Kelly v Willmott Forests Ltd (in liquidation) (No 4) [2016] FCA 323

Kelly v Willmott Forests Ltd (in liquidation) (No 4) [2016] FCA 323

Approval of the proposed settlements was refused because: the settlements would impose binding admissions as to loan enforceability on all class members, including non-participating ones, without adequate notice or opportunity for opt out at the settlement stage; the registration and opt out notices did not...

Source-derived case information.

Parties
Applicant: David Kelly; Applicant: Margaret Kelly (nee Ilacqua); Applicant: Aaron Grant; Applicant: Braeden Stephen Lord; Respondent: Willmott Forests Ltd (in liquidation) (ACN 063 263 650); Respondent: Jonathan David Madgwick; Respondent: Marcus Derham; Respondent: James William Antony Higgins; Respondent: Hugh Thomas Davies; Respondent: Raymond Maxwell Smith; Respondent: Bioforest Limited (in liquidation) (ACN 096 335 876); Respondent: MIS Funding No 1 Pty Ltd (ACN 119 268 905); Respondent: Commonwealth Bank of Australia; Respondent: Willmott Finance Pty Ltd (Receivers & Managers Appointed) (Administrator Appointed) (ACN 081 274 811)
Jurisdiction
Australia
Judgment Date
05 April 2016
Procedural Posture
Representative Proceeding (class Action) / Application for Approval of Settlement Under S 33 V of the Federal Court of Australia Act 1976 (cth)
Outcome
Applications for approval of settlement refused
Legal Topics
Settlement Approval, Representative Proceedings, Obligations of Class Representatives, Conflicts of Interest in Class Actions, Legal Costs Supervision, Opt Out Notice Sufficiency, Loan Enforceability, Estoppel and Abuse of Process, Disclosure Obligations Under Managed Investment Schemes
Corporations Class Actions Banking and Finance Insolvency Settlement Approval Representative Proceedings Obligations of Class Representatives Conflicts of Interest in Class Actions +5 more

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Parties

David Kelly

Applicant

Margaret Kelly (nee Ilacqua)

Applicant

Aaron Grant

Applicant

Braeden Stephen Lord

Applicant

Willmott Forests Ltd (in liquidation) (ACN 063 263 650)

Respondent

Jonathan David Madgwick

Respondent

Marcus Derham

Respondent

James William Antony Higgins

Respondent

Hugh Thomas Davies

Respondent

Raymond Maxwell Smith

Respondent

Bioforest Limited (in liquidation) (ACN 096 335 876)

Respondent

MIS Funding No 1 Pty Ltd (ACN 119 268 905)

Respondent

Commonwealth Bank of Australia

Respondent

Willmott Finance Pty Ltd (Receivers & Managers Appointed) (Administrator Appointed) (ACN 081 274 811)

Respondent

Procedural Posture

Representative Proceeding (class Action) / Application for Approval of Settlement Under S 33 V of the Federal Court of Australia Act 1976 (cth)

Legal Issues

  1. 1 Whether the proposed settlements should be approved under s 33V of the Federal Court of Australia Act 1976 (Cth)
  2. 2 Whether the settlements fairly and reasonably protect the interests of all class members, including non-participating members
  3. 3 Sufficiency of opt out and registration notices in informing class members of impacts of settlement, specifically regarding loan enforceability admissions

Ratio Decidendi

Approval of the proposed settlements was refused because: the settlements would impose binding admissions as to loan enforceability on all class members, including non-participating ones, without adequate notice or opportunity for opt out at the settlement stage; the registration and opt out notices did not unambiguously alert class members to the possibility of being precluded from later individual defences (particularly regarding loan enforceability); there were unaddressed and significant conflicts of interest between various subgroups; major gaps and funding difficulties in case preparation not disclosed to class members impacting informed consent and fairness; and the applicant's...

Court Disposition

Applications for approval of settlement refused

Orders

  • The applications for approval of settlements in proceedings VID 1483 of 2011, VID 1484 of 2011, VID 1485 of 2011 and VID 187 of 2013 are refused.
  • The parties and the objectors to settlement approval are granted liberty to apply.