Background
Danny Moussa brought representative proceedings concerning alleged land subsidence in the Spring Farm area. The claims against Camden Council, Cornish Group Spring Farm Pty Ltd and SMEC Testing Services Pty Ltd alleged negligence and misleading or deceptive conduct arising from unsuitable or inadequately compacted fill beneath residential properties.
Shortly before a scheduled 12-week trial, the parties agreed in principle to settle for $18 million inclusive of costs and without admissions of liability. The proposed distribution scheme limited payments to the current owners of 64 identified properties, although the class contained more than 3,000 members, and abandoned claims based on the alleged general devaluation or stigma affecting the wider suburb.
Proposed deductions of approximately $14.44 million—about 80% of the settlement sum—for legal costs, funding commission and associated payments would leave approximately $3.56 million for distribution before interest. Even under suggested reductions, approximately $7.41 million would remain available to eligible group members. The Court raised whether an independent contradictor should participate in the forthcoming settlement-approval application.
The Court’s Holding
Chen J ordered under s 183 of the Civil Procedure Act 2005 (NSW) that a contradictor be appointed for the application seeking judicial approval of the settlement. The Court did not approve or reject the settlement itself; that application remained listed for a later hearing.
The appointment was warranted because of the substantial erosion of the settlement fund, the competing interests concerning reductions to the funder’s and solicitors’ payments, the funder’s possible application for a common fund order, and the restriction of distributions to 64 members of a class exceeding 3,000. An independent contradictor would assist the Court in performing its protective role and assessing whether the settlement was fair and reasonable for absent group members.
The potential cost of the appointment and the separate representation of the funder and the plaintiff’s solicitors did not outweigh that benefit. Nor would the Court postpone the decision until the parties filed their settlement evidence, because the resulting timetable would leave the contradictor insufficient time to review the material and present evidence and submissions.
Key Takeaways
- The ruling appointed an independent contradictor; it did not determine whether the proposed $18 million settlement should be approved.
- Large deductions for funding and legal costs, together with conflicting interests over their amount, supported independent scrutiny on behalf of absent class members.
- The fact that only 64 members of a class exceeding 3,000 could receive distributions was an additional reason for appointing a contradictor.
Why It Matters
The decision underscores the Court’s supervisory and protective responsibility when approving class-action settlements. Agreement among the parties is not sufficient where funding charges, legal fees or eligibility rules may materially affect group members who are not directly represented at the approval hearing.
It also illustrates that a contradictor may be appointed early enough to examine the full settlement on an informed basis. The Court declined to confine the contradictor’s role in advance, leaving its scope to develop after review of the parties’ evidence and the proposed distribution arrangements.