FEDERAL COURT OF AUSTRALIA Hudson Ventures Pty Ltd v Colliers International Consultancy and Valuation Pty Limited [2014] FCA 982 Citation: Hudson Ventures Pty Ltd v Colliers International Consultancy and Valuation Pty Limited [2014] FCA 982 Parties: HUDSON VENTURES PTY LTD (ACN 089 512 065) v COLLIERS INTERNATIONAL CONSULTANCY AND VALUATION PTY LIMITED (ACN 076 848 112); COLLIERS INTERNATIONAL CONSULTANCY AND VALUATION PTY LIMITED (ACN 076 848 112); LONGITUDE ROZELLE BAY PTY LIMITED (FORMERLY SYDNEY SLIPWAYS PTY LIMITED) (ACN 103 449 734), JACKAROO PROPERTY PTY LTD (ACN 121 696 875), DARREN MCMULLEN and HUDSON VENTURES PTY LTD (ACN 089 048 171) File number(s): NSD 358 of 2013 Judge(s): YATES J Date of judgment: 8 September 2014 Catchwords: PRACTICE AND PROCEDURE – representative proceeding - approval of settlement by court – whether proposed settlement is fair and reasonable and undertaken in the interests of all group members Legislation: Federal Court of Australia Act 1976 (Cth) s 33V Trade Practices Act 1974 (Cth) ss 52, 53A, 82 Cases cited: Courtney v Medtel Pty Ltd (No 5) (2004) 212 ALR 311 Date of hearing: 8 August and 8 September 2014 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 16 Counsel for the Applicant: Mr J Lee SC with Mr E Coupe Solicitor for the Applicant: William Roberts Lawyers Counsel for the Respondent: Mr D L Williams SC with Mr R D Glover Solicitor for the Respondent: Colin Biggers & Paisley IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 358 of 2013 BETWEEN: HUDSON VENTURES PTY LTD (ACN 089 512 065) Applicant COLLIERS INTERNATIONAL CONSULTANCY AND VALUATION PTY LIMITED (ACN 076 848 112) Cross-Claimant AND: COLLIERS INTERNATIONAL CONSULTANCY AND VALUATION PTY LIMITED (ACN 076 848 112) Respondent LONGITUDE ROZELLE BAY PTY LIMITED (FORMERLY SYDNEY SLIPWAYS PTY LIMITED) (ACN 103 449 734) First Cross-Respondent JACKAROO PROPERTY PTY LTD (ACN 121 696 875) Second Cross-Respondent DARREN MCMULLEN Third Cross-Respondent HUDSON VENTURES PTY LTD (ACN 089 048 171) Fourth Cross-Respondent JUDGE: YATES J DATE OF ORDER: 8 SEPTEMBER 2014 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. Pursuant to sections 33V and 33ZF of the Act, the settlement of this Proceeding between the applicant and the respondent be approved on the terms set out in the: (a) the Agreement; and (b) the Scheme. 2. The application and the cross claims be dismissed. 3. There be no order as to costs (with respect to the application and the cross claims), including any reserved costs, and any costs orders be vacated. 4. The applicant be authorised nunc pro tunc on behalf of the Group Members to enter into and to give effect to the Agreement and the transactions contemplated by it, for and on behalf of the Group Members. 5. Pursuant to ss 33V and 33ZF of the Act, liberty is granted to the Administrator to apply to the Court in connection with the Scheme including for any order, approval or guidance of the kind contemplated by the Scheme. 6. Pursuant to ss 37AF and 33ZF of the Act, and until further order, the exhibit marked Confidential Exhibit BP-1 and the confidential affidavit of Bill Petrovski sworn 1 August 2014, the exhibit marked Confidential Exhibit BP-3 and the confidential affidavit of Bill Petrovski sworn 8 August 2014, the exhibit marked Confidential Exhibit BP-4 and the confidential affidavit of Bill Petrovski sworn 19 August 2014, together with the affidavit of Darren McMullen sworn 31 July 2014 not be published to any person other than the applicant without leave of the Court and to be sealed on the Court file in envelopes marked "Not to be opened except by leave of the Court or a Judge". This order is necessary to prevent prejudice to the proper administration of justice. 7. Pursuant to ss 33ZB and section 33ZF of the Act, the persons affected and bound by orders 1 to 4 be the applicant, respondent, the Group Members and the cross respondents. 