Kyle-Sailor v Heinke (No 2)
[2025] FCA 33
•31 January 2025
FEDERAL COURT OF AUSTRALIA
Kyle-Sailor v Heinke (No 2) [2025] FCA 33
File number(s): VID 698 of 2021 Judgment of: HORAN J Date of judgment: 31 January 2025 Catchwords: REPRESENTATIVE PROCEEDINGS – application for approval of settlement pursuant to s 33V of the Federal Court of Australia Act 1976 (Cth) – where proceeding concerns claims under s 18C of the Racial Discrimination Act 1975 (Cth) arising from certain publications made by the respondents – whether proposed settlement is fair and reasonable as between group members and the respondents – whether proposed settlement distribution scheme is fair and reasonable as between group members – whether additional compensation payment to lead applicant is fair and reasonable having regard to interests of group members as a whole – settlement approval granted Legislation: Federal Court of Australia Act 1976 (Cth) ss 33V(1), (2), 33X, 33Y, 33ZF, 37AF, 37AG
Australian Human Rights Commission Act 1986 (Cth) s 46PO
Racial Discrimination Act 1975 (Cth) ss 18C(1)(a), (b), 18D(b), (c)
Cases cited: Asirifi-Otchere v Swann Insurance (Aust) Pty Ltd (No 3) [2020] FCA 1885; 385 ALR 625
Blairgowrie Trading Ltd v Allco Finance Group Ltd (in liq) (No 3) [2017] FCA 330; 343 ALR 476
Caason Investments Pty Ltd v Cao (No 2) [2018] FCA 527
Camilleri v The Trust Company (Nominees) Ltd [2015] FCA 1468
Darwalla Milling Co Pty Ltd v F Hoffman-La Roche Ltd (No 2) [2006] FCA 1388; 236 ALR 322
Earglow Pty Ltd v Newcrest Mining Ltd [2016] FCA 1433
Ewok Pty Ltd (Trustee) v Wellard Ltd [2024] FCA 296
Faruqi v Hanson [2024] FCA 1264
Fowkes v Boston Scientific Corporation [2023] FCA 230
Galactic Seven Eleven Litigation Holdings LLC v Davaria (2024) 302 FCR 493
Hall v Pitcher Partners (a firm) [2022] FCA 1524
Hassan v State of Victoria [2023] VSC 478
Jones v Scully (2002) 120 FCR 243
Kelly v Willmott Forests Ltd (in liq) (No 4) [2016] FCA 323; 335 ALR 439
Kyle-Sailor v Heinke [2024] FCA 431
Liverpool City Council v McGraw-Hill Financial Inc [2018] FCA 1289
Porter v Dwyer [2022] FCAFC 116; 402 ALR 659
Smith v Commonwealth of Australia (No 2) [2020] FCA 837
Street v State of Western Australia [2024] FCA 1368
Webb v GetSwift Ltd (No 7) [2023] FCA 90; 414 ALR 500
Williams v FAI Home Security Pty Ltd (No 4) [2000] FCA 1925; 180 ALR 459
Wills v Woolworths Group Ltd [2022] FCA 1545
Wotton v State of Queensland (No 10) [2018] FCA 915
Yasmin v Commonwealth of Australia [2023] FCA 1661
Division: General Division Registry: Victoria National Practice Area: Administrative and Constitutional Law and Human Rights Number of paragraphs: 88 Date of hearing: 16 September 2024 Counsel for the Applicant: Mr R Merkel SC and Mr J Hartley Solicitor for the Applicant: Levitt Robinson Solicitors Counsel for the Respondents: Mr D McLure SC Solicitor for the Respondents: Thomson Geer Lawyers Counsel for BLM (Australia) LLC: Mr A Hochroth Solicitor for BLM (Australia) LLC: Morris Mennilli ORDERS
VID 698 of 2021 BETWEEN: ANDREA KYLE-SAILOR
Applicant
AND: ALEX HEINKE
First Respondent
NINE ENTERTAINMENT CO. PTY LTD
Second Respondent
NINE DIGITAL PTY LIMITED (ACN 077 753 461)
Third Respondent
NINE NETWORK AUSTRALIA PTY LTD (ACN 008 685 407)
Fourth Respondent
ORDER MADE BY:
HORAN J
DATE OF ORDER:
31 JANUARY 2025
THE COURT ORDERS THAT:
Approval and administration
1.Pursuant to ss 33V and 33ZF of the Federal Court of Australia Act 1976 (Cth) (the Act), the settlement of this proceeding is approved on the terms set out in:
(a)the Deed of Settlement and Release dated 22 November 2023 exhibited as Exhibit SAL-1 to the confidential affidavit of Stewart Alan Levitt sworn on 6 December 2023;
(b)the Deed of Amendment to Deed of Settlement and Release dated 26 June 2024 exhibited at pages 1 to 6 of Exhibit SAL-4 to the non-confidential affidavit of Stewart Alan Levitt sworn on 5 September 2024; and
(c)the Settlement Scheme exhibited at pages 7 to 23 of Exhibit SAL-4 to the non-confidential affidavit of Stewart Alan Levitt sworn on 5 September 2024, as modified by order 2 of these orders;
2.Within 14 days after the date of these orders, the applicant file and serve the updated Settlement Scheme with the following changes:
(a)insert a new Annexure C comprising the first sentence in paragraph 1 and paragraphs 2–15 of the document entitled “Applicant’s Supplementary Submission in Relation to Administration of Settlement Scheme” that was provided to the Court on 5 September 2024, together with the Excel spreadsheet accompanying that Submission, which are incorporated into the Settlement Scheme;
(b)delete the word “confidential” in paragraph 4(b);
(c)insert new paragraph 4(c) referring to the Amendment Deed;
(d)replace the chapeau in paragraph 17 with the following: “Subject to the making of the Distribution Orders, the allocation of the Settlement Sum will proceed in accordance with Annexure C and as follows:”;
(e)replace paragraph 17(a) with the following: “the funder, being BLM Australia LLC (Funder), will be paid a sum calculated in the manner set out in Annexure C”;
(f)replace the chapeau in paragraph 19 with the following: “The Administrator will distribute the Net Settlement Sum to Participating Group Members in accordance with Annexure C and as follows:”;
(g)indicate, with mark-up, any other typographical corrections that the applicant proposes be made.
3.Pursuant to s 33ZF of the Act, the applicant is authorised nunc pro tunc on behalf of the Participating Group Members, as defined in the Deed of Settlement and the Settlement Scheme, to enter into and to give effect to the Deed of Settlement and the Amendment Deed and the obligations, rights, releases and transactions provided for in those documents for and on behalf of those Participating Group Members.
4.Pursuant to ss 33ZB and 33ZF of the Act, the persons affected and bound by the settlement of this proceeding are the applicant, the respondents, the Participating Group Members and BLM (Australia) LLC (the Funder).
