FEDERAL COURT OF AUSTRALIA

Richards v Macquarie Bank Limited (No 5) [2013] FCA 1442 

Citation:	Richards v Macquarie Bank Limited (No 5) [2013] FCA 1442	
		
Parties:	TRACEY RICHARDS v MACQUARIE BANK LIMITED ABN 46 008 583 542, STORM FINANCIAL LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) ACN 064 804 691, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, VICKI ALLOM, ROBERT BALE, LYNDA BALE, TODD COLE, GRAEME DYER, KAREN DYER, EAMON HANNAN, RICHARD HEASLIP, LLOYD JONES, MARGARET JONES, MARIE KUPERMANN, KEITH LUNN, VERONICA LUNN, VIOLETTE RUSSO, KENNETH RYAN, FRANCES RYAN, VIKAS SEHGAL, RASHI SEHGAL, THOMAS RAYMOND WEARNE, RAYMOND ZARINS AND YVONNE ZARINS, SEAN JUDE MCARDLE and VICTOR FRANCIS AINSLIE	
		
File number:	QUD 590 of 2010	
		
Judge:	LOGAN J	
		
Date of judgment:	13 December 2013	
		
Catchwords:	PRACTICE AND PROCEDURE – representative proceedings – application for Court approval of a Second Revised Settlement Scheme under s 33V of the Federal Court of Australia Act 1976 (Cth) – fairness and reasonableness of Second Revised Settlement Scheme

Held: settlement approved subject to conditions	
		
Legislation:	Federal Court of Australia Act 1976 (Cth) ss 33V, 53A, Pt IVA 	
		
Cases cited:	Australian Securities and Investments Commission v Richards [2013] FCAFC 89 related 
Modtech Engineering Pty Limited v GPT Management Holdings Limited [2013] FCA 626 distinguished
Richards v Macquarie Bank Limited (No 4) [2013] FCA 438 related  	
		
Date of hearing:	12 - 13 December 2013	
		
Place:	Brisbane	
		
Division:	GENERAL DIVISION	
		
Category:	Catchwords	
		
Number of paragraphs:	47	
		
Counsel for the Applicant:	Mr J Kirk SC with Mr L Livingston	
		
Solicitor for the Applicant:	Thompson Eslick Solicitors	
		
Counsel for the First and Second Respondents:	Mr J Sheahan SC with Mr A Pomerenke QC	
		
Solicitor for the First and Second Respondents:	Allens	
		
Counsel for the Third Respondent:	Mr M Colbran QC with Mr D Cook

Solicitor for the Third Respondent:	Mr A Tregear, Australian Securities and Investments Commission	
		
Counsel for the First Objecting Respondents:	Mr D Campbell QC with Mr G Donnellan	
		
Solicitor for the First Objecting Respondents:	Thompson Eslick Solicitors	

IN THE FEDERAL COURT OF AUSTRALIA		
QUEENSLAND DISTRICT REGISTRY		
GENERAL DIVISION	QUD 590 of 2010	
 
BETWEEN:	TRACEY RICHARDS
Applicant
	
AND:	MACQUARIE BANK LIMITED ABN 46 008 583 542
First Respondent

STORM FINANCIAL LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) ACN 064 804 691
Second Respondent

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Third Respondent

VICKI ALLOM, ROBERT BALE, LYNDA BALE, TODD COLE, GRAEME DYER, KAREN DYER, EAMON HANNAN, RICHARD HEASLIP, KERRI-ANNE HEASLIP, LLOYD JONES, MARGARET JONES, MARIE KUPERMANN, KEITH LUNN, VERONICA LUNN, VIOLETTE RUSSO, KENNETH RYAN, FRANCES RYAN, VIKAS SEHGAL, RASHI SEHGAL, THOMAS RAYMOND WEARNE, RAYMOND ZARINS AND YVONNE ZARINS
First Objecting Respondents

SEAN JUDE MCARDLE
Second Objecting Respondent

VICTOR FRANCIS AINSLIE
Third Objecting Respondent

JUDGE:	LOGAN J	
DATE OF ORDER:	13 DECEMBER 2013	
WHERE MADE:	BRISBANE	

THE COURT ORDERS THAT:

