Cash Converters class action settlement and distribution administration approved

In this judgment, Lee J made orders approving a settlement of the Queensland Cash Converters (cash advances) class action, appointing the lawyers as the appropriate claims administrator and making observations about the inclusion of ‘conditions precedent’ in settlement deeds.

In light of the complexity and likely duration of the proceeding, the lack of any opposition by class members to the settlement, and the perceived risks of establishing liability, his Honour had 'no doubt that the settlement is fair and reasonable and in the interests of all group members' (at [3]).

His Honour also appointed Maurice Blackburn as Claims Administrator of the Settlement Distribution Scheme, and observed that he was 'satisfied that the firm is highly experienced and has skill in undertaking this challenging work' (at [12]).

His Honour was, however, critical of the inclusion of a clause in the settlement deed which provided that the settlement of the proceeding was conditional upon Maurice Blackburn being appointed as Claims Administrator. Although the applicant and the respondent did not ultimately seek approval of that clause, his Honour observed that the topic is 'an important point of principle' that deserved attention; indicated his opposition to the inclusion of conditions precedent in settlement deeds that are to the benefit of funders or solicitors; and observed (at [15]):

Attempts to dictate a particular form of order to the court by, in effect, providing the court with no option but to refuse the settlement unless solicitors for the applicant are appointed the claims administrator, are inconsistent with assisting the court to discharge its protective and supervisory function in relation to group members properly. Moreover, and again without being critical of the highly respected solicitors and firm involved in the present application, it is, at best, a 'bad look' for a representative applicant to give instructions that a settlement (presumably struck because it is perceived to benefit group members) is only to go ahead and provide benefits to group members, if the applicant's solicitors obtain a contract for the provision of future services (presumably at a profit paid out of monies that would otherwise go to group members). In some cases it might amount to more than a mere 'bad look', although this is not such a case.

Ultimately, his Honour approved the settlement and appointed Maurice Blackburn as Claims Administrator His Honour also made orders approving terms of the settlement deed which:

  • dismissed the applicant's claim for a civil penalty order pursuant to the Consumer Credit (Queensland) Code
  • provided for the payment of an amount of $10,000 to reimburse the applicant for the time spent by her providing instructions and evidence in the proceeding.

Case details

McKenzie v Cash Converters International Ltd (No 4) [2019] FCA 166

  • Federal Court of Australia, Lee J
  • Applicant's Solicitors: Maurice Blackburn
  • Respondent's Solicitors: Herbert Smith Freehills
  • Applicant's Funder: N/A

Read more on Austlii: McKenzie v Cash Converters International Ltd (No 4) [2019] FCA 166


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