FEDERAL COURT OF AUSTRALIA

Pharm-a-Care Laboratories Pty Ltd v Commonwealth of Australia (No 11) [2012] FCA 105

THE COURT:

1.    Approves the payment of $1,162,684.01 as forming part of the “Administration Costs” for the purposes of clause 10.1.2 of the Settlement Distribution Scheme.

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

REASONS FOR JUDGMENT

1    On 25 March 2011 reasons for decision were given approving a settlement in this proceeding: Pharm-a-Care Laboratories Pty Ltd v Commonwealth of Australia (No 6) [2011] FCA 277. Orders giving effect to those reasons were made on 14 April 2011 and entered on 11 May 2011.

2    A number of other judgments have since been delivered.

3    Now before the Court is an Amended Interlocutory Application dated 13 February 2012 seeking approval for the payment of $1,162,684.01 as forming part of the “Administration Costs” for the purposes of clause 10.1.2 of the Settlement Distribution Scheme.

4    The approach to be taken when considering an application of the present kind has previously been set forth in Pharm-a-Care Laboratories Pty Ltd v Commonwealth of Australia (No 9) [2011] FCA 1111. That is the approach again taken in the present Amended Interlocutory Application.

5    A further matter which has arisen, and which should be separately considered, is the filing in this Court on 6 February 2012 of a Submission by a group member (Australian Naturopathics Pty Ltd).

The Claim for Payment

6    The sum of $1,162,684.01 is the sum of the following individual claims:

The role played by each of these entities has previously been set forth: Pharm-a-Care Laboratories Pty Ltd v Commonwealth of Australia (No 9) [2011] FCA 1111.

7    The sum of $253,162.33 is in turn comprised of three invoices, being invoices dated:

The evidence also addresses the manner in which each of these invoices has been rendered, separately identifying professional fees, disbursements and GST. The invoice for $96,076.60 is thus elsewhere separately identified as being comprised of:

By way of further example, each of the invoices totalling the sum of $96,076.60 was also exhibited to an affidavit. Disbursements in the amount claimed included fees payable to both Senior and Junior Counsel. The hourly rates charged by McLachlan Thorpe Partners and by both Senior and Junior Counsel are also set forth.

8    The sum of $896,046.68 is in turn comprised of four invoices, being invoices dated:

9    Both Mr Thorpe and Mr Mazzeo have reviewed each of the invoices. Mr Mazzeo formed the opinion that the fees which have been rendered have been properly charged and that no items of costs or disbursements have been incurred unnecessarily or inappropriately. Mr Thorpe took the view that the rates were fair and reasonable and represented good value for money for group members.

10    The basis upon which the invoices have been rendered has also been separately considered by the Court.

11    It is considered that approval should be given for the payment of $1,162,684.01 as “Administration Costs”.

Australian Naturopathics

12    On 6 February 2012, a group member filed in this Court a document titled “Submission by Australian Naturopathics Pty Ltd”. That document was detailed and comprised in total some 16 pages. The introduction to the Submission stated (in part and without alteration):

AN wishes to advise the Court and apologize for AN’s inability of being represented in Court when this Submission is presented and respectfully applies for the Submission to be read and considered despite absence of full representation.

It concluded as follows:

In conclusion, AN is of the opinion that it has provided sufficient evidence to allow it to be upheld that the approach to the Review process was incorrect and inappropriate and that this has severely prejudiced AN’s rights which should have been supported and guaranteed by the Scheme Administrator under the written provisions of the Commonwealth Class Action Distribution Scheme.

We respectfully seek the Court’s assessment of this matter and a decision on how this can now be best rectified to guarantee Australian Naturopathics Pty Ltd the full and right entitlement under the provisions of the Distribution Scheme.

The submission included a letter to Mr Thorpe from Mr Marevich.

13    In very summary form, it would appear that Australian Naturopathics made a claim for payment pursuant to the Settlement Distribution Scheme. That claim was for a loss said to be $3,525,873. Pursuant to the Scheme the additional claim was assessed in the sum of $110,881. Following reassessment the additional claim was assessed at $137,352. Following a third and final reassessment the additional claim was assessed at $346,317. That still left a claimed shortfall in excess of $3 million.