5.Pursuant to s 33ZF of the Act, Stewart Alan Levitt is appointed as the Administrator of the Settlement Scheme and is to act in accordance with the terms of the Settlement Scheme, subject to any direction of the Court.
6.Pursuant to s 33V(2) of the Act, the provisions of the Settlement Scheme are approved as the procedure for the distribution of the Settlement Sum payable by the respondents.
7.Pursuant to ss 33V and 33ZF of the Act, the payment of the following amounts from the Settlement Sum in accordance with the Settlement Scheme are approved:
(a)the Funder’s commission is payable to the Funder, as set out in paragraphs 17(a) and 33(a) of the Settlement Scheme;
(b)$10,000 is payable to the applicant as the Lead Applicant Payment, as set out in paragraph 17(b) of the Settlement Scheme ;
(c)$670,000 is payable in respect of the applicant’s legal costs and disbursements of this proceeding, as set out in paragraphs 17(c) and 33(b) of the Settlement Scheme;
(d)an amount up to $100,000 is payable to the Administrator in respect of the costs and expenses incurred in the administration of the Settlement Scheme, as set out in paragraphs 17(d) and 34 and 35 of the Settlement Scheme.
8.The applicant has leave to discontinue this proceeding on the basis that there be no order as to costs.
9.All existing costs orders are vacated.
10.Pursuant to rule 9.05 of the Federal Court Rules 2011 (Cth), the Administrator is joined as a party to this proceeding for the limited purpose of exercising liberty to apply under order 11.
11.The parties and the Administrator have liberty to apply to re-list this proceeding for the purpose of seeking any orders or other relief provided for in the Deed of Settlement (as amended by the Amendment Deed) or the Settlement Scheme, including any orders or directions concerning the administration of the Settlement Scheme.
Confidentiality
12.On the ground in s 37AG(1)(a) of the Act, the disclosure (by publication or otherwise) of pages 1–58 of Exhibit SAL-5 of the confidential affidavit of Stewart Alan Levitt sworn 5 September 2024 is prohibited for a period of 14 days from the date of these orders, or until the determination of any application for leave to appeal or any appeal from these orders, whichever is later.
13.On the ground in s 37AG(1)(a) of the Act, the disclosure (by publication or otherwise) of the following paragraphs and pages of the confidential affidavit of Stewart Alan Levitt sworn 5 September 2024 is prohibited for a period of 10 years from the date of these orders, or further order:
(a)paragraph 26;
(b)pages 60–88 of Exhibit SAL-5;
(c)pages 99–126 of Exhibit SAL-5;
(d)pages 127–162 of Exhibit SAL-5;
(e)pages 168–419 of Exhibit SAL-5.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
HORAN J:
INTRODUCTION
By an amended interlocutory application filed on 1 March 2024, the applicant seeks orders approving the proposed settlement of a representative proceeding under ss 33V and 33ZF of the Federal Court of Australia Act 1976 (Cth) (FCA Act).
The representative proceeding is brought under Part IVA of the FCA Act and s 46PO of the Australian Human Rights Commission Act 1986 (Cth) (AHRC Act) in respect of claims arising from certain publications made by the respondents concerning the spending of monies received under a settlement scheme that was approved by this Court in earlier representative proceedings (the Wotton class action): see Wotton v State of Queensland (No 10) [2018] FCA 915. The applicant claims that those publications gave rise to contraventions by the respondents of s 18C of the Racial Discrimination Act 1975 (Cth), and seeks damages by way of compensation to Group Members for loss or damage suffered, an injunction to restrain the respondents from making further publications that convey the alleged imputations, and orders requiring the respondents to publish an apology and correction.
The parties have agreed on terms of settlement of the proceeding. Under s 33V(1) of the FCA Act, the settlement must be approved by the Court. Accordingly, the applicant has applied for the approval of:
(1)the Deed of Settlement and Release dated 22 November 2023, as amended by the Deed of Amendment to Deed of Settlement and Release dated 26 June 2024 (Amending Deed); and
(2)the Settlement Scheme for the distribution of the Settlement Sum.
The applicant also seeks various other orders in connection with the approval of the Deed of Settlement and the Scheme, including suppression orders under s 37AF of the FCA Act prohibiting the publication or other disclosure of certain paragraphs and pages of the confidential affidavit of Stewart Alan Levitt sworn on 5 September 2024 (Confidential Affidavit) filed by the applicant in support of the settlement approval application.
The Deed of Settlement provides for the respondents to pay a “Settlement Sum” of $3,000,000, which is inclusive of legal costs, expenses, disbursements and interest, into a settlement account to be held on trust by the Administrator until its distribution pursuant to the Scheme.
The Deed of Settlement and proposed Scheme contemplate the payment of the following amounts:
(a)a funding commission to the litigation funder, BLM (Australia) LLC (the Funder);
(b)a sum of $10,000 to the applicant as compensation or reimbursement for the time expended by her in connection with the proceeding;
(c)an agreed sum of $670,000 by way of reimbursement of the applicant’s legal costs and disbursements; and
(d)a sum of $100,000 in respect of settlement administration costs.
After the payment of such amounts, the proposed Scheme provides for the distribution of the net Settlement Sum among participating Group Members, some of whom fall into a “Higher Damages Group” with an entitlement to a higher compensation payment on the basis that they are likely to have suffered a higher degree of loss and damage because of the publications.
On the receipt of the Settlement Sum and final approval of the settlement, the applicant and the Group Members will release and discharge the respondents from the claims in the proceeding or arising out its subject matter. The Deed of Settlement also provides that the respondents will take down the publications, publish an apology and correction in agreed terms, and undertake not to republish the publications or make any future publications that convey the alleged imputations.
For the following reasons, I consider that the proposed settlement is fair and reasonable and in the interests of the Group Members as a whole, and accordingly I approve the Deed of Settlement and the Scheme pursuant to s 33V of the FCA Act.
BACKGROUND
The representative proceeding
The applicant commenced this proceeding by an originating application and concise statement filed on 26 November 2021, following the termination of complaints made by her to the Australian Human Rights Commission. The applicant is represented by Levitt Robinson Solicitors.
The background to the proceeding is relevantly summarised in Kyle-Sailor v Heinke [2024] FCA 431 at [7]–[11] which, for ease of reference, I reproduce below:
The claims advanced in this proceeding arise from certain publications made by the respondents comprising a segment broadcast on Nine News Queensland on 18 May 2021, together with an associated promotional video and online article published on 17 and 18 May 2021 respectively, concerning the spending of monies received under a settlement scheme approved by this Court in earlier representative proceedings (Wotton v State of Queensland (No 10) [2018] FCA 915) (the Wotton class action).