1.	Pursuant to s 33V and s 33ZF of the Federal Court of Australia Act 1976 (Cth) (Act), the settlement of the proceeding between the Applicant and the First Respondent be approved on the terms set out in:
(a)	the deed of settlement which is confidential exhibit BRI-A to the affidavit of Brett Richard Imlay sworn 25 March 2013 (Deed); and
(b)	the “Settlement Deed – Supplement” executed on 3 October 2013 which is contained in confidential exhibit SC-A to the affidavit of Stephanie Carmichael sworn 3 December 2013 (Supplementary Deed); and
(c)	the Second Settlement Scheme (SSS) amended 13 December which is Exhibit 6  and subject to the following matters being removed from the SSS:
(i)	the payment of interest at a rate other than that applied by the Federal Court of Australia when calculating pre-judgment interest pursuant to s 51A(1) of the Act and Practice Note CM 16;
(ii)	any discrimination or reduction on entitlements that are to be received by Discounted Claimants.
2.	The Applicant be authorised nunc pro tunc on behalf of the group members to enter into and to give effect to the Deed and the Supplementary Deed and the transactions contemplated by them, for and on behalf of the group members.
3.	The objecting group members represented by Thompson Eslick Solicitors and named in the Schedule be joined as parties to the application as the First Objecting Respondents.
4.	Sean Jude McArdle be joined as a party to the application as the Second Objecting Respondent.
5.	Victor Francis Ainslie be joined as a party to the application as the Third Objecting Respondent.
6.	Pursuant to s 33V(2) and s 33ZF of the Act: 
(a)	an amount of $231,050.91 (inclusive of GST) be approved as the Appeal Costs to be distributed in accordance with cl 49(a) of the SSS;
(b)	an amount of $572,589.49 (inclusive of GST) be approved as the Further Approval Costs to be distributed in accordance with cl 49(b) of the SSS; 
(c)	an amount of $93,707.40 (inclusive of GST) be approved as the Applicant’s IT Costs as defined in subparagraph 8 of the affidavit of Brett Imlay sworn 6 December 2013; 
(d)	an amount of $89,265.75, being GST on the professional costs component of the Administration Costs omitted from the First Approval Order identified in paragraph 8 of the affidavit of Brett Imlay sworn 6 December 2013, be approved; 
(e)	an amount of $198,000 (inclusive of GST) be approved as further Administration Costs for the estimated cost of engaging a second independent accountant to conduct reviews of group member entitlements in accordance with cll 60B-63 of the SSS;
(f)	the further costs associated with the applications for leave to appeal in the substantive proceedings identified in paragraph 6 of the affidavit of Brett Imlay sworn 3 December 2013 be approved in the amount of $4,473;
(g)	the further unpaid disbursements identified in paragraph 7 of the affidavit of Brett Imlay sworn 3 December 2013 be approved in the amount of $614.68;  
(h)	the administrator appointed under cl 23 of the Scheme (Administrator) is granted leave to apply to the Court for approval of any further Administration Costs and to obtain approval of any invoices raised by it in accordance with cl 50A of the SSS; and
(i)	Stewart Levitt and the Administrator are granted liberty to apply in relation to any question concerning the payment of Administration Costs. 
7.	Pursuant to s 33V and s 33ZF of the Act, liberty is granted to the Administrator to apply to the Court in connection with the SSS including for any order, approval or guidance of the kind contemplated by the SSS.
8.	Pursuant to s 33V and s 33ZF of the Act, liberty is granted to any Participating Group Member (within the meaning of cl 17(b) of the SSS) to apply to the Court for a review in relation to the administration of the SSS in accordance with cl 63(c)(ii) or cl 63(c)(iii) of the SSS.
9.	Pursuant to s 37AF and s 33ZF of the Act, the exhibits marked as Confidential Exhibits BRI-E (to the affidavit of Brett Imlay sworn 25 September 2013), SC-A and SC-C are not be published to any person other than the Applicant, the respondents (or their legal advisers) or Thompson Eslick Solicitors without leave of the Court and are to be sealed on the Court file in envelopes marked “Not to be opened except by leave of the Court or a Judge”.
10.	Pursuant to s 37AF and s 33ZF of the Act, the exhibit marked as Confidential Exhibit 2 is not be published to any person other than the Applicant, the Second Respondent, the First Objecting Respondents (or their legal advisers), the Second Objecting Respondent or the Third Objecting Respondent without leave of the Court and are to be sealed on the Court file in envelopes marked “Not to be opened except by leave of the Court or a Judge”.
11.	Pursuant to s 37AF and s 33ZF of the Act, the exhibit marked as Confidential Exhibit 3 is not be published to any person other than the Applicant, the First Respondent’s solicitors (who are authorised to provide it to counsel for the First Respondent, and the contents of the exhibit so provided may be used solely for the purposes of the current application), the Second Respondent, the First Objecting Respondents (or their legal advisers), the Second Objecting Respondent or the Third Objecting Respondent without leave of the Court and are to be sealed on the Court file in envelopes marked “Not to be opened except by leave of the Court or a Judge”.
12.	Pursuant to s 33ZB and s 33ZF of the Act, the persons affected and bound by orders 1 and 2 are the Applicant, the respondents and the group members.
13.	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 these reasons for judgment. 
14.	Cost be reserved.
15.	This matter is adjourned to 9.30am on Friday 20 December 2013.

