Bywater v Appco Group Australia Pty Ltd

• Jurisdiction: Australia Federal only
• Court: Federal Court
• Judgment Date: 24 December 2020
• Neutral Citation: [2020] FCA 1877
• Date: 24 December 2020

Federal Court of Australia

Bywater v Appco Group Australia Pty Ltd [2020] FCA 1877

File number:	NSD 1857 of 2016
Judgment of:	LEE J
Date of judgment:	24 December 2020
Catchwords:	REPRESENTATIVE PROCEEDINGS – settlement approval application pursuant to s 33V of Federal Court of Australia Act 1976 (Cth) – where respondent restructured business – investigations ordered into the financial position of the respondent including whether restructure is an attempt to defeat judgment or is a voidable or uncommercial transaction – application adjourned pending investigations – investigations did not yield additional useful information concerning further assets of the respondent – notice sent to group members reflecting this information – overwhelming support for the current settlement to be approved – further attempts to augment any settlement sum likely to be throwing good money after bad – settlement approved
Cases cited:	Bywater v Appco Group Australia Pty Ltd [2020] FCA 1537
Division:	Fair Work Division
Registry:	New South Wales
National Practice Area:	N/A FCC, FCoA
Number of paragraphs:	8
Date of hearing:	22 December 2020
Counsel for the Applicant:	Dr K Hanscombe QC with Ms K Bowshell
Solicitor for the Applicant:	Adero Law
Counsel for the Respondent:	Mr S Keizer
Solicitor for the Respondent:	Baker McKenzie

ORDERS

		NSD 1857 of 2016
BETWEEN:	JACOB CORNELIUS BYWATER Applicant
AND:	APPCO GROUP AUSTRALIA PTY LTD ABN 49 092 605 671 Respondent

order made by:	LEE J
DATE OF ORDER:	24 DECEMBER 2020

THE COURT ORDERS THAT:

Defined terms:

Act means the Federal Court of Australia Act 1976 (Cth).

Administration Costs means costs incurred by the Settlement Administrator in administering the Final Settlement Scheme.

Escrow Account means the escrow account described in the Settlement Deed.

Final Settlement Scheme means the Settlement Distribution Scheme as approved in the form of Annexure A.

Funder means Harbour Fund III, L.P.

Group Member has the meaning set out in the Settlement Deed and does not include any person who has opted out of the proceedings

Settlement Deed means the Deed of Settlement and Release between the applicant, the respondent, Appco Group Pty Ltd (ACN 151 870 343), the Funder and Adero Law Pty Ltd on 14 August 2020 as varied by the Deed of Variation between the applicant, the respondent, Appco Group Pty Ltd (ACN 151 870 343), the Funder and Adero Law Pty Ltd on 8 December 2020.

Settlement Distribution Scheme means the document which is exhibit RMM 2-31 to the Affidavit of Rory Michael Markham made 7 October 2020.

Settlement Sum means the moneys paid by the respondent into the Escrow Account in accordance with the terms of the Settlement Deed.

1. Pursuant to s 33V(1) of the Act, the settlement of the representative proceedings and the claims of the applicant and each Group Member be approved on the terms set out in the Settlement Deed and Settlement Distribution Scheme, which are respectively annexures RMM2-4 and RMM2-31 to the Affidavit of Rory Michael Markham made 7 October 2020, the latter being varied pursuant to Order 3 below.

2. Pursuant to s 33ZB(a) of the Act, the persons affected by these orders are the applicant and the Group Members who have not opted out of the proceedings.

3. The Settlement Distribution Scheme be varied as shown in the marked-up document at Annexure A, which is the Final Settlement Scheme.

4. Pursuant to s 33ZF of the Act, Rory Markham, principal of Adero Law, be appointed as the Settlement Administrator of the Final Settlement Scheme and authorised to act in accordance with the Final Settlement Scheme, subject to any direction of the Court.

5. The Settlement Administrator is to apply for orders dismissing the proceedings with no order as to costs within two days of completion of the Settlement Distribution in accordance with the Final Settlement Scheme.

6. Pursuant to ss 37AF and 37AG(1)(a) of the Act, in order to prevent prejudice to the proper administration of justice, the following documentary material is to remain confidential and its publication is prohibited until further order:

   1. the opinion of counsel for the applicant dated and filed 7 October 2020 in relation to the application pursuant to s 33V of the Act for approval of the settlement;

   2. annexures RMM1-1, RMM1-2 and RMM1-3 to the Affidavit of Rory Michael Markham made 6 October 2020;

   3. the information redacted as shown at Annexure B to annexures RMM3-1 and RMM3-2 to the Affidavit of Rory Michael Markham made 27 November 2020; and

   4. annexures RMM4-1, RMM4-2, RMM4-3, RMM4-4, RMM4-5, RMM4-6 and RMM4-7 to the Affidavit of Rory Michael Markham made 14 December 2020.

7. Pursuant to s 33J(3) of the Act, the time and date for Teleasha Conroy and Zo Griffin to opt out of this proceeding is extended to 5pm on 24 December 2020.

8. All outstanding costs orders in the proceedings be vacated.

9. There be no order as to costs of the proceeding or the interlocutory application for settlement approval dated 18 September 2020.

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

REASONS FOR JUDGMENT

(Revised from Transcript)

LEE J:

1. In Bywater v Appco Group Australia Pty Ltd [2020] FCA 1537, I provided reasons for the adjournment of the settlement approval application in this proceeding.

2. The purpose of that adjournment was to allow an investigation to take place to obtain further information about the financial position of the respondent, including whether there existed grounds for taking steps to ascertain if various transactions could be characterised as an attempt to defeat a possible judgment and be potentially voidable or uncommercial transactions. As I outlined at [19] of those reasons, the solicitors for the applicant indicated that they were prepared to carry out those further investigations. Those investigations have now occurred, and save for one matter that I will mention below, they did not yield additional useful information concerning further assets of the respondent. I am satisfied this position is not going to change without further and perhaps significant sums being expended, currently unsupported by any source of additional funding.

3. Given this position, I was concerned to ensure that group members be provided with a straightforward notice as to those investigations and their result. To that end, on 9 December 2020, I approved and ordered a notice (Notice) to be sent to group members in the following terms:

IMPORTANT NOTICE ABOUT SETTLEMENT

FEDERAL COURT OF AUSTRALIA

Jacob Cornelius Bywater v Appco Group Australia Pty Ltd

NSD 1857/2016

1. This notice has been sent by order of the Federal Court of Australia in relation to the matter of Bywater v Appco Group Australia (Appco Class Action).

2. You recently received a ‘Notice of Settlement and Opt Out Process’ which informed you that Mr Bywater and Appco Group Australia Pty Ltd (Appco Group) have agreed to resolve the class action out of Court but that before the settlement can go ahead, it needs to be approved by the Court. Since that notice, following further discussion between the parties, the proposed payment from Appco Group in accordance with that agreement has increased from $1.9 million to $2.05 million.

3. Mr Bywater estimates the potential claim for Group Members is worth approximately $65 million (excluding interest). The lawyers for Mr Bywater say that the prospects of success of these claims are good. This is all disputed by the Appco Group.

4. The proposed settlement amount is $2.05 million.

5. If the settlement is approved Group Members such as yourself would not be able to further pursue their claims in the Appco Class Action but the settlement does not include any releases against Marketing Companies. This means that Group Members are able to pursue claims against Marketing Companies, should they wish to do so, regardless of whether the settlement is approved.

6. If the settlement is approved, the following payments will be made...