$170m settlement approved in junk-insurance class action

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This was a judgment approving the settlement of the class action against Allianz Australia Insurance Limited (Allianz). The plaintiffs sought damages for claims, arising out of the sale of ‘add-on’ insurance products when they purchased cars or motorcycles from authorised car dealerships.  In essence, the plaintiffs alleged that Allianz had engaged in misleading and deceptive conduct and unconscionable conduct in its sale of the products through the dealerships.

Separate proceedings were brought by Maurice Blackburn (MB) and Johnson Winter Slattery (JWS).  Those proceedings were consolidated in September 2021 and run jointly by MB and JWS. In December 2022, Justice Nichols made a ‘group costs order’ that the plaintiffs’ legal costs be calculated at 25% of any award or settlement recovered (GCO).   

 A Settlement Deed was signed on the eve of trial on 25 October 2024, for $170 million. 

 In this judgment, Justice Mathews approved: 

• the proposed settlement and settlement distribution scheme; 
• the percentage to the paid to the plaintiffs’ solicitors, set by the GCO; 
• the appointment of MB as the settlement administrator;  
• settlement administration costs up to $4.72 million; and  
• the inclusion in the settlement, of certain late registrants. 

 Approval of proposed Settlement 

Matthews J found the settlement to be fair and reasonable and in the interests of group members as a whole.  Very few objections were received and none of those objections led to a contrary conclusion.

Some group members sought to ‘opt out’ of the proceeding after the deadline to do so had passed. Matthews J held that opt out notices received after the proposed settlement was announced, were ineffective and those members were bound by the proposed settlement. Her Honour noted (at [53]) that finality in settlement is crucial, especially for the defendant:

When a settlement is negotiated on the basis of the opt-out process having concluded, and by reference to the claims of Registered Group Members, allowing group members to opt out of the proceeding after settlement has been reached would undermine the bargain struck between the parties.  

 Group costs order 

Matthews J found no reason to amend the percentage initially set in the GCO.  Her Honour found (at [181]) that the settlement ‘which has emerged in fact was within the range of outcomes contemplated at the time the GCO was made, and the assessment at that time was that it was in the interests of justice for the GCO to be made’.   

 Her Honour made the following key findings: 

• the rate of 25% was proportionate, having regard to the work and investment of the plaintiffs’ solicitors and the substantial risk they assumed in running the proceeding almost to trial; 
• the amount to be recovered under the proposed settlement fell within the estimated range of recoveries provided at the time of the making of the GCO, and the GCO had been of benefit to group members compared to alternative funding models; 
• an important reason for the GCO being ordered was the certainty it afforded group members of a recovery of no less than 75% of any settlement or judgment;  
• as noted by Justice Watson in Allen v G8 Education Ltd (No 4) [2024] VSC 487, the fact that no-one was seeking any change to the GCO as initially ordered, is relevant though not determinative; and
• while an independent costs report addressing legal fees and disbursements was ultimately not necessary in this case:

In another case, it is possible that a court might be assisted by such a report in satisfying itself that there is no need to vary the percentage of the GCO. This will be a matter for the court and will depend on the circumstances of the particular proceeding.  

Settlement Administration  

Matthews J approved the settlement distribution scheme and appointed MB as administrator of the scheme. Her Honour considered MB’s experience and expertise in settlement administration and found that a tender process was highly unlikely to result in a more cost-effective distribution process. 

Her Honour found (at [125]), that there were also clear benefits in having MB administer the settlement, given its detailed background knowledge of the proceeding; where this background can be leveraged effectively, the administration process can be run most efficiently.  

Matthews J capped the settlement administration costs at $4.72 million. Her Honour declined to give pre-approval for a further 10% contingency amount but noted (at [144]) that ‘in the event that it appears that the pre-approved cap may be exceeded, MB could approach the court to seek further orders in respect of any additional amount required’. 

Late registrants 

A small number of group members registered to participate after the registration deadline had passed but before the settlement approval hearing.  Matthews J ordered that those members be treated as having registered in time.  As there were only a few late registrants, including them would have minimal effect on the settlement. Her Honour noted (at [62]), that on a cost-benefit analysis, attempting to preserve the settlement sum from such a nominal dilution, would be outweighed by the cost of trying to vet each late registrant: 

In such circumstances, allowing Late Registrants into the class does not undermine the principle that court-ordered timetables ought to be enforced; it simply reflects the outcome of that cost-benefit analysis in this case. 

Tracy-Ann Fuller v Allianz Australia Insurance Ltd  
(Settlement Approval) [2025] VSC 160

Supreme Court of Victoria | Matthews J | 2 April 2025
Plaintiffs’ Solicitors: Maurice Blackburn and Johnson Winter & Slattery
Defendants’ Solicitors: King & Wood Mallesons

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