Note:	Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA		
QUEENSLAND DISTRICT REGISTRY		
GENERAL DIVISION	QUD 590 of 2010	
 
BETWEEN:	TRACEY RICHARDS
Applicant
	
AND:	MACQUARIE BANK LIMITED ABN 46 008 583 542
First Respondent

STORM FINANCIAL LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) ACN 064 804 691
Second Respondent

AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Third Respondent

VICKI ALLOM, ROBERT BALE, LYNDA BALE, TODD COLE, GRAEME DYER, KAREN DYER, EAMON HANNAN, RICHARD HEASLIP, KERRI-ANNE HEASLIP, LLOYD JONES, MARGARET JONES, MARIE KUPERMANN, KEITH LUNN, VERONICA LUNN, VIOLETTE RUSSO, KENNETH RYAN, FRANCES RYAN, VIKAS SEHGAL, RASHI SEHGAL, THOMAS RAYMOND WEARNE, RAYMOND ZARINS AND YVONNE ZARINS
First Objecting Respondents

SEAN JUDE MCARDLE
Second Objecting Respondent

VICTOR FRANCIS AINSLIE
Third Objecting Respondent

JUDGE:	LOGAN J	
DATE:	13 DECEMBER 2013	
PLACE:	BRISBANE	

REASONS FOR JUDGMENT
1		This is an application under s 33V of the Federal Court of Australia Act 1976 (Cth) (Federal Court of Australia Act) for the approval of the settlement of a class action.  There is a history to this matter which needs to be recited.  
2		On 24 December 2010, an originating application under Pt IVA of the Federal Court of Australia Act was filed in the Court.  That instituted proceedings as between Mrs Richards, who was the lead plaintiff and representative of a class, and Macquarie Bank Limited (the Bank) and Storm Financial Limited (Receivers and Managers Appointed) (in liquidation).  After considerable interlocutory work and related directions hearings, a trial in respect of those proceedings commenced before Reeves J on 24 September 2012.
3		On 15 March 2013, and at a time when final addresses in the trial of the proceedings were due to commence, a deed of settlement was executed as between Mrs Richards and the Bank.  Upon that being notified to the Court, Reeves J vacated further hearing dates and directed the parties to apply to the Court for approval upon filing of the settlement documents concerned.  Later that month and as a consequence of the filing of an application for approval, the application came on before me for initial directions.  Thereafter, some 28 objection notices were filed.  On 2 May 2013, the approval application was heard by me, with judgment being delivered the following day:  see Richards v Macquarie Bank Limited (No 4) [2013] FCA 438.
4		The settlement concerned provided for the distribution of $82.5 million, inclusive of interest and costs, as between a class which comprised approximately 1050 group members.  The settlement had as a feature a funders’ premium.  That entailed about $28.875 million, or about 35% of the settlement sum.  That would have seen a subclass within the overall class, comprised of some 317 group members who had contributed funds to the litigation, receive about 42% of the combination of their lost equity and legal cost contributions.  The balance would then have been allocated to the subclass comprising those who had not made contribution to the litigation.  There were approximately 733 persons in this subclass.  They would have received about 17.6% of their lost equity
5		On 24 May 2013, the Australian Securities and Investments Commission (Commission) lodged an appeal against the approval of the settlement in those terms.  On 12 August 2013, the Full Court decided to allow the Commission’s appeal:  see Australian Securities and Investments Commission v Richards [2013] FCAFC 89.  That saw the matter returned to the Court’s original jurisdiction.  Thereafter, Mrs Richards and the Bank entered into further negotiations, which culminated in a revised settlement scheme being propounded for approval.  These reasons for judgment must necessarily be read having regard to the history as cited, in conjunction with my earlier reasons for judgment and those of the Full Court.  
6		It is also necessary to record that there is litigation presently before the court which is yet to be resolved as between the Commission and Macquarie Bank Limited.  It is a feature of that litigation that persons who have a grievance against the Bank, though not parties to that litigation, may rely upon findings made in that litigation in other proceedings.
7		Following directions in respect of the second application for approval, 42 notices of objection were received.  In addition, 285 notices were separately received by the Court in which support was voiced for the approval of the scheme as revised following the Full Court’s judgment.  It will be evident enough from that fact alone, in other words that there is support and objection, that there is no universality of support for the approval of the scheme.  That absence of universality was further manifested in the appearance and related submissions on the hearing of the approval application yesterday.  At that hearing, both Mrs Richards and the Bank were represented by counsel, as was, again, the Commission.  In addition, a group of 19 of those who had lodged objections, and who have come to be represented by the solicitors firm Thompson Eslick, also made submissions by counsel.  Further, two individuals who had lodged objection notices made submissions in person.
8		It is convenient first to deal with the essence of the submissions made by the individuals as to their objection to approval.  
