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[2023] NSWSC 1378

Komlotex Pty Ltd v AMP Limited (No 4)

See paragraph 22

Catchwords

CIVIL PROCEDURE — Representative proceedings — Court approval – where group members were persons who had acquired shares in AMP – where group members alleged they suffered loss or damage by reason of conduct engaged in by AMP – where success by the plaintiffs was not guaranteed – whether the settlement was fair and reasonable.

Cases cited

  • Findlay v DSHE Holdings Ltd; Mastoris v DSHE Holdings Ltd; Mastoris v Allianz Australia Insurance Ltd[2021] NSWSC 249; (2021) 150 ACSR 535
  • Oasis Fund Management Limited and Royal Bank of Scotland NV & Ors[2012] NSWSC 532
  • Williams v FAI Home Security Pty Ltd (No 4)[2000] FCA 1925

Legislation cited

  • Civil Procedure Act 2005 (NSW), § 10, s 173, 179(a), 183
  • Court Suppression and Non-publication Orders Act 2010 (NSW), ss7(b), 8(1)(a)

Judgment

  1. [1]

    These proceedings arise from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. The final report was published on 4 February 2019. A relevant, as regards the defendant, Interim Report was published on 28 September 2018.

  2. [2]

    The proceedings were commenced on 5 June 2018. An amended statement of claim was filed on 7 December 2021. The case was set down for hearing on 21 August 2023, with an estimate of 15 days. The proceedings are representative proceedings brought pursuant to Pt 10 of the Civil Procedure Act 2005 (NSW) (“the Act”).

  3. [3]

    The parties resolved their differences on the cusp of the hearing. In order to give effect to the resolution the approval of the court is necessary, pursuant to s 173 of the Act.

  4. [4]

    A notice of motion seeking approval was filed on 3 November 2023.

  5. [5]

    The settlement must be fair and reasonable. To expand a little on this general statement I refer to the decision of Stevenson J in Findlay v DSHE Holdings Ltd; Mastoris v DSHE Holdings Ltd; Mastoris v Allianz Australia Insurance Ltd [2021] NSWSC 249; (2021) 150 ACSR 535, from [12]:

  6. [6]

    In Oasis Fund Management Limited and Royal Bank of Scotland NV & Ors [2012] NSWSC 532, Sackar J at [47] referred with approval to the test stated by Goldberg J in Williams v FAI Home Security Pty Ltd (No 4) [2000] FCA 1925, at [19]:

  7. [7]

    The amended statement of claim sets out the allegations made by the plaintiffs. The plaintiffs are the named plaintiffs together with the group members. There are 18,702 group members. The group members are persons who had entered into a contract to acquire an interest in fully paid ordinary shares in AMP or American Depository Receipts representing AMP shares. They are also persons who alleged they suffered loss or damage by reason of AMP’s alleged conduct.

  8. [8]

    The relevant period for purposes of the action begins in May 2012 and ends on 16 April 2018.

  9. [9]

    The group members acquired their shares at different times during the relevant period and in different quantities. I was informed that AMP has a large number of small shareholders, perhaps derived from the demutualisation of AMP in 1998. These shareholders would have been offered opportunities to increase their shareholdings during the relevant period.

  10. [10]

    The primary allegations against the defendant are as follows:

  11. [11]

    It was also alleged that the defendant misled ASIC in respect of the charges it was levying for services it was actually not providing. Another issue was whether the systems employed by the defendant were capable of preventing the “false” charging for phantom services.

  12. [12]

    I was informed that all of the above allegations were conscientiously denied by the defendant so that success by the plaintiffs was not assured. Further, there was a live “causation” issue arising from a debate as to the degree to which the share price was affected, if at all, by the defendant’s conduct and lack of disclosure. An additional quantum issue arose from an argument as to the impact (on share prices) of any reputational damage that would have been suffered by the defendant had it, as it should have, disclosed its charging policy.

  13. [13]

    I have no doubt that each of the arguments put against the plaintiff’s would have varied in strength. Nevertheless, I accept they were genuine arguments calling for an appropriate and measured compromise of the claim.

  14. [14]

    Having read the Confidential Advice of Counsel I am satisfied that the contested issues were real and capable of not only impeding the range of quantum but extended to success on liability.

