Pearson v State of Queensland (No 2)
[2020] FCA 619
•17 January 2020
FEDERAL COURT OF AUSTRALIA
Pearson v State of Queensland (No 2) [2020] FCA 619
File number:
QUD 714 of 2016
Judge:
MURPHY J
Date of judgment:
17 January 2020
Date of publication of reasons:
8 May 2020
Catchwords:
REPRESENTATIVE PROCEEDINGS – application for court approval of settlement under s 33V of the Federal Court of Australia Act 1976 (Cth) – claim by Aboriginal and Torres Strait Islander workers in respect of wages earned but not paid between 1939 and 1972 –relevant principles in relation to settlement approval – whether the settlement amount is fair and reasonable – whether proposed deductions including for legal costs and funding commission are fair and reasonable – consideration of objections to the settlement – the operation of the extant common fund order – settlement approved
Legislation:
Australian Human Rights Commission Act 1986 (Cth)
Racial Discrimination Act 1975 (Cth)
Imperial Acts Application Act 1984 (Qld)
Limitation Act 1960 (Qld)
Limitation of Actions Act 1974 (Qld)
Statute of Frauds and Limitations 1867 (Qld)
Succession Act1981 (Qld)
The Aboriginals Preservation and Protection Act of 1939 (Qld)
The Aborigines’ and Torres Strait Islanders’ Affairs Act 1965 (Qld)
The Aborigines’ and Torres Strait Islanders’ Regulations of 1966
The Torres Strait Islanders Act of 1939 (Qld)
The Aboriginals Regulations of 1945 (Qld)
The Islanders Regulations 1946 (Qld)
Colonial Laws Validity Act 1865 (Imp)
Slavery Abolition Act 1833 (Imp)
Cases cited:
Blairgowrie Trading Ltd v Allco Finance Group Ltd (Recs & Mgrs Apptd) (In Liq) (No 3) [2017] FCA 330; (2017) 343 ALR 476
BMW Australia Ltd v Brewster [2019] HCA 45 (2019) 374 ALR 627
Breen v Williams [1996] HCA 57; (1996) 186 CLR 71
Caason Investments Pty Ltd v Cao (No 2) [2018] FCA 527
Camilleri v Trust Company (Nominees) Ltd [2015] FCA 1468
Chubb Insurance Co of Australia Ltd v Moore [2013] NSWCA 212; (2013) 302 ALR 101
Commercial Bank of Australia v Amadio [1983] HCA 14; (1983) 151 CLR 447
Cubillo v Commonwealth of Australia [2001] FCA 1213; (2001) 112 FCR 455
Darwalla Milling Co Ltd v F Hoffman-La Roche (No 2) [2006] FCA 1388; (2006) 236 ALR 322
Earglow Pty Ltd v Newcrest Mining Limited [2016] FCA 1433
Forbes v Cochrane (1824) 107 ER 450
Grant v John Grant & Sons [1954] HCA 23; (1954) 91 CLR 112
Kelly v Willmott Forests Ltd (in liquidation) (No 4) [2016] FCA 323; (2016) 335 ALR 439
Kuterba v Sirtex Medical Ltd (No 3) [2019] FCA 1374
Lifeplan Australia Friendly Society Limited v S&P Global Inc (Formerly McGraw-Hill Financial, Inc) (A Company Incorporated in New York) [2018] FCA 379
Mabo v Queensland (No 2) [1992] HCA 23; (1992) 175 CLR 1
Money Max Int Pty Limited (Trustee) v QBE Insurance Group Limited [2016] FCAFC 148; (2016) 338 ALR 188
Pearson v State of Queensland [2017] FCA 1096
Santa Trade Concerns Pty Limited v Robinson (No 2) [2018] FCA 1491
Somerset v Stewart (1772) 98 ER 499
State of New South Wales v Kable [2013] HCA 26; (2013) 252 CLR 118
Timbercorp Finance Pty Ltd (in liquidation) v Collins; Timbercorp Finance Pty Ltd (in liquidation) v Tomes [2016] HCA 44; (2016) 259 CLR 212
Tito v Waddell (No 2) [1977] Ch 106
Wik Peoples v Queensland [1996] HCA 40; (1996) 187 CLR 1
Williams v The Minister, Aboriginal Land Rights Act & Anor (1994) 35 NSWLR 497
Wotton v State of Queensland (No 11) [2018] FCA 1841
Date of hearing:
21 November, 11 December, 19 December 2019
Registry:
Queensland
Division:
General Division
National Practice Area:
Administrative and Constitutional Law and Human Rights
Category:
Catchwords
Number of paragraphs:
297
Counsel for the Applicant:
Mr D J Campbell QC, Mr J Creamer, Mr A Newman and Mr A Edwards
Solicitor for the Applicant:
Bottoms English Lawyers
Counsel for the Respondent:
Mr A Crowe QC, Mr C Murdoch QC and Ms G Dann
Solicitor for the Respondent:
Crown Law
Counsel for the Intervener:
Mr L Armstrong QC and Mx N Chow
ORDERS
QUD 714 of 2016
BETWEEN:
HANS PEARSON
Applicant
AND:
STATE OF QUEENSLAND
Respondent
LITIGATION LENDING SERVICES LTD
Intervener
JUDGE:
MURPHY J
DATE OF ORDER:
17 JANUARY 2020
OTHER MATTERS:
