Endeavour River Pty Ltd v MG Responsible Entity Ltd (No 2)

Endeavour River Pty Ltd v MG Responsible Entity Ltd (No 2) involved an application for approval of a settlement under section 33V of the Federal Court of Australia Act 1976 (Cth) in a representative proceeding. The case concerned a dispute over the fairness of a proposed litigation funding commission. The previous application for settlement approval was denied due to concerns about the reasonableness of the proposed commission rate sought by the litigation funder. Following negotiations, the funder reduced its commission rate, leading to the current application for approval of the revised settlement.

The key legal issues the court needed to address included the admissibility and necessity of expert evidence to determine the fairness of the funding commission, the implications of an open offer by the funder to reduce the commission rate, the applicant's request for an interim partial distribution to class members, and the funder's application for an interim part-payment of the funding commission. The court had to evaluate whether the reduced commission rate was fair and reasonable, considering the financial risks involved and the market rates of return for comparable investments.

The court found that the proposed reduction in the funding commission to 28% was fair and reasonable, considering the market rates of return for comparable investments. The court was initially inclined to allow expert evidence to assist in determining the reasonableness of the commission rate but was cautious about the proportionality of the costs involved. The court decided against the need for expert evidence after the funder reduced the commission rate. The court approved the settlement based on the revised terms, which included the reduced commission rate and the proposed distribution scheme. The court also authorised the applicant to act on behalf of the group members and approved the distributions from the settlement funds. The settlement was approved subject to conditions, including the dismissal of the proceeding upon completion of the distribution and the filing of an affidavit regarding the settlement distribution process.

In summary, the court approved the settlement, acknowledging the reduced funding commission as fair and reasonable, and authorised the applicant to act on behalf of the group members. The settlement distribution scheme was also approved, subject to conditions for final orders and the filing of an affidavit regarding the distribution process.