Federal Court upholds settlement reached in class action

Federal Court upholds settlement reached in class action

The Federal Court has upheld the agreed settlement of a representative proceeding and related claims, determining it to be a fair and reasonable compromise from the perspective of the group members despite some initial concerns raised by Justice Robert Bromwich regarding 35% of the net proportion of the settlement money being paid to the litigation funder.

The case arose from an initial On Hire Labour Agreement between Corestaff NT Pty Ltd (Corestaff NT) and the Commonwealth of Australia dating back to 2011 and 2012. Pursuant to the agreement, Corestaff NT sponsored and employed skilled workers from Papua New Guinea to work in Australia. Over the subsequent years, a number of those workers were terminated.

In October 2018, one of those workers, Mr TK, commenced proceedings in the Federal Court alleging Corestaff NT had made misleading or deceptive representations to him concerning his employment and also breached his employment contract through the underpayment of wages.

In November 2018, another worker, Mr AJ and 19 other named applicants made similar claims against the company.

As noted by Justice Bromwich, the case brought by the applicants was not a simple one with a complex interplay between the different statutory and contractual causes of action relied upon, with further complications raised by Corestaff NT, who suggested that the initial contracts had been supplanted by subsequent individual contracts which had been terminated. In addition, most of the affected workers no longer resided in Australia.

Nevertheless, after several attempts at mediation, the key critical terms of the settlement were agreed upon in November 2021, leading to a signed deed of settlement that Corestaff NT pay a sum of $6.4m in settlement of all aspects of the case. By 30 June 2022, the final deed of settlement and release had been executed by all the parties to it.

As noted by Justice Bromwich,

“I am comfortably satisfied that the agreed settlement amount is a fair, reasonable and appropriate compromise from the perspective of the group members, especially given the factual and legal complexity of the case that would otherwise have gone to trial, the likelihood of the success of the applicants, the real risk of success by the respondent (including partial success having a material impact on the quantum of success and therefore the risk of a pyrrhic victory), and the inevitability of judgement delay and quite likely appeal proceedings whatever the outcome”.

Although initially troubled by the amount of the settlement to be paid to the litigation funder, ultimately, Justice Bromwich noted,

“Viewed holistically, and having regard to the risks involved, being a real risk that was taken by the funder, and the real and significant amount of legal work that had to be done to get these claims to the point of settlement, I am satisfied in all the circumstances that the final distribution arrived at as a proportion of the settlement sum of $6.4m is fair and reasonable”.

Workforce Advisory anticipates significant growth in class actions within industries such as engineering and construction that have a high number of pattern agreements.

Jack v CoreStaff NT Pty Ltd [2022] FCA 1005 (26 August 2022)

For queries about wage claims, employment entitlements, or other employment questions, please contact Dean Cameron at Workforce Advisory Lawyers – We Know Employment Law on 1300 925 529, 0417 622 178 or via email to dean.cameron@workforceadvisory.com.au

Disclaimer: This information is provided as general advice on workplace relations and employment law. It does not constitute legal advice, and it is always advisable to seek further information regarding specific workplace issues. Liability limited by a scheme approved under professional standards legislation.

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