A. The Court notes that the common fund order, Order 2 of the Orders made on 25 August 2017, continues in effect.
AND THE COURT ORDERS THAT:
Confidentiality
1. Pursuant to ss 37AF and 37AG(1)(a) of the Federal Court of Australia Act 1976 (the Act), and to prevent prejudice to the proper administration of justice, each of:
(a) Exhibits JT1, JT2, the second sentence of paragraph 21 and paragraph 22 of the Second Affidavit of Jerry Tucker filed 19 November 2019;
(b) Exhibit JB1 of the Sixth Affidavit of John Bottoms filed 13 December 2019;
(c) the Applicant’s confidential submissions in response to Mr Msii’s submissions, filed 10 December 2019,
shall be treated as confidential and, subject to further order of the Court:
(i) the relevant exhibits, affidavits and submissions be sealed on the Court file in envelopes marked “Not to be opened except by leave of the Court or a Judge” and are not to be published or made available in the Registry or on the Court’s internet platform;
(ii) not disclosed to any person other than:
1. the Court;
2. the Applicant and his legal representatives;
3. LLS and its legal representatives;
4. upon the giving of a confidentiality undertaking in a form reasonably satisfactory to the Applicant or approved by the Court – group members and their legal representatives.
Group member registration
2. The 168 persons referred to at paragraph 17 of the Sixth Affidavit of Jerry Tucker filed 17 December 2019, being persons from Papua New Guinea who have provided registration forms to Bottoms English Lawyers (BELAW), are deemed to have been registered in accordance with the orders of 4 September 2019.
3. The Applicant’s solicitors are to write to Mr Kebei Salee, referred to at paragraph 14 of the Sixth Affidavit of Jerry Tucker filed 17 December 2019, to advise that registration forms will be accepted by BELAW from Papuans who maintain that they are group members prior to 4.00 pm (in Queensland) on 7 February 2020. Any such persons who provide a registration form prior to 4.00 pm (in Queensland) on 7 February 2020 will be deemed to have registered in accordance with the orders of 4 September 2019.
Settlement approval
4. Pursuant to s 33V of the Act, the settlement of this proceeding be approved on the terms set out in:
(a) the Settlement Deed (Deed) annexed to the First Affidavit of John Bottoms filed 15 November 2019; and
(b) the Settlement Distribution Scheme (Scheme), in the form annexed to these orders as Annexure A.
5. Pursuant to ss 33V and 33ZF of the Act:
(a) on and from the date of this order, the Applicant and Group Members shall be barred from any further proceedings made in, arising out of, or in connection with, whether directly or indirectly the allegations in and the facts, matters and/or circumstances of the proceeding against the Respondent (including its present and former officers, servants, employees, agents, successors or assigns), save that such bar will not prevent the Applicant and Group Members from making any application to the Court in connection with the administration of the Scheme; and
(b) the Applicant is authorised, nunc pro tunc, to enter into the Deed for and on behalf of group members.
Approval of further amounts to be deducted, pursuant to the Scheme
6. Pursuant to ss 33V and 33ZF of the Act:
(a) the legal costs rendered by BELAW to 17 October 2019 and disbursements rendered to 31 October 2019 in the sum of $12,742,357.79; and
(b) the legal costs rendered by BELAW from 17 October 2019 to 12 December 2019 and disbursements rendered from 31 October 2019 to 12 December 2019 in the sum of $841,876.13,
making total legal costs and disbursements to 12 December 2019 of $13,584,233.92, are approved as the “Applicant’s Legal Costs and Disbursements” for the purposes of the Scheme.
