Equity Financial Planners Pty Ltd v AMP Financial Planning Pty Ltd
[2024] FCA 1036
•6 September 2024
FEDERAL COURT OF AUSTRALIA
Equity Financial Planners Pty Ltd v AMP Financial Planning Pty Ltd [2024] FCA 1036
File number(s): VID 498 of 2020 Judgment of: MCELWAINE J Date of judgment: 6 September 2024 Catchwords: REPRESENTATIVE PROCEEDINGS– application for approval of a settlement pursuant to s 33V(1) of the Federal Court of Australia Act 1976 (FCA Act)- where 20% of group members object- the importance of objections and the protective function of the Court explained- whether proposed settlement is fair and reasonable-consideration of proposed deductions from settlement sum- ATE insurance premiums and internal expenses disallowed- whether suppression and non-publication orders are necessary to prevent prejudice to the administration of justice-duration of orders- whether orders until further order comply with the requirement to fix a definite period at s 37AJ of the FCA Act-limited confidentiality orders made with variable duration periods- settlement with adjustments approved Legislation: Corporations Act 2001 (Cth)
Federal Court of Australia act 1976 (Cth) ss 33J(1), 33V, 33X, 33Y(2), 33ZB, 37AF, 37AG(1)(a)
Legal Profession Uniform Law, s 172
The Class Actions Practice Note (GPN-CA)
Cases cited: Asirifi-Otchere v Swan Insurance (Aust) Pty Ltd (2020) 385 ALR 625
Blairgowrie Trading Ltd v AllcoFinance Group Ltd (Receivers and Managers Appointed) (in liq) (No 3) (2017) 343ALR 476
BMW Australia Ltd v Brewster (2019) 269 CLR 574
Bolitho v Banksia Securities Ltd (No 6) [2019] VSC 653
Botsman v Bolitho (No 1) [2018] VSCA 278
Bradshaw v BSA Ltd (No 2) [2022] FCA 1440
Camilleri v The Trust Company (Nominees) Ltd [2015] FCA 1468
Dyczynski v Gibson (2020) 280 FCR 583
Equity Financial Planners Pty Ltd v AMP Financial Planning Pty Ltd [2023] FCA 741
Equity Financial Planners Pty Ltd v AMP Financial Planning Pty Ltd (No 2) [2023] FCA 1033
Ewok Pty Ltd (Trustee) v Wellard Ltd [2024] FCA 296
Fordham v Commonwealth Bank of Australia Ltd [2023] FCA 1106
Fowkes v BostonScientific Corporation [2023] FCA 230
Galactic Seven Eleven Litigation Holdings LLC v Davaria (2024) 302 FCR 493
Ghee v BT Funds ManagementLtd [2023] FCA 1553
Inabu PtyLtd v Leighton Holdings Ltd [2014] FCA 622
Jenkins v Northern Territory of Australia (No 4) [2021] FCA 839
Kelly v Willmott Forests (in liq) (No 4) (2016) 335 ALR 439
Lee v Deputy Commissioner of Taxation (2023) 296 FCR 272
Luke v Aveo Group Ltd (No 3) [2023] FCA 1665
Motorola Solutions Inc v Hytera Communications CorporationLtd (No 2) [2018] FCA 17
Scott v Scott [1913] AC 417
Timbercorp Finance Pty Ltd (in liq)v Collins (2016) 259 CLR 212
Webb v GetSwift Ltd (No 7) (2023) 414 ALR 500
Wellesley v Duke of Beaufort (1827) 2 Russ 1
Division: General Division Registry: Victoria National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Number of paragraphs: 194 Date of last submission/s: 4 September 2024 Date of hearing: 29-30 August 2024 Counsel for the Applicant Mr R Craig KC with Mr R Rozenberg and Ms J Nikolic Solicitor for the Applicant Corrs Chambers Westgarth Counsel for the Respondent Ms E Collins SC with Ms N Wootton Solicitor for the Respondent King & Wood Mallesons Counsel for the Funder Mr D Sulan SC with Ms T Epstein Solicitor for the Funder Morris Mennilli Contradictor Mr J Kirkwood SC Counsel for Pinnacle Financial and Investment Services Pty Ltd Mr D Healey Solicitor for Pinnacle Financial and Investment Services Pty Ltd Hamilton Blackstone Lawyers Counsel for Investment, Retirement, Insurance and Superannuation Pty Ltd Mr D Healey Solicitor for Investment, Retirement, Insurance and Superannuation Pty Ltd Hamilton Blackstone Lawyers Counsel for Entire Financial Solutions Pty Ltd Mr L Hamilton Solicitor for Entire Financial Solutions Pty Ltd Shine Lawyers ORDERS
VID 498 of 2020 BETWEEN: EQUITY FINANCIAL PLANNERS PTY LTD
Applicant
AND: EQUITY FINANCIAL PLANNING PTY LTD
Respondent
ORDER MADE BY:
MCELWAINE J
DATE OF ORDER:
6 SEPTEMBER 2024
THE COURT ORDERS THAT:
1.Pursuant to s 33V of the Federal Court of Australia Act 1976 (Cth) (Act), the settlement of this proceeding (Settlement) be approved on the terms set out in:
(a)the Settlement Deed, being pages 4 to 36 to Confidential Exhibit CJP–1 of the Affidavit of Christopher John Pagent sworn 18 April 2024; and
(b)the Settlement Distribution Scheme, being pages 1 to 32 of Confidential Exhibit CJP–8 of the Affidavit of Christopher John Pagent sworn 26 June 2024 (Settlement Distribution Scheme).
2.Pursuant to s 33V of the Act, the Court authorises the Applicant nunc pro tunc on behalf of the Group Members (as defined in the Settlement Deed) (Group Members) to enter into and give effect to the Settlement Deed and the transactions contemplated thereby for and on behalf of the Group Members.
3.Pursuant to s 33ZB of the Act, the persons affected and bound by the Settlement are the Applicant, the Respondent, the Group Members and Augusta Pool 523 Limited (Funder).
Appointment of Administrator, Independent Barrister and Independent Senior Counsel
4.Pursuant to ss 33V and 33ZF of the Act, the Court appoints Mr Andrew Ross and Mr Ben Mahler of KordaMentha as the administrator of the Settlement Distribution Scheme (Administrator) to act in accordance with the Settlement Distribution Scheme and be given the powers and immunities contemplated by the Settlement Distribution Scheme.
5.The Administrator has liberty to apply in relation to any matter arising in relation to the Settlement Distribution Scheme.
6.Pursuant to ss 33V and 33ZF of the Act, the Court appoints Mr Peter Strickland and Ms Jane Buncle, each of counsel, as the Independent Barrister as defined in the Settlement Distribution Scheme, to perform the functions set out in the Settlement Distribution Scheme.
7.Pursuant to ss 33V and 33ZF of the Act, the Court appoints Mr Bernard Quinn KC as the Independent Senior Counsel as defined in the Settlement Distribution Scheme, to perform the functions set out in the Settlement Distribution Scheme.
Applicant and Sample Claimant Reimbursements
8.Pursuant to s 33V of the Act, the following payments be approved as, respectively, the Applicant’s Reimbursement and the Sample Claimant’s Reimbursement, as defined in the Settlement Distribution Scheme:
a.Applicant’s Reimbursement:
i.Ms Kylie Braschey ($30,000)
ii.Ms Leanne Scott ($30,000)
b.Sample Claimant’s Reimbursement – Mr Michael Finch ($20,000).
Approval of amounts to be deducted under the Settlement Distribution Scheme
9.Pursuant to section 33V(2) of the Act, the deductions from the Resolution Sum as outlined in the Settlement Distribution Scheme (updated as necessary to reflect the below deductions and figures) be approved, namely:
a.the “Funder Commission” totalling $26,578,805.83, to be paid to the Funder;
b.the “Applicant’s Paid Legal Costs” in the total amount of $10,573,022.33 (GST inclusive), to be paid to the Funder;
c.the “Applicant’s Unpaid Legal Costs” in the amount of $509,989.98 (GST inclusive), to be paid to the Applicant’s solicitors;
d.the “Applicant’s Future Legal Costs” in the amount of $1,009,926.02 (GST inclusive), to be paid to the Applicant’s solicitors;
e.a further amount in respect of the “Applicant’s Future Legal Costs” up to the amount of $195,800 (GST inclusive), subject to any further order varying that amount, to be paid to the Applicant’s solicitors;
f.the “Security Costs” in the amount of $360,259.96, to be paid to the Funder;
g.the “Applicant’s Reimbursement” as described in Order 8(a) above, to be paid to Ms Braschey and Ms Scott;
h.the “Sample Claimant’s Reimbursement” as described in Order 8(b) above, to be paid to Mr Finch;
i.the “Adverse Costs Order Reimbursement” in the amount of $58,500, to be paid to the Funder;
j.the “Contradictor’s Costs”, in the amount of up to $100,000.00, to be paid to the Contradictor and his junior, subject to any further order of the Court varying this amount;
k.the “Costs Referee’s Costs”, in the amount of $55,000 (GST inclusive), to be paid to the Costs Referee;
l.the “Administrator’s Costs” in the amount of $1,006,000.00, subject to any further order of the Court varying this amount;
Dismissal
10.Pursuant to ss 22, 23 or 33ZF of the Act or r 1.32 of the Federal Court Rules 2001 (Cth) (FCR) and/or the Court’s implied jurisdiction, and with effect from the date on which the final distribution of the Resolution Sum occurs under the Settlement Distribution Scheme, the proceeding against the Respondent be dismissed:
a.in accordance with the Settlement Deed, without prejudice to:
i.the right of any party to the Settlement Deed to make an application to enforce the Settlement Deed in a new proceeding;
ii.the right of any Group Member to make an application to the Court in accordance with the terms of the Settlement Distribution Scheme; and
iii.the right of the Administrator to refer any issues relating to the Settlement Distribution Scheme to the Court for direction or determination in accordance with the terms of the Settlement Distribution Scheme; and
b.on the basis that there be no order as to costs as between the Applicant and the Respondent and all previous costs orders in the proceeding between them are vacated.
Security for costs
11.All orders requiring the Applicant to provide security for costs are vacated and the security provided by the Funder, pursuant to orders made on 15 December 2020 and 1 June 2022, be paid to the Administrator.
Funding equalisation
12.Pursuant to s 33V and/or s 33ZF of the Act, the Funder Commission payable to the Funder by the Applicant and those Group Members who have entered into a litigation funding agreement with the Funder be apportioned on a pro rata basis between all Group Members and deducted from the Resolution Sum payable to all Group Members.
Confidentiality and undertakings
13.Pursuant to ss 37AF and 37AG(1)(a) of the Act, to prevent prejudice to the proper administration of justice, the publication of each of the items listed in Annexure A to these orders (the Confidentiality Claims Schedule) be limited to the persons and, or alternatively, subject to the limitation identified.
14.The applicant is to file by 4 pm on 10 September 2024 two consolidated PDF versions of the documents in the Confidentiality Claims Schedule, with the authorised redactions where applicable, one version containing the documents prior to the expiry of the appeal period and the other thereafter.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Annexure A – Confidentiality Claims Schedule
Item Document Date Section over which confidentiality is claimed Accessible by Duration Category 1 Information: Information which the parties have agreed to keep confidential (only applies to the Settlement Deed as per ruling of McElwaine J). 1.
Affidavit of Christopher John Pagent
18 April 2024
The whole of the Settlement Deed and the whole of the executed copies of the Settlement Deed, executed by the Applicant AMPFP, Corrs and Augusta, contained in Confidential Exhibit CJP–1 at pages 4–164.
The following persons: (a) the Court; (b) the Applicant; (c) the Applicant’s legal representatives; (d) Group Members (upon undertaking to maintain confidentiality); (e) the Contradictor; (f) the Funder; (g) the Funder’s legal representatives; (h) the Respondent; and (i) the Respondent’s legal representatives.
These permitted disclosures are on the terms that none of these persons or entities disclose such material or any part of it to any person or entity other than those listed above.Until approval of the settlement
Category 2 Information: Information which discloses the proposed distribution the Settlement Sum, or which is otherwise privileged, disclosed to the Court on a confidential basis for the purposes of the settlement approval hearing. 2.
Interlocutory Application
18 April 2024
The following paragraphs of Annexure A, being the Unredacted Settlement Notice: [62], [66]–[67], [69]–[73], [76], [77] (but only the words between “the Independent Barrister” and “to an independent senior counsel”); Annexure A to the Settlement Notice.
The following persons: (a) the Court; (b) the Applicant; (c) the Applicant’s legal representatives; (d) Group Members (upon undertaking to maintain confidentiality); (e) the Contradictor; (f) the Funder; and (g) the Funder’s legal representatives.
These permitted disclosures are on the terms that none of these persons or entities disclose such material or any part of it to any person or entity other than those listed above.Until the expiry of the appeal period
3.
Affidavit of Christopher John Pagent
18 April 2024
Paragraphs [117], [121]–[122], [124]–[128], [131], [132] (but only the words between ‘the Independent Barrister’ and ‘to an independent senior counsel’).
The following parts of the Settlement Distribution Scheme contained at pages 165–195 of Confidential Exhibit CJP–1:· the information contained between the definitions of “Group Member” and “Opt-Out Deadline” on page 172; and
· the following parts of Schedule 3 contained at pages 187–195:
· the words between “determination of the” and “to their claim” in definition of Statutory Declaration;
· cll 2.3, 2.4, 4, 5, 7;
· cl 8(c)(iv) (but only the words following ‘the Independent Barrister’s determination of the’); and
· cl 8(e) (but only the words between “the Independent Barrister in respect of” and “(Appeal Threshold)”.