9		I was reminded by each gentleman, courteously, yet nonetheless powerfully, of the variation as between the original settlement scheme as propounded and the present in the absence from the present of provision for a funders’ premium, which would have seen, as I have mentioned, a return of some 42% to those who had provided funds for the litigation.
10		Obviously enough, the notion that those who had provided money which had enabled the conduct of litigation which had, in the end, culminated in a consensual settlement, had a powerful attraction for me: witness my original reasons for judgment.  It did not have such an attraction for the Full Court in terms of the manner in which the prospect that there may be such a differential distribution of settlement moneys had not been notified in advance.
11		It is a necessary feature of our legal system, and fundamental to the rule of law, that the judgment of an appellate court must be respected.  It was in deference to that fundamental principle and also the desirability nonetheless, if possible, of compromising the litigation that those representing Mrs Richards (and necessarily, then, those having the carriage of the proceeding for the plaintiff) and the Bank, struck a revised settlement scheme.
12		It would be subversive of the rule of law were I to refuse to approve the settlement scheme for the reason only that it did not provide for a premium of the kind which the earlier scheme provided.  That is an idea whose time has passed.  That is not to say, as the Full Court allowed, that such a premium could never be provided for.   It is just that due notice in advance of the prospect of such a premium is necessary in order for there to be a fair and reasonable compromise sufficient to attract the Court’s approval.
13		There are, underpinning the Full Court’s judgment, certain related considerations which do intrude upon whether, or whether subject only to particular conditions, approval of the scheme in its revised form should be granted.  In my earlier reasons for judgment, I canvassed authorities which relate to the considerations pertinent to approval of a scheme.  I do not propose to repeat what is there stated, nor do I propose to repeat the view expressed in my earlier reasons for judgment that the compromise concerned in terms of the sum offered and proposed to be accepted is fair and reasonable, having regard to the causes of action pleaded and the risks of litigation.  It is not, though, the sum itself which falls for approval but rather the scheme of which that settlement sum forms part that falls for consideration of approval.
14		Before turning to features of that scheme, it is convenient to deal with one of the issues raised on behalf of the 19 objectors.  That was that there ought to be an adjournment of this application so as to provide for further mediation, and mediation which would incorporate, by direction, mediation not only of this proceeding as including now the overtly identified interests of those 19 objectors, but also mediation in respect of the separate litigation I have mentioned as between the Commission and the Bank. 
15		I accept that I have power compulsorily to order such mediation (see s 53A of the Federal Court of Australia Act).  The subject of the 19 objectors’ submission is therefore a matter which goes to discretion, not power.  As to discretion, it is relevant to note, and indeed, it was common ground, that there was, at a much earlier stage in proceedings, an attempt to achieve a comprehensive settlement via a mediation conducted by The Honourable Kevin Lindgren AM.  Hindsight can be a powerful educator, and hindsight of 2103 might well instruct that prudence ought to have intruded in a mediation conducted by that highly experienced and well-respected person, such that a comprehensive compromise was achieved.  It was not, though, such education which was available at that time, and no such comprehensive settlement then commended itself.  It is neither necessary, nor desirable nor appropriate to explore why that was so, other than explicitly to record that it is no reflection on the mediator that it did not.  
16		As it happened, a further mediation, on this occasion not involving the Commission, did occur, this time conducted by The Honourable Michael McHugh AC.
17		The background against which that mediation in respect of the proceedings as between Mrs Richards and the Bank did occur could not have been more fulsome in terms of the evidentiary foundation of the relative strengths and weaknesses of the respective parties’ cases.  This time, a settlement was achieved, subject to court approval.  
18		In that settlement, if approved, the Bank has the benefit of comprehensive releases and indemnities.  There is no doubt that those releases will have an impact, so far as class members are concerned, upon whatever benefit they might otherwise have been able to gain from findings made in the litigation instituted by the Commission.  To put matters bluntly, the Bank is not a charity.  There is, when one examines the settlement concerned, a benefit for the bank, and it is the one mentioned.  That is the quid pro quo represented by those releases and indemnities.  The Bank is hardly to be criticised for seeking that, nor, for that matter, are those acting for Mrs Richards to be criticised for recognising that that is indeed the quid pro quo.  I should add that I do not regard the provision in the revised scheme for indemnity as anything other than fair and reasonable. 