7. Subject to any contrary order by the Court, any further amount allowed or certified by Elizabeth Harris as Referee in respect of “Approval Costs” are deemed to be approved as the “Applicant’s Legal Costs and Disbursements” for the purposes of the Scheme.
8. Pursuant to ss 33V and 33ZF of the Act, the amount of $35,000 be paid to the Applicant in recognition of the time and inconvenience in acting as the representative Applicant and prosecuting the proceeding on behalf of Group Members.
Appointment of Administrator
9. Pursuant to ss 33V and 33ZF of the Act, Anthony James Jonsson and Anthony Raymond Beven of Grant Thornton Australia Ltd be appointed as Administrators of the Scheme, to act in accordance with the Scheme and have the powers and immunities contemplated by the Scheme.
Matters consequential upon settlement approval
10. Pursuant to ss 33V and 33ZF of the Act, upon the coming into effect of Orders 4 to 9 above, each of the undertakings given by:
(a) the Applicant;
(b) BELAW; and
(c) Litigation Lending Services Ltd,
to each other, and to the Court, on 12 September 2017 to comply with their obligations under the Funding Terms being Annexure A to the orders of the Court dated 25 August 2017, be discharged.
11. The Referee, Ms Elizabeth Harris, is directed to inquire and report to the Court at 3-monthly intervals as to the reasonableness and proportionality of costs charged or proposed to be charged by the Advisor to the Scheme for work undertaken under the Scheme.
12. Further to Order 10, upon the coming into effect of Orders 4 to 10 above, the undertaking given by Litigation Lending Services Ltd to the Respondent on 13 March 2017 to meet the terms of any order as to costs made against the Applicant in favour of the Respondent, be discharged.
13. All existing costs orders in the proceeding be vacated.
14. Pursuant to s 33ZB of the Act, the persons affected and bound by Orders 4 to 9 above are the Applicant, group members (other than those who have opted out pursuant to Order 1 of the Orders made 12 December 2017 and Order 4 of the Orders made 4 September 2019), and the Respondent.
15. The Applicant shall apply for the proceeding to be dismissed within 7 days after the Court is notified that the administration of the Scheme is complete.
Access to State Database
16. For the purpose of data verification by the Administrator in relation to the Settlement Distribution Scheme, the respondent provide the Administrator with access to the database established by the Queensland Government Department of Aboriginal and Torres Strait Islander Partnerships for the purposes of the Indigenous Wages and Savings Reparations Scheme(s), subject to an appropriate confidentiality regime agreed between the parties, or in the absence of agreement as determined by the Court.
17. Leave to apply.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Annexure A
REASONS FOR JUDGMENT
MURPHY J:
INTRODUCTION
This class action, colloquially known as the “Stolen Wages Case” arose out of discriminatory, unjust and, it should be said, disgraceful legislation and policies that applied to Aboriginal and Torres Strait Islander people living in Queensland in the period between 12 October 1939 and 4 December 1972 (the claim period). The applicant, Mr Hans Pearson brought the proceeding against the respondent, the State of Queensland (the State), on his own behalf and on behalf of all persons who during all or any part of the 33 years of the claim period:
(a) was or was deemed to be an “aboriginal” as that term was used in The Aboriginals Preservation and Protection Act of 1939 (Qld) as amended (1939 Act); or
(b) was or was deemed to be an “islander” as that term was used in The Torres Strait Islanders Act of 1939 (Qld) as amended (Islander Act); and/or
(c) was an “aborigine” or a “part-aborigine” who fell within the category of “assisted aborigines”, or an “Islander” who fell within the category of “assisted Islanders” as those terms were used in The Aborigines’ and Torres Strait Islanders’ Affairs Act 1965 (Qld) as amended (1965 Act); or
(d) was subject to the 1939 Act and/or The Aboriginals Regulations of 1945 (Qld) as amended (1945 regulations) (collectively, the 1939 Act and regulations); or
(e) was subject to the Islander Act and/or The Islanders Regulations 1946 (Qld) as amended (Islander regulations) (collectively, the Islander Act and regulations”; or
(f) was subject to the 1965 Act and The Aborigines’ and Torres Strait Islanders’ Regulations of 1966 as amended (1966 regulations) (collectively, the 1965 Act and regulations);
(g) lived in Queensland in one or more of the following areas, namely:
(i) an area which had been proclaimed or was otherwise deemed to be a “District” for the purposes of the 1939 Act, the Islander Act, or the 1965 Act (Districts);
(ii) on land granted in trust or reserved from sale or lease by the Governor in Council for the benefit of Aborigines of Queensland and defined as (or deemed to be) a “reserve” for the purposes of the 1939 Act or the 1965 Act (reserves);
(iii) on any Torres Strait island (as defined in the Islander Act) or part of a Torres Strait island granted in trust or reserved from sale or lease by the Governor in Council for the benefit of islanders and defined as (or deemed to be) a “reserve” for the purposes of the Islander Act or regulations (islander reserve);
(iv) in a settlement built on a reserve or on a islander reserve; or
(v) in a mission operated by a religious institution on a reserve or islander reserve (referred to as a “mission reserve” in r 2 of the 1945 regulations);
(h) was employed or was required to work, such employment being controlled or which was required to be controlled by the 1939 Act and regulations, the Islander Act and regulations and/or the 1965 Act and regulations; and
(i) by reason of the pleaded claims is entitled to equitable and other relief.
