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This was an open class shareholder proceeding arising from allegedly criminal activities undertaken by the respondent (Crown) and its employees in the People’s Republic of China.

In this decision, Beach J approved a settlement of the proceeding in the amount of $125 million (being the fourth largest settlement in the history of Australian securities class actions). In finding that the settlement was a fair and reasonable compromise of class members’ claims, his Honour observed that “clearly it is a very strong and favourable settlement” (at [38]).

The approved deductions from the settlement sum were as follows:

  • $30.2 million for the funder’s (ILFP) funding commission, by way of a funding equalisation order (FEO). His Honour declined to make a common fund order for 25% of the settlement sum ($31.25 million) sought by ILFP, on the basis that ILFP would be “adequately rewarded” by receiving $30.2 million pursuant to the FEO “and the lower figure is obviously more beneficial to the class” (at [86]). However, his Honour rejected the even lower figure of $26.6 million proposed by two objecting class members (Teachers Retirement System of Texas and California State Teachers Retirement System) (Objectors) on the basis that the formula used by the Objectors to arrive at that figure “lacked symmetry or at least internal consistency” (at [81]). His Honour also rejected several criticisms made by the Objectors about the level of disclosure in the notice of settlement distributed to class members (see [57]-[67]).

  • $11.5 million for the applicant’s legal costs and disbursements. In approving those costs, his Honour rejected significant disallowances to Maurice Blackburn’s professional fees proposed by the Court-appointed costs referee, Ms Liz Harris (see [42]-[52]). His Honour said (at [44]):
Ms Harris disallowed a portion of the proposed legal costs. But in my view there are some difficulties. The evidence shows that the referee made some assumptions which were incorrect and also considered the wrong question in relation to aspects of the costs, namely, whether there was a cheaper way to do part of the work, instead of whether the costs of the method taken was reasonable. Further, she may have misunderstood the evidence in relation to the nature of the book-build work. Moreover, there were arithmetic errors.
In relation to Ms Harris’ disallowance of Maurice Blackburn’s fees relating to book-build work, his Honour said (at [46]):

There is only one matter that I want to specifically comment on concerning the book-build. The referee disallowed 30% of the book-build costs that she characterised as advertising, mailout of funding packs, and responding to or signing up group members. She distinguished this work from related work that she accepted was for the benefit of group members. But I do not accept her disallowance. First, there was no paid advertising of this proceeding. Second, it is unrealistic to regard the work of bringing the proceeding (or potential proceeding) to the attention of group members as not being work for their benefit. Third, there is little substantiation of the assumption that 30% of the total work related to the mechanical tasks of mailing out funding packs. Fourth, work responding to enquiries should be regarded as work for the benefit of the group members, both individually and, to the extent that it verifies group-wide loss estimates necessary for mediation purposes, for the whole class. Fifth, work undertaken by the firm for the purpose of securing funding was expressly identified in the costs agreement, as part of the “Legal Work” to which charges would apply.

  • $440,606 for the estimated settlement administration costs.

  • $25,000 for the applicant’s reimbursement payment.

After the above deductions, registered class members will receive $82.8 million, being 66.25% of the settlement sum.

Zantran Pty Ltd v Crown Resorts Ltd (No 4) [2022] FCA 500

Federal Court of Australia, Beach J,
29 April 2022

Applicant’s Solicitors: Maurice Blackburn
Respondent’s Solicitors: MinterEllison
Applicant’s Funder: International Litigation Funding Partners Pte Ltd

Austlii Link: Available here

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