Case: Darwalla Milling Co Pty Ltd v F Hoffmann-La Roche Ltd (No. 2) (2007) 236 ALR 322
Outcome: applied
In Darwalla Milling Co Pty Ltd v F Hoffmann-La Roche Ltd (No. 2) (2007) 236 ALR 322, Jessup J took a slightly different approach from Goldberg J. His Honour observed at [3] that each case is dealt with on its own merits and by reference to specific factors which might raise serious doubts as to fairness. His Honour said at [35] that he could see no particular warrant for incorporating into Part IVA of the Act the requirements of the rules of the court of an overseas jurisdiction. His Honour said at [39] that: The practical judicial approach has been...to identify any features of the settlement that are obviously unreasonable or unfair... [and] where some group members object to a settlement and state their reasons..., their reasons will provide a convenient focus by reference to which the court will decide matters of fairness and reasonableness. 61 Jessup J at [41] proceeded on the basis of considering whether the overall settlement sum was reasonable having regard to: the manner of its calculation and its relationship to the best possible case outcome for the group as a whole; the prospects of achieving an outcome at or near the best probable case; the extent of the weaknesses, substantive or procedural, in the applicant's case; [and] whether the settlement sum falls within a realistic range of likely outcomes... 62 The test applied by his Honour at [41] was to determine whether the settlement involved any actual potential unfairness to any group member or categories of group members having regard to all relevant matters, including: whether the overall settlement sum involved unfair compromises by some members or categories of members for the benefit of others; and whether the distribution scheme fairly reflected the apparent or assumed relative losses suffered by particular members or categories of members. 63 Jessup J at [50] also said that he did not consider that it was the Court's function under s 33V to second-guess the applicants' advisers as to the answer to the question whether the applicants ought to have accepted the respondents' offer. 64 He also said at [50]: the court's function is, relevantly, confined to the question of whether the settlement was fair and reasonable. There will rarely, if ever, be a case in which there is a unique outcome which should be regarded as the only fair and reasonable one...the court should, up to a point at least, take the applicants and their advisers as it finds them...So long as the agreed settlement falls within the range of fair and reasonable outcomes, taking everything into account, it should be regarded as qualifying for approval under s 33V. 67 It seems to me that whether I adopt the approach of Jessup J or that taken earlier by Goldberg J, I ought to approve the settlement. My reasons for this are as follows. 68 Counsel for the applicant have provided a joint opinion that the proposed settlement is fair and reasonable. This is a matter which carries weight in the exercise of my discretion although, of course, ultimately it is for me to satisfy myself in accordance with the relevant principles. 69 I have given careful consideration to the objections which have been raised. 71 As I have said earlier, Jessup J in Darwalla drew attention to the approach which the Court should take, namely that the Court should take the legal advisers as it finds them. Of course, that is a matter which has bearing in relation to the members of the group who retained Slater &amp; Gordon, but it does seem to me also to be a matter which I ought to take into account in considering the fairness and reasonableness of the settlement proposal. 72 The second objection was as to the fees that are payable. I have considered the evidence of Mr Thompson who is an independent and accredited costs assessor. He is the principal of the firm known as Blackstone Legal Costing Pty Ltd. He has assessed the costs as fair and reasonable. It should be noted that Mr Thompson points out that the actual professional costs incurred by Messrs Slater &amp; Gordon exceed the amount that has been claimed. Moreover, although Slater &amp; Gordon have undertaken work in relation to the files of the 223 group members who retained them, the firm will not be charging costs for that work. The estimate of the amount of those costs would be in excess of $100,000. Slater &amp; Gordon will incur irrecoverable costs in administering the settlement. They have not charged a success fee or any uplift in their fees nor have they charged for disbursements including overseas calls. 73 Although the amount of the costs looked at in isolation seems to be a large figure, it is necessary to take into account the stage at which the settlement has been reached. It is evident from the evidence that has been filed and the fact that settlement was reached only about two weeks before the hearing that a substantial amount of work has gone into the preparation of the case. The global figure is as I have said $1.25 million, but approximately a third of that is comprised of expenses and disbursements including counsel's fees.