Federal Court Rules 2011 (Cth). 12. The matter be stood over for further directions on 21 October 2014. 13. All procedural directions made in the proceedings apart from confidentiality orders are vacated. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. Annexure B Annexure C IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 324 of 2009 BETWEEN: CHARLES HODGES & MARK HODGES AS TRUSTEES OF THE CHARLES HODGES SUPERANNUATION FUND Applicant AND: ANDREA JANE WATERS First Respondent KPMG Second Respondent WELLINGTON INVESTMENT MANAGEMENT LIMITED Third Respondent OCTAVIAR LIMITED (ADMINISTRATOR APPOINTED) Fourth Respondent GUY HUTCHINGS Fifth Respondent JOHN ARTHUR WHATELEY Sixth Respondent JACK SIMON DIAMOND Seventh Respondent CRAIG ROBERT WHITE Eighth Respondent DEBORAH BEALE Ninth Respondent STEVEN KRIS KYLING Tenth Respondent STUART ROBERTSON PRICE Eleventh Respondent MICHAEL GORDON HISCOCK Twelfth Respondent MICHAEL CHRISTODOULOU KING Thirteenth Respondent PAUL JOSEPH MANKA Fourteenth Respondent FERNANDO ESTEBAN Sixteenth Respondent RAYMOND KELLERMAN Seventeenth Respondent DAVID MARK ANDERSON Eighteenth Respondent OCTAVIAR LIMITED (IN LIQUIDATION) ACN 107 863 390 Nineteenth Respondent OCTAVIAR ADMINISTRATION PTY LTD (IN LIQUIDATION) ACN 101 069 390 Twentieth Respondent JUDGE: PERRAM J DATE: 5 SEPTEMBER 2014 PLACE: SYDNEY REASONS FOR JUDGMENT 1 Subject to the question of Court approval under s 33V of the Federal Court of Australia Act 1976 (Cth) the parties have reached an accommodation which will dispose of the suit in its entirety. The remaining steps which need to be taken before that can occur are: (a) the publication of notices of the settlement in newspapers; (b) the notification of the members of the group of the settlement and of their right to participate in it; and (c) the closing of the group by limiting those who may receive funds to those who have elected to take part in the settlement by responding to the notification procedure in (a) and (b). 2 When the class is finally precisely defined it will be possible to ascertain the entitlement of each member. 3 On 22 August 2014 I made orders providing for the above. They had the following broad effects. Order 5 provided for the publication of an advertisement in the Australian Financial Review and The Australian. The proposed advertisement explains what has occurred in terms which, to my mind, are satisfactory. Critically, it identifies the need for any group member wishing to share in the settlement to return a registration form by 4:00 pm on 1 October 2014. I discuss this date below but for present purposes it suffices to note that it is upon that date that it is proposed the class will be closed. 4 I was concerned that the age of the cohort of group members might make this period too short in the sense that some group members might be in hospital which might impact on their ability to respond. I raised this with Mr Lee of senior counsel for the applicants who indicated a countervailing concern, namely, a desire to distribute the proceeds whilst the group members were still alive. I accept this as a legitimate concern in the present context. In those circumstances, I am content with the 1 October 2014 cut-off date. In all other ways, the proposed advertisement was unexceptional. 5 The proposed notice which is to be distributed to class members is a more detailed document which, subject to correcting a minor typographical error ('why is this notice is important' to have the first 'is' deleted) was satisfactory in form. 6 As I have mentioned, the class is proposed to be closed on 1 October 2014 and limited to those who have registered. Practical considerations compel such an approach for it will not be possible to determine the members' entitlements until their number is known. The power of the Court to close the group in this fashion is not in dispute: cf. McMullin v ICI Australia Operations Pty Ltd (1998) 84 FCR 1 at 3-4 per Wilcox J. The registration orders I have made will facilitate that process: cf. orders made by Stone J in Dorajay Pty Ltd v Aristocrat Leisure Limited (Federal Court of Australia Proceedings NSD362/2004) on 21 May 2008; Inabu Pty Ltd v Leighton Holdings Limited [2014] FCA 622 per Jacobson J. 7 The applicants' solicitors have concluded that it will be more cost effective to use a firm specialising in providing registration services to receive the registration forms and telephone calls from group members. This is plainly a sensible proposal given the cost of using legal staff to perform the same function. 8 It was for these reasons that I made the orders I did on 22 August 2014 setting up a notification and registration procedure and providing for class closure. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram. Associate: Dated: 5 September 2014