4.
Affidavit of Christopher John Pagent
23 April 2024
The following paragraphs of Exhibit CJP–3, being the Unredacted Settlement Notice: [62], [66]–[67], [69]–[73], [76], [77] (but only the words between “the Independent Barrister’ and ‘to an independent senior counsel’); Annexure A to the Settlement Notice.
5.
Affidavit of Christopher John Pagent
26 June 2024
Paragraphs [87]–[89], [91]–[100], [104]–[107] (up to the table extract), [108] (but only the words between “the Independent Barrister of the” and “to an Independent Senior Counsel”) and [201] (but only following the words “Settlement Distribution Scheme”) to the end of [207].
The redactions indicated in Confidential Exhibit CJP–7 (Objections).
The following parts of the Settlement Distribution Scheme contained at pages 1–32 of Confidential Exhibit CJP–8:· the information contained between the definitions of “Group Member” and “Opt-Out Deadline” on page 8;
· the following parts of Schedule 3 contained at pages 24–32:
· the words between “determination of the” and “to their claim” in definition of Statutory Declaration on page 26;
· cll 2.3, 2.4, 4, 5, 7;
· cl 8(c)(iv) (but only the words following “the Independent Barrister’s determination of the”); and
· cl 8(e) (but only the words between “the Independent Barrister in respect of” and “(Appeal Threshold)”.
5A.
Affidavit of Christopher John Pagent
26 June 2024
Paragraphs [68] (but only the information contained after the words “replicated below”), [75] (but only the information contained after the words “as follows”), [107] (but only the information contained after the words “as follows”). These paragraphs extract information from pages 165–175 of CJP-8.
The whole of Confidential Exhibit CJP–5 (Confidential Opinion).
The following parts of Confidential Exhibit CJP-6 (Costs Referee’s Reports):· the third and fourth sentence of paragraph [64] on page 23; and
· the remainder of the second sentence following the words “For example,” in [65] on page 23.
Pages 165–175 and 366 of Confidential Exhibit CJP-8.
The following persons: (a) the Court; (b) the Applicant; (c) the Applicant’s legal representatives; (d) the Contradictor; (e) the Funder; and (f) the Funder’s legal representatives.
These permitted disclosures are on the terms that none of these persons or entities disclose such material or any part of it to any person or entity other than those listed above.10 years or until further order
Category 3 Information: Information which discloses: (i) sensitive aspects of the funding arrangements provided by the Funder; or (ii) privileged material provided to the Funder 6.
Affidavit of Christopher John Pagent
18 April 2024
The following parts of the Early Stage Funding Agreement contained in Confidential Exhibit CJP–1: key term (5), (6) and (7) on page 196.
The following parts of the Litigation Funding Agreement between the Applicant and the Funder contained in Confidential Exhibit CJP–1:· the first definition after ‘definitions and interpretation’ on page 212;
· the sentences following ‘Item(k) of Schedule 2’ on page 212;
· the definitions following ‘Beneficiaries’ on page 213–214;
· the definition between ‘Business Day’ and ‘Claim’ on page 214;
· the description following the definition of ‘Claim Proceeds’ on page 214;
· the conclusion of the definition of ‘Early Stage Funding Amount’ following the words ‘means the amount of’ at page 216;
· the definition between ‘Loss’ and ‘Multiplicity Order’ on page 217;
· the sub points following ‘Tranche 1’, ‘Tranche 2’ and ‘Tranche 3’ on page 220;
· the words contained at the bottom of the header of the table on page 239;
· the information contained after ‘Option 1’ and ‘Option 2’ in schedule 2(d) on page 240;
· the particulars of schedule 2(e) on page 240;
· the particulars of schedule 2(f) on page 240;
· the particulars of schedule 2(g) on page 241;
· the particulars of schedule 2(i) on page 241;
· the information after ‘A/C Name’, ‘SWIFT CODE’, ‘BSB’ and ‘A/C’ under schedule 2(j) on page 241;
· the particulars of schedule 2(k) on page 241;
· the information contained following ‘the greater of’ in schedule 2(l) on page 241;
· clause 7.2.5 between the words ‘to’ and ‘set’ on page 251;
· schedule 6(1.1)(a)-(f) on page 254 after ‘the following basis:’; and
· schedule 7(1)-(4) on page 255 after ‘approval of any Settlement:’
The following parts of the Litigation Funding Agreement between the Funder and one of the Group Members contained in Confidential Exhibit CJP–1:
· the first definition after ‘definitions and interpretation’ on page 260;
· the sentences following ‘Item(k) of Schedule 2’ on page 260;
· the definitions following ‘Beneficiaries’ on page 261–262;
· the definition between ‘Business Day’ and ‘Claim’ on page 262;
· the description following the definition of ‘Claim Proceeds’ on page 262;
· the conclusion of the definition of ‘Early Stage Funding Amount’ following the words ‘means the amount of’ at page 264;
· the sub points following ‘Tranche 1’, ‘Tranche 2’ and ‘Tranche 3’ on page 268;
· the words contained at the bottom of the header of the table on page 287;
· the information contained after ‘Option 1’ and ‘Option 2’ in schedule 2(d) on page 288;
· the particulars of schedule 2(e) on page 288;
· the particulars of schedule 2(f) on page 288;
· the particulars of schedule 2(g) on page 289;
· the particulars of schedule 2(i) on page 289;
· the information after ‘A/C Name’, ‘SWIFT CODE’, ‘BSB’ and ‘A/C’ under schedule 2(j) on page 289;
· the particulars of schedule 2(k) on page 289;
· the information contained following ‘the greater of’ in schedule 2(l) on page 289;
· clause 7.2.5 between the words ‘to’ and ‘set’ on page 299;
· schedule 6(1.1)(a)-(f) on page 302 after ‘the following basis:’; and
· schedule 7(1)-(4) on page 303 after ‘approval of any Settlement:’
The following parts of the First Instance ATE Policy contained in Confidential Exhibit CJP–1:
· schedule 1(6.) following ‘Premium:’ on page 316; and
· schedule 1(7.) following ‘Limit:’ on page 316.
The following parts of the Appeal ATE Policy contained in Confidential Exhibit CJP–1:
· item 5 of the schedule between ‘Stage 1:’ and ‘($60,000)’ on page 334;
· item 5 of the schedule between ‘Stage 2:’ and ‘($87,500)’ on page 334;
· item 5 of the schedule under ‘Deferred Premium’ between ‘(i)’ and ‘(i.e. $165,000)’ on page 334;
· item 5 of the schedule under ‘Deferred Premium’ between ‘(ii)’ and ‘(i.e. $240,000)’ on page 334;
· item 6 of the schedule on page 334 after ‘Limit:’; and
· item 7 of the schedule on page 335 after ‘Participating Insurers’.
The following parts of the Affidavit of Christopher John Pagent sworn 18 April 2024:
· The figure following the word ‘up to’ in paragraph [46];
· The figure following the word ‘amount of’ in paragraph [52];
· The words following the words ‘of the claims’ in paragraph [65];
· The figure following the words ‘limit of’ in paragraph [67];
· The figure following the words ‘limit of’ in paragraph [72]; and
· Paragraphs [94] from the words ‘circumstances’ to the end of [96].
The following persons: (a) the Court; (b) the Applicant; (c) the Applicant’s legal representatives; (d) the Contradictor; (e) the Funder; and (f) the Funder’s legal representatives.
These permitted disclosures are on the terms that none of these persons or entities disclose such material or any part of it to any person or entity other than those listed above.Until the expiry of the appeal period
7.
Affidavit of Christopher John Pagent
18 April 2024
The following parts of the First Instance ATE Policy contained in Confidential Exhibit CJP–1: the remainder of page 317 following ‘Insurer Subscriptions’.
The following part of the Litica ATE Premium Invoice dated 20 May 2020 contained at page 322 of the Confidential Exhibit CJP–1: the information between ‘please make payments to:’ and ‘Thank you’.
The following part of the Litica ATE Premium Top Up Invoice dated 9 November 2023 contained at page 341 of the Confidential Exhibit CJP–1: the information following ‘please make payments to:’.
The following part of the Litica Invoice to The Judge dated 17 December 2020 contained at page 342 of the Confidential Exhibit CJP–1: the information between ‘please make payments to:’ and ‘Thank you’.The following part of the PartnerRe Invoice to Augusta dated 18 March 2021 contained at page 345 of Confidential Exhibit CJP–1: the information following ‘Name and address of bank:’.
The following part of the Litica Invoice to The Judge dated 2021 contained at page 346 of the Confidential Exhibit CJP–1: the information between ‘please make payments to:’ and ‘Thank you’.
The following part of the Litica Invoice to Augusta dated 9 June 2022 contained at page 347 of the Confidential Exhibit CJP–1: the information between ‘please make payments to:’ and ‘Thank you’.
The following part of the Litica Invoice to Augusta dated 26 September 2022 contained at page 348 of the Confidential Exhibit CJP–1: the information between ‘please make payments to:’ and ‘Thank you’.The following persons: (a) the Court; (b) the Applicant; (c) the Applicant’s legal representatives; (d) the Contradictor; (e) the Funder; and (f) the Funder’s legal representatives.
These permitted disclosures are on the terms that none of these persons or entities disclose such material or any part of it to any person or entity other than those listed above.10 years or until further order
8.
Affidavit of Christopher John Pagent
26 June 2024
Paragraphs [124] following the word “circumstances” to the end of [127].
Paragraph [130(i)] following the words “proposal whereby commission was” to the end of the sub-paragraph.
The following parts of Confidential Exhibit CJP-6 (Costs Assessors Reports):· The words between “funding” and “to obtain advice” in [12] on page 12; and
· The penultimate sentence in [42] on page 17.
Pages 235–352 and 362–363 of Confidential Exhibit CJP–8.
The following persons: (a) the Court; (b) the Applicant; (c) the Applicant’s legal representatives; (d) the Contradictor; (e) the Funder; and (f) the Funder’s legal representatives.
These permitted disclosures are on the terms that none of these persons or entities disclose such material or any part of it to any person or entity other than those listed above.Until expiry of the appeal period
9.
Affidavit of Chris Martin
4 July 2024
The following parts of the affidavit of Chris Martin affirmed on 4 July 2024:
· paragraph [23] (but only the words following “commencement of the proceedings and”);
· paragraph [27] (but only the words following “that included the following”);
· paragraphs [29] (but only the words following “greater of either” to the end of [30]);
· paragraph [34] (but only the figure between the words “amount of approximately” and “to fund the costs”);
· paragraph [36] (but only the words following “CEO of AVL, and me; and”)
· paragraph [42] (but only the figure between “contained a limit of” and “with an upfront premium”); and
· paragraph [43] (but only the figure between “with the limit of” and “with an upfront premium”).
The following persons: (a) the Court; (b) the Applicant; (c) the Applicant’s legal representatives; (d) the Contradictor; (e) the Funder; and (f) the Funder’s legal representatives.
These permitted disclosures are on the terms that none of these persons or entities disclose such material or any part of it to any person or entity other than those listed above.Until the expiry of the appeal period
10.
Exhibit CM-1
4 July 2024
The following parts of Exhibit CM–1:
· page 13 paragraph 29;
· pages 23–25 (until the words “Cristopher Symons QC”;
· pages 26 (under the words “Review Panel Legal Report) to 28;
· pages 55 to 66; and
· pages 68–83.
The following persons: (a) the Court; (b) the Applicant; (c) the Applicant’s legal representatives; (d) the Contradictor; (e) the Funder; and (f) the Funder’s legal representatives.
These permitted disclosures are on the terms that none of these persons or entities disclose such material or any part of it to any person or entity other than those listed above.10 years or until further order
11.
Exhibit CM-1
4 July 2024
The following parts of Exhibit CM–1:
· pages 1–7;
· page 14 paragraph 36 to page 18 (above the names at the bottom of the page);
· page 14 paragraph 35;
· pages 19 (under the words “Review Panel Economics Report”) to 21 (but only information above the words “The Review Member has provided a positive recommendation for funding this matter”); and
· page 85–92.
The following persons: (a) the Court; (b) the Applicant; (c) the Applicant’s legal representatives; (d) the Contradictor; (e) the Funder; and (f) the Funder’s legal representatives.
These permitted disclosures are on the terms that none of these persons or entities disclose such material or any part of it to any person or entity other than those listed above.Until the expiry of the appeal period
12.
Exhibit CM-1
4 July 2024
The following parts of Exhibit CM–1:
· the redactions indicated on page 96;
· the redaction indicated on page 97;
· page 98 (but only the figure between the words “shall be distributed with” and “paid to the Funder” and the figure between the words “the Funder and” and “paid to the Insurer”); and
· page 106 (but only the redaction indicated on that page).
The following persons: (a) the Court; (b) the Applicant; (c) the Applicant’s legal representatives; (d) the Contradictor; (e) the Funder; and (f) the Funder’s legal representatives.
These permitted disclosures are on the terms that none of these persons or entities disclose such material or any part of it to any person or entity other than those listed above.Two years or until further order
13.