The class includes people who claim a right in respect of property forming part of the estate of a person who met the above description and I use the term ‘class member’ to describe living Aboriginal and Islander people who were subject to the Protection Acts during the claim period and also persons who claim on behalf of their estates.
The parties agreed to settle the claims of the applicant and class members for $190 million inclusive of legal costs and interest, subject to Court approval under s 33V of the Federal Court of Australia Act 1976 (Cth) (the FCA), with the settlement monies (after various deductions) to be distributed to class members under a Court-approved settlement distribution scheme (SDS). In return the applicant and class members provide broad releases from all actions, claims and demands they have in relation to the subject matter of the proceeding.
In announcing the settlement the Deputy Premier of Queensland and Minister for Aboriginal and Torres Strait Islander Partnerships and the Queensland Attorney-General and Minister for Justice said:
This settlement has been reached in the spirit of reconciliation and in recognition of the legacy and impact of the ‘control’ policies on Aboriginal and Torres Strait Islander Queenslanders, including elders past and present….The Queensland Government is committed to righting historic wrongs and [we] look forward to continuing to work closely with the community as we move forward together.
On 17 January 2020 I made orders to approve the settlement and I now provide reasons for doing so. The reasons are unavoidably lengthy because of the need to explain various matters in detail having regard to public importance of the case. For convenience, I now provide a summary.
Summary
I commence by noting that the parties referred to Mr Pearson and the class members as “Aboriginals” and “Islanders” throughout the proceeding. For clarity I have adopted those expressions but I am concerned to explain that I intend no disrespect to Mr Pearson or other indigenous Australians by doing so. The parties also described the 1939 Act, the Islander Act, the 1965 Act and the subordinate legislation as the “Protection Acts”. I have similarly adopted that description, even though I would not describe the effect of the statutory controls placed upon Aboriginals and Islanders under those Acts as protective.
The proceeding alleged the following three broad causes of action.
(1) During the claim period Aboriginals and Islanders were subject to various controls under the Protection Acts, including that any wages they earned while working away from the settlements, reserves or mission reserves (settlements) on which they were required to live were required to be paid by their employers to the Superintendent or Protector on the settlement rather than to them, to be held on their behalf in communal savings accounts created and maintained by the State (savings accounts). The proceeding alleged breach of trust and fiduciary duties owed by the State to Mr Pearson and class members and asserted that a substantial amount of the wages paid to the State were never paid to the Aboriginal and Islander employees who undertook the work, and that some of those monies were instead taken by the State and put to its own uses (the Stolen Wages Case).
(2) Contravention of the Racial Discrimination Act 1975 (Cth) (the RDA) in the provision of legal advice as part of the reparations scheme instituted by the State from 2002 (the Reparations Scheme) in respect of wages earned by Aboriginals and Islanders and held by the State which had not been paid to them (the Racial Discrimination Case).
