Another Maurice Blackburn victory for clients as Sirtex settlement approved
Settlement approval – Approval of funders’ commission rate, applicants’ reimbursement payment, and applicants’ legal costs – Approval granted
This was an application for approval of a settlement of a shareholder class action. In this judgment, Beach J gave reasons for approving the settlement (in the amount of $40 million), together with a common fund order and a reimbursement payment to the applicants.
His Honour indicated that he did not consider it necessary for the Court to appoint an amicus before determining the application. In his reasons, his Honour addressed three principal topics relating to the settlement: (i) the proposed common fund order; (ii) the applicants’ proposed reimbursement payment; and (iii) the applicants’ legal costs.
In relation to the common fund order, his Honour considered that the Court had ample power under s 33V(2) of the Federal Court of Australia Act 1976 (Cth) to make such an order at the settlement approval stage, irrespective of the extant challenge to ‘interlocutory’ common fund orders currently before the High Court. His Honour then proceeded to approve a funding commission equal to 25% of the gross settlement sum. His Honour emphasised the need to ensure that the commission rate properly reflected the risk undertaken. His Honour also noted that the rate of 25% was below the indicative rate of 28% that was set earlier in the proceeding when the interlocutory common fund order had been made.
Finally, his Honour noted that class members would, after deductions, receive around 50% of the gross settlement sum, but his Honour deprecated suggestion that such a level of return to class members should represent some kind of minimum benchmark, and that there may well be cases where any return to class members is ‘better than nothing’ (-).
In relation to the applicants’ reimbursement payment, his Honour approved a payment of $25,000 to each of the two applicants which, although above the median payment approved in other cases (of approximately $19,000), his Honour considered was justified on the evidence (-).
Finally, in relation to the applicants’ legal costs, his Honour accepted the reports of an expert costs consultant, who had reviewed the costs claimed and discounted them by around $1.1 million (or approximately 10%), to around $9.3 million (-). A solicitor for an objecting class member (Mr Barrow) had sought to raise objections to the applicants’ legal costs.
However, his Honour had ‘no hesitation’ in denying Mr Barrow access to the underlying source materials which he sought relating to the applicants’ legal costs, in circumstances where:
- the appointed expert had already reviewed the costs in a comprehensive fashion; and
- Mr Barrow’s background and experience (or lack thereof) meant that “there was no potential value add for group members by Mr Barrow’s independent assessment of the value of Maurice Blackburn’s work product” (at ).
Kuterba v Sirtex Medical Ltd (No 3)  FCA 1374
- Federal Court of Australia, Beach J, 26 August 2019
- Applicants’ Solicitors: Maurice Blackburn;
- Respondent’s Solicitors: Watson Mangioni;
- Objector’s Solicitors: Kingsnake Class Action Lawyers;
- Applicant’s Funder: IMF Bentham Ltd / Australian Funding Partners Ltd
Read more about this case on Austlii: Kuterba v Sirtex Medical Ltd (No 3)  FCA 1374
Andrew WatsonNational Head of Class Actions, Class actions, Melbourne
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