Funder’s Outline of Submissions
19 July 2024
The following paragraphs of the Funder’s Outline of Submissions:
· [14] (but only the figure between “seed funding of up to” and “for an opinion”);
· [15] (but only the words between “and contingent on” and “The relevant approvals”);
· [18] (but only the words following “in all the circumstances”);
· [22] (but only the words between “Resolution Sum” and “Augusta agreed”);
· [29] (but only the figure between the words “fee is equal to” and “of the aggregate of”, the figure between the words “Early Stage Funding Amount being” and “and the total amount” and the figure at the end of that paragraph);
· [35] (but only the figure between the words “with a limit of” and “from Partner Re Ireland DAC”);
· [36] (but only the figure between the words “with a limit of” and “The upfront premium”);
· [47] (but only the words between “being” and “the relevant Project Costs”);
· [51] (but only the words between “the alternative proposal was calculated as” and “Having regard to”, the words between “Having regard to” and “the alternative proposal”, and the words following “a commission based upon”);
· [52] (but only the figure between the words “approximately” and “The Funding Terms also referred to ATE premiums” and the figure between “total funding amount” and “There has therefore been no meaningful variation”);
· [55] (but only the figure between the words “in the vicinity of” and “The proceedings could not”);
· [56] (but only the words between “The Funding Terms noted” and “reflecting a significant period”);
· [57] (but only the words between “anticipated that the position on” and “Similarly, the funding application provided” and the figure between the words “deployed capital of approximately” and “prior to the first resolution”);
· [59] (but only following the words “the litigation was in respect of the”);
· [60] (but only following the words “heightened in the circumstances where the”);
· [61] (but only the figure between the words “to spend approximately” and “to fund the costs of the appeal”);
· [66] (but only the words between “which had a limit of” and “The ATE Appeal Policy” and the figure between “up to a limit of” and “Augusta seeks a deduction”); and
· [75] (but only the figure between the words “a sum of approximately” and “Further, Augusta expended”).
The following persons: (a) the Court; (b) the Applicant; (c) the Applicant’s legal representatives; (d) the Contradictor; (e) the Funder; and (f) the Funder’s legal representatives.
These permitted disclosures are on the terms that none of these persons or entities disclose such material or any part of it to any person or entity other than those listed above.Until the expiry of the appeal period
14.
Affidavit of Cigdem Kadayifci
23 August 2024
The following parts of the document annexed to the affidavit and entitled “Frequently asked questions”: From the words “free ride” to “as set out above” on page 196.
The following persons: (a) the Court; (b) the Applicant; (c) the Applicant’s legal representatives; (d) the Contradictor; (e) the Funder; and (f) the Funder’s legal representatives.
These permitted disclosures are on the terms that none of these persons or entities disclose such material or any part of it to any person or entity other than those listed above.Until the expiry of the appeal period
Category 4 Information: Information which may be subject to a claim for confidentiality by Ms Mary Benton. [Not used] Category 5 Information: Information which discloses sensitive information regarding alternative funding proposals. [Not pressed] Category 6 Information: Information which discloses without prejudice communications authored by AMPFP, disclosed to the Court on a confidential basis for the purposes of the settlement approval hearing. 15.
Affidavit of Christopher John Pagent
26 June 2024
Paragraphs [34(a)–(g)], [35], and [54(a)–(b)].
The following parts of Confidential Exhibit CJP–8:· page 33; and
· pages 82–164.
*Note that pages 34–81 of Confidential Exhibit CJP–8 were not in evidence.
The following persons: (a) the Court; (b) the Applicant; (c) the Applicant’s legal representatives; and (d) the Contradictor; (e) the Funder; (f) the Funder’s legal representatives; (g) the Respondent; and (h) the Respondent’s legal representatives.
These permitted disclosures are on the terms that none of these persons or entities disclose such material or any part of it to any person or entity other than those listed above.10 years or until further order.
Category 7 Information: Information which discloses without prejudice communications authored by the Applicant, disclosed to the Court on a confidential basis for the purposes of the settlement approval hearing. 16.
Affidavit of Christopher John Pagent
26 June 2024
Paragraphs [69] and [73] (from the word “methodology”) to the end of [74], including footnote 1.
Pages 176–234 of Confidential Exhibit CJP–8.The following persons: (a) the Court; (b) the Applicant; (c) the Applicant’s legal representatives; and (d) the Contradictor; (e) the Funder; (f) the Funder’s legal representatives; (g) the Respondent; and (h) the Respondent’s legal representatives.
These permitted disclosures are on the terms that none of these persons or entities disclose such material or any part of it to any person or entity other than those listed above.10 years or until further order.
Category 8 Information: Personal information of group members (including addresses, email addresses etc). 17.
Affidavit of Christopher John Pagent
26 June 2024
Pages 368–376, 387 and 389–396 of Confidential Exhibit CJP–8.
The following persons: (a) the Court; (b) the Applicant; (c) the Applicant’s legal representatives; and (d) the Contradictor; (e) the Funder; (f) the Funder’s legal representatives; (g) the Respondent; and (h) the Respondent’s legal representatives.
These permitted disclosures are on the terms that none of these persons or entities disclose such material or any part of it to any person or entity other than those listed above.10 years or until further order
REASONS FOR JUDGMENT
MCELWAINE J:
AMP Financial Planning Pty Ltd (AMPFP) is a wholly owned subsidiary of AMP Ltd. AMPFP is the holder of an Australian Financial Services Licence (AFSL). Relevantly, between 2014 and 8 August 2019, AMPFP appointed many persons and corporations as authorised representatives pursuant to Part 7.6 of the Corporations Act 2001, who were then able to carry on business as financial planners. The authorised representatives provided financial services pursuant to the AFSL. AMPFP developed a substantial financial planning practice network. The authorised representatives did not own the clients or the client database attached to each business. Rather, AMPFP maintained institutional ownership of each practice client register. The consequence of this arrangement was that AMPFP retained the relationship with each client introduced to or serviced by each authorised representative. Upon termination of the appointment of an authorised representative, the clients remained with AMPFP. Expressly, by contractual provision, no authorised representative had any goodwill or other proprietary rights in relation to the clients.
A document incorporated with the contractual arrangements between AMPFP and each of its authorised representatives is the Buyer of Last Resort Policy (BOLR Policy). The BOLR Policy provided that AMPFP “is recognised as the owner of the registered rights” and limited the rights of the authorised representative to provide financial advice and other financial services to a client recorded in the register, to access the client files for that purpose and correspondingly to receive payments in return for the provision of such advice.
The BOLR Policy provided for a significant benefit to authorised representatives. Subject to certain eligibility criteria, if an authorised representative wished to exit the financial services industry then, upon satisfying a minimum qualifying period, the representative could make an application to sell their registered rights to AMPFP in exchange for a price calculated by a multiple of revenue received by the representative in the previous 12 months. Until 8 August 2019, that multiple was 4x.
On 8 August 2019, AMPFP unilaterally purported to amend the multiple with immediate effect. In the case of continuing revenue, other than grandfathered commission revenue, the multiple was reduced to 2.5x and in the case of grandfathered commission was reduced to 1.42x with a continuing reduction of 0.833 per month from 1 September 2019 to 1 January 2021, by which time the multiple would be zero.
Understandably, a very large number of financial planners who were authorised representatives of AMPFP were upset with this alteration. A representative proceeding was commenced in this Court under Part IVA of the Federal Court of Australia act 1976 (FCA Act) on 28 July 2020. Equity Financial Planners Pty Ltd is named as applicant for the Group Members who as at 8 August 2019 were party to an authorised representative agreement and had not received a confirmed exercise date of 8 August 2019 or earlier.
The proceeding was heard by Moshinsky J in October and November 2022. His Honour also heard the claim of one sample Group Member, WealthStone Pty Ltd. His Honour heard and determined all issues of liability and damages in each case. For reasons published on 5 July 2023, his Honour upheld each claim: Equity Financial Planners Pty Ltd v AMP Financial Planning Pty Ltd [2023] FCA 741 (primary reasons). His Honour ordered the parties to file a minute of proposed orders to give effect to his reasons or, absent agreement, a short outline of submissions in support of any competing orders. The parties filed submissions. On 29 August 2023, his Honour published supplementary reasons as to the form of orders, together with the formulation of the common questions and the answers thereto: Equity Financial Planners Pty Ltd v AMP Financial planning Pty Ltd (No 2) [2023] FCA 1033 (supplementary reasons). In that decision, his Honour ordered AMPFP to pay $814,944.76 by way of damages and $151,138.42 for interest to Equity Financial and $115,533.51 for damages and $17,177.84 for interest to WealthStone.
AMPFP appealed to the Full Court. Equity Financial cross-appealed and filed a notice of contention. The appeal has not been heard.
On 8 and 22 November 2023, the parties attended a mediation. In the result, the parties entered into a binding heads of agreement to settle the proceeding, subject to the approval of the Court. They subsequently entered a more formal deed of settlement. The headline effect is that AMPFP agrees to pay $100 million (Resolution Sum) in full and final settlement in exchange for a release of liability.
By interlocutory application filed on 19 April 2024, Equity Financial seeks approval pursuant to s 33V of the FCA Act of the settlement of the proceeding in the terms of a proposed settlement, as contained in a Settlement Deed dated 20 March 2024 and a Settlement Distribution Scheme, to provide for distribution the amount of the Resolution Sum plus interest thereon, after deduction of a commission payable to the litigation Funder, legal costs and disbursements and other expenses.
The parties to the Settlement Deed are Equity Financial, AMPFP, Augusta Pool 523 Ltd (Funder) and Corrs Chambers Westgarth Solicitors (solicitors in the proceeding). Performance of the settlement is conditional upon this Court’s approval.
There are 475 Group Members. I made preliminary orders on 30 April 2024 to the following effect:
(a)Leave was granted to the Funder to intervene in the proceeding;
(b)Pursuant to s 33X of the FCA Act, the Group Members be given notice of the proposed settlement, the date time and place of the hearing of the application for orders approving the settlement and their right to oppose the application;
(c)Pursuant to s 33Y(2) of the FCA Act, the form and content of the notice of the proposed settlement be in accordance with annexure A to the orders in redacted form, but be made available to Group Members, upon signing confidentiality undertakings, in unredacted form;
(d)Providing for the procedure for the giving of notice, including the placement of an advertisement on the Court’s website;
(e)Providing a mechanism for the lodgement of objections by notice of objection to be given by 22 May 2024 to Corrs;
(f)For the appointment of Ms Liz Harris as the independent Costs Referee, to assess and to provide an opinion as to the reasonableness of the in incurred and estimated future legal costs of Equity Financial;
(g)For the appointment of Mr Jonathan Kirkwood SC as Contradictor;
(h)For the timetabling of written submissions; and
(i)For confidentiality and non-publication orders pursuant to ss 37AF and 37AG (1)(a) of the FCA Act.
The orders have been complied with. There are 92 objectors who strongly oppose approval of the settlement. That represents approximately 20% of the Group Members. I heard from each individual who wished to speak in support of his or her objection, without limitation as to time, at the hearing of this matter. Each person who addressed the Court spoke passionately and with conviction. Many were quite distressed in explaining their deeply personal reasons for opposing the settlement. Each courageously explained how their personal and professional lives have been shattered by the decision to alter the BOLR Policy. Many remain in significant debt. Most have experienced deep personal trauma and anxiety. Some have suffered with suicidal ideation. These are broken individuals who cannot accept that payment of $100 million is adequate to compensate for their individual and collective suffering. Nor is it an amount that is adequate to hold AMPFP to account for its actions. They seek solace in a public trial of more of their claims, particularly their contentions that AMPFP behaved unconscionably and in breach of the trust, confidence and goodwill that once existed between AMPFP and its network of authorised representatives.
As I explain, the concerns of each objector have weighed heavily on my mind in considering whether the settlement as proposed is fair and reasonable.
Ultimately, with certain amendments, I am satisfied that the settlement should be approved and that orders should be made with respect to the distribution of the Resolution Sum.
Doubtless the objectors will be bitterly disappointed. In these reasons, I set out in considerable detail why I am satisfied that in broad terms the settlement scheme should be approved. This is not because I am insensitive to the views of the objectors, that I disbelieve them or that I give their views little weight. I accept their accounts as truthful, their concerns valid and that each has properly put matters that are relevant upon this application. The principal reason why I have not acceded to their individual and collective position, is that I have objectively assessed all the material which I am satisfied provides a proper basis to exercise the statutory discretion to approve.
BACKGROUND
On 8 November 2021, Moshinsky J made an order fixing 28 January 2022 as the date by which a Group Member may opt out of the proceeding pursuant to s 33J(1) of the FCA Act. His Honour made consequential orders as to the form and content of the notice, its method of service and for public notification. A number of Group Members did opt out.
On 31 August 2022, the parties unsuccessfully attended a mediation, at a point when each case had been substantially worked up. Thereafter, the trial proceeded for 21 days.
His Honour pellucidly summarised the claims and his conclusions in the introductory part of his primary reasons at [3] – [22] which I gratefully reproduce (without original emphasis):
The proceeding relates to changes made (or purportedly made) by AMPFP to the valuation methodology under its BOLR Policy on 8 August 2019. The BOLR Policy formed part of the contractual relationship between AMPFP and each financial planning practice in its network. As at August 2019, there were approximately 542 practices in the AMPFP network (described below). The BOLR Policy gave practices in the AMPFP network that wanted to exit the network the ability to sell back their register rights (defined below, but broadly the contractual relationships with customers including the right to commissions) to AMPFP on 12 months’ notice (or less in some cases). Under the BOLR Policy as it stood before the 8 August 2019 changes, subject to certain exceptions and qualifications, the register rights were to be valued on the basis of a multiple of 4x ongoing revenue (i.e. ongoing revenue received by the practice in the prior 12 months) and the practice would be paid that amount by AMPFP.
