Justice Croft of the Victorian Supreme Court has confirmed and clarified the task before a court in the approval of a group proceeding (class action) settlement application in a recent decision which approved the settlement of the Great Southern Victorian proceedings: Peter Clarke & Ors v Great Southern Finance & Ors  VSC 516 (11 December 2014).
His Honour noted that the settlement approval task (which is made all the more difficult when the number of group members is extensive, as was the case in the Great Southern proceedings) is a balancing exercise and involves a consideration of the specific factors relevant to the particular proceeding.
The Great Southern Victorian proceedings arose from the collapse of the Great Southern Group and the failure of several agricultural investment schemes. They involved more than 20,000 claimants, eight group proceedings, 22 individual proceedings and a trial that lasted 90 days, concluding on 24 October 2013. DLA Piper acted for Great Southern Managers Australia Ltd (in Liquidation) in those proceedings. The parties advised the Court 2 days before judgment was due to be delivered that the proceedings had settled. An application for Court approval of the settlement ensured, which was ultimately heard by Justice Croft on 17-19 November 2014. Justice Croft handed down his judgment approving the settlement (and annexing his unpublished reasons for decision at trial, comprising 2012 pages) on 11 December 2014. This was one of the largest class action settlements in Victoria’s history.
Justice Croft has confirmed that the correct approach which a court must take when determining the approval or otherwise of a settlement application is to assess specific factors in each case which may impact on fairness or appropriateness of the proposed settlement. Where there have been formal objections to the approval of the terms of settlement (as in Great Southern), it is appropriate for the court to take those into consideration – but they are only one factor the court must consider. Other factors relevant to the court’s task are the amount offered to each group member, the prospects of success in the proceedings, the likelihood of the group members obtaining judgment for an amount significantly in excess of the settlement offer, the terms of any advice received from counsel in relation to the issues in the proceeding and the likely duration and cost of the proceeding if continued to judgment. All of these factors will assist the court in determining whether the proposed settlement is fair and reasonable, having regard to the claims made on behalf of group members who will be bound by the settlement.
The Federal Court and the Supreme Court of Victoria have developed an approach to class action settlement approval applications that focuses on each case on its merits rather than adhering to any strict guidelines which must be followed. This approach is likely to be followed in other class action settlement approvals coming before the courts, including in the pending settlement approval application in the Federal Court in the Willmott Forests group proceedings which was filed on 9 April 2015.