Federal Court of Australia

Amory v RMS Engineering & Construction Pty Ltd [2022] FCA 1505

ORDERS

THE COURT ORDERS THAT:

Approval of settlement

1.    Pursuant to s 33V of the Federal Court of Australia Act 1976 (Cth) (the Act), the proposed settlement of this proceeding is approved upon the terms of the Deed of Settlement and Release which appears as Annexure HT-1 to the affidavit of Hunter Trotman filed on 16 June 2022 (the Deed).

2.    Pursuant to s 33ZF of the Act:

(a)    the applicant is authorised, nunc pro tunc, to enter into and give effect to the Deed and all transactions contemplated by it for and on behalf of the group members defined in paragraph 2 of the Further Amended Statement of Claim filed on 27 June 2022 (the Group Members);

(b)    the Settlement Sum, as defined in the Deed, must (and must only) be paid and distributed in accordance with the Deed and the distribution schedule which appears as Annexure HT-2 to the affidavit of Hunter Trotman filed on 2 September 2022 (together, the Settlement Scheme); and

(c)    the legal costs and disbursements, as particularised in the Settlement Scheme, are approved.

3.    Pursuant to s 33ZB of the Act, the persons affected and bound by the settlement are the applicant and respondents to the proceeding, the Group Members, Preadvocate Legal Pty Ltd (ACN 614 122 931) t/as Queensland Workplace & Workplace Injury Law, and Roberts Nehmer McKee Lawyers.

Administration of Settlement

4.    Pursuant to s 33ZF of the Act, Preadvocate Legal Pty Ltd (ACN 614 122 931) t/as Queensland Workplace & Workplace Injury Law is appointed as the Administrator of the Settlement Scheme and is to administer it in accordance with its provisions, subject to any direction of the Court.

Confidentiality

5.    Pursuant to ss 37AF and 37AG(1)(a) of the Act, and in order to prevent prejudice to the proper administration of justice, the affidavit of Hunter Trotman sworn on 2 September 2022 (other than in its redacted form as filed on that date) is to be treated as confidential and to be sealed on the Court file so as to be marked “Not to be opened except by leave of the Court or a Judge”.

Finalisation of proceedings

6.    The proceeding is dismissed with no order as to costs.

7.    All previous costs orders in the proceeding (if any) are vacated.

8.    All parties to the proceeding and all persons bound by the settlement have liberty to apply.

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

REASONS FOR JUDGMENT

RANGIAH J:

1    The applicant applies for orders approving the settlement of a representative proceeding pursuant to s 33V of the Federal Court of Australia Act 1976 (Cth) (the FCA Act), as well as ancillary orders.

2    The representative proceeding seeks compensation and the imposition of pecuniary penalties for contraventions of the Fair Work Act 2009 (Cth) (the FW Act) and the Fair Work Regulations 2009 (Cth).

3    For the reasons that follow, I will make orders in the terms sought by the applicant.

Principles concerning approval of a settlement

4    Section 33V of the FCA Act provides:

(1)    A representative proceeding may not be settled or discontinued without the approval of the Court.

(2)    If the Court gives such an approval, it may make such orders as are just with respect to the distribution of any money paid under a settlement or paid into the Court.

5    In Williams v FAI Home Security Pty Ltd (No 4) [2000] FCA 1925; (2000) 180 ALR 459, Goldberg J observed at [19]:

Ordinarily the task of a court upon an application such as this, is to determine whether the proposed 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. Ordinarily in such circumstances the court will take into account the amount offered to each group member, the prospects of success in the proceeding, 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 and from any independent expert in relation to the issues which arise in the proceeding, the likely duration and cost of the proceeding if continued to judgment, and the attitude of the group members to the settlement.

6    In Williams, Goldberg J also suggested at [19] that a useful guide could be found in the “nine-factor test” which directs attention towards:

(1) the complexity and duration of the litigation; (2) the reaction of the class to the settlement; (3) the stage of the proceedings; (4) the risks of establishing liability; (5) the risks of establishing damages; (6) the risks of maintaining a class action; (7) the ability of the defendants to withstand a greater judgment; (8) the range of reasonableness of the settlement in light of the best recovery; and (9) the range of reasonableness of the settlement in light of all the attendant risks of litigation.

7    The nine factors are reflected in para [15.5] of the Class Actions Practice Note (GPN-CA), together with the additional factor of, “the terms of any advice received from counsel and/or from any independent expert in relation to the issues which arise in the proceeding”.