On 8 August 2019, AMPFP amended (or purported to amend) the valuation methodology under the BOLR Policy (the 8 August 2019 Changes) with immediate effect. The changes were broadly as follows:
(a) changing the multiple for the purposes of the BOLR Policy from 4x to 2.5x in respect of ongoing revenue other than grandfathered commission revenue; and
(b) changing the multiple for grandfathered commission revenue:
(i) initially, from 4x to 1.42x; and
(ii) then, reducing by 0.8333 per month (referred to as a “glide path”) from 1 September 2019, such that the multiple would be zero by 1 January 2021.
The changes to the multiples were applied by AMPFP not only to practices that submitted a BOLR application after 8 August 2019, but also to practices that had submitted a BOLR application before 8 August 2019 with an exercise date after 8 August 2019. Under the terms of the BOLR Policy, those practices could not withdraw their application once it had been submitted unless AMPFP consented.
The central issue in this proceeding is whether the 8 August 2019 Changes were effective. The BOLR Policy had been in place for many years, and had been revised from time to time. The latest version of the policy as at 8 August 2019 was the version of the policy that commenced on 1 June 2017 (the 2017 BOLR Policy). That version of the policy contained a term relating to amendments that had been agreed between AMPFP and the AMP Financial Planners Association Ltd (ampfpa), which was an organisation representing financial planning practices in the AMPFP network (described below). The amendment term (on page 5 of the policy) was as follows:
Changes to this policy
The AMP Financial Planners Association Ltd Board (ampfpa) and AMPFP have agreed in writing to the terms of this policy effective 1 June 2017.
-Unless a shorter period of notice is agreed to by the ampfpa, AMPFP will give 13 months’ notice of a change to the valuation methodology for registers and to any other change having a materially adverse financial or other significant effect on a practice.
-Subject to the above, AMPFP may make any other changes to this policy following consultation with the ampfpa.
-AMPFP has the right to make any change to this policy should legislation, economic or product changes render any part of this policy inappropriate following consultation with the ampfpa. In particular, where AMPFP believes that any provision contained in this policy will, or may, cause it to breach or be subject to a penalty under any laws.
-The Buyer of last resort terms that apply are those terms in force on the Buyer of last resort exercise date or the date the practice surrenders its AR [Authorised Representative] Agreement, whichever is the later.
I will refer to the third indented paragraph, which refers to “legislation, economic or product” changes, as the LEP Provision. (The paragraph was referred to as the “LEP Exception” in Equity’s submissions and as the “LEP Provision” in AMPFP’s submissions. Whether the paragraph constitutes an exception forms part of an issue in the proceeding, namely the issue of onus. I will therefore adopt the neutral expression, “LEP Provision”.)
Equity contends that the 8 August 2019 Changes were not authorised by the LEP Provision (or otherwise authorised by the amendment term). In summary, Equity contends that:
(a) AMPFP did not consult with ampfpa in relation to the changes as required by the LEP Provision and the Master Terms (referred to below);
(b) AMPFP did not identify the economic or legislation changes it was relying on in making the changes, and did not state how these rendered the policy inappropriate;
(c) There was no “economic change” or “legislation change” within the meaning of the LEP Provision;
(d) If (contrary to the above) there was an economic or legislation change, it did not render any part of the policy “inappropriate” within the meaning of the LEP Provision; and
(e) If (contrary to the above) there was an economic or legislation change that rendered a part of the policy inappropriate, the changes to the multiples were not reasonably necessary to address that circumstance (Equity contends that this is a requirement of the LEP Provision, properly interpreted).
Accordingly, Equity contends that the 8 August 2019 Changes were ineffective and that AMPFP acted in breach of contract in putting forward BOLR valuations based on those changes. Equity seeks a declaration that the changes were ineffective and claims damages for loss and damage. In the alternative, Equity claims that AMPFP acted in breach of a contractual obligation of good faith in relation to the changes. In the further alternative, Equity contends that AMPFP engaged in unconscionable conduct within the meaning of s 21 of the Australian Consumer Law, being Sch 2 to the Competition and Consumer Act 2010(Cth) (the Australian Consumer Law), in relation to the changes. Further, Equity contends that AMPFP engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in connection with the changes in contravention of s 18 of the Australian Consumer Law.
In response, AMPFP contends that the 8 August 2019 Changes were authorised by the LEP Provision (and were effective immediately). In summary, AMPFP contends that:
(a) while there was a contractual obligation upon AMPFP to consult (within the meaning of cl 1.4 of the Master Terms) with ampfpa, the obligation was not “jurisdictional”; that is, a breach of the obligation does not have the effect that the changes are ineffective; the breach merely sounds in damages for the loss of opportunity to consult, but this results in an award of only nominal damages;
(b) In any event, on the facts, AMPFP did consult (within the meaning of cl 1.4 of the Master Terms) with ampfpa in relation to the changes;
(c) It is not a requirement of the LEP Provision that AMPFP identify the economic or legislation change that it relies on; nor is it a requirement that it state how these render the policy inappropriate;
(d) There was an “economic change” that rendered the policy inappropriate, namely either:
(i) A sustained and quantifiable decrease in the market value of register rights linked to ongoing revenue; or
(ii) a material change in the supply of and demand for financial advice services and practices;
(e) Further, in relation to the changes to grandfathered commission revenue, there was a “legislation change” that rendered the policy inappropriate; and
(f) The changes that were made were responsive to the economic and/or legislation changes (this being the relevant requirement, on AMPFP’s interpretation of the LEP Provision).
In the alternative, AMPFP contends that the 8 August 2019 Changes were effective 13 months later, that is, on 8 September 2020.
The hearing of this proceeding in October and November 2022 involved the trial of Equity’s claim against AMPFP on all issues of liability and the amount of any damages. Equity did not enter into a buy-back agreement with AMPFP and still holds its register rights.
The hearing also involved the trial of the claim of one sample Group Member, WealthStone Pty Ltd (WealthStone), on all issues of liability and the amount of any damages. Unlike Equity, WealthStone did enter into a buy-back agreement with AMPFP. That agreement contained a release in favour of AMPFP. AMPFP contends that the release defeats WealthStone’s claim against it. In response, Equity Financial contends that:
(a) The condition precedent to the operation of the release – the payment of the BOLR benefit (properly calculated) – has not been satisfied;
(b) The release is void under s 23 of the Australian Consumer Law, which applies to unfair terms of small business contracts; and
(c) AMPFP’s conduct in procuring the release was, in all the circumstances, unconscionable within the meaning of s 21 of the Australian Consumer Law.
I was informed by AMPFP that approximately 135 Group Members have signed buy-back agreements with AMPFP. About 120 of those agreements contain releases, but they are not all in the same form.
In summary, for the reasons that follow, I have concluded as follows:
(a) the 8 August 2019 Changes were not authorised by the LEP Provision on the basis of AMPFP’s first alternative economic change contention;
(b) the 8 August 2019 Changes were not authorised by the LEP Provision on the basis of AMPFP’s second alternative economic change contention;
(c) the changes to the multiple for grandfathered commission revenue (which were part of the 8 August 2019 Changes) cannot be supported on the basis of a “legislation change”;
(d) the requirement to consult (within the meaning of cl 1.4 of the Master Terms) is a precondition to the effectiveness of the change;
(e) AMPFP failed to consult within the meaning of cl 1.4 of the Master Terms in relation to the proposed changes; and
(f)It is unnecessary to determine whether AMPFP breached a contractual obligation of good faith.
It follows from the above that the 8 August 2019 Changes (with immediate effect) were not authorised by the LEP Provision and were ineffective.
Insofar as AMPFP contends, in the alternative, that the 8 August 2019 Changes were effective 13 months later (on 8 September 2020), I reject that contention.
In light of the above conclusions, it is unnecessary to determine whether AMPFP engaged in unconscionable conduct in relation to the 8 August 2019 Changes.
It is not necessary to resolve the misleading or deceptive conduct claim to determine the individual claims of Equity or WealthStone, and I therefore prefer not to do so at this stage.
In relation to Equity’s claim, I am satisfied that Equity has suffered loss and damage as a result of AMPFP’s breach of contract, and is entitled to damages in the sum of $813,560 (subject to the possible need to adjust this figure as discussed in [675] below).
In relation to WealthStone’s claim, I have concluded in summary that:
(a) the condition precedent to the operation of the release has been satisfied;
(b) the release is not void under s 23 of the Australian Consumer Law; and
(c) AMPFP’s conduct in procuring the release was, in all the circumstances, unconscionable.
WealthStone is entitled to an order declaring the release void to the extent that it would preclude its claims in this proceeding. Further, WealthStone is entitled to damages in the sum of $115,533.51 (subject to the possible need to adjust this figure as discussed in [719] below).
Relevant for present purposes, in the supplementary reasons, Moshinsky J ordered that:
(1)The common questions raised in this proceeding set out in Schedule A to these orders be answered in the terms set out in Schedule A.
(2)Pursuant s 33ZB of the FCA Act, all persons who were Group Members in the proceeding as at the date of these orders (other than persons who had opted-out of the proceeding by that date) are bound by the answers to the common questions as specified in Schedule A to these orders.
Schedule A provides:
# Question Answer and reference to 5 July 2023 reasons for
judgment (J) or 29 August 2023 reasons for judgment
Contract Claim 1. Did AMPFP effectively amend the BOLR Policy to introduce the 8 August 2019 Changes as of 8 August
2019?
No: J [602], [644] 1.a. Was there an economic change that rendered the BOLR Policy, or any part of it, inappropriate? No: J [582], [596] 1.a.i. Was there a sustained and quantifiable decrease in the market value of register rights linked to ongoing revenue during the period 1 January 2017 to 30 June 2019 (First Alternative Economic Change)? Yes: J [580] 1.a.ii. Was the First Alternative Economic Change an
“economic change” within the meaning of the LEP Provision?
Yes: J [581] 1.a.iii. Did the First Alternative Economic Change render the BOLR Policy, or any part of it, “inappropriate”, within the meaning of the LEP Provision? No: J [582] 1.a.iv. Was there a material change in the supply of and
demand for financial advice services and practices (Second Alternative Economic Change)?
No finding made: J [594] 1.a.v. Was the Second Alternative Economic Change an “economic change” within the meaning of the LEP Provision? Assuming the Second Alternative Economic Change occurred (in respect of the supply of and demand for financial advice services), yes: J [595] 1.a.vi. Did the Second Alternative Economic Change render the BOLR Policy, or any part of it, “inappropriate”, within the meaning of the LEP Provision? Assuming the Second Alternative Economic Change occurred (in respect of the supply of and demand for financial advice services), no: J [596] 1.b. Was there a legislation change that rendered the valuation multiple in the BOLR Policy inappropriate in respect of grandfathered commission revenue? No: J [600]-[601] 1.b.i. Were any, or any combination, of the following a
“legislation change” within the meaning of the LEP Provision:
(a) on 4 February 2019, the Commonwealth Government’s response to the Financial Services Royal Commission’s Final report;
(b) on 22 February 2019, the release of the exposure draft of “A Bill for an Act to amend the Corporations Act 2001 in relation to grandfathered conflicted remuneration, and for related purposes”;
(c) on 1 August 2019, the introduction into the House of Representatives and First Reading of the Treasury Laws Amendment (Ending
Grandfathered Conflicted Remuneration) Bill 2019 (Cth)?
No: J [600] 1.c. On the proper construction of the BOLR Policy, did any proposed changes pursuant to the LEP Provision have to be:
(a) reasonably necessary to make the BOLR Policy appropriate in light of the economic or legislation change that renders the policy or any part of it inappropriate; or
(b) responsive to the economic or legislation
change that renders the policy or any part of it inappropriate?
Neither. Any proposed changes to the BOLR Policy pursuant to the LEP Provision needed to be proportionate to the economic or legislation change that renders the policy (or any part of it) inappropriate:
J [560]
1.c.i. Were the 8 August 2019 Changes proportionate to the First Alternative Economic Change? No: J [583] 1.c.ii. Were the 8 August 2019 Changes proportionate to the Second Alternative Economic Change? Assuming the Second Alternative Economic Change occurred (in respect of the supply of and demand for financial advice services), no: J [597] 1.d. Was AMPFP required, as a matter of construction or as an implied term, to identify to practices and/or ampfpa the legislation or economic change in response to which the power to amend the BOLR Policy was being exercised? Subject to the requirements of consultation in cl 1.4 of the Master Terms, no: J [562] 1.e. Was consultation (within the meaning of cl 1.4 of the Master Terms) with ampfpa a pre-condition to the effective exercise of the power to amend pursuant to the LEP Provision? Yes: J [610], [615] 1.e.i. Did AMPFP consult with ampfpa in respect of the 8 August 2019 Changes, or any of them, within the meaning of cl 1.4 of the Master Terms? No: J [636], [638], [642] 2. Did AMPFP effectively amend the BOLR policy to introduce some or all of the 8 August 2019 Changes
as of 8 September 2020?