The Wotton class action arose from events arising after the death of an Aboriginal man, Cameron Doomadgee, known posthumously as Mulrunji, while he was in police custody on Palm Island on 19 November 2004. The claims in the Wotton class action “broadly concern[ed] the role that race played in the investigation by [Queensland Police Service] officers into Mulrunji’s death in custody, and the QPS’s management of community concerns and protests, tensions and anger in the weeks after Mulrunji’s death and in the police responses to the protests and fires that occurred on Palm Island on 26 November 2004”: Wotton v State of Queensland (No 10) [2018] FCA 915 at [4]-[5] (Murphy J).
The Wotton class action settlement involved the payment by the State of Queensland of a settlement sum of $30 million which, after payment of various amounts for legal costs and disbursements and settlement administration costs, was distributed among 447 registered group members (of whom 441 group members were entitled to recover compensation).
In the present proceeding, the applicant claims on her own behalf and on behalf of the Group Members that the publications gave rise to contraventions of s 18C of the Racial Discrimination Act 1975 (Cth). The Group Members in the present proceeding are defined in the applicant’s amended Concise Statement dated 26 November 2021 as Aboriginal and Torres Strait Islander people who, as at 17 May 2020, had received or were entitled to receive compensation pursuant to the Wotton class action settlement scheme. There are 437 Group Members who were not deceased at the time of the respondents’ publications, 401 of whom have signed a funding agreement with a litigation funder under which the funder is entitled to a commission of 28% of any sum received by those Group Members from the proposed settlement, net of any sum received pursuant to an order for costs.
In very broad terms, it is alleged that the publications gave rise to a number of imputations, including that the Group Members, or a significant number of them, were improper or unworthy recipients of compensation under the Wotton class action settlement, or were wasteful or irresponsible in relation to the manner in which they were spending such compensation monies. The heads of damage claimed include general damages for offence, insult, humiliation or intimidation, as well as shame, embarrassment or distress caused by the publications, together with special damages in respect of past and future medical expenses, out-of-pocket expenses and past economic loss. Additional damages are claimed in respect of those Group Members who were publicly vilified or insulted after and because of the publications. The applicant also sought an injunction to restrain the respondents from publishing or causing to be published statements to the effect of the alleged imputations and orders requiring the respondents to publish an apology and correction.
In mid-2023, the parties reached an in principle agreement to settle the proceeding, subject to Court approval. The Deed of Settlement was executed on 22 November 2023.
On 6 December 2023, the applicant filed an interlocutory application in relation to the approval by the Court of the proposed settlement. By an amended interlocutory application filed on 1 March 2024, the applicant sought:
(1)in Part A, orders pursuant to ss 33X and 33Y of the FCA Act for the approval and distribution to Group Members of a settlement notice and an opt out notice, along with orders under s 33J of the FCA Act fixing a date by which Group Members may opt out of the proceeding, and orders in relation to objections to the proposed settlement; and
(2)in Part B, orders pursuant to ss 33V and 33ZF of the FCA Act for the approval of the proposed settlement on the terms set out in the Deed of Settlement and the Scheme.
Following a hearing in relation to the application for the Part A orders, the parties executed the Amending Deed, the effect of which was to remove an apparent inconsistency between the Deed of Settlement and the terms of the Scheme, in so far as the former had defined “Participating Group Members” as “Group Members who register in accordance with the Settlement Notice and Settlement Scheme”. The amendment to the Deed of Settlement ensures that Group Members who were not deceased at the date of the relevant publications are not required to register in order to participate in the settlement.
As discussed further below, the Scheme continues to require those Group Members who wish to nominate themselves for the “Higher Damages Group” (on the basis that they were vilified or insulted by a member or members of the public as a result of any of the publications) to register a claim in order for their eligibility as such to be assessed by the Administrator.
On 26 June 2024 and 12 August 2024, orders were made approving the form of the settlement notices and the opt out notices and setting out a procedure for their distribution to Group Members. Those orders also fixed a date by which Group Members could opt out of the proceeding by sending a completed opt out form, or oppose the approval application by sending a completed objection form. The application for the orders set out in Part B of the amended interlocutory application in relation to the approval of the settlement was listed for hearing on 16 September 2024.
The applicant relied on the following affidavits on the hearing of the approval application:
(a)the affidavit of Brett Imlay sworn on 6 December 2023;
(b)the affidavits of Stewart Alan Levitt sworn on 6 December 2023, 7 August 2024, 8 August 2024, 5 September 2024 and 13 September 2024;
(c)the affidavit of Blaise Prentice-Davidson affirmed on 15 March 2024;
(d)the confidential affidavit of Stewart Alan Levitt sworn on 5 September 2024;
(e)the affidavit of the applicant affirmed on 5 September 2024; and
(f)the affidavit of Suzanne Ward, a costs consultant, sworn on 13 September 2024.
Overview of proposed settlement
Under the Deed of Settlement, within 28 days after “Final Settlement Approval”, the respondents are obliged to pay the Settlement Sum of $3,000,000 into a Settlement Account opened by the Administrator, who is required to hold that Settlement Sum and accrued interest on trust in accordance with the Deed of Settlement for the Group Members and the Funder until its distribution pursuant to the Scheme: cl 2. The Administrator under the Deed of Settlement and the Scheme is Stewart Levitt of Levitt Robinson, or such other person or entity appointed by the Court who undertakes to be bound by and to perform the obligations of Administrator under the Deed of Settlement.
Upon Final Settlement Approval and the payment of the Settlement Sum into the Settlement Account, the applicant on her own behalf and on behalf of all Group Members releases and discharges the respondents from the claims in or arising out of or in relation to the subject matter of the proceeding, and the Deed of Settlement may be pleaded as a complete defence to any action, proceeding or suit which may be taken or commenced by a party in connection with or incidental to the proceeding: cll 9 and 12. The applicant, the Funder and Levitt Robinson also relinquish any entitlement to enforce a costs order in favour of the applicant that was made by the High Court in a related proceeding (the High Court costs): cl 11.4.
In addition, within 28 days after Final Settlement Approval, the respondents must take down all of the impugned publications, publish an apology and correction in agreed terms, and undertake not to republish those publications or make any future publications that convey the same alleged imputations: cl 6.1.
The Group Members are defined in the originating application by reference to the class of Aboriginal and Torres Strait Islander people who received compensation pursuant to the settlement of the Wotton class action. As mentioned above, there are 437 Participating Group Members who were alive at the time of the impugned publications, none of whom have opted out of the proceeding.
A subset of 401 Group Members, including the applicant, are Funded Group Members who have signed litigation funding agreements with the Funder, under which the Funder is entitled to a commission of 28% of the gross aggregate amount received by those Funded Group Members. The remaining 36 Group Members have not signed funding agreements.
The monies in the Settlement Account are to be administered by the Administrator, who is responsible for implementing the Scheme. Under the Deed of Settlement:
(a)The Administrator shall pay the Funder Payment to the Funder: cl 7.2. The Funder Payment is defined as the payment or payments due to be paid to the Funder pursuant to the Scheme, including a funding commission at a rate of 28% (or such other rate approved by the Court) of the gross aggregate amount received or due to be received in satisfaction of the claims as part of the settlement of the proceeding (net of the High Court costs).