8    In Fisher (trustee for the Tramik Super Fund Trust) v Vocus Group Limited (No 2) [2020] FCA 579, Moshinsky J summarised a number of relevant principles at [17]:

(a)    the central question for the Court is whether the proposed settlement is fair and reasonable in the interests of the group members considered as a whole;

(b)    there will rarely be one single or obvious way in which a settlement should be framed, either between the claimants and the defendants (inter partes aspects) or in relation to sharing the compensation among claimants (the inter se aspects) – reasonableness is a range, and the question is whether the proposed settlement falls within that range;

(c)    it is not the task of the Court to ‘second-guess’ or go behind the tactical or other decisions made by the plaintiff’s legal representatives, but rather to satisfy itself that the decisions are within the reasonable range of decisions, having regard to: the circumstances which are ‘knowable’ to the plaintiffs and their representatives; and a reasonable assessment of risks, based on those circumstances;

(d)    the list of factors typically relevant to an assessment of the reasonableness of a proposed settlement, set out in Williams at [19], is a useful guide but is neither mandatory nor necessarily exhaustive – it is just a guide, and additional consideration needs to be given to factors relevant to the fairness of the settlement inter se;

(e)    in relation to the inter se fairness, a particular concern of the Court is to confirm that the interests of the lead plaintiff, or signed-up clients of a given firm of solicitors, are not being preferred over the interests of other group members. The arrangement should be framed to achieve a broadly fair division of the proceeds, treating like group members alike, as cost-effectively as possible;

(f)    an important consideration will be whether group members were given timely notice of the critical elements, so that they had an opportunity to take steps to protect their own position if they wished. Once appropriate notice is given, the absence of objections or other response action from group members is a highly relevant consideration in support of a settlement, and all its elements;

(g)    where a group member does object to the settlement, an important further question is whether the objector is prepared to assume the role − and risks – of being lead plaintiff;

(h)    in relation to provisions for costs-sharing among the successful group members, again an important consideration is where the group members were alerted at an early stage to the potential costs-sharing consequences of subsequent participation in the action. It is not, thereafter, the role of the Court to go behind the costs agreements, but rather to satisfy itself that the agreements have been applied reasonably according to their terms; and

(i)    further, the level of detail which the Court will require in order to be satisfied that costs have been calculated in accordance with the applicable agreements will vary, depending on factors such as whether the group members are all clients, or include non-client claimants, and the proportion of the settlement funds to be applied to costs.

(Citations omitted.)

9    The focus of s 33V of the FCA Act is the fairness and reasonableness of the proposed settlement having regard to the interests of the group members as whole. In that context, it was observed by Beach J in Newstart 123 Pty Ltd v Billabong International Ltd [2016] FCA 1194; (2016) 343 ALR 662 at [11] that reasonableness is a range and the question is whether the proposed settlement and scheme fall within that range.

The proposed settlement

10    The parties have executed a deed of release and settlement (the Deed). In respect of the class action, the effect of the Deed is essentially that, subject to Court approval:

(a)    the respondents will pay $130,000 in full and final settlement of the proceeding (cl 6.1 and definition of “Settlement Sum”);

(b)    the applicant’s solicitors will determine the distribution of the settlement funds as between participating group members (cl 6.2);

(c)    the parties will agree to dismissal of the proceeding with no orders as to costs (cl 7.4); and

(d)    the group members and parties will give mutual releases and indemnities (cl 2).

11    The group members are defined in para 2 of the Further Amended Statement of Claim (the FASOC).

12    All group members are to be bound by the settlement, regardless of whether they have registered to be participating group members (cl 5). However, only participating group members are entitled to receive a distribution of the settlement funds (cl 5).

13    On 24 June 2022, I ordered that a combined opt out notice and proposed settlement notice be sent by the first respondent by email to its employees or former employees who were group members and be published on the applicant’s solicitors’ website. I made orders for the registration of claims and for objections to the proposed settlement to be made. After compliance with those orders, there are eight participating group members.

14    The Deed includes, as part of its terms, settlement of the individual claim by the applicant, Kerry Amory, for contraventions of “general protections” provisions. To the extent that the Deed effects a settlement of that claim, it is not subject to the requirements of s 33V of the FCA Act.

Whether the settlement is fair and reasonable

15    The following factors demonstrate that the proposed settlement is fair and reasonable and ought to be approved.

The complexity and duration of the litigation

16    The FASOC alleges that the first respondent caused the group members to work on certain identified projects performing civil concrete works under the supervision of identified individuals between September 2017 and June 2020.

17    The FASOC alleges that, at various times:

(1)    The first respondent contravened s 45 of the FW Act by directing and causing group members not to take paid or unpaid meal breaks or rest periods to which they were entitled under the Building & Construction General On-site Award 2010 (cl 35).