No: J [647] 3. Did AMPFP breach the authorised representative agreements of relevant group members within [35] or [37] of the statement of claim by offering to enter into a buyback agreement with a BOLR payment calculated pursuant to the 2019 BOLR Policy (and/or by failing to offer a register valuation, or to enter a buyback agreement, with a BOLR payment calculated pursuant to the 2017 BOLR Policy)? Yes: J [655], [678] 4. Was AMPFP entitled to discount or exclude grandfathered commission revenue from the calculation of the BOLR Benefit under the terms of the 2017 BOLR Policy? If so, from what date? Yes, from 1 January 2020: reasons for judgment dated 29 August 2023, [16] Release validity 5.a. In respect of WealthStone (and other group members who fall within [58] of the statement of claim) on the proper construction of those group members’ buy- back agreements, has AMPFP, by paying a BOLR Benefit calculated based on the 8 August 2019 Changes, paid the “BOLR Benefit” within the meaning of the agreements so as to satisfy the condition precedent to the operation of the release? Yes in respect of WealthStone; not answered in respect of other group members: J [687] 5.b.i. In relation to the buy-back agreements of WealthStone (and other group members who fall within [58] of the statement of claim), were the buy- back agreements contracts for the supply of services within the meaning of s 23(4)(a) of the Australian Consumer Law? Yes: J [695(a)] 5.b.ii. In relation to the buy-back agreements of WealthStone (and other group members who fall within [58] of the statement of claim), was AMPFP’s conduct in entering the buy-back agreements conduct in connection with the acquisition or possible acquisition of services within the meaning of s 21(1)(b) of the Australian Consumer Law? Yes: J [702] 5.b.iii. In relation to the buy-back agreements of WealthStone (and other group members who fall within [58] of the statement of claim), in the case of buy-back agreements providing for payment of the BOLR Benefit in the form of an initial payment and a deferred payment (however described), was the “upfront price” payable under those contracts, within the meaning of s 23(4)(c) of the Australian Consumer Law:
1. the initial payment; or
2. the BOLR Benefit?
The upfront price was the BOLR Benefit: J [695(c)(i)] 5.b.iv. In relation to the buy-back agreements of WealthStone (and other group members who fall within [58] of the statement of claim), was the duration of the buy-back agreements longer than
12 months?
Yes in respect of WealthStone; not answered in respect of other group members:
J [695(c)(ii)]
5.b.v. Did AMPFP have a right, under the authorised representative agreements, to require a group member to enter into a buy-back agreement containing a release in order to receive a BOLR Benefit? No: J [714] 5.c. At the time of entering into the WealthStone Buy- Back Agreement, did AMPFP know, or ought AMPFP to have known, that practices were likely to challenge, or had challenged, the legal validity of the 8 August 2019 Changes? Yes: J [711]
On 26 September 2023, AMPFP filed a notice of appeal to the Full Court. On 18 October 2023, Equity Financial filed a notice of contention and a notice of cross-appeal. The notice of appeal contends that his Honour erred on five grounds:
1. The learned primary judge erred in holding that AMPFP did not effectively amend the BOLR Policy to introduce the 8 August 2019 Changes as of 8 August 2019 (Reasons[16], [602], [644]). His Honour should have held that AMPFP effectively amended the BOLR Policy to introduce the 8 August 2019 Changes as of 8 August 2019.
2. Further and more particularly as to paragraph 1 above:
(a) The learned primary judge erred in holding that the economic change he found(at Reasons [580], referred to as the First Alternative Economic Change) was not one that rendered any part of the BOLR Policy inappropriate within the meaning of the LEP Provision (Reasons [582]). His Honour should have held that the First Alternative Economic Change rendered the BOLR Policy’s valuation multiple inappropriate.
(b) The learned primary judge erred in holding that any changes to the BOLR Policy under the LEP Provision must be proportionate to the economic change that renders the Policy (or any part of it) inappropriate (Reasons [560]). His Honour should have held that any changes to the BOLR Policy under the LEP Provision must be responsive to that economic change, and that the 8 August 2019 Changes were responsive to the First Alternative Economic Change.
(c) Alternatively to sub-paragraph (b), the learned primary judge erred in finding that the 8 August 2019 Changes were not proportionate to the First Alternative Economic Change (Reasons [583]).
(d) The learned primary judge erred in holding that consultation (within the meaning of cl 1.4 of the Master Terms) with ampfpa was a pre-condition to the effective exercise of the power to amend the BOLR Policy pursuant to the LEP Provision (Reasons [610], [615]).
(e) Further or alternatively to sub-paragraph (d), the learned primary judge erred in finding that AMPFP did not provide ampfpa reasonable prior notice of the 8 August 2019 Changes and thereby failed to comply with the obligation in cl 1.4(a) of the Master Terms in respect of those Changes (Reasons [634], [636], [642]).
3. Alternatively to paragraphs 1 and 2 above, the learned primary judge erred in holding that the announcement of the 8 August 2019 Changes on that date did not constitute 13 months’ notice so as to render those Changes to the BOLR Policy effective from 8 September 2020 (Reasons, [17], [647]).
4. The learned primary judge:
(a) erred in holding that AMPFP’s conduct in entering the buy-back agreements was conduct in connection with the acquisition of services within the meaning of s 21(1)(b) of the Australian Consumer Law (Reasons [702]);
(b) should have held that the buy-back agreements were not contracts for the supply or acquisition of services within the meaning of s 21(1) of the Australian Consumer Law.
5. The learned primary judge erred in holding that AMPFP’s conduct in procuring the release in the WealthStone buy-back agreement was unconscionable within the meaning of s 21 of the Australian Consumer Law (Reasons [21], [716]-[717]).
The notice of cross-appeal contends that his Honour erred on four grounds:
1.The learned primary judge erred in holding that the First Alternative Economic Change was an “economic change” within the meaning of the LEP Provision (Reasons, [581]). His Honour should have held that the First Alternative Economic Change was not an “economic change” within the meaning of the LEP Provision.
2.The learned primary judge erred in holding that, on the proper construction of the WealthStone Buy-Back Agreement (and the buy-back agreements of other group members who fall within [58] of the statement of claim), AMPFP, by paying a BOLR Benefit calculated based on the 8 August 2019 Changes, had paid the “BOLR Benefit” within the meaning of the agreement so as to satisfy the condition precedent to the operation of the release in those agreements (Reasons, [687]-[688]). His Honour should have held that AMPFP had not paid the “BOLR Benefit” within the meaning of the agreements, and that the condition precedent to the operation of the release in each such agreement was not satisfied.
3.The learned primary judge erred in holding that, where the buy-back agreements of WealthStone and the group members in paragraph [58] of the statement of claim provided for payment of the BOLR Benefit in the form of an initial payment and a deferred payment (however described), the “upfront price” payable under those contracts, within the meaning of s 23(4)(c) of the Australian Consumer Law was the (entire) BOLR Benefit (Reasons, [695(c)(i)]). His Honour should have held that the “upfront price” was the initial payment (however described).
4.The learned primary judged erred in holding that the WealthStone Buy-Back Agreement is not a “standard form contract” within the meaning of s 23(1) of the Australian Consumer Law (Reasons, [698]). His Honour should have found that the release in the WealthStone Buy-Back Agreement is:
a.a “standard form contract” within the meaning of s 23(1) of the Australian Consumer Law;
b.“unfair” within the meaning on s 23(1) of the Australian Consumer Law; and
c.void under s 23(1) of the Australian Consumer Law.
The notice of contention is to the effect that his Honour’s answer to common question (1) should be affirmed on three grounds, which need not be reproduced.
On any view, the trial was a hard-fought contest and the appeal, if it proceeds, will be likewise litigated.
EVIDENCE AND SUBMISSIONS RELIED ON
Equity Financial primarily relies on:
(1)Affidavits of Christopher Pagent, solicitor and partner of Corrs who has primary carriage of the proceeding, made on 18 and 23 April and 26 June and 30 August 2024, portions of which are redacted in accordance with confidentiality orders;
(2)Counsel’s submissions of 5 July 2024;
(3)Counsel’s Confidential Opinion on the settlement application of 25 June 2024.
The Funder relies on:
(1)An affidavit of Christopher Martin, an investment manager employed by Augusta Ventures Ltd (the holding company of the Funder) made on 4 July 2024. Mr Martin is employed in the London office of the holding company;
(2)An affidavit of Thomas Riddell, the Funder’s solicitor, made on 19 July 2024; and
(3)Counsel’s submissions of 19 July and 23 August 2024.
AMPFP relies on counsel’s submissions of 23 August 2024.
The Contradictor, Mr Kirkwood SC with Mr Nanlohy, has provided written submissions of 9 August 2024.
The Costs Referee, Ms Harris has provided her referee reports of 31 May and 19 June 2024.
Three objecting parties have filed interlocutory applications, supported by affidavits.
Pinnacle Financial and Investment Services Pty Ltd by interlocutory application dated 23 August 2024, seeks leave to be heard together with orders that it not be bound by or otherwise affected by the Settlement Deed, but otherwise be bound by any settlement of the proceeding that is approved by the Court and, for the avoidance of doubt, that it remains bound by orders 1 and 2 made on 29 August 2023 on the common questions.
Entire Financial Solutions Pty Ltd by interlocutory application dated 2 August 2024, seeks leave to bring the application and orders that it is not bound or affected by the Settlement Deed, any settlement Distribution Scheme that is approved by the Court or any orders approving the settlement of this proceeding. In the alternative it seeks orders that it “be opted out” of this proceeding.
Investment, Retirement, Insurance & Superannuation Pty Ltd (IRIS) by interlocutory application dated 23 August 2024, seeks leave to be heard and to bring the application together with orders that it not be bound by any settlement of the proceeding as approved by the Court, not be bound by the Settlement Deed, not be bound by any settlement Distribution Scheme approved by the Court but, for the avoidance of doubt, that it remains bound by orders 1 and 2 made on 29 August 2023 on the common questions. In the alternative it seeks an order that the time to file an opt-out notice be extended to a date to be fixed and that, upon such filing, that it ceases to be a Group Member and thereby not be bound by any settlement of the proceeding.
Those interlocutory applications were not ultimately pressed, for reasons that I explain relating to the scope of the release clause in the Settlement Deed.
All affidavits were formally read without objection and no application was made for leave to cross-examine any deponent.
A total of 92 written objections were lodged, and of those the following 19 persons made an oral submission in person or by Teams:
Group Member Name Person Appearing 1. Caloundra Financial Advisors Pty Ltd Richard Scully 2. Complete Financial Providence Group Pty Ltd Nicholas Carmichael 3. Financial Cornerstone Solutions Pty Ltd Vadim Valev 4. Financial Trends Pty Ltd Eamonn Wallace 5. Hatray Pty Ltd Maryanne Hamilton 6. In Advance Financial Management Pty Ltd Boris Glushankov 7. Integrity Wealth Planners Kelly Roche 8. IRIS Financial Solutions Cigdem Kadayifci 9. Kensington FS Pty Ltd Simon Burge 10. Kismet Financial Services Pty Ltd Genine Cowell 11. Life Star Financial Services Pty Ltd Stephen Mackinder 12. M.W. Vincent & Associates Pty Ltd Mark Vincent 13. McGinn Trading Company Pty Ltd John McGinn 14. Oak Financial Planning Cameron Vallve 15. Plan4wealth Pty Ltd Mary Benton 16. RD Morgan Financial Services Roderic Morgan 17. Stathopoulos Pty Ltd ATF Stathopoulos Family Trust trading as Financial Essence Nick Stathopoulos 18. The Updated Investor Pty Ltd David Haseldine 19. Curran-Nicholls Financial Services Jonathan Curran-Nicholls
Of the 477 Group Members,101 are in Group 1 and 326 in Group 2 (each as categorised in the Distribution Scheme). Statistically, the objectors comprise approximately 20% of all Group Members. Mr Kirkwood acknowledges that the number of objectors, as a proportion of the Group Members, is “higher than in many settlement approval applications” in his experience. However, that fact is not of itself evidence that the settlement is unfair or unreasonable, nor is the corresponding fact that a larger proportion of Group Members have not objected: Kelly v Willmott Forests (in liq) (No 4) (2016) 335 ALR 439; [2016] FCA 323 at [55] – [61], Murphy J.
I record that I have carefully considered all the affidavits and submissions (written and oral), including material that is the subject of confidentiality orders.
Principles
Section 33V of the Act provides:
33V Settlement and discontinuance—representative proceeding
(1) A representative proceeding may not be settled or discontinued without the approval of the Court.
(2) If the Court gives such an approval, it may make such orders as are just with respect to the distribution of any money paid under a settlement or paid into the Court.
The Court’s function is well understood. Recently, the Full Court emphasised the importance of maintaining vigilance in representative settlement applications to ensure compliance with the overarching purpose of the civil practice and procedure of the Court at ss 37M and 37N of the Act: Galactic Seven Eleven Litigation Holdings LLC v Davaria (2024) 302 FCR 493; [2024] FCAFC 54 at [10], Murphy J.
In this application, the parties, the Funder and the Contradictor proceeded accordingly, and the Court is grateful for the assistance received.
The task is to assess whether the proposed settlement is fair and reasonable and in the interests of Group Members, considered as a whole and inter se. As summarised by Murphy J in Webb v GetSwift Ltd (No 7) (2023) 414 ALR 500; [2023] FCA 90 at [15]-[17]:
The applicable principles in relation to settlement approval under s 33V of the FCA Act are now well-established. The Court’s fundamental task is to determine whether the settlement is fair and reasonable and in the interests of the group members who will be bound by it, including as between the group members inter se [citations omitted].
