Federal Court of Australia

Bist v Cyan Stone Clydesdale Estate 1 Pty Ltd (in liquidation) (No 3) [2025] FCA 577

ORDERS

THE COURT ORDERS THAT:

Approval of settlement

1.    Pursuant to s 33V of the Federal Court of Australia Act 1976 (Cth) (Act) the settlement of this representative proceeding be approved on the terms set out in:

(a)    the Deed of Settlement and Release (Deed) (to be included in confidential Exhibit RI-8 to the confidential affidavit of Robert Ishak sworn on 23 May 2025 and filed on 30 May 2025 pursuant to order 9 of the orders made by Jackman J on 4 April 2025); and

(b)    The Settlement Scheme (as that term is defined in the Settlement Notice) (to be included in open Exhibit RI-9 to the open affidavit of Robert Ishak sworn on 27 May 2025 and filed on 30 May 2025 pursuant to order 9 of the orders made by Jackman J on 4 April 2025).

2.    Pursuant to s 33ZF of the Act, the Applicants are 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 in this proceeding as defined at paragraph [1] of the Amended Statement of Claim filed on 19 December 2024 (save for any person or entity who has opted out of the proceeding).

3.    Pursuant to s 33ZB of the Act, the persons affected and bound by the settlement of this proceeding are the Applicants, the Respondents, the Group Members and the Financiers (as that term is defined in the Deed).

4.    Any Group Member who is not a Group Member that has duly completed the Notice of Participation and Confidentiality Agreement at Schedule 1 of the Notice of Settlement on or before 12 June 2025 will remain a Group Member for all purposes of this proceeding but shall not, without leave of this Court, be permitted to seek any benefit to any settlement approved by this Court.

Confidentiality

5.    Pursuant to sections 37AF and 37AG(1)(a) of the Act and in order to prevent prejudice to the proper administration of justice, the confidential affidavit of Robert Ishak sworn on 23 May 2025 and filed on 30 May 2025 and the confidential Exhibit RI-8 to that affidavit, the confidential opinion of counsel dated 27 May 2025 and the confidential affidavit of Robert Ishak sworn on 27 May 2025 and filed on 30 May 2025 and the confidential Exhibit RI-10 to that affidavit is not to be published or disclosed without the prior express consent of the Applicants and/or prior leave of this Court to any person or entity other than this Court and the Applicants, prior to the date on which any right to appeal from these orders has lapsed or such appeal had been determined as long as that appeal results in these orders not being set aside, noting that the order made on 11 March 2025 for the suppression of the affidavit of Marc Saadie sworn 2 September 2024 and the documents referred to in order 2 made on 11 March 2025 until 4 September 2026, remains in effect until 4 September 2026.

Appointment of Settlement Administrator

6.    William Roberts Lawyers be appointed as the Settlement Administrator (as that term is defined in the Deed) and is to act in accordance with the Settlement Distribution Scheme (as approved by this Court) and is to have the powers and immunities conferred by the Settlement Scheme, subject to any direction of the Court.

7.    The Settlement Administrator have liberty to apply in relation to any matter arising under the Settlement Distribution Scheme including for the purposes of seeking orders consequential to or in connection with the Deed and/or the Settlement Distribution Scheme.

Other orders

8.    Extend the time for compliance with order 9 of the Court’s orders of 5 May 2025 to 14 days after any settlement approval.

9.    Reinstate Jay Shah and Hemang Shah as Group Members.

10.    The proceeding be dismissed with no order as to costs and subject to the Settlement Administrator having liberty to apply for the purpose set out in Order 7 above.

11.    All orders relating to the provision of security for the Respondents’ costs are vacated.

12.    Pursuant to r 2.43(1) of the Federal Court Rules 2011, the $85,000 deposited by the Applicants in this Court, on 29 November 2024 as security costs of the Seventh to Ninth Respondents’, is to be returned to the Applicants, by way of payment being made into the trust account of William Roberts Lawyers.