(b)The Administrator is entitled to charge and be compensated for the Administration Costs, which are defined to mean the costs and disbursements incurred in administration of the Scheme calculated on a full indemnity basis in accordance with the rates and limits (if any) approved by the Court: cl 7.3.
(c)An amount of $670,000 is to be paid from the Settlement Sum for the applicant’s legal costs of the proceeding: cl 11.1.
(d)Subject to the appointment of Stewart Levitt as the Administrator, Levitt Robinson agree to restrict their entitlement to costs for the administration of the Scheme to $100,000, subject to the Court’s approval and the terms of the Scheme: cl 11.2.
(e)If the approved legal costs fall short of $670,000 or the costs of the administration fall short of $100,000, the balance is to be distributed to Group Members in accordance with the Scheme: cl 11.3.
The Scheme provides for the following deductions from the Settlement Sum:
(a)The Funder will be paid a sum as the Funder’s commission in the amount approved by the Court.
(b)The applicant will be paid a “Lead Applicant Payment” in the amount of $10,000 as reimbursement for the significant time expended by her for the purposes of the proceeding.
(c)The applicant’s approved legal costs and disbursements for the proceedings, the settlement approval and the administration of the settlement will be reimbursed to the Funder or paid to Levitt Robinson.
(d)The Administrator’s costs and expenses in the administration of the Scheme will be paid up to an amount approved by the Court.
The balance of the Settlement Sum remaining after these deductions will be available for distribution to Group Members by reference to two categories.
(a)Group Members who are accepted by the Administrator as being members of the Higher Damages Group will each receive an equal payment no greater than $5,202, after taking into account any commission payable to the Funder.
(b)Each of the remaining Group Members will receive an equal payment of at least $2,000, being the minimum payment that a Group Member is entitled to receive in compensation under the Scheme, after taking into account any commission payable to the Funder.
A Group Member will be part of the Higher Damages Group if the Administrator is satisfied they were vilified or insulted by a member or members of the public as a result of any of the publications, and are therefore likely to have suffered a higher degree of loss and damage as compared to other Group Members who were not so vilified or insulted. In order to have their eligibility to be a member of the Higher Damages Group considered by the Administrator, a Group Member must submit a registration form to the Administrator within 45 days after the issue of a notice confirming the settlement approval.
The calculation of the precise entitlements of each Group Member will ultimately turn on the number of Group Members who are accepted as members of the Higher Damages Group. The Scheme establishes a cap on the higher payment to members of the Higher Damages Group, in that the payment amount will be no greater than $5,202, and a floor on the payment made to other Group Members, in that the minimum amount that a Group Member will receive will be no lower than $2,000. This is articulated as follows in paragraph 19(c) of the Scheme:
The Higher Payment will not be higher than $5,202, and the Minimum Payment shall be calculated by deducting the total of the Higher Payments from the Net Settlement Sum and dividing the balance (Balance of Net Settlement Sum) equally between the remaining Participating Group Members after taking into account any obligation to pay or contribute to the commission payable to the Funder under the Funding Agreements or the Distribution Orders, unless that would give a Minimum Payment less than $2,000, in which case, the Minimum Payment is to be $2,000 and the Higher Payment is to be calculated by deducting the total of the Minimum Payments from the Net Settlement Sum and dividing balance equally among the Participating Group Members who are accepted.
In other words, Group Members in the Higher Damages Group (HDG Members) will be entitled to a payment of $5,202, unless the combined total of such payments would result in the balance of the Group Members receiving a payment of less than $2,000. In that case, the Group Members who are in the remaining base group (BG Members) would each be paid $2,000, and the balance would then be divided equally between the HDG Members.
In this way, the effect of the cap on the higher payment to HDG Members in conjunction with the minimum payment to BG Members is to create a counter-balancing mechanism: if there are fewer HDG Members, the cap on the higher payment will increase the payment to BG Members; conversely, if there is a greater number of HDG Members, then the floor on the payment to BG Members will decrease the higher payment to HDG Members.
In paragraphs 19(a) and (b) of the Scheme, the payments were estimated as between $4,700 and $5,202 for each of the HDG Members, and between $2,000 and $3,000 for the remaining Group Members, based on estimates of the number of persons who are likely to be members of the Higher Damages Group. These estimated payment ranges were also contained in the settlement notices that were given to Group Members.
The applicant filed a supplementary submission dated 5 September 2024 which provides further information as to how the Administrator is to administer the Scheme, together with an accompanying Excel spreadsheet that sets out more detailed calculations. It is proposed that the supplementary submission will be incorporated as an annexure to the Scheme, in accordance with which the allocation of the Settlement Sum will proceed and the net Settlement Sum after the specified deductions will be distributed.
The supplementary submission clarifies how the precise figures payable to Group Members will be ascertained as between the Higher Damages Group and the other Group Members, in circumstances where there might otherwise have been a number of possible options that would comply with the Scheme. The supplementary submission also addresses how the Funder’s commission is to be calculated, in circumstances where the Funder has not applied for a common fund order and where not all of the Group Members have entered into litigation funding agreements under which a commission is payable to the Funder.
The estimated ranges of compensation payments that were included in the notice of proposed settlement were based on a number of assumptions, including an estimate of the number of Group Members who would be included in the Higher Damages Group, and an assumption that the Funder would seek and obtain a common fund order of 28% of the Settlement Sum net of the High Court costs.
However, as no common fund order was ultimately made, the amount payable to the Funder will be limited to its contractual entitlement to 28% of the compensation payable to the Funded Group Members, who comprise approximately 92% of all Group Members. This results in a slight increase in the amount available for distribution to the Group Members from the amount on which the estimated ranges were previously based. Because there might be a number of possible ways in which that additional amount could be distributed consistently with the $2,000 floor for BG Members and the $5,202 cap for HDG members, the supplementary submission directs the Administrator on how to calculate the compensation entitlements in given situations.
The methodology set out in the supplementary submission involves the deduction from the Settlement Sum of the Funder’s “Notional Commission”, which is calculated “by multiplying $2,937,806.27 by 401/437, by 28% i.e., $754,821.25” (in other words, 28% of the Settlement Sum net of the High Court costs in respect of the 401 Funded Group Members). Together with the other deductions in respect of legal costs, administration costs and the lead applicant payment, this will result in an amount for distribution to Group Members of $1,465,178.75.
The supplementary submission then contains directions as to how to calculate “Notional Compensation” amounts for HDG Members and BG Members respectively. If the number of HDG Members is between 1 and 184, each of the HDG Members will receive the capped maximum of $5,202, with the balance to be divided between the BG Members (each of whom will receive an amount between $2,007.95 and $3,348.57). If the number of HDG Members is 185 or more, each of the BG Members will receive the $2,000 minimum, with the balance to be divided between the HDG Members (each of whom will receive an amount between $3,355.91 and $5,195.56).
