Lopez v Star World Enterprises Pty Ltd [1999] FCA 104

Lopez v Star World Enterprises Pty Ltd [1999] FCA 104

The settlement was approved because, although the potential aggregate claims might substantially exceed $750,000, Star World Enterprises was hopelessly insolvent, Mr and Mrs Chiem could not meet a substantial judgment, and recovery under the insurance policy was uncertain due to Australian Unity's denial of indemnity and advice that the exclusion clause was likely to apply. The proposed fund therefore offered group members a fair and reasonable compromise. The existence of group members under disability did not prevent approval because the settlement scheme provided for representation by a legally entitled person or solicitor. The compromise of the insurance cross-claim was also...

Jurisdiction
Australia
Judgment Date
28 January 1999
Procedural Posture
Representative Proceeding and Cross Claim Concerning Alleged Salmonella Contamination of Food Products and Insurance Indemnity / Applications for Court Approval of Proposed Settlement Under S 33 V of the Federal Court of Australia Act 1976 (cth) and Approval of Liquidator's Compromise Under Ss 477(2 A) and 506(1 A) of the Corporations Law
Outcome
Settlement approved; judgment entered for the settlement amounts; opt-out date extended; cross-claim dismissed with related costs and expenses orders.
Legal Topics
['approval of Settlement of Representative Proceeding' 'group Members Including Persons Under Disability' 'opt Out Under S 33 J of the Federal Court of Australia Act 1976 (cth)' 'liquidator Compromise of Insurance Claim' 'distribution of Settlement Fund' 'product Contamination and Personal Injury Claims']
['practice and Procedure' 'representative Proceedings' 'corporations' 'insurance' 'consumer Protection' 'negligence'] ['approval of Settlement of Representative Proceeding' 'group Members Including Persons Under Disability' 'opt Out Under S 33 J of the Federal Court of Australia Act 1976 (cth)' 'liquidator Compromise of Insurance Claim' 'distribution of Settlement Fund' 'product Contamination and Personal Injury Claims']

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Procedural Posture

Representative Proceeding and Cross Claim Concerning Alleged Salmonella Contamination of Food Products and Insurance Indemnity / Applications for Court Approval of Proposed Settlement Under S 33 V of the Federal Court of Australia Act 1976 (cth) and Approval of Liquidator's Compromise Under Ss 477(2 A) and 506(1 A) of the Corporations Law

Legal Issues

  1. 1 ['Whether the proposed compromise of the representative proceeding was fair and reasonable and should be approved under s 33V of the Federal Court of Australia Act 1976 (Cth).' "Whether the proposed compromise of Star World Enterprises Pty Ltd's cross-claim against Australian Unity General Insurance Ltd should be approved under ss 477(2A) and 506(1A) of the Corporations Law." 'Whether the inclusion of group members under disability prevented approval of the settlement.' "Whether the settlement scheme could be approved although the administrator's assessment of group members' entitlements was not subject to court review."]

Ratio Decidendi

The settlement was approved because, although the potential aggregate claims might substantially exceed $750,000, Star World Enterprises was hopelessly insolvent, Mr and Mrs Chiem could not meet a substantial judgment, and recovery under the insurance policy was uncertain due to Australian Unity's denial of indemnity and advice that the exclusion clause was likely to apply. The proposed fund therefore offered group members a fair and reasonable compromise. The existence of group members under disability did not prevent approval because the settlement scheme provided for representation by a legally entitled person or solicitor. The compromise of the insurance cross-claim was also...

Court Disposition

Settlement approved; judgment entered for the settlement amounts; opt-out date extended; cross-claim dismissed with related costs and expenses orders.

Orders

  • ['The settlement agreements dated 28 January 1999 and the settlement scheme were approved by the court.' "On the applicant's claim against the respondents and on behalf of the applicant and group members, and on the cross-claimant's claim against the cross-respondent, judgment was entered in the sum of $750,000 with...