  15. [15]

    The overall settlement sum is $110 million. The two plaintiffs each contributed $32,000 in pursuit of the claim. They are to be reimbursed this amount. The plaintiff’s legal costs and disbursements amount to $26,213,702.45. An amount of $1,130,714 is also to be deducted as pre-approved administration costs. This leaves $82,591,583.55 to be disbursed to the plaintiffs and group members.

  16. [16]

    There is of course not an equal division to be made of the above balance because of the difference in shareholdings, and when the shares were held, and for how long, by the different group members. The amount to be received by each group member is to be calculated according to a Settlement Distribution Scheme which has a pro rata distribution at its core.

  17. [17]

    As noted above, there are 18,702 members in the group. Only one of them has expressed an objection to the settlement. I was informed that the objection is based on a misunderstanding of the relevant figures involved. This level of objection is itself an endorsement of the settlement.

  18. [18]

    In relation to costs, almost a quarter of the settlement sum goes towards legal fees and disbursements. I have read the confidential advice of Ms Kerry-Ann Rosati the principal of a firm specialising “in the provision of legal costing services and advice to the legal profession”. Ms Rosati conducted a detailed analysis of the cost structure, including examining all of the work, both in court and by way of preparation and concluded that all costs were “reasonably incurred” on a solicitor and client basis. As to the relationship between the amount of costs and the overall settlement, Ms Rosati said:

  19. [19]

    I have referred above to a confidential advice. I have also been provided with other confidential material and have been asked that this material remain confidential. The material includes an affidavit of the plaintiff’s solicitor affirmed on 13 November 2023 together with the attached exhibit, the confidential opinion of counsel and the confidential opinion of Ms Rosati, again including an exhibit.

  20. [20]

    The Settlement Deed, to which my orders will give effect, is to remain confidential. On one level, settlement of this type, involving a public company and a large sum of money, should be explained. On the other hand, it is not unusual for commercial settlements to remain confidential. I note that a Settlement Notice disclosing the quantum of the settlement, together with the releases and covenants set out in the Deed has been provided to the registered class members.

  21. [21]

    I am satisfied that previously made orders regarding confidentiality should remain in place and that the confidentiality sought in respect of the solicitor’s affidavit and the cost expert’s affidavit should be granted.

  22. [22]

    In summary, I am satisfied that the settlement is fair and reasonable and accords with the principles for approval that I have set out above. Accordingly, I approve the settlement and make the following orders:

    1. (1)

      Pursuant to section 173 of the Civil Procedure Act 2005 (NSW), the settlement is approved upon the terms set out in:

    2. (2)

      Pursuant to s 183 of the Act or otherwise, the Court authorises the plaintiffs nunc pro tunc to enter into and give effect to the Settlement Deed on behalf of the persons identified in Part C paragraph 8 of the Further Amended Commercial List Statement filed 7 December 2021, other than such persons who have opted out of the proceeding (Group Members).

    3. (3)

      Pursuant to s 179(a) of the Act, the persons affected and bound by these orders are the plaintiffs, the Group Members and the defendant.

    4. (4)

      From the date on which the final distribution under the Settlement Distribution Scheme is confirmed to the Court by the person appointed by the Court as the Administrator of the scheme (as defined in that document) (Scheme Administrator):

    5. (5)

      There be no order as to costs.

    6. (6)

      Pursuant to s 183 and/or s 173(2) of the Act, Maurice Blackburn is appointed as Scheme Administrator.

    7. (7)

      Pursuant to ss 173(2) and 183 of the Act, the following payments (as defined in the Settlement Distribution Scheme) are approved and to be paid in accordance with the Settlement Distribution Scheme:

    8. (8)

      Pursuant to sections 173(2) and 183 of the Act, the amount of $1,130,714.00 is approved as pre-approved Administration Costs to be paid to the Administrator in accordance with the terms of the Settlement Distribution Scheme.

    9. (9)

      Maurice Blackburn have liberty to apply in relation to any matter arising under the Settlement Distribution Scheme.

    10. (10)

      Pursuant to ss 7(b) and 8(1)(a) of the Court Suppression and Non-publication Orders Act 2010 (NSW), on the ground that the order is necessary to prevent prejudice to the proper administration of justice, until further order, the material contained in:

Unofficial copy. Source: NSW Caselaw. Refer to the official version for authoritative text.