8. None of the orders made in this proceeding under s 37AF of the Act shall prevent any person from publishing the whole or any part of any reasons for judgment. IN THESE ORDERS: Act means the Federal Court of Australia Act 1976 (Cth). Administrator means William Roberts Lawyers as defined at cl 1.1 of the Scheme at page 6 of BP-1. Agreement means the Conditional Offer of Settlement Agreement executed by the applicant, respondent and cross respondents on 23 July 2014 by their respective solictors, being pages 1 to 2 of BP-1. BP-1 means Confidential Exhibit BP-1 to the Affidavit (Confidential) of Blagoj (Bill) Petrovski sworn on 1 August 2014. FASOC means the Further Amended Statement of Claim filed in the Proceeding on 20 September 2013 Group Members means the persons referred to in schedule 2 of the FASOC. Proceeding means this proceeding between the applicant and the respondent being a representative proceeding commenced under s 33C of the Act. Scheme means the Settlement Distribution Scheme dated 8 August 2014, being pages 3 to 18 of BP-1. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 358 of 2013 BETWEEN: HUDSON VENTURES PTY LTD (ACN 089 512 065) Applicant COLLIERS INTERNATIONAL CONSULTANCY AND VALUATION PTY LIMITED (ACN 076 848 112) Cross-Claimant AND: COLLIERS INTERNATIONAL CONSULTANCY AND VALUATION PTY LIMITED (ACN 076 848 112) Respondent LONGITUDE ROZELLE BAY PTY LIMITED (FORMERLY SYDNEY SLIPWAYS PTY LIMITED) (ACN 103 449 734) First Cross-Respondent JACKAROO PROPERTY PTY LTD (ACN 121 696 875) Second Cross-Respondent DARREN MCMULLEN Third Cross-Respondent HUDSON VENTURES PTY LTD (ACN 089 048 171) Fourth Cross-Respondent JUDGE: YATES J DATE: 15 SEPTEMBER 2014 PLACE: SYDNEY REASONS FOR JUDGMENT 1 The present application is for the approval of a settlement of a representative proceeding commenced under Pt IVA of the Federal Court of Australia Act 1976 (Cth) (the Act). The application is made in somewhat unusual circumstances. The number of group members is small, and all members are sophisticated investors who have agreed to the settlement that is proposed. These circumstances do not, of course, relieve the Court of its obligations under s 33V of the Act. However, they do signify that the Court can have confidence that, when taken with all appropriate material brought to the Court's attention in support of the application for approval, the settlement, as proposed, is fair and reasonable and has been undertaken in the interests of all group members. Background 2 The principal proceeding is for damage alleged to have been suffered by reliance on a valuation provided by the respondent in January 2007 with respect to land and water areas, and associated improvements and facilities, at Rozelle Bay in Sydney, which were to be leased and licensed as part of a proposed development providing for a marine repair and maintenance slipway facility business and a commercial office building. The principal proceeding is also for damage alleged to have been suffered by reliance on a review and update, in June 2008, of the capitalisation rates used by the respondent in its initial valuation. The applicant and the other group members claim to have made investments in reliance on the January 2007 valuation and, in some cases, the June 2008 review and update. The arrangements under which the applicant and other group members are said to have made their investments are complex. They do not need to be summarised in these reasons. 3 The applicant's claim, and that of other group members, is that both the June 2007 valuation and the June 2008 update contained material errors and deficiencies, and resulted in the respondent contravening ss 52 and 53A(1)(b) of the Trade Practices Act 1974 (Cth) (the Trade Practices Act). Damages are sought under s 82 thereof. 4 The respondent cross-claimed against a number of cross-respondents, who included the applicant and its principal, Mr McMullen. The cross-claim involves allegations of breach of contract, inducing breach of contract, and contravention of ss 52 and 53A of the Trade Practices Act and other statutory equivalents, leading to claims for indemnity and contribution. 5 The hearing of the proceeding commenced on 21 July 2014, with an estimated duration of three weeks. In the course of the applicant's opening, counsel handed up a 10 page document entitled "Applicant's List of Issues at Initial Trial". Once again, it is not necessary to summarise the issues identified in that document. Indeed, an informative summary could not be made without largely repeating the document itself. It is sufficient for me to record that the initial trial of the whole of the applicant's claim and the respondent's cross-claim, together with the determination of common questions of law and fact applicable to the claims of group members, would have involved the resolution of not only a large number of disputed facts, but also a large number of difficult legal questions. Put simply, the case, proceeding from both sides of the record, is complex. 