19		Against that background, and bearing in mind the history recited, I see little point at all in forcing parties who have already reached a compromise to seek to abandon that and reach some wider compromise.  There comes a time when enough alternative dispute resolution is enough.  That time, in my view, has been reached.  I do not, therefore, propose to adjourn the proceeding as requested by the 19 objectors.  It is necessary to consider not just their particular interests, nor even, for that matter, those of other objectors, nor even, for that matter, that larger number who support the settlement and have voiced that support by the filing of notices with the Court, but rather the interests of the group as a whole.  There is also a public interest in lending finality to litigation. 
20		I turn, then, to some features of the scheme as revised.  The funders’ premium, which would have seen the return of some 42% of equity and funding contributions is no longer a feature of the revised scheme, as I have mentioned.  Also gone from the revised scheme is a provision in respect of foregone claims which would have allowed the bank to recoup funds not claimed by participating group members as part of the settlement.  In lieu of that, there are provisions in the revised scheme which allow for the redistribution of such unclaimed funds amongst the participating group members.  That is, in effect, a benefit for participating group members, which was not a feature of the earlier scheme.
21		There is the addition in the revised scheme of provisions allowing for the payment to the solicitor’s firm, Levitt Robinson, who act for Mrs Richards, of the unpaid costs of the Commission’s appeal to the Full Court, as well as costs associated with the revised settlement.  In principle, those provisions are not controversial, although there is a controversy about the allowance of Levitt Robinson’s costs as a whole.  It will be necessary to say something to that later in these reasons for judgment.  It is also a feature of the revised scheme that there is clarification in the calculation of the equity contributions and a changed manner in which what one might term storm-related settlements with other banks are accounted for.
22		There has been, in respect of the revised scheme as originally filed, further revision as a result of consultations between counsel, the results of which repose in exhibit 6.  Those consultations have, to my complete satisfaction, been engaged in with a genuine spirit of promoting, to the extent possible, compromise of litigation.  I commend all counsel who have appeared for the spirit in which the approval application has been approached.  Even allowing for that, there remain a number of issues which could not be conceded by one party or another.  I do not in any way suggest that the absence of concession in these respects is unreasonable.  This truly is a peculiarly difficult case in which to consider what is fair and reasonable in terms of settlement.
23		I propose to deal in turn with particular areas which remain controversial.  First, payment of interest on costs contributions.  Two clauses in the revised scheme are pertinent:  clause 34 and clause 40.  Clause 34 forms part of a group of clauses which provide for the submission of information grounding that part of a group member’s claim on the overall settlement fund, which relates to interest payments made on borrowed funds used to make contributions to the applicant’s costs, ie, Mrs Richards’ costs, or the costs of the appeal to the Full Court, or both.  
24		Clause 40 makes provision of the payment of simple interest on such contributions, those contributions being referred to in clause 39, at the greater of two rates:  
(a)	in the case of funding group members who contributed to costs using borrowed funds, and on the provision of evidence acceptable to the administrator and the accountant of the cost of those funds at the rate paid by the funding group member;  or 
(b)	at the rate applied at the Federal Court of Australia when calculating prejudgment interest pursuant to s 51A(1) of the Federal Court of Australia Act, and practice note CM16.
25		The intention of the payment of interest is obvious enough and was supported by Mrs Richards and the Bank.  Viewed in the abstract, there is much to be said in favour of returning to those who have put Mrs Richards, and those advising her, in funds sufficient not just to institute the proceedings, but to prosecute them to the point where the Bank, notwithstanding what can only be described as a closely contested trial, nonetheless felt moved, following further mediation, to come to an agreement.  There is an attraction in the provision of interest on moneys used for that purpose.  Others who, for one reason or another, could not or did not contribute will, nonetheless, have the benefit of the compromise achieved and achieved only by the institution and prosecution of litigation.  
26		There are, though, other considerations which also intrude as a matter of fairness.  These were highlighted by the Commission in its submissions.  The Commission drew attention to the possibility that some of the funding group members may have borrowed funds at particular high rates of interest.  There was no evidence as to what particular rates were at large amongst funding group members.  In particular, there was no evidence to support a proposition that rates as high as 89% per annum had been visited upon particular funding group members.  That appears to be something of a red herring. 
