Justice Ross Robson in the Victorian Supreme Court has found in favour of a class action plaintiff who is seeking to challenge the terms of the $64 million settlement in the Banksia Securities group proceeding. His Honour found the financier of the Banksia Securities group proceeding, Australian Funding Partners (AFPL), had waived its right to oppose the class member’s objection.
The challenge by the class action member will now be heard by the Court of Appeal on Friday, 8 June 2018.
Banksia Securities, a non-bank property lender, collapsed in October 2012. About 5600 of Banksia’s estimated 15,622 holders of debentures entered into a funding agreement with AFPL, a special-purpose vehicle that is 76 per cent owned by lawyer Mark Elliott.
In January 2018, class member Wendy Botsman filed submissions objecting to the terms of a proposed settlement of the group proceeding. On 30 January 2018, Justice Clyde Croft approved the settlement and ordered that AFPL received a commission of $12.8 million (plus GST) and legal costs and disbursements of $4.75 million (plus GST).
Mrs Botsman subsequently sought leave to appeal Justice Croft’s decision in the Court of Appeal. AFPL then sought a mandatory injunction restraining the class member from objecting to settlement.
AFPL claimed Mrs Botsman was bound by the terms of the Litigation Funding Agreement not to appeal. As well, Australian Funding Partners sought damages from Mrs Botsman at the rate of $37,000 per week ($5,289 per day) unless she dropped her appeal, saying it was being kept out of its money.
Justice Robson has found that implicit in a group member’s right to object and to appear at a hearing of a proposed settlement is the right to pursue an appeal in the event that the objection is unsuccessful. His Honour said AFPL had an opportunity at the 30 January approval hearing to take issue with Mrs Botsman’s objections. “It should have used that opportunity to express any concerns it had that Mrs Botsman’s objections … constituted a breach of the Litigation Funding Agreement,” Justice Robson said.
Justice Robson’s decision only dealt with the right of Mrs Botsman to appeal, and did not deal with the merits of the appeal itself.
NOTE: This summary is necessarily incomplete. The only authoritative pronouncement of the Court’s reasons and conclusions is that contained in the published reasons for judgment.