Carriage fight unlocks potential for Federal contingency fee workaround

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This was a judgment given by Lee J in a carriage fight, in which his Honour was critical of delays by the applicants’ solicitors in giving effect to an agreement already reached to consolidate two proceedings. However, what is most notable about the brief judgment is his Honour’s observations about the Federal Court’s power to make a ‘solicitors common fund order’ (at [17]) (echoing observations his Honour made on the same topic in Klemweb Nominees Pty Ltd (as trustee for Klemweb Superannuation Fund) v BHP Group Ltd (2019) 369 ALR 583; [2019] FCAFC 107): 

It has been suggested recently that there is no power to make any type of common fund order under Pt IVA of the FCA Act: see Davaria Pty Limited v 7-Eleven Stores Pty Ltd (No 13) [2023] FCA 84 (at [190] per O’Callaghan J). Although it is unnecessary to decide such a point for the purposes of these reasons, I doubt that this is the case. I also doubt that the making of such an order is necessarily restricted to funders. Even leaving aside the question of statutory power in the context of “Settlement CFOs”, as I indicated in Klemweb, this Court, as a Court of equity, will apply fundamental equitable principles in the execution of its jurisdiction, including the maxim that equity is equality… 

However, his Honour was unimpressed by the proposal that, in the absence of a ‘solicitors common fund order’ being made, a transfer of the proceedings to the Supreme Court of Victoria may be sought in order to secure a ‘group costs order’ instead, saying (at [20]-[21]): 

It should be obvious to all concerned that such a step will mean that the substantive progress of these proceedings will be frustrated. This reinforces a concern that one often has about Pt IVA proceedings, namely that solicitors and funders are focussed so intently on their own position that they forget that it is their duty to advance the claims of the applicant and group members towards a swift resolution of the substantive matter… 

Although I have no firm view about the matter and will hear any application if it is made on the merits, in the light of the overarching purpose, it is presently difficult to reconcile further delay of the proceeding by countenancing the transfer of the matter to the Supreme Court of Victoria only to procure more favourable financial arrangements for the solicitors and funders in the proceeding. 

R&B Investments Pty Dtd (Trustee) v Blue Sky Alternative Investments Ltd (in liq) (Carriage Application No 2) [2023] FCA 142

Federal Court of Australia, Lee J,
14 February, 2023 

Applicants’ Solicitors: Banton Group / Shine Lawyers
Respondents’ Solicitors: Arnold Bloch Leibler / GRT Lawyers / Corrs Chambers Westgarth
Applicants’ Funder: N/A 

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