27		Nonetheless, in prospect at least, is the possibility that rates of interest higher than those for which practice note CM16 makes provision could, nonetheless, be at large.  Of greater resonance is the submission made by the Commission that there was nothing in the original notice in respect of the proposed litigation which went to the possibility that group members might receive some particularly elevated rate of interest or, indeed, any rate of interest at all in respect of contributions to the litigation.  When I made earlier reference to a need to respect the judgment of the Full Court, I meant, also, that the need extended to a need to respect, not just the very issue addressed, but also the underlying foundation for why the funders’ premium was regarded as not fair in the particular circumstances.  A critical factor in that regard was the absence of notice in advance.  
28		For all that, funding group members have been kept out of an amount of capital contributed.  How, if at all, can one balance respect for the principle for which the Full Court’s judgment stands and the unattractive notion that those who have contributed and have contributed to the benefit of all should receive something for that loss of use of their capital, be that capital from their own available funds or capital which is borrowed?  In reflecting upon that, it seems to me that a person reading the notice originally would regard it as going without saying that a person should at least receive interest of the kind which is customary in litigation in respect of the loss of use of capital up to judgment.  I do not consider that it would be regarded as going without saying that, if one had borrowed, one ought to receive the interest back, however much that interest might be.  For that reason, it does not seem to me that it is fair and reasonable to approve a settlement which admits of the possibility of a rate of interest higher than that for which practice note CM16 provides.  I do consider that it is fair and reasonable to make provision for the payment of interest at that rate and as provided for in greater detail in clause 40(b) at present.  Thus, if I were otherwise disposed to approve the revised scheme, that approval would be conditioned upon interest being paid only in accordance with the present clause, 40(b).  
29		In other words, removal of clause 40(a) and related clauses which intrude upon the ability to make the higher rate of interest, principally, it would seem to me, clause 34 is necessary.  That, nonetheless, would leave as approved a scheme which entails funding group members receiving a rate of interest on contributions at the rates of interest, or by reference to the rates of interest, described in practice note CM16.  That is a rate which is regarded as generally appropriate in litigation.  I note further that practice note CM16 entails rates of interest which are not just regarded as appropriate in this Court but also have a wider approval amongst other courts in this country.  
Discounted claimants
30		Unlike the earlier scheme, this revised scheme makes provision for a reduction – a reduction in the order of 50% – in respect of a class of persons who might be described as those who were a director of Storm Financial, a Storm Financial adviser, or a senior Storm Financial employee, or a person in like capacity in a subsidiary whose role related to the design, implementation or promotion of what one might term “the Storm investment model”.  
31		I have the benefit, in relation to that class, of a confidential joint opinion prepared by those advising Mrs Richards, as well as a related and also necessarily confidential submission made on behalf of the Commission.  These two documents are necessarily confidential because they do contain opinions and submissions in relation to prospects of that class.  Raised for consideration is whether it would be fair and reasonable to approve a revised scheme which entails discrimination in respect of this group of claimants who form part of the overall class.  There are some 20 persons affected.  The causes of action concerned in the litigation – unauthorised managed investment scheme, contract based, unconscionable conduct and linked credit provider based causes of action – are such that it is not immediately apparent to me that all of those causes of action are necessarily affected to the extent which would warrant identification of a separate class and discounting.  That is not to voice an opinion one way or the other as to what the prospects might be were those 20 persons separately to have sued.  
32		The Commission put the proposition that there may be some populist attraction in identifying that group as a separate class.  There may also, of course, be some populist attraction in not approving the scheme for some, so that they might take advantage of whatever forensic success the Commission might enjoy in its separately-instituted proceedings against the Bank.  Intruding more fundamentally is the consideration that this type of discrimination was not telegraphed in advance by notice given pursuant to the orders originally made by the Court.  No such notice would have enabled those particular claimants who fell within the class to decide to opt out.  Even allowing for inferences which one might draw in respect of the particular positions held, and allowing everything which one might extrapolate from those inferences as to likelihood or otherwise of success in respect of that class, as elaborated upon in the confidential joint opinion, what remains is nonetheless an absence of prior notice.