6 On 23 July 2014, the applicant and the respondent announced to the Court that an "in principle" agreement to settle the proceeding had been reached on the basis that all claims of the applicant, respondent and group members would be resolved. 7 On the same day, the trial judge, Rares J, made orders providing for, amongst other things, the giving of notice to group members of the application to the Court for approval of the settlement, by the email transmission of an approved notice. There is evidence before the Court of the applicant's compliance with his Honour's orders in that regard. 8 On 24 July 2014, an initial settlement notice was sent to group members. On 29 July 2014, a further settlement notice was sent to group members. The last-mentioned notice was a personal notice to each group member which set out an estimate of the amount that the member would receive from the settlement after taking into account the prior payment of other estimated sums specified in the notice. 9 No group member has opposed the settlement. Indeed, as I have noted, following the giving of the notices to which I have referred, all members have expressed their agreement to the settlement. The hearing of the application for approval 10 Notwithstanding the agreement of all group members, the hearing of the application for approval proceeded in what may be described as a "standard way". A number of confidential affidavits were filed and read. A number of confidential exhibits were tendered. I was taken through this material, carefully. The applicant's evidence and submissions addressed the salient parts of Practice Note CM 17 concerning Court approval of settlements in representative proceedings commenced under Pt IVA of the Act. 11 I was assisted in my consideration by a detailed written joint opinion of counsel for the applicant directed to the fairness and reasonableness of the settlement, and by written submissions directed to the procedural aspects of the approval application. The proposed settlement 12 The proposed settlement involves the payment of a sum of money which is to be distributed to the applicant and all group members in accordance with a settlement distribution scheme after the payment of legal costs and disbursements, compensation paid to the applicant for the time and effort incurred by it in prosecuting the representative proceeding on behalf of group members, administration costs payable in relation to the settlement distribution scheme, and the relevant amount to be paid by the applicant and each group member to a litigation funder. The applicant and group members are each funded under separate litigation funding agreements with the same litigation funder. Each of the prior payments was estimated and particularised in the further settlement notice sent to each group member on 29 July 2014. 13 Detailed evidence has been given in respect of the amount incurred for legal costs and disbursements (which, at the present time, is slightly less than that estimated in the further settlement notice), the calculation of the compensation to the applicant, and the administration costs in relation to the settlement distribution scheme. 14 Usually, there would be independent evidence of the kind referred to by Sackville J in Courtney v Medtel Pty Ltd (No 5) (2004) 212 ALR 311 at [56]-[61] in relation to legal costs and disbursements. Such evidence has not been provided in this case in light of the communication to each group member of the estimates of each prior payment to be made and the final sum to be distributed to that group member, to which each has signified his or its acceptance. Consideration 15 Having considered all of the evidentiary material, the detailed joint opinion, and the other submissions made by the applicant, and having regard to the agreement to the settlement expressed by or on behalf of each group member, I am satisfied that the settlement is fair and reasonable and in the interests of all group members, and should be approved. Disposition 16 Orders, as now sought, should be made. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Yates. Associate: Dated: 15 September 2014