In undertaking that task, the Court:
(a) assumes an onerous and protective role in relation to group members’ interests, in some ways similar to Court approval of settlements on behalf of persons with a legal disability;
(b) must be astute to recognise that the interests of the parties before it, and those of the group as a whole (or as between some members of the group and other members), may not wholly coincide;
(c) relatedly to the second point, should be alive to the possibility that a settlement may reflect conflicts of interest or conflicts of duty and interest between participants in the common enterprise which has conducted the representative proceeding;
(d) should understand that at the point of settlement approval, the interests of the parties will ordinarily have merged in the settlement. It is likely that they both will have become “friends of the deal”. As a result, both sides may not critique the settlement from the perspectives of any group members who may suffer a detriment or obtain lesser benefits through the settlement; and
(e) must decide whether the proposed settlement is within the range of reasonable outcomes, rather than whether it is the best outcome which might have been won by better bargaining.
The Class Actions Practice Note (GPN-CA) at [15.5], sets outs the factors that are ordinarily required to be addressed in the material filed in support of an application for settlement approval. These factors, drawn from the remarks of Goldberg J in Williams v FAI Home Security Pty Ltd (No 4) (2000) 180 ALR 459 at [19], are to be approached as a guide, insofar as they are relevant to the circumstances of the case and not as a mandatory requirement: Caason at [13]; Davison v Commissioner of Police, NSW Police Force [2021] FCA 1324 at [47].
See also the detailed analysis and summary of principles by Lee J in Fowkes v BostonScientific Corporation [2023] FCA 230 at [11]-[15], particularly his Honour’s commencing statement about the “Court’s supervisory and protective role.”
The material relied on addresses the non-mandatory and non-exclusive factors at [15.5] of The Class Actions Practice Note (GPN-CA):
(a) the complexity and likely duration of the litigation;
(b) the reaction of the class to the settlement;
(c) the stage of the proceedings;
(d) the risks of establishing liability;
(e) the risks of establishing loss or damage;
(f) the risks of maintaining a class action;
(g) the ability of AMPFP to withstand a greater judgment;
(h) the range of reasonableness of the settlement in light of the best recovery;
(i) the range of reasonableness of the settlement in light of all the attendant risks of litigation; and
(j) the terms of any advice received from counsel and/or from any independent expert in relation to the issues which arise in the proceeding.
In what follows, I address these and other factors. The statutory requirement to make orders that are “just” with respect to the distribution of the Resolution Sum is necessarily fact sensitive and fact intensive.
However, before doing so, and so that the objectors may have a full understanding of the process, I commence with a summary of the Court’s protective function, the important role of the objectors, the obligations of counsel for Equity Financial and the function of the Contradictor.
ROLES AND OBLIGATIONS
Justice Lee, as a member of the Full Court in Dyczynski v Gibson (2020) 280 FCR 583 likened the function of the Court to the protective jurisdiction of the Chancery Courts. At [402] he stated:
It is well established that the Court has a protective and supervisory role in relation to the interests of Group Members. It is a modern and far more specific mirror of Chancery’s parens patriae jurisdiction, whereby courts of equity could make a diverse range of orders for the protection of children and persons historically regarded as incapable (who could not be heard in a suit before the Court).
For the benefit of the objectors, I explain what is meant by that reference. Very briefly, it may be traced to the Crown’s prerogative to care for those who have no other guardian or protector: the King is bound to protect his subjects: Wellesley v Duke of Beaufort (1827) 2 Russ 1 at 20 (38 ER 236 at 243). There is debate whether this is the true origin of the jurisdiction: Story, Commentaries on Equity Jurisprudence (1884, first English ed) at 919-921. In any event, in exercising parens patriae jurisdiction, the Court of Chancery assumed direct responsibility for persons incapable of protecting their own interests. The proceeding was not adjudicative as explained by Viscount Haldane LC in Scott v Scott [1913] AC 417 at 437:
[T]he judge who is administering their affairs, in the exercise of what has been called paternal jurisdiction delegated to him from the Crown through the Lord Chancellor, is not sitting merely to decide a contested question. His position as an administrator as well as judge may require the application of another and over-riding principle to regulate his procedure in the interest of those whose affairs are in his charge.
The analogy is neither direct nor perfect, but informs the role of counsel for Equity Financial, the Contradictor and the Court in the exercise of the jurisdiction to approve conferred in the modern context by s 33V of the FCA Act. It explains why I permitted each objector to address the Court in the form of oral submissions by way of elaboration of their written objections and unconstrained by the need to verify any factual matters by affidavit or sworn evidence. The parties raised no objection to this procedure. In other cases, it may be appropriate to receive the objections into evidence, which was done by Lee J in Fowkes at [56]-[58]. I did not consider that to be necessary in this proceeding. I will treat the objections as opposition to the settlement and as submissions in support. As I explain, one must distinguish between the subjective views of the members and the statutory assessment that the Court undertakes.
This is not to gainsay the importance of permitting each objector to articulate their concerns. As Lee J also observed in Fowkes at [50]: “It must always be borne firmly in mind that we are dealing with real people who perceive they have real claims, and any approved settlement would compromise those claims.”
Which brings me to the respective roles of counsel for Equity Financial and the Contradictor. Mr Craig KC, Mr Rozenberg and Ms Nikolic in authoring the Confidential Opinion expressly recognised and proceeded in accordance with their obligation, as officers of the Court, to candidly and frankly analyse the facts, to expose the basis for their risk analysis and not to act as advocates for Equity Financial: Galactic Seven at [94], Murphy J; [158] Colvin J. I am well-satisfied that this obligation has been complied with.
Mr Kirkwood has likewise proceeded in accordance with his important obligation to ensure that there is a real contest between conflicting interests, which role Dixon J explained in Bolitho v Banksia Securities Ltd (No 6) [2019] VSC 653 at [110]:
The Contradictor’s role is conceptually distinct from that of an amicus. The Contradictor’s role should be fundamentally understood as ensuring there is a real contest between conflicting interests where the outcome will be a res judicata. It is a role more closely aligned with that of an intervener than an amicus because the contradictor best assists the court when armed with the rights and powers of a party in the proceeding. The analogy to a party is to the position of group members whose rights will be determined by the approval of the settlement.
I turn now to the settlement.
THE SETTLEMENT DEED
Clause 2.1 of the Settlement Deed required Equity Financial to apply to the Court for orders approving the form and content of a notice to Group Members informing them of the main provisions of the settlement. The orders that I made on 30 April 2024 approved the form of that notice, summarised the proposed settlement, the primary provisions of the Settlement Deed and the Distribution Scheme. With limited interpolation, I reproduce following.
The Settlement Deed provides:
(a)Clause 2.4: If the proposed settlement is approved, AMPFP must pay the Resolution Sum into an interest-bearing holding account for distribution in accordance with the Settlement Deed;
(b)Clause 2.5: Upon payment of the Resolution Sum, Equity Financial on its own behalf and on behalf of each Group Member releases and discharges AMPFP, and its present and former directors, officers, employees, partners, servants, contractors and agents (related parties) from:
(i)the claims made by Equity Financial and any Group Member in the proceeding;
(ii)any other claim by Equity Financial or any Group Member which is in respect of, or arises out of, the same or related circumstances to those raised in the proceeding;
(iii)any claim that Equity Financial or any Group Member could have raised in the proceeding relating to, or arising out of, or in respect of (either directly or indirectly) the matters the subject of the proceeding, or any part of it, or which are raised in the proceeding, or which are in respect of, or arise out of, the same or related circumstances to those raised in the proceeding and anything related to the proceeding, including any damage, loss, cost or expense suffered as a result of the matters the subject of the proceeding or any part of the proceeding or which are raised in the proceeding;
(c)Clause 2.5: AMPFP releases Equity Financial and each Group Member (the Claimants) together with their related parties, who entered into either a buy-back agreement, institutional release or settlement deed (as each of those terms were defined in the amended defence) from any claim which AMPFP might have relating to, or arising out of, or in respect of, those Group Members obligations pleaded in paragraph 100A and schedule three of the amended defence filed by AMPFP in the proceeding;
(d)Clause 3.2: Equity Financial must prepare a Distribution Scheme.
(e)Clause 3.2: The Administrator is to distribute the Resolution Sum in accordance with the Distribution Scheme.
(f)Clause 5.5: If, after the Settlement Deed has been executed, the Court allows an existing Group Member to opt out of the AMPFP BOLR Class Action (and if that development does not entitle AMPFP to terminate the Settlement Deed or if AMPFP elects not to do so), the parties agree that the Resolution Sum is to be reduced by an amount equal to the amount that the Administrator determines would have been distributed to such Group Member or Group Members pursuant to the Distribution Scheme had they remained Group Members.
(g)Clause 6.1: Equity Financial is not to make any public statement about the terms recorded in the Settlement Deed, except with AMPFP’s consent, or except for the purpose of preparing or providing to the Court evidence in support of its application for approval of the Proposed Settlement, or if another exception provided for in the Settlement Deed applies.
(h)Clause 7.1: Equity Financial and Group Members are not entitled to seek any costs from AMPFP, including their legal costs and the costs of administering the settlement. AMPFP is not entitled to seek any costs from Equity Financial or the Group Members, including its legal costs.
It is proposed by Equity Financial and the Funder that the following amounts will be deducted from the Resolution Sum, comprising the Funder’s entitlements pursuant to litigation funding agreements it entered into with Equity Financial and 378 Group Members. In those agreements, Equity Financial and the contracting Group Members are obliged to pay the Funder an amount equal to the Project Costs and the Commission (each as defined in the agreements). The Project Costs comprise:
(1)The Funder Commission of $26,578,805.83;
(2)Paid legal costs of $10,573,022 (GST inclusive) to be paid to the Funder;
(3)Unpaid legal costs in the amount of $509,989.98 (GS T inclusive) to be paid to Corrs;
(4)Future legal costs of $1,009,927 (GST inclusive) to be paid to Corrs;
(5)A further amount in respect of future legal costs of $216,493.92 to be paid to Corrs;
(6)The security costs sum in the amount of $360,259.96 to be paid to the Funder;
(7)Reimbursement costs of $30,000 each to be paid to Ms Braschey and Ms Scott and the sample claimants reimbursement in the amount of $20,000 to be paid to Mr Finch;
(8)The adverse costs order reimbursement of $58,500 to be paid to the Funder;
(9)The costs of the Contradictor in an amount of up to $100,000 to be paid to the Contradictor and his junior, subject to any further order of the Court varying this amount;
(10)The costs of the Costs Referee of $50,000 (excluding GST);
(11)An adverse costs insurance premium (ATE costs) paid by the Funder of $2,134,924.96 to be paid to the Funder;
(12)An amount of $567,355 characterised as administrative fees to be paid to the Funder;
(13)The Administrator’s Costs of administering the Distribution Scheme of $1,006,000.
In the result, the total amount claimed for Project Costs by the Funder is $42,009,278.65. This amount excludes items (7), (9), (10) and (13) which total $1,236,000.
Items (6), (7), (8), (9), (10) and (13) are not controversial and may be shortly dealt with as there is no issue about whether they were reasonably incurred, or will be, if the settlement is approved.
The balance of the Resolution Sum will be distributed to Group Members in accordance with the Distribution Scheme.
THE DISTRIBUTION SCHEME
The Administrator will invite all Group Members to seek to participate in the Distribution Scheme, and to provide certain information for that purpose. The Administrator will then assess the claims of all such Group Members and determine the value of each claim on the assumption it would have succeeded (Gross Value).
The approach to calculating the Gross Value of Group Member’s claims is intended to reflect the approach the Court would have likely adopted in valuing those claims.
Interest will be added to the Gross Value of each Group Member’s claim.
Discounts will then be applied to the Gross Value (and interest) of the claims, reflecting an assessment of the risks involved in pursuing them. Different discounts apply to different cohorts of Group Members to reflect the legal strengths and weaknesses of the claims of each cohort.
For the purpose of determining the Gross Value of Group Members’ claims and the applicable discounts, Group Members will be categorised into one of two categories:
(a)Group 1 Members – Group Members who have been paid a benefit under a BOLR Policy; and
(b)Group 2 Members – all other Group Members.
All Group 1 Members will be entitled to participate in the Distribution Scheme.
The Gross Value of a Group 1 Member’s claim will be calculated by the Administrator as:
(a)the amount that the Group 1 Member should have received under the BOLR Policy based on the primary reasons (ie, the multiple set out below for Grandfathered Commission and 4x for all other revenue);
minus
(b)the amount of the benefit that the Group 1 Member actually received under the BOLR Policy.
In calculating the amount that the Group 1 Member should have received under the BOLR Policy, the multiple to be applied to Grandfathered Commission is:
Exercise date
Multiple
On or before 31 December 2019
4x
On or after 1 January 2020
In accordance with the glide path multiples applicable to Grandfathered Commission announced by AMPFP on 8 August 2019.
Interest will then be added to the Gross Value of each Group 1 Member’s claim.
Provision is made for a discount to be applied in the case of Group Members who have provided a release to AMPFP relating to the claims made in the proceeding.
Group 2 Members will be entitled to participate in the Distribution Scheme if, by the due date set out in the Distribution Scheme they provide, or a representative authorised by them to do so provides, a Statutory Declaration to the Administrator stating that, had it not been for AMPFP’s alleged misleading or deceptive conduct in relation to the changes to the BOLR Policy on 8 August 2019, they would have:
(a)lodged and completed a BOLR application; or
(b)completed (and not withdrawn) a BOLR application which they did lodge.