33		Thus whilst I have reservations in any event as to the discounting, what I can and must respect is a principle which seems to me to underpin the Full Court’s reasons for judgment.  If a discriminatory funding premium is not to be permitted, however otherwise just it might seem, because of an absence of prior notice, it seems to me necessarily to follow that a discrimination against a particular subclass of claimant, which was also not the subject of prior notice, should not be regarded as fair and reasonable.  For that reason, I would only approve the revised scheme if the clauses providing for discrimination in respect of the persons who have been described as the discounted claimants were removed.
Should there be provision for an extended opt-out period?  
34		This consideration was raised on behalf of the 19 objectors.  It emerged in the course of submissions that of these 19 persons, only three were not Queensland resident.  At the time when the original approval application came before me, I considered then that the notice which had been given in accordance with the order made by Reeves J was adequate.  I see no reason to revise that view, even in light of the submissions made on behalf of the 19 objectors.  The advertisements were placed in The Courier-Mail, the Townsville Bulletin and The Australian.  The latter has a national circulation, The Courier-Mail at least a Queensland-wide circulation and the Townsville Bulletin a regional circulation obviously enough centred upon Townsville.  They were particularly targeted publications, obviously responsive to the evidence before his Honour.  It seems that three persons in New South Wales did not come to see the notice in The Australian.  That is as may be.  The notice order itself does not strike me as anything other than orthodox.  
35		It was also put that a reader of the Commission’s website would have assumed that the Commission was instituting proceedings for all.  That may well be so, but that was a proceeding instituted by the Commission, not by Ms Richards.  There was separate provision for notice by court order of those proceedings.  That notice came, it would seem, to the attention of many.  I do not therefore propose to condition approval upon any extension of the opt-out period.  I also take into account in that regard that the settlement scheme at the moment has a comprehensive quality, so far as the Bank is concerned, to provide for opt-out, and no objectors actually said they wished to opt-out.  To extent the opt-out period would be to detract from the comprehensiveness of the releases and indemnities for which the Bank has bargained and do that for no reason other than inattention to notices made in an orthodox way, pursuant to court order.
36		I note further that, when on 12 November 2013, I inquired of the Commission’s counsel at a directions hearing as to bases upon which the Commission proposed to contest the revised settlement, the Commission indicated that it was not objecting to the notice.  That, of course, related to the notice in respect of the revised scheme.  That method of notice was more comprehensive than that originally provided for.  It may well be that that greater comprehensiveness led to the 19 objectors being alerted. Nonetheless, as I have said, the order originally made was orthodox, having regard to the actions and activities of Storm Financial.  
Should there be provision in respect of a right of review?  
37		I consider that the powers conferred upon the court by s 33V of the Federal Court of Australia Act are sufficiently wide either to condition approval only on the basis of the incorporation of a right of review in a scheme or to approve with an order that there be such a right of review.  As first propounded, the revised scheme provided for Mr Levitt to act as administrator.  As a result of the cooperative spirit which I have described and perhaps also responsively to a suggestion made in the course of submissions by me, the scheme which is to be found now in exhibit 6 provides for an independent administrator and for that person to be appointed by the Court.  It further provides for that person’s remuneration not to be approved by Levitt Robinson, but rather by the Court.  In other words, the administrator is a person who is, and is seen to be, independent of either those advising Ms Richards or, for that matter, the Bank.  
38		There is provision in the scheme as revised in clauses 26A and 26B for the administrator to conduct a review.  For the 19 objectors, it was submitted that there ought to be a further clause, a proposed clause 26C, which would be in these terms:
A Group Member aggrieved by any act, omission or decision in relation to the administration of the Second Revised Settlement Scheme may apply to the Court in respect of the act, omission or decision and the Court may confirm, reverse or modify the act or decision, or remedy the omission as the case may be, and make orders and give such directions as it thinks fit.