13.    All outstanding programming orders be vacated.

14.    All costs orders made in the proceeding are vacated.

15.    There be no order as to costs.

16.    The costs of the first to sixth respondents be costs in the liquidations, respectively, of those companies.

17.    Liberty to apply on reasonable notice.

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

REASONS FOR JUDGMENT

Delivered ex tempore, revised from transcript

JACKMAN J:

1    The applicants in these proceedings seek the Court's approval for the proposed settlement pursuant to s 33V of the Federal Court of Australia Act 1976 (Cth) (the FCA Act). The applicants also seek the Court's approval of the costs of the proceeding and administration of the settlement. The nature of the proceedings is apparent from the interlocutory judgment of Kennett J in Bist v Cyan Stone Clydesdale Estate 1 Pty Ltd [2024] FCA 1108. In short, in 2020 and 2021 the first to sixth respondent, now in liquidation (the Vendors) advertised a large property development known as "Clydesdale" to the general public (Clydesdale development). According to the Vendor's website, it was "154 homes with lot[s] sized from 453 to 710 sqm". During the marketing campaign, 234 Group Members entered "off the plan" contracts with the Vendors for the purchase of the 150 lots yet to be created in the Clydesdale development. One of those contracts was entered into by the applicants, Mr and Mrs Bist.

2    By May 2021, 150 lots were subject to "off the plan" contracts with Group Members (the remaining four lots had never been offered to the market). From time to time after then, over 2022 and 2023, Group Members received updates from the Vendors, reporting progress towards completion. The sunset date was 31 December 2024, although I note the provisions of Div 10 of the Conveyancing Act 1919 (NSW), which constrain developers from relying on sunset clauses without the approval of the Supreme Court of New South Wales.

3    On 15 March 2024, Astro Fort Clydesdale Pty Ltd (AFC) was incorporated as a special purpose vehicle for the acquisition of the Clydesdale development. Between March 2024 and May 2024, AFC negotiated to acquire the land comprising Clydesdale from the Vendors. AFC admits in its defence that, at the time of those negotiations with the Vendors, it knew that the Clydesdale lots had been marketed as part of a property development to the public, and that at least some of those lots were the subject of pre-sale contracts. On 31 May 2024, the agreement between the Vendors and AFC was formalised in the contract of sale of the development land. The contract provided for completion on that day. The contract for the sale of the Clydesdale development did not make allowance for AFC to perform the contracts with Group Members.

4    On 27 August 2024, these proceedings were commenced as a representative action under Pt IVA of the FCA Act. After introductory hearings, including the dismissal by Kennett J of an application for interim relief, the matter was set down for a 10-day hearing on an expedited basis in May 2025. On 7 February 2025, the Vendors (by their liquidators) made an application to the Court to disclaim any requirement to carry out the contracts of the Group Members with the Vendors. That application was adjourned indefinitely, pending the outcome of the proposed settlement.

5    The proceedings settled after a mediation conducted by a highly experienced and able mediator, the Honourable Patricia Bergin AO SC, on 17 February 2025. The hearing has been vacated in light of the settlement. At the time the matter was settled, service of evidence was incomplete, and discovery and production under third-party subpoenas which had been issued had not occurred. The principles which guide consideration of a settlement approval application are well-established. As Lee J said in Fowkes v Boston Scientific Corporation [2023] FCA 230 at [33]:

The Court’s "principal task is to assess whether the compromise is a fair and reasonable compromise of the claims made on behalf of the group members" … and "to ensure … that a settlement acceptable to a representative party accommodates the interests and circumstances of group members".

6    There is no definitive checklist of mandatory considerations, however the Class Actions Practice Note (GPN-CA) sets out the following factors which are required to be addressed in the material filed in support of an application for Court approval at [15.5]:

(a)    the complexity and likely duration of the litigation;

(b)    the reaction of the class to the settlement;

(c)    the stage of the proceedings;

(d)    the risks of establishing liability;

(e)    the risks of establishing loss or damage;

(f)    the risks of maintaining a class action;

(g)    the ability of the respondent to withstand a greater judgment;

(h)    the range of reasonableness of the settlement in light of the best recovery;

(i)    the range of reasonableness of the settlement in light of all the attendant risks of litigation; and

(j)    the terms of any advice received from counsel and/or from any independent expert in relation to the issues which arise in the proceeding.

7    These matters are addressed in the confidential opinion of counsel for the applicants. In my view, the settlement is well within the range of fair and reasonable ways in which the proceedings may be compromised. Indeed, I have read the constituent documents and surrounding evidence with admiration for the creative thinking which has been deployed in reaching the compromise in the present case.

8    On 5 May 2025, the Court made orders requiring various methods to be used by the applicants' lawyers to contact Group Members to notify them of the proposed settlement. Group Members, in turn, were required to send the applicants' lawyers completed Notices of Participation and Confidentiality Agreements by 4.00 pm on 19 May 2025. There were 150 lots in the development. Of those, 150 were put up for sale by the Vendors, and 147 of those were the subject of contracts for the sale of land, and 3 were the subject of an unexercised option to buy. Of the 147 lots the subject of exchange contracts, the applicants are waiting on responses from 7 lot owners as explained below.