The Statutory Declaration must also state:
(c)the date when the Group 2 Member lodged, or would have lodged, a BOLR application (Intended Application Date);
(d)if the Intended Application Date was before 1 January 2020, whether the Group 2 Member would have sought a reduced notice period of 6 months on the basis of a willingness to accept a discount to their register value or due to the Group 2 Member’s Tenure (being the period of time for which the Group 2 Member was appointed as an Authorised Representative of AMPFP, as provided for in the BOLR Policy), and if so, the Tenure the Group 2 Member would have had by their Exercise Date.
Group 2 Members who do not provide the required Statutory Declaration are not entitled to participate in the Distribution Scheme. A formula is provided to determine the quantum of payments to Group 2 members who provide the required Statutory Declaration, being the amount a member should have received under the BOLR Policy based on the findings in the primary reasons, less the amount they would have received if they had lodged an application prior to 8 August 2019. A further calculation mechanism is provided to determine those amounts. There is an entitlement to receive interest on the amounts so determined.
After calculating the Gross Value of each Group Member’s claim, adding interest and then applying any applicable discounts, the resulting amount is the Group Member’s Claim Value.
Once the Claim Value of all claims has been calculated, the Administrator will distribute the available balance to the Group Members, determined proportionately by reference to the greater of a fixed percentage.
There is a provision which allows for a Group Member to appeal the assessment made by the Administrator of the claim value to an independent senior counsel.
Funding equalisation order
The interlocutory application for settlement approval gave notice that Equity Financial intends to apply for a funding equalisation order to apportion the cost of the Funder’s entitlements pursuant to the litigation funding agreements equally as between the Group Members, regardless of whether a Group Member entered into a funding agreement.
CONSIDERATION
In what follows, I express some of my findings and reasons at a level of generality so as not to disclose material that is subject to confidentiality orders.
MATTERS RAISED IN THE OBJECTIONS
In assessing a settlement, the views of objecting Group Members “provide a convenient focus for the Court” in the identification “of any features of a settlement that are obviously unreasonable or unfair: Fowkes at [38] per Lee J. In this proceeding, the objectors are all people, some with long-standing commercial and professional relationships with AMPFP, either individually or through corporate structures.
In summary, 92 notices of objection have been provided from 86 Group Members. A convenient summary of the objections is contained in the third affidavit made by Christopher Pagent, which I am satisfied is accurate and which I adopt:
Objections
Grounds Sub-ground Number (a) Settlement Terms (i) Resolution Sum inadequate 81 (ii) Releases unfair 45 (iii) Should not have settled in circumstances of favourable judgment* 53 (iv) Should not have settled where part of claim not determined 38 (v) Treatment of GST 14 (b) Settlement Distribution (i) Individual quantum indeterminable 58 (ii) Group Membership indeterminable 12
Objections
Grounds Sub-ground Number (iii) Treatment of Group 2 58 (iv) Settlement does not adequately account for differences among Group Members and individual circumstances of Group Members 17 (v) Discounts unreasonable 14 (c) Deductions (i) Legal fees excessive 16 (ii) Funding commission excessive 17 (iii) Reference to the funding equalisation order 5 (d) Procedural Issues (i) Insufficient time to prepare objection 5 (ii) Criticism of Corrs and/or Augusta's conduct of proceedings 11 (e) Personal
Circumstances
(i) Claims Group Members would have exercised their BOLR rights if notice had been given 15 (ii) General accounts of mental distress 42 (iii) General recounts of history of relationship with AMPFP and complaints about conduct 63 (iv) Corporate misconduct 34 (f) Other As identified below 13
I have considered the terms of each objection. Many are deeply personal: some attach documents in support of a claim that the likely amount to be received pursuant to the Distribution Scheme is less than the objector’s “contractual entitlement”.
Disappointment, grievance and personal suffering are common themes. For example, one objector in part says:
This entire process has seen AMP duck and weave their way around their responsibility. This responsibility sits at a professional, ethical, and human level and I believe AMP have missed the mark in relation to the settlement.
We have heard from AMP executives regarding this settlement and how it is a material step forward in restoring the relationship between the adviser network and licensee, yet this offer comes with the bitter pill that it is AMP walking away unaccountable for the irreplaceable losses, grief, distress, anger, and pain they have caused even though the Courts have already found them guilty.
We all know stories where advisers, businesses, families, and other relationships have fallen or been torn apart while the corporate juggernaut, being AMP, continues to forge ahead seemingly oblivious or undeterred by these ramifications.
In my opinion, the offer made continues to support this view, as it does not adequately compensate those impacted on any of these levels.
In contrast, the Contradictor does not accept that deduction of the claimed ATE insurance premiums is fair and reasonable and with some force submits that I should not approve of it. In forming that view, the Contradictor accepts that a range of approaches have been adopted by this Court to these claims as summarised by Murphy J in Ghee v BT Funds ManagementLtd [2023] FCA 1553 at [147] – [152]. The Contradictor further accepts that it is relevant to consider the number of Group Members who entered into litigation funding agreements and accepted that this item would be included as a Project Cost and that the Funder has agreed, despite its contractual entitlement, not to seek reimbursement of the deferred ATE premiums.
Attention is drawn to the decision of Lee J in Asirifi-Otchere v Swan Insurance (Aust) Pty Ltd (2020) 385 ALR 625; [2020] FCA 1885 where at [31] – [33] his Honour characterised indemnity insurance premiums of this type as “a central obligation” of the litigation funder: a cost of doing business of this type. Although that was a CFO case, his Honour emphasised the importance, for comparative analysis, of consideration of “the total amount to be paid to a funder in the context a s 33V application, it is the aggregate amount to be paid to the funder” which is relevant. Further:
If a funder wishes to defray their risk of performing that obligation it is matter for the Funder but, in my view, it is not a cost that ought be passed on separately to Group Members when the Court controls the remuneration.
Similar views were expressed by Bromberg J in Bradshaw v BSA Ltd (No 2) [2022] FCA 1440 at [161]-[162], that a funder cannot “double dip” or “have it both ways”.
The Funder submits that the principal risk it assumed was that it would not recover its paid legal costs and disbursements (including the ATE premiums) and accepts that “the risk of adverse costs exposure [was] mitigated by the ATE Policies.” The Contradictor submits that ultimately risk allocation in this way “is of little moment” as the entirety of the commission is to be assessed by reference to all the risks assumed by the Funder, not simply those carried as a matter of choice. I accept that submission. Moreover, the Contradictor’s submission continues:
…[I]f adverse costs risk were to be excluded from consideration, a funding commission above the middle of the range becomes harder to justify. As addressed in [42(d)] above, the Funder Commission sought here is already slightly above the middle of the range. If adverse costs risk is excluded from consideration, that level of commission becomes more contestable.
While the LFAs here excluded ATE premiums from the amount of Project Costs used to calculate the Funder’s commission, this appears to me to have been unavoidable because if they had been included, the higher Funder’s commission would have been difficult to justify by reference to the risks assumed by the Funder in this case.
I accept the force of that submission. It corresponds with the point made by Lee J in Swan Insurance that it is the aggregate amount of the claim which is to be assessed by reference to the fairness and reasonableness criteria. Further, in my view, and despite the terms of the litigation funding agreements, this is an internal cost which the Funder voluntarily assumed to defray aspects of the risk that it was prepared to assume. What was clear from the outset, as stated in the funding agreements, is that the entitlement to commission could not in any event exceed “any amount which the Court determines to be fair and reasonable in all of the circumstances”.
In my view deducting the ATE premiums is not fair and reasonable, not only because it compensates the Funder for a cost of defraying a component of the very risk which it contracted to accept. Further, I accept the submission of the Contradictor that in considering the overall fairness of the settlement, allowing the Funder Commission plus the proposed deduction of the ATE insurance costs, produces an overall commission which is excessive as a percentage of the resolution sum of (from 26.5% to 28.7%%) which then sits outside of the range of what is fair and reasonable. This item will not therefore be allowed as a deduction.
Funder administrative fees
Mr Martin does not give evidence to justify the calculation of this claim. He simply states that the total administrative fees incurred pursuant to the litigation funding agreements was $567,355. Pursuant to the litigation funding agreements, administrative fees are defined as a fee for the internal administrative costs incurred by the Funder “in respect of the claims, obtaining approval for the provision of funding and ongoing monitoring and prosecution of the claims”. The fee is calculated as a percentage of the aggregate of the early-stage funding amount and the total amount of legal fees and disbursements budgeted for. The percentage calculation, and those amounts, are confidential. It is the formula which derives the amount claimed.
I am not satisfied on the evidence that this item is fairly and reasonably deducted from the Resolution Sum. In oral submissions, Mr Sulan accepted that it is an internal cost of doing business of the Funder. In my view it is no more than an internal overhead expense. To include it in the deduction is to allow an amount of pure profit. Expenses of this character must be absorbed by the Funder. Moreover, even if as a matter of principle there was some basis for a Funder to recoup internal costs, the amount is arbitrary and no attempt has been made in the evidence to justify the application of a fixed percentage to certain funding amounts, as reasonably and proportionately reflecting actual costs incurred by the Funder.
Legal costs and disbursements
Four deductions are claimed: (1) $10,573,022.33 (GST inclusive) for amounts paid by the Funder; (2) $509,989.98 (GST inclusive) for unpaid legal costs, to be paid to Corrs; (3) $1,009,926.02 (GST inclusive) for future legal costs to be paid to Corrs; and (4) $216,493.92 (GST inclusive) characterised as a further amount in respect of future legal costs, to be paid to Corrs.
The first and second items are the subject of the Costs Referee report dated 31 May 2024. Save for the question of GST, which I separately address, the report was not questioned. I therefore adopt it pursuant to r 26.67 of the Federal Court Rules 2011 and I allow each item.
The third item is the subject of the second report of the Costs Referee dated 19 June 2024. Once again, save for GST the report was not questioned, I adopt it and allow this item.
The fourth item was not assessed by the Costs Referee, because it was raised at a late stage. It is addressed in the affidavit of Mr Pagent made on 30 August 2024. This item is the legal costs and disbursements incurred by Equity Financial, but not yet invoiced, in addition to those assessed by the Costs Referee from 1 June 2024. For that sub-period, the Costs Referee estimated future legal costs (including GST) at $195,698 for professional fees, $143,750 for counsel fees and $81,400 for disbursements. The evidence of Mr Pagent is that these estimates did not consider the three interlocutory applications and “other interested party engagement”.
The actual amount of work in progress, the estimated future work in progress, the fees of counsel and disbursements are now calculated by Mr Pagent (inclusive of a correction for the double counting of an item in the second Costs Referee report and excluding GST) is:
Period
Fees
Counsel
Disbursements
Revised
WIP from 1 June to COB on 29 August 2024
$353,985.00
$178,300.00
$55,290.00
Estimate until completion on 30 August 2024
$40,000.00
Total
$393,985.00
$178,300.00
$55,290.00
Increase to the Cost Referee assessment
$188,372.65
$34,550.00
($26,100.00)
Combined Increase
$196,812.65
There are some notes to that assessment which should be mentioned. The increase in professional fees includes a deduction of 5% of the global WIP amount, which is consistent with the approach of the Costs Referee. There is also an adjustment to the figure of $353,985 described as inclusive of amounts written off “in accordance with the approach taken by the Costs Referee to deduct figures that would not meet the solicitor and own client test”. The amount written off is not disclosed. Nor is there any explanation of how that write-off was applied to individual items. The increase in disbursements includes an amount of $23,890 which relates to the hearing fees upon the application, initially estimated as the fee for an interlocutory application. It was accepted during argument before me that if I approve the settlement, my orders will be final and therefore the fee applicable to a two-day hearing applies. And the decrease in disbursements of $26,110 adjusts for the amount previously double counted by the Costs Referee.
It was generally accepted at the hearing that I should not refer this additional claim to the Costs Referee (as that would delay the matter and increase the costs further) and that I should make a broad-brush assessment of the claim. To assist me in that task, the evidence of Mr Pagent includes:
(a)Approximately $75,000 is attributable to the three interlocutory applications and “other interested party engagement”:
(b)Approximately $10,000 is attributable to an increase in Group Member engagement and communication;
(c)Approximately $90,000 is attributable to additional work undertaken in preparing for and appearing at the settlement approval hearing, including my requirement to prepare two versions of the Court book, one containing the confidential material and the other containing the open material;
(d)Approximately $40,000 is attributable to the costs of preparing for and attending the second day of the hearing; and
(e)The fees charged by counsel increased by $34,500 attributable to the interlocutory applications, the consideration of and referencing a Court book and the consideration of the claims for confidentiality.
I accept the evidence of Mr Pagent. However, the difficulty is that I have not been provided with the work in progress ledger which itemises the professional fees, discloses which partners or solicitors were engaged on particular tasks and for how long and what is the extent of the charges made for administrative staff. Nor do I have the benefit of the conferences and information that was provided to the Costs Referee to inform her in the making of the estimates. The Costs Referee applied deductions to the quantum of the WIP, in addition to a 3% global reduction that had been applied by Corrs. This reflected that a considerable amount of the work was administrative in nature (and not chargeable to the Group Members) together with other non-chargeable work (including reading) and work undertaken by junior lawyers where the overall costs were increased, in comparison to the time and cost likely to have been spent by a more senior lawyer. On that basis the Costs Referee applied a global reduction of 5%. The evidence of Mr Pagent is that the same reduction has been applied to the revised estimates for professional fees. The difference is that the Costs Referee applied that reduction after her detailed assessment of the actual charges and the basis therefor. I do not enjoy the same advantage.