39		It was additionally submitted that there ought to be a provision granting liberty to apply to the Court for the determination of any matter arising in relation to the implementation of the settlement.  
40		As I have said, I accept that there is power to condition approval in the presence of such a clause or to make an order granting liberty to apply in those terms.  I am not persuaded that there is any need in the circumstances of this case for any such provision, given the revision or, rather, the further revision which has occurred in relation to the appointment and remuneration of the administrator.
41		It is not the subject of express provision in the Act that there must be such scope for court review.  Nor is there anything in the cases which would suggest that no scheme can be approved as fair and reasonable unless it provides for that.  It is said that there may nonetheless be an ability to approach a State Court under State legislation providing for trusts.  A nice question may well be raised as to whether the scheme for which Pt IVA of the Federal Court of Australia Act provides is a code not admitting of the intrusion of State Courts into a compromise approved by this Court.  For the present, that contingency, if it be one at all in law, is no sound basis at all for doing that which is not otherwise necessary in the interests of justice in this particular case.  What I propose to do instead is to make provision for the administrator, if so advised, to approach this Court for advice in relation to any subject arising in the administration.  Otherwise, it is to be expected that the administrator will do his independent duty.
Costs
42		It was put that there ought to be some provision in respect of scrutiny of the solicitor/client costs which fall to be paid to Levitt Robinson out of settlement funds.  It is axiomatic, of course, that the Court must approve costs.  It is not axiomatic that such approval must only be given on the basis of costs as taxed by a court registrar.  In Modtech Engineering Pty Limited v GPT Management Holdings Limited [2013] FCA 626, against a very different background in respect of an application which entailed approval of solicitor’s costs Gordon J was moved to require a report from a registrar.
43		Here, though, I have the benefit – as I did for that matter on the earlier occasion when I heard the approval application – of considered expert opinion by an independent costs assessor.  That opinion does not, of course, bind me.  Nonetheless, upon examination of it, it seems to me to provide the requisite degree of detached scrutiny of costs upon which it is reasonable to rely and I do so.  I propose, therefore, to allow such costs as have passed that particular scrutiny.
Notification of the proposed revised new scheme
44		The Commission drew attention to a fact reported upon in the evidence read on behalf of Mrs Richards in relation to the notification of the proposed revised new scheme.  That evidence was that there were some 116 notifications of undelivered email and a further 42 registered post returns.  Levitt Robinson used email or, as the case may be, postal addresses which had hitherto been given to the firm in respect of communications.  These email and postal addresses had been earlier used for notices. 
45		The Commission voiced concern about these returns.  Concern is one thing; failure on the part of an individual member of a class to keep current his or her address for contact is another.  There comes a time when individuals must take responsibility for their own actions.  One such time is when in the course of litigation of which they have had notice, they move.  I am quite satisfied that the notice which was given was adequate in the circumstances.
46		Finally, lest they be thought to have been forgotten, I should make reference to those persons who have filed with the Court notices supporting approval of the settlement.  There are heart-rending accounts to be found in those notices of support.  What particularly motivates me to approve, but approve subject only to the conditions which I have mentioned, this revised scheme is the desirability of closure to a wide class of persons and the return to them at an early stage – much earlier than one might otherwise apprehend – of something in respect of what must seem to many to have been in hindsight a most imprudent investment decision indeed.
47		
For these reasons, the orders which I propose to make are not to approve the scheme as it is in exhibit 6, but rather to approve a scheme as revised in the way that I have indicated.  As to the other orders which are proposed in draft, these seem to me to be apt subject to their revision so as to include the conditions mentioned.

I certify that the preceding forty-seven (47) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan.	

Associate:

Dated:	23 December 2013