FEDERAL COURT OF AUSTRALIA

Petrusevski v Bulldogs Rugby League Club Limited [2004] FCA 1712

ROBERT PETRUSEVSKI AND ROBERT SPIRKOVSKI v BULLDOGS RUGBY LEAGUE CLUB LIMITED ACN 001 869 405

N 962 OF 2002

GYLES J

15 DECEMBER 2004

SYDNEY

THE COURT NOTES THAT:

The respondent releases the applicants from all prior orders made by the Court that the applicants pay the respondent’s costs.

AND THE COURT ORDERS THAT:

Orders are made in accordance with the draft Short Minutes of Order omitting Orders 6 and 7. 

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     This is an application for approval pursuant to s 33V of the Federal Court of Australia Act 1976 (the Act) of the settlement of a proceeding brought pursuant to Pt IVA of the Act and for consequential orders which are set out in Short Minutes of Order which I initialled and dated 15 December 2004.

2                     There are two named applicants, Robert Petrusevski and Robert Spirkovski.  The respondent is Bulldogs Rugby League Club Limited (Bulldogs).  The proceedings were commenced on behalf of the applicants and other group members who are alleged to have suffered financial loss caused by the conduct of the Bulldogs in allegedly making a representation that the Bulldogs was properly eligible to field a team in the 2002 National Rugby League (NRL) Premiership which would entitle the Bulldogs to the sporting and commercial benefits attached to competition points.  The representation allegedly arose from various things said and not said by the Bulldogs on or before 19 August 2002.  The representation was allegedly false because of alleged breaches by the Bulldogs of the salary cap imposed by the NRL for the 2002 competition.  The alleged salary cap breaches and other alleged conduct by the Bulldogs allegedly caused the NRL to strip the Bulldogs of all of its competition points, placing it last in the competition.  Such conduct allegedly caused loss to the applicants and other group members who had placed bets on the competition, for which the applicants seek damages and other relief on behalf of themselves and the group members.  The Bulldogs denied some of these allegations and defended the proceedings.

3                     There have been various interlocutory steps and the proceeding is set down for hearing of certain final issues before Branson J on 21 February 2005. 

4                     On 5 November 2004 the parties attended a formal mediation by Mr Andrew Rogers QC.  At that time 59 persons had been identified as a member of the relevant group in addition to the two named applicants.  The solicitors for the applicants acted for each of those persons.  All but two of those persons have provided direct evidence of the bets which had been placed.  The total established bets outlaid amounted to $393,656.  The essence of the settlement is that the Bulldogs will pay $200,000 together with payment of the applicants’ costs of the proceedings as agreed or, if not agreed, as taxed on a party/party basis. 

5                     It was proposed that if the number of group members remained the same, the $200,000 would be disbursed as follows:

(a)        The first applicant is to receive the full amount of his bets totalling $1650.

(b)        The second applicant is to receive the full amount of his bets totalling $3600.

(c)        Mr Colin Tidy has agreed to receive 40% of the total bets outlaid, resulting in the payment of the sum of $61,900.

(d)        All known group members whose bets ranged between $1 and $500 are to receive the full amount of their bets (‘Category 1 Payments’).

(e)        All known group members whose bets are in excess of $500 are to receive the first $500 of the total bets outlaid plus 30% of the outstanding amount (‘Category 2 Payments’).

(f)         The remaining sum of $49,974.20 is to go towards the solicitor/client costs of the applicants and the known group members.  No additional amount by way of solicitor/client costs is or has been paid to Clinch Neville Long with respect to these proceedings.

6                     On 25 November 2004 a notice dealing with the proposed settlement was published in The Australian newspaper in a form approved by a judge of the Court.  On the same day a letter was forwarded to the applicants and each of the identified group members for whom the solicitors for the applicants acted, which enclosed a copy of the published notice.  The notice included an account of the nature of the proceedings, the key provisions of the proposed settlement, a statement of the criteria for eligibility as a group member, instructions as to how to participate in the settlement and advice that if the party did not wish to accept the proposed settlement it might appear before the Court.

7                     Eligibility for Group membership was set out in the following way:

‘You are an eligible Group Member if you, on or before 19 August 2002:

1                    lawfully placed a bet on the Bulldogs for the 2002 competition other than for the Wooden Spoon.

2                    lawfully placed a bet on any team except the Bulldogs to win the Wooden Spoon in the 2002 competition.

3                    did not know of the breaches of the salary cap by the Bulldogs which endangered the competition points; and

4                    expected the Bulldogs to comply with the requirements of the salary cap; and

5                    suffered financial loss as a consequence.’

8                     No additional person claiming to be a group member has communicated with the solicitors for either party since publication of that notice and no such person has appeared at the hearing.

9                     The principles governing an application of this kind and relevant authorities have recently been discussed by Sackville J in Courtney v Medtel Pty Ltd (No 5) [2004] FCA 1406 at [37]–[42]; see also Reiffel v ACN 075 839 226 Pty Limited (No 2) [2004] FCA 1128 (Reiffel).  Consideration of these principles causes me to focus upon three issues.

1          Reasonableness overall

10                  The overall settlement is the result of a mediation conducted by an experienced mediator with experienced counsel and solicitors on both sides present.  The solicitor for the applicants has set out some of the considerations which led to the compromise.  I am satisfied that the compromise was reasonable taking account of those factors and the risks of litigation generally.

2          Allocation of part of the proceeds to solicitor/client costs

11                  The allocation of part of the amount to be paid to satisfaction of the solicitor/client costs is not expressly disclosed in the advertisement or in the correspondence with group members.  The issue of costs in proceedings such as this is often a matter of some sensitivity (cf Reiffel). 

12                  The evidence now establishes that the costs retainers entered into in the matter envisage that, under certain circumstances, solicitor-client costs could be deducted from amounts recovered as a result of the litigation with a cap, however, of one third of the amount recovered.  The evidence satisfies me that the amount properly charged for solicitor-client costs in this matter would be significantly in excess of the approximately $50,000 which is to be retained from the proceeds and it is clear that the amount retained does not exceed the cap imposed by the retainer arrangements.  Furthermore, the evidence discloses that Category 1 group members are not adversely affected by the arrangement.  So far as Category 2 group members are concerned, all but two have been contacted by the solicitor for the applicants and no objection has been raised by any party.  Under the circumstances, I am satisfied that allocation of part of the proceeds to solicitor-client costs as proposed is reasonable.

3          Apportionment between Group Members

13                  The first issue is the distinction between Category 1 and Category 2 group members, that is, between bets below and above $500.  This is admittedly somewhat arbitrary and pragmatic.  It has not been the subject of complaint by any group member.  It is reasonable in the circumstances.  The next issue relates to the full recovery by each of the named applicants.  This is justified on the basis that the applicants incurred potential responsibility for costs and were involved in time and effort in preparation of the case above that of ordinary class members.  The same issue arises in relation to an advantage accruing to Mr Tidy in comparison with other Category 2 class members on account of his participation in the proceedings.  In my opinion, the settlement is reasonable in these respects.

Conclusion

14                  I am thus satisfied that approval should be granted and ancillary orders disposing of the proceedings made.  For reasons explained in argument I do not think it appropriate to make Order 7 as sought in the Short Minutes of Order.  The Act governs the effect of what has occurred.  Order 6 is properly a matter for noting by the Court.  Orders are made in accordance with the draft Short Minutes of Order omitting Orders 6 and 7. 

Associate:

Dated:              22 December 2004