Gill v Ethicon Sàrl (No 12)

In Gill v Ethicon Sàrl (No 12), the Federal Court considered an application by Shine Justice, a law firm, to deduct over $32 million in interest from settlement proceeds intended for women who suffered complications from pelvic mesh implants. The dispute centred on the firm's decision to enter into a "disbursement funding facility" to fund the litigation, which exposed the group members to potentially high-interest rates. The court was tasked with determining whether such a deduction was permissible and fair under the circumstances.

The legal issues before the court involved the interpretation of the Federal Court of Australia Act 1976 and the Corporations Act 2001 (Cth). Specifically, the court had to decide whether the proposed deduction was just and reasonable under section 33V(2) of the Federal Court Act and whether it complied with the Corporations Act regarding dividend payments and financial disclosure. Additionally, the court considered whether the firm had adequately disclosed the financial implications of the disbursement funding facility to the group members and the applicants.

The court found that the firm had not sufficiently explored alternative funding options and had not disclosed the true extent of the financial risks to the group members. The court also noted that the firm had paid dividends amounting to over $45 million since the 2016 financial year, which suggested that the directors believed the company's financial position was sound. The court concluded that the proposed deduction was not just and reasonable in all the circumstances, as there was insufficient evidence that the exposure to high-interest rates was reasonable. Consequently, the application was dismissed, and the firm was ordered to pay the contradictor's costs.

In summary, the court held that the firm's attempt to deduct over $32 million in interest from the settlement proceeds was unjust and unreasonable. The court emphasised the need for transparency and adequate disclosure to both the applicants and the group members. The dismissal of the application and the order for the firm to pay costs underscored the importance of fair and reasonable practices in representative proceedings.