This was a decision concerning a settlement approval application in relation to an open class shareholder class action. Justice Beach approved the settlement of $38.4 million, finding that the net return to class members of approximately 60% was fair and reasonable.
In relation to the proposed deductions from the settlement sum, his Honour observed that:
(a) the applicants’ legal costs of $5.516 million were not disproportionate to the overall scope and nature of the claim
(b) the contractual commission rates charged by the funders reflect the remuneration agreed between the funders and the funded class members and no common fund order had been sought; and
(c) it was just for the costs of the proceeding to be spread between funded and unfunded class members via a funding equalisation order – in this respect, the commission rates (25%-28% of each funded member’s gross entitlement) were reasonable.
This decision is significant because his Honour found that the Court had the power under s 33ZF of the Federal Court of Australia Act 1976 (Cth) (FCAA) to make class closure and registration orders before settlement or judgment. In doing so, his Honour distinguished, and queried the correctness of, the recent decisions in Haselhurst v Toyota Motor Corporation Australia Ltd (2020) 101 NSWLR 890;  NSWCA 66 (Haselhurst) and Wigmans v AMP Ltd (2020) 102 NSWLR 199;  NSWCA 104 (Wigmans) which came in the wake of the High Court’s decision in BMW Australia Ltd v Brewster (2019) 374 ALR 627;  HCA 45 (Brewster). In Haselhurst and Wigmans the New South Wales Court of Appeal found that such orders could not be made under the cognate provision of the Civil Procedure Act 2005 (NSW) (s 183), on the basis that the orders effected a contingent extinguishment of class members’ choses in action and so could not be said to be necessary or appropriate to ensure justice was done in the proceeding. His Honour observed:
Hence, his Honour found the March 2020 Orders did not effect an extinguishment of class members’ claims.
Federal Court of Australia, Beach J,
7 May 2021
Applicants’ Solicitors: Phi Finney McDonald;
Respondents’ Solicitors: Minter Ellison;
Applicants’ Funder: ICP Capital Pty Ltd, LLS Fund Services Pty Ltd
Austlii Link: Accessible here
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