9    From 7 to 14 May 2025, various methods were employed in an attempt to make Group Members aware of the settlement. By 4.00 pm on 19 May 2025, the owners of 138 of the lots had sent the applicants' lawyers completed notices of participation and confidentiality agreements. In respect to the non-responses, the applicants' lawyers made various attempts to follow up. These remaining lot owners fall into three categories:

(a)    Owners that submitted the documentation late: this applies to the owners of lots 3173 and 3172;

(b)    Owners that are yet to submit any documentation and are yet to indicate if they want to participate or not: this applies to lots 3227, 3114, 3257, 3130, 3256, 3156, 3148;

(c)    One person who is not a group member:  this applies to the option purchaser of lots 3121, 3122 and 3123. This person never exchanged a contract for sale.

10    There are various reasons why Group Members fell into the first two categories, including that they only became aware of the settlement shortly before the documents were due on 19 May 2025 or after they were due, that they were overseas, or that they were seeking legal advice. As to each person in the second category, the applicants' solicitors are continuing to make inquiries and intend to further continue to make inquiries. To accommodate this position, an order is proposed extending the time for compliance to 14 days after today's settlement approval. In my view, that order is plainly appropriate.

11    The proposed settlement distribution scheme is contained in a confidential exhibit. A summary of the key dates for the settlement distribution is set out in one of the confidential affidavits. My attention has been drawn to one matter in the settlement distribution scheme that differs from the Deed of Settlement agreed by the parties, concerning unclaimed settlement amounts. The Deed of Settlement provided that those moneys were to be donated to charity. However, upon a group member raising an objection, the settlement scheme was changed so as to use unclaimed settlement moneys in the first instance to rateably pay legal costs, and then to provide any residual amount to charity. That variation strikes me as entirely appropriate.

12    As to the costs associated with the settlement and its administration, the Court's approval for those costs is also sought in the present application. The total professional fees and disbursements have been set out in the confidential affidavit of Mr Ishak, the solicitor with carriage of the matter for the applicants. I am satisfied on the basis of that evidence that the costs incurred to date, and anticipated to be incurred in the administration of the settlement scheme, are reasonable. 

13    It is also proposed that the lead applicants will receive a fee of $1000 (being $500 per lead applicant) per lot in the Clydesdale development, which on present numbers of participants, will equate to approximately $138,000 to compensate them for the onerous demands on their time and energy in acting as the representative parties, and undertaking the very substantial financial risk in relation to the litigation, in circumstances where no other group member was willing to take that risk or to run their own individual case for their own benefit. The figure strikes me as an appropriate one, and I have read the evidence concerning the matters which the lead applicants attended to, as well as the financial risk which they personally undertook, with considerable admiration.

14    Six objections have been received from Group Members. Those objections have been considered by counsel in their confidential opinion. I do not regard the matters raised in the objections as sufficient to persuade me not to approve the settlement. It should also be noted that each objector has chosen to participate in the settlement.

15    The applicants seek suppression orders under s 37AF of the FCA Act on the ground referred to in s 37AG(1)(a) over the constituent documents for the settlement and also evidence, including counsel’s confidential opinion, concerning the settlement. The evidence in the confidential affidavits is plainly of a confidential and sensitive nature, and a suppression order is plainly justified in relation to it.

16    As to the Deed of Settlement and other constituent documents of the settlement, the Deed of Settlement contains a confidentiality clause in relatively conventional terms which is of perpetual effect. The Notice of Proposed Settlement to Group Members clearly disclosed that clause (see [29]). Nearly all Group Members have now sent notices of participation and confidentiality agreements, which include confidentiality obligations, again of perpetual effect. It was necessary for the applicants to tender the Settlement Deed and related material as to the terms of the proposed settlement. Those contractual confidentiality provisions would be undermined if the terms of settlement were to be publicly available merely because they had been tendered in this application.

17    While there may well have been room for debate as to whether the terms of settlement are, of their nature, such as to require a suppression order independently of the contractual obligations of confidentiality, I regard it is necessary, to prevent prejudice to the proper administration of justice, to make such a suppression order, having regard to the need to preserve the effect of the contractual obligations of confidentiality which the parties and Group Members have bargained for and entered into. Accordingly, I make the orders as proposed, with the variations discussed during the course of the interlocutory hearing.

Associate:

Dated:    5 June 2025

SCHEDULE OF PARTIES