The next step under the methodology set out in the supplementary submission is to identify the Funder’s actual commission, based on the Notional Compensation amounts to HDG Members and BG Members respectively. This involves applying a “Gross-up Proportion” to the Notional Compensation amounts in order to calculate the commission on the grossed-up compensation to Funded Group Members. If the actual commission is greater than the Notional Commission, the difference is deducted rateably from the Notional Compensation payable to all Group Members (subject to the minimum floor of $2,000 for BG Members). If the actual commission is less than the Notional Commission, the difference is added rateably to the Notional Compensation payable to all Group Members (subject to the maximum cap of $5,202 for HDG Members).
Thus, the precise amount to be paid to the Funder will only be able to be ascertained once the Administrator has determined which Group Members are accepted in the Higher Damages Group. The amount of the commission that will be paid to the Funder is expected to be in the order of $750,000.
While the methodology summarised above is rather complicated, it is rendered necessary in order to calculate the actual commission payable to the Funder after ascertaining how many HDG Members and BG Members are Funded Group Members, and to spread the burden of that payment among all Group Members so as to maintain equality within the respective groups of HDG Members and BG Members. In that way, the methodology removes the need for a funding equalisation order involving either the deduction of amounts from the shares of unfunded Group Members and the redistribution of such amounts across the class or the sharing by the whole class of the expense incurred by Funded Group Members (see Hall v Pitcher Partners (a firm) [2022] FCA 1524 at [33]–[38] (Beach J)), by implementing a mechanism that achieves a similar outcome.
APPLICABLE PRINCIPLES
Section 33V of the FCA Act provides:
33VSettlement 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.
I have previously addressed the principles relevant to s 33V in Yasmin v Commonwealth of Australia [2023] FCA 1661 at [43]–[49]; see also Camilleri v The Trust Company (Nominees) Ltd [2015] FCA 1468 at [5] (Moshinsky J); Fowkes v Boston Scientific Corporation [2023] FCA 230 at [31]–[45] (Lee J); Webb v GetSwift Ltd (No 7) [2023] FCA 90; 414 ALR 500 at [15]–[16] (Murphy J).
The central question is whether the proposed settlement is fair and reasonable in the interests of group members considered as a whole, both as between the parties (inter partes fairness) and as between the group members themselves (inter se fairness): Williams v FAI Home Security Pty Ltd (No 4) [2000] FCA 1925; 180 ALR 459 at [19] (Goldberg J); Kelly v Willmott Forests Ltd (in liq) (No 4) [2016] FCA 323; 335 ALR 439 at [3], [62], [68] (Murphy J); see also the Class Actions Practice Note (GPN-CA), paras 15.3 and 15.5.
In this context, the task of the Court is to satisfy itself that the settlement reached by the parties is within the reasonable range of outcomes, having regard to all relevant circumstances including: the nature and complexity of the issues in the proceeding; the stage that the proceeding has reached; the risks of litigation (including the risks of establishing liability and loss or damage); the “best case” outcome that might be obtained in the proceeding; the delays involved in conducting a trial and any appeals, including any potentially unrecoverable costs; the ability of the respondent to withstand a greater judgment; and the reaction of group members to the proposed settlement.
The Court must consider whether the settlement has been “framed to achieve a broadly fair division of the proceeds, treating like group members alike, as cost-effectively as possible”, and that the interests of the lead applicant or signed-up clients of a given firm of solicitors are not being preferred over the interests of other unrepresented group members: Camilleri at [5](e) (Moshinsky J).
Further, the Court should have regard to any advice received from counsel or from an independent expert in relation to the issues in the proceeding.
Ultimately, the decision whether to approve a proposed settlement under s 33V of the FCA Act involves a broad, evaluative and impressionistic decision: Smith v Commonwealth of Australia (No 2) [2020] FCA 837 at [12] (Lee J).
CONSIDERATION
The proposed settlement is fair and reasonable
In considering whether the proposed settlement is fair and reasonable in the interests of the Group Members as a whole, I have placed significant weight on a confidential joint opinion from the applicant’s counsel dated 5 September 2024, which sets out the issues arising in the proceeding and analyses the strengths and weaknesses of the applicant’s case, before giving their opinion on the fairness and reasonableness of the settlement. For completeness, I have also been provided with a copy of a confidential pre-litigation advice that was provided by counsel dated 7 September 2020.
Although some years have passed since the impugned publications, the proceeding remains at a relatively early stage. The complaint process before the Commission took more than one year, and another year elapsed between the commencement of the proceeding and the determination of an unsuccessful application by the respondents to remove the proceeding to the High Court. Settlement negotiations were conducted over a considerable period, during which amended pleadings were filed and discovery orders were on foot. The parties have not yet filed their evidence.
Nevertheless, the proceedings have advanced to a stage at which the parties are in position to identify the issues that are likely to arise if the matter proceeds to trial, and to assess the strengths and weaknesses of their respective cases on those issues.
There are a number of contested factual and legal issues raised on the pleadings, including:
(1)whether the impugned publications conveyed the imputations that are alleged by the applicant;
(2)whether any of those imputations was reasonably likely to offend, insult, humiliate or intimidate another person or a group of people within the meaning of s 18C(1)(a) of the Racial Discrimination Act;
(3)whether the respondents made the publications “because of” the race, colour or national or ethnic origin of the Group Members, as required by s 18C(1)(b) of the Racial Discrimination Act;
(4)whether the respondents’ conduct involved anything said or done reasonably and in good faith “in the course of any statement, publication, discussion or debate made or held for any genuine academic, artistic or scientific purpose or any other genuine purpose in the public interest”, within the meaning of s 18D(b) of the Racial Discrimination Act;
(5)whether the respondents’ conduct involved anything said or done reasonably and in good faith “in making or publishing … a fair and accurate report of any event or matter of public interest”, or a fair comment on any such matter that was an expression of a genuine belief held by the person making the comment, within the meaning of s 18D(c) of the Racial Discrimination Act;
(6)whether the application of ss 18C and 18D of the Racial Discrimination Act to the impugned publications is consistent with the implied freedom of communication in relation to governmental or political matters — including:
(a)whether the publications involved communications about governmental or political matters;
(b)whether the implied freedom applies to communications that are (knowingly or recklessly) false and whether the impugned publications met such a description; and
(c)whether ss 18C and 18D are for a legitimate purpose compatible with the maintenance of the constitutionally prescribed system of representative and responsible government and, if so, are reasonably appropriate and adapted to advance that object in a manner that is so compatible; and
(7)whether and what loss or damage was suffered by the Group Members because of the impugned publications.
