Judge finds cost of pursuing litigation outweighs quantum; approves settlement in lost cargo case

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This was a class action arising from container damages and losses incurred on the “APL England” (a 5,780 TEU cellular containership) in Sydney on 24 May 2020. In January 2021, the lead applicant (St John Ambulance Australia Ltd) brought proceedings on behalf of “owners or persons entitled to immediate possession of cargo that was lost or damaged as a result of the collapse of container stacks on the vessel…”. Despite the 104 class members, it was ultimately the members’ insurers acting as subrogated claimants under s 85 of the Marine Insurance Act 1909 (Cth) who instructed Mills Oakley to begin proceedings. The class members were indemnified by their respective insurers.

In this judgment, Stewart J made orders approving a settlement of the proceeding in the amount of ~$2.3 million. His Honour highlighted the following features of the settlement agreement:

1. it was not an agreement between the applicants and respondents as is usually the case;
2. the settlement amount equated to 88% of the total claimed amount;
3. none of the settlement amount was to be distributed to class members as the agreement was between insurers and respondents;
4. the legal costs were not being extracted from the settlement amount but were paid separately by the insurers.

His Honour concluded that the settlement agreement was fair and reasonable for the following reasons:

1. the considerable cost of pursuing litigation outweighed the quantum at stake;
2. there were no objections to the settlement agreement by class members;
3. the proceedings were at an early stage;
4. there was risk to the applicants’ ability to establish liability due to the inconvenience, cost and legal and factual complexities;
5. the settlement amount was within the range of reasonable settlements when considering the best likely recovery and risks of litigation;
6. there was no risk to the class members in respect of claims brought in the proceeding and settled; and
7. there were no limits placed on class members to pursue other claims they may have.

Owners of Cargo laden on board the MV “APL England” v CMB Ocean 13 Leasing Company Pte Ltd [2022] FCA 565

Federal Court of Australia, Stewart J,
2 May 2022

Applicants’ Solicitors: Mills Oakley
Respondents’ Solicitors: Clyde & Co, HWL Ebsworth Lawyers and D Shahen of Kennedys
Applicants’ Funder: N/A

Austlii Link: Available here

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