Kain v R&B Investments Pty Ltd; Ernst & Young (a firm) v R&B Investments Pty Ltd; Shand v R&B Investments Pty Ltd

The High Court of Australia considered appeals from the Full Court of the Federal Court of Australia concerning representative proceedings. The parties involved were Kain, Ernst & Young, and Shand (appellants) against R&B Investments Pty Ltd and Mr David Furniss (respondents), who were the applicants in the representative proceedings. The dispute centred on whether the Federal Court had the power to make a "solicitors' common fund order" (S CFO) in favour of the law practices conducting the representative proceedings, which would allow them to receive a percentage of the settlement or judgment sum as remuneration for their risk.

The legal issues before the High Court were whether sections 33V(2) and 33Z(1)(g) of the *Federal Court of Australia Act 1976* (Cth) empowered the Federal Court to make a common fund order in favour of a law practice conducting a representative proceeding, particularly when that law practice was subject to the *Legal Profession Uniform Law (NSW)*. Specifically, the court had to determine if such an order would be consistent with the prohibition on contingency fees contained within section 183 of that Uniform Law.

The High Court reasoned that while sections 33V(2) and 33Z(1)(g) of the *Federal Court of Australia Act* grant the Federal Court broad powers to make just orders regarding the distribution of settlement or judgment sums in representative proceedings, this power must be exercised in conjunction with other applicable laws. The Court held that where solicitors are practising in New South Wales, they are subject to section 183 of the *Legal Profession Uniform Law (NSW)*, which prohibits contingency fees. Consequently, the Federal Court could not make an order that would effectively constitute a contingency fee for a law practice subject to that law, as doing so would be contrary to the Uniform Law and therefore not "just" within the meaning of the Federal Court's powers.

The High Court allowed the appeals, setting aside the orders of the Full Court. The reserved question was answered to the effect that where a solicitor is subject to the *Legal Profession Uniform Law (NSW)*, the Federal Court may not make an order under section 33V(2) or 33Z(1)(g) of the *Federal Court of Australia Act* for an amount to be paid to or for the benefit of the solicitor calculated by reference to the settlement or award amount. The Court also made orders regarding the costs of the appeals and the reserved question.