Many of the issues set out above are complex, both factually and legally. If the matter were not settled by agreement between the parties, a trial on liability and possibly on the determination of the quantum of any damages would be lengthy and would involve substantial costs. Further, it is likely to be a considerable time before the matter would be heard and determined, and there is a prospect that any judgment obtained by the applicant would be subject to appeal. The delay and costs involved in obtaining and defending any judgment are likely to cause ongoing stress and uncertainty for the applicant, and for the Group Members more generally.
There are litigation risks for the applicant in establishing liability for the alleged contraventions of s 18C of the Racial Discrimination Act. Accepting that the applicant may have good prospects of establishing that the alleged imputations were conveyed by the impugned publication, she would be required to demonstrate that those imputations were offensive, insulting, humiliating or intimidating in the requisite sense. The applicant would also be required to establish a causal nexus or link between the publications and the Group Members’ race, colour or national or ethnic origin, and to negative each of the statutory public interest and fair comment defences. Further, the applicant would be required to support the constitutional validity of ss 18C and 18D in their application to the impugned publications. If the applicant were ultimately unsuccessful on any of these issues, then she would fail to establish any contravention of s 18C for which the respondents would be liable.
That is not to suggest that the applicant’s case on any of the issues set out above is weak. The nature of the alleged imputations may well be reasonably likely to offend or insult, if not also humiliate or intimidate, a reasonable Group Member or an ordinary member of the public in the relevant circumstances. The subject matter of the Wotton class action provides a context that might support a finding that the race of the Group Members was a reason or motivation for the impugned publications. In circumstances where it is alleged that the publications contained numerous factual errors or inaccuracies, the respondents might face difficulties in establishing a public interest or fair comment defence under s 18D. And there is existing authority that supports the constitutional validity of a provision such as s 18C as consistent with the implied freedom of political communication: Jones v Scully (2002) 120 FCR 243 at [239]–[240] (Hely J); Faruqi v Hanson [2024] FCA 1264 at [308]–[378] (Stewart J).
Nevertheless, as is the case with most substantial litigation, success on the part of the applicant and Group Members is not guaranteed, and the path to any successful outcome may be long and arduous.
If liability can be established, there are also meaningful litigation risks in relation to the proof and quantification of recoverable loss or damage arising from the impugned publications. Each Group Member would have a separate claim for damages, which would require evidence of the manner in which the publications impacted on that Group Member. There may also be questions about whether and to what extent the respondents are liable for loss or damage that was indirectly caused by the conduct of third parties (including potentially unlawful conduct) in response to or as a result of the impugned publications.
In relation to the reasonableness of the proposed settlement in the light of the best recovery if the matter were to proceed to trial, the applicant submitted that the proposed settlement is within the range of reasonable outcomes in the proceeding, particularly in circumstances where the “best case” scenario (which itself is difficult to quantify) would be devalued by reason of delay and unrecoverable legal costs. Under the proposed settlement, BG Members will receive a compensation payment of at least $2,000 and, depending on the final number of HDG Members, may receive a higher amount (up to around $3,350). HDG Members, comprising a subgroup who have suffered a higher degree of loss or damage, will receive a higher payment up to a cap of $5,202. While it is difficult to predict the pecuniary awards that might be made in favour of each Group Member in respect of a contravention of s 18C of the Racial Discrimination Act following a contested trial, I consider that the payment of such amounts to each Group Member is a fair and reasonable outcome as between the parties in the circumstances, including the litigation risk and the delay and cost that would be involved in proceeding to trial.
In assessing whether the proposed settlement is within the range of reasonable outcomes as against the best recovery that might be obtained by the applicant and Group Members, it is also relevant that the settlement provides for various non-pecuniary matters, namely, the taking down of the impugned publications with an undertaking not to republish, and the publication of an apology and correction.
In so far as the Deed of Settlement and the Scheme provide for the payment to the Funder of a funding commission, the amount of that payment reflects the Funder’s contractual entitlement under its agreements with the Funded Group Members, who represent a substantial majority of the Group Members as a whole. It may be debatable whether this amount is itself subject to approval under s 33V(1) or (2) of the FCA Act: see Ewok Pty Ltd (Trustee) v Wellard Ltd [2024] FCA 296 at [64]–[66] (Button J); Liverpool City Council v McGraw-Hill Financial Inc [2018] FCA 1289 at [47] (Lee J). The Funder has not sought a common fund order for the deduction from the Settlement Sum of a comparable commission in respect of amounts payable to unfunded Group Members. Nevertheless, the payment to the Funder is a feature of the proposed settlement, which may be taken into account in exercising the discretion to approve the settlement under s 33V: see Liverpool City Council at [22] (Lee J); Earglow Pty Ltd v Newcrest Mining Ltd [2016] FCA 1433 at [113]–[120], [133] (Murphy J). The commission rate of 28% of the gross aggregate amount received by Funded Group Members appears to be “towards the middle range of rates offered or accepted by Funders for class actions in Australia”: see Galactic Seven Eleven Litigation Holdings LLC v Davaria (2024) 302 FCR 493 at [89] (Murphy J, with whom Lee and Colvin JJ agreed), referring to Asirifi-Otchere v Swann Insurance (Aust) Pty Ltd (No 3) [2020] FCA 1885; 385 ALR 625 at [25] (Lee J); cf. Street v State of Western Australia [2024] FCA 1368 at [310]–[314] (Murphy J). To the extent that it is relevant, I consider that the proposed payment to the Funder under the Deed of Settlement and the Scheme is commercially realistic and properly reflects the costs and risks taken on by the Funder, and the deduction of that payment from the Settlement Sum is appropriate.
Further, the methodology for distribution of the Settlement Sum set out in the supplementary submission, in so far as it effects a “funding equalisation” as between funded and unfunded Group Members, is fair and reasonable in that it avoids unfunded Group Members having a “free ride” in relation to the costs of funding the proceeding.
I am also satisfied that the proposed settlement, including the arrangements for the distribution of the Settlement Sum, is fair and reasonable as between the Group Members. In so far as the Scheme divides Group Members into two classes, the HDG Members and the BG Members, this is consistent with the manner in which the applicant’s case has been framed. In paragraph 19 of the applicant’s concise statement dated 26 November 2021, it was alleged that there were “some Group Members … who were publicly vilified or insulted after and because of the Impugned Publications”, and who “should be compensated with additional damages”. The amended concise statement dated 23 February 2022 provided particulars to this allegation which identified different cohorts of group members by reference to the nature of the abuse or intimidation, the inappropriate or humiliating questioning or comments or other invasions of privacy, the aggravations of psychological injuries, or the general intimidatory effect of the publications in their lives. Accordingly, it is reasonable for the Scheme to provide a process by which those Group Members who were vilified or insulted by a member or members of the public will receive greater compensation as part of the Higher Damages Group: see the Scheme, paras 11–13 and 20–26.
