The ‘common fund’ debate – does the Court have the power?
Approval of settlement, legal costs, and exploring whether the Court has the power to make a ‘common fund’ or ‘expense sharing’ order at settlement.
In this matter, Murphy J approved a settlement of the RMBL class action, including the applicant’s legal costs and a reimbursement payment to the applicant in the amount of $5,000. His Honour found (at  and ) that the settlement fell “comfortably at the high end of the range of possible settlements of the case”, and was “plainly fair and reasonable”. The most notable features of the judgment, however, were the fact that:
- following the proposed settlement, a ‘class closure’ order had been made (which extinguished the rights of any class members who failed to register prior to a specified deadline); and
- his Honour held that the Court had power, notwithstanding the decision of the High Court in BMW Australia Ltd v Brewster (2019) 374 ALR 627;  HCA 45 (Brewster), to make a common fund order (CFO) (a.k.a an ‘expense sharing’ order) under s 33V of the Federal Court of Australia Act 1976 (Cth) (FCAA).
In relation to class closure, his Honour held that the order which he had made (and which had not been challenged) was enforceable as an order of a superior court notwithstanding the subsequent decision in Haselhurst v Toyota Motor Corporation Australia Ltd  NSWCA 66 (Haselhurst); and further, in any event, the order (being one that was made after the settlement had been agreed), was not precluded by Haselhurst. His Honour said (at ):
I consider the preclusion of unregistered class members was appropriate at the time the orders were made. It is strictly unnecessary to decide this question in circumstances where there has been no challenge to the class closure order and it remains valid. Were it necessary to decide, in my view it would be appropriate to make orders as part of the settlement approval application under ss 33V and 33ZB to bind class members who neither opted out nor registered into the settlement of the proceeding, but to preclude them from recovering compensation through the settlement… [T]he decision in Haselhurst can be distinguished on the basis that it concerned a pre-trial class closure order, and different considerations apply at the settlement approval stage.
In relation to the CFO, no bookbuild had been undertaken at any stage of the proceeding, and in those circumstances a ‘funding equalisation’ order would have served no purpose; and although a CFO had been made at an early stage of the proceeding (and had not been set aside), the CFO did not fix the amount of the funder’s commission, but left that to be determined at the conclusion of the proceeding. As such, it was necessary for his Honour to consider whether such an order could be made at the conclusion of the proceeding under s 33V of the FCAA. The funder sought a commission equal to 25% of the gross settlement sum. His Honour held that:
- such an order was ‘just’ under s 33V(2) of the FCAA (at );
- neither the ratio of Brewster, nor the considered dicta of the majority, stand for the proposition that the Court has no power to make a CFO upon approval of a settlement under s 33V(2) of the FCAA (at -);
- the proper scope of the decision in Brewster was recognised in para [15.4] of the Class Actions Practice Note (GPN-CA), which provides for the making of a CFO (at ); and
- class members were notified of the amount of the funding commission that would be sought, and none had objected to it (at ).
Uren v RMBL Investments Ltd (No 2)  FCA 647
Federal Court of Australia, Murphy J, 13 May 2020
Applicant’s Solicitors: Maurice Blackburn;
Respondent’s Solicitors: Hope & Co;
Applicant’s Funder: Litigation Lending Services Ltd
Andrew WatsonNational Head of Class Actions, Class actions, Melbourne
"I'm an experienced litigator in class actions, particularly for shareholders who have been victims of corporate misconduct."
Ben SladeState Managing Principal, Office Leader, Class actions, Sydney
"I am driven to give a voice to those who would otherwise have to suffer because those who have done them wrong are all too powerful."
Kimi NishimuraPrincipal Lawyer, Class actions, Melbourne
"I'm committed to fighting for the rights of victims of corporate misconduct as well as pursuing compensation on behalf of my clients."
Rebecca GilsenanExecutive Director, Principal Lawyer, Class actions, Sydney
"I have extensive experience in running complex and novel litigation, including class actions in the areas of price fixing, failed investment schemes, product liability and securities."
Miranda NagyPrincipal Lawyer, Class actions, Sydney
"I have a strong conviction that the community should be able to expect our governments and the companies we deal with to comply with the law."
Julian SchimmelPrincipal Lawyer, Class actions, Sydney
"Class actions are a unique legal mechanism that have helped hundreds of thousands of people receive compensation after mistreatment at the hands of powerful companies, and it’s gratifying to help people get access to justice when otherwise it would’ve been difficult for them."
Vavaa MawuliPrincipal, Class actions, Brisbane
"The most rewarding thing about my work is the change in scale of what we are able to accomplish."