In July this year the parties to the Great Southern class action advised the Supreme Court of Victoria that they had reached settlement. However, that settlement is only conditional until it receives Court approval.
Justice Croft heard the approval motion on 17 and 18 November 2014. His Honour reserved his decision.
Background
The Great Southern litigation was one of the largest matters in Victorian history. The plaintiffs are investors in the Great Southern timber plantation schemes who claim that they invested in the schemes based on the misleading and deceptive conduct of the scheme's promoters.
The defendants are the liquidated companies that operated the schemes, the former directors and the lenders who advanced funds to the investors to participate in the schemes.
In the proceedings the plaintiffs sought damages as well as orders setting aside the loans which they took out to fund their investment.
After eight months of hearing and even longer preparing the judgment, the presiding judge, Justice Croft, advised the parties that he would deliver judgment on 25 July 2014.
Two days before Justice Croft was due to deliver the judgment the parties notified the Court that they had reached settlement. The judgment was never delivered.
As a class action involves the interests of parties that are not active participants in the proceedings, any settlement must be approved by the Court. To grant approval the Court must be satisfied that the settlement is fair and reasonable to all the group members who will be bound by it.
The hearing of submission on the settlement approval commenced on 27 October 2014 before Justice Judd.
The settlement terms involved a payment of $23 million dollars by the insurer of the scheme operator to the group members. In return the group members agreed that the loans they had taken out were repayable in full.
Of the settlement amount, the majority would be applied to reimburse the funders of the legal proceedings. Of the $23 million only $3.55 million would be distributed to the group members providing a return of approximately $17.00 for each $10,000 invested.
A large number of group members opposed the settlement, arguing that the benefits were so insignificant they would prefer to take their chances with the judgment.
At the conclusion of the second day of hearing, Justice Judd declined to hear the matter further. He stated that he was uncomfortable assessing the settlement knowing that a judgment had been prepared and remained locked away in a cupboard. He concluded that the only person who could assess the settlement was Justice Croft and he adjourned the matter to be heard by him 17 November 2014.
The hearing before Justice Croft went for two days, during which time submissions were provided by all parties involved. At the conclusion of the hearing his Honour reserved his decision.
As he has already prepared a judgment it seems that Justice Croft will have no choice but to assess the settlement against it. If the settlement is more favourable to the group members than the judgment he must approve it. If it is less favourable, he can only refuse it. Either way all parties will now get to see the judgment. During the course of the hearing Justice Croft advised the parties that he will be providing his judgment to them whatever the outcome.
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