It may be observed that there is no further differentiation within the Higher Damages Group according to the nature or severity of the public vilification or insult experienced by any particular HDG Member. For example, one or more HDG Members might have suffered abuse or intimidation involving physical intimidation or violence, whereas other HDG Members might have suffered non-physical abuse or intimidation, or offence or insult falling short of abuse or intimidation. Under the Scheme, all such HDG Members would be entitled to an equal payment which, although higher than the payment to which a BG Member is entitled, would not distinguish between the level of loss or damage that might have been suffered by each HDG Member. In other words, the Higher Damages Group does not recognise or accommodate any degrees of public vilification or insult as a result of the impugned publications.
In my view, this lack of differentiation within the Higher Damages Group does not render the Scheme unfair and unreasonable as between the Group Members (including the HDG Members) inter se. In this context, the observations of Moshinsky J in Camilleri at [40]–[41] are pertinent:
In this case, as in many representative proceedings, the manner in which the settlement sum is to be distributed requires assumptions to be adopted and judgment calls to be made. There are different classes of claimants within the body of group members here, and it is necessary to arrive at some model that fairly and reasonably divides the settlement sum between those classes, recognising the differences in their respective claims. There is no single approach which alone can qualify as reasonable for sharing the fixed pool of funds among the claimants. Inevitably, adjustments in a given approach will be favourable for certain group members at the expense of others.
The question, therefore, can only be whether the model is within the bounds of fairness and reasonableness in its attempts to balance what are, unavoidably, conflicts between the interests of the different claimants.
In Camilleri at [43], Moshinsky J identified some factors that are relevant to the fairness and reasonableness inter se of a proposed settlement scheme:
The cases indicate a number of factors relevant to the assessment whether a proposed distribution scheme is fair and reasonable having regard to the interests of the group as a whole. Some of these factors are as follows:
(a)whether the distribution scheme subjects all claims to the same principles and procedures for assessing compensation shares;
(b)whether the assessment methodology, to the extent that it reflects ‘judgment calls’ of the kind described above, is consistent with the case that was to be advanced at trial and supportable as a matter of legal principle;
(c)whether the assessment methodology is likely to deliver a broadly fair assessment (where the settlement is uncapped as to total payments) or relativities (where the task is allocating shares in a fixed sum);
(d)whether the costs of a more perfect assessment procedure would erode the notional benefit of a more exact distribution;
(e)to the extent that the scheme involves any special treatment of the applicants or some group members, for instance via ‘reimbursement’ payments – whether the special treatment is justifiable, and whether as a matter of fairness a group member ought to be entitled to complain.
I consider that the Scheme in the present case meets each of these factors. Claims by Group Members to be included in the Higher Damages Group will be assessed by reference to common principles and procedures. As discussed above, the differentiation between the Higher Damages Group and the remaining Group Members is both consistent with the case that was to be advanced by the applicant at trial and supportable as a matter of legal principle, based on the likelihood that HDG Members will have suffered a higher degree of loss or damage. The allocation of the Settlement Sum is likely to deliver broadly fair relativities as between HDG Members and BG Members. Importantly, in relation to the treatment of HDG Members as a single group, any notional benefit from a more perfect assessment procedure, sensitive to the particular degrees of public vilification or insult suffered by particular HDG Members, is likely to be eroded by the costs of such an assessment procedure.
Further, as to the procedural factors (see Camilleri at [44]), the Scheme establishes appropriate and timely procedures for lodging and assessing claims to be included in the Higher Damages Group, and that process will be administered by the Administrator who has a long association and familiarity with the proceeding. While there is no specific provision for objection or review of determinations made by the Administrator, the increased costs of any such review process would not be justified by the amounts at stake and therefore would be unlikely to be in the interests of Group Members as a whole.
While no Group Member has opted out of the proceeding, objections to the proposed settlement were received from three Group Members. It appears that these objections were provided to the applicant on 5 September 2024, shortly after the objection deadline. Each objection was in identical terms, and relevantly stated:
Everyone should be paid equally not the way you lawyers put it.
We all suffered the same racism and it is not fair.
I have had regard to these objections in considering whether or not to approve the proposed settlement. As discussed above, I consider that there is a proper and principled basis on which the Scheme distinguishes between the two classes of HDG Members and BG Members, which is fair and reasonable in the interests of Group Members as a whole. While all Group Members were exposed to the impact of the impugned publications, some Group Members experienced different consequences and suffered a different degree of loss or damage. Group Members within each of those classes will otherwise be treated equally.
Apart from the three objections, it appears that Group Members are generally supportive of the proposed settlement. In her affidavit sworn on 5 September 2024, the applicant has given evidence of what she has seen about the reaction of Group Members to the proposed settlement. The applicant has lived and worked in Palm Island since about 1980, and expresses a strong cultural and spiritual connection to Palm Island as a historical owner. In her daily life and in the course of her employment as a community development worker and cultural advisor, the applicant travels around Palm Island and surrounding areas. She has discussed the proposed settlement with around 60 local community members. The applicant states that, after she explained the nature of the proceeding and the opt out and objection process, most of the persons to whom she spoke expressed support for the proposed settlement and did not want to opt out or object to the settlement. The applicant states that, apart from the three persons from whom she received completed objection forms, “the common theme in my discussions with Group Members was one of acceptance of the settlement and a desire to get paid and move on”.
Pursuant to the orders made on 26 June 2024 and amended on 12 August 2024, Group Members were given timely notice of the proposed settlement and its critical elements, and the opportunity to opt out of the proceeding or object to the settlement. The steps taken to distribute the settlement notice and opt out notice in compliance with those orders are set out in Mr Levitt’s non-confidential affidavit sworn on 5 September 2024. This included displaying the notices at public facilities on Palm Island, sending the notices by email to those Group Members whose email address is known, sending the notices by ordinary mail to other Group Members whose postal address is known, sending the notices to the next of kin of deceased Group Members who have died since the impugned publications were made, displaying copies of the notices on the Levitt Robison website, and posting a sponsored advertisement on Facebook containing the settlement notice.
I note that the settlement notice given to Group Members did not address the specific distribution methodology that is now set out in the supplementary submission, including the manner in which the commission payable to the Funder will be spread across the Group Members as a whole. However, the notice referred to the Funder’s commission and indicated that the applicant would seek a funding equalisation order “for the purpose of ensuring that all Participating Group Members pay a fair share of the commission to be paid the Funder”, noting that this share would be deducted from their compensation. In my view, the Group Members have been adequately notified of the arrangements for the payment to the Funder of its commission of 28% of the compensation payable to Funded Group Members.
In relation to the ability of the respondents to withstand judgment, there is no suggestion that the respondents would not have adequate means to meet a judgment that is greater than the proposed settlement. Nor is there likely to be any recovery risk in relation to the execution of any award of damages against the respondents.
It remains to consider the fairness and reasonableness of the proposed deductions to be made from the Settlement Sum in respect of legal costs, administration costs, and the additional payment to the applicant.
Legal costs
The Deed of Settlement provides for an agreed amount of $670,000 to be paid from the Settlement Sum for the applicant’s legal costs of the proceeding.