The total of the disclosed component estimates given by Mr Pagent for professional fees is $175,000 in comparison to the figure of $198,287 (before application of the 5% global reduction). The difference is not explained. Further, the starting figure of $353,985 is a figure derived after the making of undisclosed write-offs. How those write-offs were calculated and applied to which charges is not addressed in the evidence.
Nor is there any explanation as to the basis on which the estimate of $40,000 for the second day of the approval hearing plus various reports, communications and reviews thereafter has been derived.
Ultimately, Equity Financial carries the onus of persuading me that the estimates for professional fees are properly categorised as solicitor/own client costs being no more than fair and reasonable in all of the circumstances having regard to proportionality, whether the costs were reasonably incurred and proportionate to and reasonable in amount: Legal Profession Uniform Law, s 172.
The evidence falls short. But it does not follow that I am unable to make a broad-brush assessment. In doing so, I apply my knowledge derived from reading all the material relevant upon this application, the rates of charge that were considered by the Costs Referee in her two reports, the approach of the Costs Referee to non-chargeable items, her deductions for the attendance of multiple practitioners to conferences and her overall approach to a global reduction of 5%. Doing the best that I can on the material available, I allow an increase in professional fees of $150,000. I do not have concerns about the increase in counsel fees or reduction in the disbursements . The rounded total amount I allow for this item is $ 178,000 plus GST if properly included.
GST
During oral submissions I raised whether GST has been double counted. That is whether the Funder claimed an input tax credit on the GST applied to tax invoices that it paid, particularly from Corrs. Counsel was unable to immediately answer that question. I gave leave to the Funder to file a further affidavit. I now have the affidavit of Thomas Riddell, a solicitor in the employ of the Funder’s legal firm, made on 4 September 2024. I am satisfied in accordance with his evidence that no adjustment is required for any double counting of GST. What occurred is that Corrs rendered accounts to its client, Equity Financial, inclusive of GST. The Funder paid the invoices on behalf of Equity Financial. The Funder was not the recipient of the services, is not registered for GST purposes in Australia and is not required to be registered as it does not carry on business in Australia.
Funding equalisation order
Equity Financial seeks an order pursuant to s 33V or s 33ZF of the FCA Act that the Funder Commission be apportioned on a pro rata basis between all Group Members. This is designed to avoid the “free rider” problem: BMW Australia Ltd v Brewster (2019) 269 CLR 574 at [88]. No objection is taken to the order. It is appropriate to make it.
Appointment of the Administrator, Independent Barristers and Independent Senior Counsel
The orders propose that pursuant to the Distribution Scheme, Mr Andrew Ross and Mr Ben Mahler of KordaMentha be appointed as the Administrator, that Mr Peter Strickland and Ms Jane Buncle, each of counsel, be appointed as the Independent Barrister and that Mr Bernard Quinn KC be appointed as the Independent Senior Counsel. There is no objection to these appointments Each appointment is appropriate.
Confidentiality orders
Equity Financial and the Funder seek a range of confidentiality orders pursuant to s 37AF and s 37AG(1)(a) of the FCA Act to prevent prejudice to the proper administration of justice. The proposed orders discriminate, in some detail, between various categories of information, the extent of access and the time periods for each.
Ms Nikolic for Equity Financial addressed this component of the orders. Mr Sulan for the Funder sought a slight variation to the proposed orders. The orders are framed mindful of what several judges of this Court have described as “the wasteful and unwelcome practice of overly broad confidentiality and suppression claims being made in settlement approval applications”: Ewok at [96], Button J. Her Honour also very usefully summarised the guard rails that usually apply to justifiable suppression and non-publication orders in settlement proceedings at [96] – [112] where many of the categories of claim made in that proceeding are like the categories in this proceeding. In what follows, I proceed in accordance with her Honour’s analysis, without setting the passages out in full.
A particular matter of concern that I raised in argument is that some of the orders are sought “until further order”. Section 37AJ of the FCA Act provides:
Duration of orders
(1) A suppression order or non - publication order operates for the period decided by the Court and specified in the order.
(2) In deciding the period for which an order is to operate, the Court is to ensure that the order operates for no longer than is reasonably necessary to achieve the purpose for which it is made.
(3) The period for which an order operates may be specified by reference to a fixed or ascertainable period or by reference to the occurrence of a specified future event.
I drew attention to Porter v Dwyer [2022] FCAFC 116 at [28], where Besanko and Abraham JJ observed:
Such authority as we have been able to find suggests that a concluding date or event for a suppression order must be identified (Australian Competition and Consumer Commission v Air New Zealand Limited (No 3) [2012] FCA 1430 at [24] per Perram J; Oreb v Australian Securities and Investments Commission [2016] FCA 321; (2016) 154 ALD 124 at [94] per Markovic J).
Their Honours provisionally concluded that a period of 10 years was appropriate, subject to further submissions. Justice Lee dissented on the question whether the suppression orders made by the primary judge should be set aside and did not consider this separate issue.
A review of various single judge decisions of this Court reveals that orders have been made until further order as satisfying the requirement of the section. I need not essay them. Until the Full Court determines otherwise, the construction applied by Besanko and Abraham JJ, which accords with my own view, is that the orders must specify a date, a fixed period or a certain future event as required by ss (3). A specification until further order is inherently uncertain and it is difficult to reconcile with the primary objective at s 37AE. When I expressed this as a tentative view in argument, counsel accepted that the subject orders, in some categories, may be expressed as applicable for a period of years from the date of the orders or until other order. An order in that form permits the period to be adjusted (decreased or increased) for proper cause.
Dealing next with the document categories, I am very much assisted by the comprehensive written and oral submissions of counsel for Equity Financial, particularly Ms Nikolic, which I regard as correct, and which I adopt with necessary interpolation as follows. I was also assisted by supporting submissions from Ms Wootton for AMPFP and Ms Epstein for the Funder.
The submissions are framed by reference to Annexure A to the third affidavit of Mr Pagent and to understand what follows it is necessary to comprehend the structure of that document and the excepted categories of persons who have had, or may, access material. To the extent now relevant, it provides:
Item Category Description Final order to be proposed Accessible by 1.
Category 1
Information which the parties agreed to keep confidential (only applies to the Settlement Deed as per his Honour’s ruling).
Until the approval of the settlement
The following persons: (a) the Court; (b) the Applicant; (c) the Applicant’s legal representatives; (d) Group Members (upon undertaking to maintain confidentiality); (e) the Contradictor; (f) the Funder; (g) the Funder’s legal representatives; (h) the Respondent; and (i) the Respondent’s legal representatives.
2.
Category 2
Information which discloses the proposed distribution the settlement sum.
Information which is otherwise privileged, disclosed to the Court on a confidential basis for the purposes of the settlement approval hearing.
If the settlement is approved, until the expiry of any appeal period
The following persons: (a) the Court; (b) the Applicant; (c) the Applicant’s legal representatives; (d) Group Members (upon undertaking to maintain confidentiality) in relation to the documents identified in Annexure B to the Settlement Notice, but not otherwise; (e) the Contradictor; (f) the Funder; and (g) the Funder’s legal representatives.
3.
Category 3
Information which discloses: (i) sensitive aspects of the funding arrangements provided by the Funder; and (ii) privileged material provided to the Funder
Until further order.
The following persons: (a) the Court; (b) the Applicant; (c) the Applicant’s legal representatives; (d) the Contradictor; (e) the Funder; and (f) the Funder’s legal representatives.
4.
Category 4
Information which may be subject to a claim for confidentiality by Ms Mary Benton.
Order potentially to be sought on terms proposed by Ms Benton
Currently disclosed to: (a) the Court; (b) the Applicant; (c) the Applicant’s legal representatives; (d) the Contradictor; (e) the Funder; and (f) the Funder’s legal representatives.
5.
Category 5
Information which discloses sensitive information regarding alternative funding proposals.
Until further order.
Currently disclosed to: (a) the Court; (b) the Applicant; (c) the Applicant’s legal representatives; and (d) the Contradictor.
6. Category 6 Information which discloses without prejudice communications authored by AMPFP. Order potentially to be sought on terms proposed by the Respondent Currently disclosed to: (a) the Applicant; (b) the Applicant’s legal representatives; (c) the respondent; (d) the Respondent’s legal representatives. 7.
Category 7
Information which discloses without prejudice communications authored by the Applicant, disclosed to the Court on a confidential basis for the purposes of the settlement approval hearing.
Until further order.
Currently disclosed to: (a) the Court; (b) the Applicant; (c) the Applicant’s legal representatives; and (d) the Contradictor;
(e) the Funder; (f) the Funder’s legal representatives; (g) the Respondent; and
(h) the Respondent’s legal representatives.8.
Category 8
Personal information of group members (including addresses, email addresses etc).
Until further order
Currently disclosed to: (a) the Court; (b) the Applicant; (c) the Applicant’s legal representatives; and (d) the Contradictor;
(e) the Funder; (f) the Funder’s legal representatives; (g) the Respondent; and
(h) the Respondent’s legal representatives.
The orders of 30 April 2024 were extended until delivery of judgment on this application. Although the final orders that are now sought are confined to information in categories 1, 2, 3, 6, 7 and 8, with limited modifications proposed by the Funder, for transparency reasons I record why final orders are not to be made for the other categories. I accept the submission of Ms Nikolic that the process of refining the claims “to be as narrow as possible” to ensure that the orders do not go beyond that which is necessary results in a lengthy specification of the claims over individual documents and parts thereof. That process has resulted in some errors in the draft orders that were provided to me. I have made certain corrections to conform with my reasons. At my request, amended draft orders were provided on 4 September 2024, on notice to the objectors. Some objectors have provided further submissions which I have considered.
Category 1 concerns the Settlement Deed, which is the subject of earlier confidentiality orders. Having determined to approve of the settlement, the maintenance of that order is no longer necessary, and I accept that the duration of the order should now be as proposed- until approval of the settlement- essentially for the reasons given by Mortimer J (as her Honour was) in Jenkins v Northern Territory of Australia (No 4) [2021] FCA 839.
Category 2 concerns information which discloses the proposed distribution of the settlement sum in accordance with the Distribution Scheme. It comprised two distinct sub-categories. The first concerns information which discloses the proposed distribution scheme- items 2-5. The distribution is a matter which concerns the relative merit of the claims of individual Group Members. I accept that the disclosure of this information would be likely prejudicial to the interests of the Group Members and that it is consistent with authority for a confidentiality order to be made until the expiry of the appeal period: for example, Fordham v Commonwealth Bank of Australia Ltd [2023] FCA 1106 at [108] – [109], O’Bryan J.
The second sub-category, 5A, relates to material that is the subject of legal professional privilege or without prejudice privilege which was disclosed upon this application on a confidential basis. It includes the entirety of the Confidential Opinion and parts of exhibits CJP 6 and CJP 8. Orders are appropriately made over this material: Ewok at [103]. The duration will be 10 years or until further order.
Category 3 concerns information which discloses that which is described as “sensitive aspects” of the funding arrangements and privileged material provided to the Funder. It traverses many separately identified claims numbered 6-14, which claims were addressed by Ms Wotton and Ms Epstein. Save as to the duration, I accept their submissions in substance. Material that is subject to without prejudice privilege and legal professional privilege (items 7 and 10) is properly the subject of protection for a period of 10 years or until further order. Bank account details as contained particularly in invoices together with the names and subscriber details to the ATE policies (item 7) also warrant orders for a period of 10 years or until further order as this material contains personal and commercially sensitive information.
The publication of aspects of the litigation funding agreements and the risk assessments undertaken for the purpose of funding the proceeding (items 6, 8, 9, 11, 13 and 14) should be prohibited until expiry of the appeal period from my orders.
Item 12 is also concerned with the ATE policies, which I am informed are part of a portfolio of policies applicable to other current proceedings. Publication of this type of information is likely to prejudice the litigants in those proceedings. A period of 2 years or until further order is appropriate.
Category 4 relates to an apparent claim by one of the objectors. The claim was not addressed before me. It will not be the subject of an order.
Category 5 relates to information that discloses alternative funding proposals. The claim is not pressed.
Category 6 concerns without prejudice communications authored by AMPFP, disclosed to the Court on a confidential basis for the purposes of the settlement approval hearing. I am satisfied that without prejudice communications should be the subject of an order of fixed duration of 10 years or until further order.
Category 7 is the corollary of category 6 being without prejudice communications from Equity Financial. The same order will be made.
Category 8 relates to personal information of Group Members including addresses and email addresses. I accept that the disclosure of this information would not materially assist a member of the public in understanding why I have determined to approve the settlement and information of this type regularly attracts a confidentiality order: Lee v Deputy Commissioner of Taxation (2023) 296 FCR 272 at [91]. An order with the duration of 10 years or until further order is appropriate.
Framing orders to accommodate these categories is complex, and determining which documents may be publicly released and when is also complex. The latter task should not be left to the administrative staff of the Court. I will order the applicant to prepare and file electronic bundles of redacted documents. One will apply to the expiry of the appeal period and the other from it.
CONCLUSION
For these reasons, I have determined that orders should be made approving the settlement, with certain modifications, and that confidentiality orders are appropriate.
I certify that the preceding one hundred and ninety-four (194) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice McElwaine. Associate:
Dated: 6 September 2024
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