(2)    The first respondent contravened s 50 of the FW Act by directing and causing group members not to take paid or unpaid meal breaks or rest periods to which they were entitled under the RMS Engineering & Construction Enterprise Agreement (cl 7.3), the AWX Labour Workplace Agreement 2014 (cl 21), or the AWX Labour Workplace Agreement 2018 (cl 22).

(3)    The first respondent contravened s 323 of the FW Act by underpaying group members through the use of unauthorised deductions.

(4)    The first respondent contravened s 343(1) of the FW Act by responding to complaints from group members about being deprived of meal breaks or rest periods by threatening or taking adverse action against them.

(5)    The first respondent contravened s 536(3) of the FW Act by giving the group members payslips that did not record the actual hours worked by those group members.

(6)    The first respondent’s contraventions were part of a systemic pattern of conduct and amounted to serious contraventions under s 557A(2) of the FW Act.

(7)    The second respondent, who is the director of the first respondent, was knowingly concerned in the first respondent’s contraventions for the purposes of s 550 of the FW Act.

18    The first and second respondents deny the allegations made against them. They dispute that the group members were not paid correctly. They dispute a number of the factual premises for the claim including, for example, the start time of pre-start meetings and that the timesheets were altered. They dispute a number of the factual allegations concerning claims for general damages made by the participating group members.

19    The matter does not appear to involve any particular legal complexity, but the affidavits reveal a reasonable degree of factual complexity. About 38 affidavits of witnesses have been filed. The parties estimate that a trial on the question of contraventions of the FW Act would take three to four weeks. There may then have to be a separate hearing in respect of the pecuniary penalties sought against the respondents to the representative proceeding.

The stage of the proceedings

20    The proceedings have been the subject of a lengthy Court-supervised mediation. The parties have filed the affidavits they intend to rely upon. If the settlement is not approved, the next stage is preparation for trial.

The risks of establishing liability, establishing damages, and maintaining the class action

21    These risks are addressed in the confidential opinion of the applicant’s counsel. The success of the claims depends in large measure on the evidence of witnesses in respect of events and conversations that are not recorded or corroborated by documentary material. The matter is otherwise attended with the usual kinds of risks that arise in any disputed litigation. These risks are properly to be taken into account in considering the reasonableness of the proposed settlement.

The range of reasonableness of the settlement in light of the best recovery

22    The opinion of counsel for the applicant is that the settlement amount is within the range of the total compensation and penalties that may be awarded if the claim is successful following a trial, and accordingly, the settlement is within the range of reasonable outcomes. That opinion seems entirely reasonable.

The range of reasonableness of the settlement in light of all the risks of litigation

23    One of the risks is that even if the matter proceeds to trial and is successful, the amount that may be received by the group members after additional legal costs and outlays are deducted may be substantially less than the amount received under the proposed settlement.

24    The applicant has already incurred legal costs of over $140,000. The applicant's legal representatives have agreed to cap their fees at approximately $30,000 for the applicant's solicitors and $35,000 for counsel, with some additional amounts to be paid for the applicant's two expert witnesses. If the matter proceeds to a three to four week trial, the legal fees will increase significantly. Costs are unlikely to be recovered in view of s 570 of the FW Act.

25    The settlement sum is sufficient to enable each of the participating group members to recover the full economic loss that it is estimated they sustained as a result of the contraventions. In addition, each participating group member will recover an amount towards non-economic loss, albeit potentially less than might be possible after trial.

26    Accordingly, there is a substantial risk that, even if the claim is successful at trial, the group members will be worse off after a trial than under the proposed settlement.

The reaction of the class to the settlement

27    Notice of the proposed settlement was given in accordance with orders made on 24 June 2022, and the result is a final group of eight participating group members. All the participating group members support the settlement.

28    In addition, viewed objectively, the interests of the participating group members will be protected under the proposed settlement and inter se fairness will be achieved. That is because each participating group member will recover the full economic loss that it has been estimated was sustained and some compensation for non-economic loss assessed by reference to the group member’s length of relevant employment (and, for the applicant, allowing for the additional time and risk he assumed).

Costs

29    The proposed distribution of the settlement sum of $130,000 would be as follows:

(a)    the sum of $63,296.85 to the group members; and

(b)    the sum of $66,703.15 towards costs and disbursements.

30    The affidavit from Raymond Bull, an experienced costs assessor, shows that he has formed the view that the costs being charged are reasonable. This assessment is made in the context that the applicant’s lawyers engaged in this matter have reduced their fees to facilitate the settlement.

Conclusion

31    In all the circumstances, the proposed settlement is fair and reasonable having regard to the interests of the group members as a whole.

32    I will make orders in accordance with the applicant’s draft.

Associate:    

Dated:    16 December 2022

SCHEDULE OF PARTIES