Waimoana Pty Ltd as Trustee for the Waimoana Superannuation Fund v Centuria Strategic Property Limited [2017] NSWSC 1091

Supreme Court New South Wales

Medium Neutral Citation: Waimoana Pty Ltd as Trustee for the Waimoana Superannuation Fund v Centuria Strategic Property Limited [2017] NSWSC 1091 Hearing dates: 10 August 2017 Date of orders: 10 August 2017 Decision date: 10 August 2017 Jurisdiction: Equity Before: Sackar J Decision: See para [16] Catchwords: Practice and procedure — Actions — Class actions — Deed of settlement Legislation Cited: Civil Procedure Act 2005 (NSW) Cases Cited: Blairgowrie Trading Limited v Allco Finance Group Ltd (No 3) (2017) 118 ACSR 614 Modtech Engineering Pty Ltd v GPT Management Holdings Limited [2013] FCA 626 Category: Procedural and other rulings Parties: Waimoana Pty Ltd as Trustee for the Waimoana Superannuation Fund (Plaintiff) Centuria Strategic Property Limited (First Defendant) Strategic Property Holdings No 2 Pty Limited (2nd Defendant) Rowan Wall (3rd Defendant) Representation: Counsel: WAD Edwards (Plaintiff) M Izzo (1st and 2nd Defendants) G P McNally SC, R D Glover (3rd Defendant)

Solicitors: Arnold Bloch Leibler (Plaintiff) Johnson Winter & Slattery (1st and 2nd Defendants) Bradfield & Scott (3rd Defendant) File Number(s): 2015/326423

Judgment 1. By Notice of Motion dated 9 June 2017 the First Plaintiff moved the court for the approval of a settlement of the proceedings pursuant to section 173 of the Civil Procedure Act 2005 (NSW) ("The Act"). In support of the application the Plaintiffs relied upon a number of affidavits of Mr Jonathon Milner, solicitor, one of 9 June, two of 3 August and a fourth of 8 August 2017. 2. Appropriately, confidentiality was sought in relation to a number of the affidavits and exhibits thereto. 3. The matter came before me on 10 August 2017 and all parties were represented by Counsel. Having carefully read the papers in advance and heard from all Counsel concerned, I made the orders in accordance with the short minutes, the effect of which was, amongst other things, to approve the settlement and the consequential mechanical arrangements necessary to ensure the settlement implementation. 4. All parties consented to the settlement arrangement, including each member of the class totalling some 42 persons. 5. In addition to the relevant documentation which included a settlement distribution scheme and an expert report from Mr Deborah Vine-Hall of 27 July 2017, I received an opinion from Mr WAD Edwards who appeared for the Plaintiffs dated 7 August 2017, again as a confidential document. 6. The fundamental question that arises in any application under section 173 of the Act is whether the settlement is "a fair and reasonable compromise of the claims made on behalf of the Group Members". There are many authorities for this proposition, with one of the more recent being Blairgowrie Trading Limited v Allco Finance Group Ltd (No 3) (2017) 118 ACSR 614 at [81]-[85], per Beach J. 7. A Court considering whether or not to grant approval to a settlement will generally need to take into account the amount offered to each group member, the prospects of success in the proceedings, the likelihood of group members obtaining judgment for an amount significantly in excess of the settlement offer, the terms of any advice received from Counsel and from any independent expert in relation to the issues which arise in the proceedings, the likely duration and costs of the proceedings of continuing to judgment and the attitude of group members to the settlement; Modtech Engineering Pty Ltd v GPT Management Holdings Limited [2013] FCA 626 at [13] per Gordon J. 8. The primary cause of action pleaded against the Defendants was for misleading or deceptive conduct in connection with capital raising for the Lang Centre Trust. Certain representations were said to have been made as to the debt to equity profile, the low risk associated with the investment and other representations about management fees and commission to be charged by the promoters. In addition it was alleged there was an omission to disclose relevant risks. 9. Claims in negligence were also pleaded along with breaches of fiduciary duty and further misleading and deceptive conduct alleged in relation to what might be described as the 2010 capital raising. 10. The case was put alternatively on the basis the Plaintiff and some members relied upon representations and/or omissions and would not have subscribed otherwise. It was also put but for the contravening conduct, there would have been insufficient subscriptions for the Lang Centre Trust to be able to purchase the Lang Centre. 11. The Defence and Cross Claim asserted in broad terms, that representations made were as to future matters and that there were reasonable grounds for making them at the time. In addition the pleadings asserted the true cause of the losses of the various members was not entering into the investment but subsequent factors such as the fall in value of underlying property after the global financial crisis, the loss of key tenants, and a difficult commercial leasing market. Statute of Limitation defences were also raised along with allegations of contributory negligence and the assertion there were other concurrent wrongdoers. Having examined the underlying documentation, and in particular the opinion of Mr Edwards, I concur entirely with his views that prospects in establishing liability and causation in the 2007/2008 claims carried significant risks. Again, in addition significant risks confronted the case brought in relation to the 2010 capital raising such that it was entirely possible the case would have failed completely. 12. In those circumstances the case was eminently suitable for compromise. 13. I have considered the terms of the proposed Settlement Deed and the relevant features of the Settlement Scheme. In my view, they are appropriate. 14. Given the total amount invested, in my view a figure agreed to by way of settlement is entirely fair and reasonable in the context. Further, I should add I am satisfied the methodology adopted by the settlement distribution scheme is fair, reasonable and in the interest of group members. 15. Not the least importantly, having regard to the Expert Opinion of Ms Vine-Hall I am of the view that the legal costs associated with the litigation are reasonable and have been properly incurred. 16. In all the circumstances the settlement should be approved and the Orders I made on 10 August are entirely appropriate.