The level of “precision” required to justify the costs incurred for the benefit of the Group Members, for the purposes of approving a mechanism for imposing those costs on the Group Members, may vary according to the quantum of the costs (both in absolute terms and relative to the Settlement Sum), and having regard to the scale and duration of the steps in respect of which the costs were incurred: see Camilleri at [53]–[54] (Moshinsky J); see also Wills v Woolworths Group Ltd [2022] FCA 1545 at [21]–[24] (Beach J); Blairgowrie Trading Ltd v Allco Finance Group Ltd (in liq) (No 3) [2017] FCA 330; 343 ALR 476 at [181] (Beach J).
I have considered the matters set out in Mr Levitt’s confidential affidavit sworn on 5 September 2024 and his subsequent affidavit sworn on 13 September 2024, including the nature of the work performed and the costs incurred by the applicant’s solicitors and counsel.
Having regard to the affidavit and expert report of Ms Suzanne Ward, a legal costs consultant, I am satisfied that the amount agreed between the parties in respect of legal costs is fair and reasonable. Among other things, the legal costs are within a range that was estimated and disclosed to Group Members, and are consistent with and proportionate to the nature, size and complexity of the matter and the stage at which the settlement of the proceeding was reached. The fee agreements were reasonable in the market for legal services, and appropriate hourly rates were charged.
Administration costs
The Deed of Settlement provides for the payment to the Administrator of an amount of $100,000 in respect of the costs of administration of the Scheme.
The appointment of Mr Levitt as Administrator is likely to be cost-effective, in the light of his familiarity with this proceeding and his broader experience in in relation to the approval and administration of settlements in representative proceedings. In all the circumstances, and having regard to Ms Ward’s expert report, I am satisfied that such an amount is reasonable and proportionate to the work involved in distributing the Settlement Sum in accordance with the Scheme.
Lead applicant payment
The Deed of Settlement contemplates an application for approval of a payment to the applicant of up to $10,000 “as compensation for the significant time expended by her in the course of and for the furtherance of the Proceeding”.
A reimbursement payment of this nature is not uncommon in settlements of representative proceedings: see Yasmin at [75], [78]–[81], referring to Caason Investments Pty Ltd v Cao (No 2) [2018] FCA 527 at [176] (Murphy J); Darwalla Milling Co Pty Ltd v F Hoffman-La Roche Ltd (No 2) [2006] FCA 1388; 236 ALR 322 at [75]–[76] (Jessup J); Smith at [91]–[106] (Lee J); Hassan v State of Victoria [2023] VSC 478 at [58]–[67] (Dixon J). Nevertheless, such payments may raise questions as to whether the interests of the lead applicant are being preferred over the interests of Group Members as a whole, and whether any preferential treatment is justified.
In the present case, the quantum of the proposed reimbursement payment is relatively modest. Although it represents a significant increase in the amount to be received by the applicant relative to the amounts payable to each of the Group Members (including HDG Members), I do not consider that to be an appropriate frame of reference in the circumstances of this case. The proposed payment of $10,000 is a small deduction from the net Settlement Sum available for distribution to Group Members as a whole, and is proportionate to the time and cost that is likely to have been expended by the applicant in connection with her involvement in the proceeding as a representative party. Accordingly, I consider that the additional payment of $10,000 to the applicant is fair and reasonable.
Confidentiality orders
The parties have also sought suppression orders under s 37AF of the FCA Act prohibiting the publication or other disclosure of specified paragraphs of the confidential affidavit of Mr Levitt sworn on 5 September 2024 and specified pages of confidential Exhibit SAL-5, on the ground that the order is necessary to prevent prejudice to the proper administration of justice within s 37AG(1)(a).
The applicant seeks a suppression order in relation to the following documents reproduced in the following pages of Exhibit SAL-5:
(a)the form of the litigation funding agreement between the Funder, Levitt Robinson and each Funded Group Member (pages 1–58);
(b)the confidential joint opinion dated 5 September 2024 (pages 60–88);
(c)the memorandum of advice from counsel on the applicant’s prospects of success dated 7 September 2020 (pages 99–126);
(d)an executed copy of the litigation funding agreement between the Funder, Levitt Robinson and one of the Funded Group Members (pages 127–162); and
(e)copies of invoices from Levitt Robinson and counsel for the applicant (pages 168–419).
These documents are confidential and are likely to attract legal professional privilege. In the course of oral argument, counsel for the applicant clarified that confidentiality over the litigation funding agreement was sought only in respect of the period prior to settlement approval and any appeal period, after which the disclosure of the funding agreement would not confer on the respondents any tactical or strategic advantage in the litigation. In respect of the opinion and pre-litigation memorandum of advice provided by counsel, the applicant maintains a claim of legal professional privilege over those documents and seeks a suppression order which extends beyond the approval of the settlement and the conclusion of the proceeding. The provision of such confidential legal opinions to the Court is of great assistance in determining whether the proposed settlement is fair and reasonable and should be approved under s 33V of the FCA Act. Similarly, the invoices from the applicant’s legal representatives may potentially disclose privileged communications, and have been provided to assist the Court in assessing the reasonableness of the legal costs to be deducted from the Settlement Sum.
In my view, it is appropriate to make a suppression order in relation to those documents, although it is preferable that such an order be expressed to operate for a fixed or ascertainable period by reference to a concluding date or event, rather than “until further order” as was sought by the applicant: see FCA Act, s 37AJ; Porter v Dwyer [2022] FCAFC 116; 402 ALR 659 at [28] (Besanko and Abraham JJ). Accordingly, I propose to make an order that operates for a period of 10 years or further order, except for the litigation funding agreement, in respect of which the order will operate until the end of the applicable appeal period.
With one exception, I am not satisfied that it is necessary to make an order for the suppression of particular paragraphs in Mr Levitt’s confidential affidavit of 5 September 2024. Some of those paragraphs contain relatively anodyne references to the confidential joint opinion and pre-litigation advice, without directly disclosing anything about the content of that opinion or advice. Such references would not amount to a waiver of privilege in the joint opinion or the pre-litigation advice, the confidentiality of which will be maintained by the suppression order in relation to those documents. Similarly, the paragraphs of the affidavit that refer to and exhibit the costs agreement, the litigation funding agreement and the invoices do not themselves contain any information which needs to be suppressed. While paragraph 61 of the affidavit refers to the total sum of various invoices, it is difficult to see why this information should be suppressed in the light of the affidavit and expert report from the costs consultant.
The exception is paragraph 26 of Mr Levitt’s affidavit, which refers to discussions between one of the Group Members and Levitt Robinson that may attract legal professional privilege.
CONCLUSION
For the reasons set out above, I approve the proposed settlement contained in the Deed of Settlement and the Scheme, and make orders accordingly.
I certify that the preceding eighty-eight (88) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Horan. Associate:
Dated: 31 January 2025
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