14    Correspondence with McLachlan Thorpe addressed the claim being made by Australian Naturopathics and the shortfall between the amount claimed and the amount as assessed. Part of that exchange of correspondence included the following “Email Transmission” dated 17 January 2012 from McLachlan Thorpe Partners to Mr Bruno Marevich, being the person identified in the Submission as “Director and representative in this matter”:

We advise that in accordance with clause 7.1 of the Settlement Distribution Scheme, the Review Expert is to conduct and determine Reviews and it is not the role of the Administrator to comment upon the Review Determination. The Review Determination is final. It is therefore not open to the Administrator to enter into dialogue with you as to the issues you raise in your email.

As we have previously advised, if you are dissatisfied with the process provided for by the Scheme, you are able to raise your objections with the Court. Should you wish to make your own arrangements to appear before the Court, we advise that the next occasion on which the Administrator is before the Court on an application in relation to other Scheme matters is 14 February 2012. Please let us know whether you intend to appear before the Court, so that in the event there are any changes to the hearing date, we can keep you informed.

15    When the Amended Interlocutory Application was called on for hearing on 14 February 2012, there was no appearance on behalf of Australian Naturopathics. Nor was there any appearance when the matter was called outside the Court. Given the introduction to the Submission filed on 6 February 2012, the absence of attendance was perhaps not surprising.

16    The power of the Court to make any order or direction addressing the concerns of Australian Naturopathics was only briefly addressed during the course of the hearing on 14 February 2012. Reference was then made to clause 7 of the Settlement Distribution Scheme (being the process of review provided for in the Scheme) and to clause 13.1 (being the ability of the Administrator to refer to the Court “any issues arising in relation to the Settlement Distribution Scheme”).

17    The dissatisfaction raised by Australian Naturopathics has not been referred to the Court by the Administrator pursuant to Clause 13. The ability of a group member to have an issue that may arise in relation to the Scheme brought before the Court was briefly canvassed with Counsel for the Administrator on 14 February 2012. Whether a group member could or could not raise any such issue with the Court was not resolved.

18    The role of the Court when approving a settlement pursuant to s 33V of the Federal Court of Australia Act 1976 (Cth) is to consider whether a settlement or compromise is “… fair and reasonable, having regard to the claims made on behalf of the group members who will be bound by the settlement” (Williams v FAI Home Security Pty Ltd [2000] FCA 1925 at [19], 180 ALR 459 at 465 per Goldberg J) and “… not just in the interests of the applicant and the respondent” (Australian Competition and Consumer Commission v Chats House Investments Pty Limited (1996) 71 FCR 250 at 258 per Branson J). See also: Vernon v Village Life Ltd [2009] FCA 516 at [44] to [45] per Jacobson J. The task of the Court when granting approval, it has also been acknowledged, is “… an onerous one especially where the application is not opposed”: Lopez v Star World Enterprises Pty Ltd [1999] ATPR 41-678 at 42,670.

19    In such circumstances, it would be surprising if the ability of this Court to protect the interests of group members ceased when it grants approval to a settlement pursuant to s 33V. It would be equally surprising if the ability of this Court subsequent to approval being given pursuant to s 33V is confined to merely supervising the distribution of settlement monies in accordance with that approval and not to address unexpected unfairness arising from the approved distribution scheme. Perhaps something may turn upon whether any unfairness arises pursuant to the terms in which a distribution scheme has been approved or pursuant to disagreement as to the facts upon which distribution is to take place. But no concluded view on any of these issues need presently be expressed.

20    If Australian Naturopathics wish to make an application to the Court for some form of order, the manner in which that application is to be made and the form of order then sought can be addressed if and when it is made.

21    The Submission as filed has alerted the Court – and the Administrator of the Scheme – to the prospect that an application may be made. It remains a matter for Australian Naturopathics to further pursue the Submission it has filed, if it so wishes. If an application is to be made by Australian Naturopathics it should be made prior to the monies being distributed. Approval for the distribution of monies may be sought as early as next month.

22    A copy of this judgment should be served upon Mr Marevich. Given the role played by the Administrator, it is not necessary to make a formal order to that effect.

Conclusion

23    Approval should be given in the terms sought in the Amended Interlocutory Application.

The Court:

1.    Approves the payment of $1,162,684.01 as forming part of the “Administration Costs” for the purposes of clause 10.1.2 of the Settlement Distribution Scheme.

Associate:

Dated:    17 February 2012