(3) That the provisions of the 1939 Act and regulations which authorised the Superintendent or Protector to direct Aboriginals to undertake compulsory unpaid work on settlements were repugnant to Imperial anti-slavery legislation then in force in Queensland, and therefore invalid, because they authorised the enslavement of Mr Pearson and Aboriginal class members. The proceeding alleged that Aboriginals who were required to perform compulsory unpaid work were entitled to damages representing the reasonable value of their compulsory labour (the Slavery Case). This case does not apply to Islander class members as it is based in the 1939 Act and regulations which applied only to Aboriginals.
The salient considerations for the decision to approve the settlement include the following.
First, the Court had the benefit of a comprehensive confidential opinion from senior and junior counsel for the applicant and class members (Counsels’ Opinion), which candidly considered the fairness and reasonable of the settlement as between the parties and as between the class members. Counsel assessed the strengths and weaknesses of each of the cases advanced in the proceeding and considered the difficulties and risks the applicant and class members faced in: proving that the State is liable to pay damages; and if the applicant and class members succeeded in proving liability, obtaining judgment in an amount commensurate to the substantial settlement that has been achieved. Counsel recommended that the Court approve the proposed settlement. It is appropriate to place significant weight on Counsels’ Opinion.
Second, in my view the proceeding faced real risks and difficulties on liability and quantum, such that it was impossible for the applicant’s lawyers to be confident of succeeding in the causes of action pleaded or, if they did succeed, obtaining any better result than the proposed settlement.
It is clear from the materials that Aboriginals and Islanders who were subject to the Protection Acts during the claim period suffered serious racial discrimination, being treated as lesser human beings than non-indigenous Australians, incompetent to manage their own affairs, and appropriate to be ‘controlled’ by government-appointed Superintendents or Protectors in relation to their ability or capacity to earn income, own property, move or travel to areas outside the settlements, marry, or even engage in customary native practices. On top of the discrimination and the indignity they suffered, it is clear enough for the purposes of the application that many class members did not receive all of the wages which were paid or ought to have been paid by their employers to the State for their work during the claim period.
As much has been acknowledged by the State in public statements and by the institution of the Reparations Scheme. But in the absence of the proposed settlement, the applicant and class members bore the onus to establish their claims to the requisite legal standard. The materials before the Court indicate that many class members would have likely faced real difficulties in doing so, or alternatively in proving an entitlement to compensation anywhere near the substantial amount that has been achieved through the proposed settlement. For claims brought on behalf of deceased estates, which comprise the majority of claims, those difficulties would likely have been extreme.
The difficulties and risks vary between the three cases advanced but each faced serious obstacles. For example, in the Stolen Wages Case the applicant and many class members faced difficulties in proving on the balance of probabilities that: (a) they were not paid ‘pocket money’ at the time, or that they were only paid modest amounts; (b) they did not withdraw monies from the savings accounts or withdrew little; (c) they did not make withdrawals from the savings accounts by placing orders in the settlement store or made few orders; and (d) they did not receive all the wages that their employers paid or ought to have paid to the State for their work. Insofar as class members were able to overcome these obstacles, they also faced risks in relation to the quantum of their claims; that the losses they were able to prove would be less than they would achieve through the proposed settlement.
For many class members the difficulties they would face include that:
(a) the relevant events occurred between 48 and 81 years ago, many class members are elderly and their recall in relation to everyday events from that time such as whether they withdrew money from a savings account or placed an order at a settlement store are likely to have faded with the effluxion of time. Recollections of such events occurring so long ago may be honestly held but nevertheless be unreliable, or at least not as rationally probative as evidence such as contemporaneous documentary records which contradict them;
(b) there is a general paucity of records in relation to the relevant events and the former employers, and the former Superintendents and Protectors, are mostly deceased. Where records do exist they sometimes, apparently often, do not accord with class members’ recollections; and
(c) the majority of claims are on behalf of deceased estates. The paucity of records and the fact that in such cases there can be no direct evidence from the person who undertook the work as to the wages earned, whether pocket money was paid, and the extent of any withdrawals from the savings accounts or orders placed in the settlement store, means that the difficulties of establishing many such claims are likely to be extreme.
The applicant and many of the class members assert that they did not make any, or only made modest, withdrawals from their respective savings accounts. However, in relation to Mr Pearson (and also some of the ten sample class members), the State produced contemporaneous records which tended to show that Mr Pearson and the relevant sample class members made many more withdrawals than they now recall. To explain the inconsistency between their evidence regarding the extent of withdrawals and the documentary records upon which the State relies, the applicant’s lawyers submitted that it should be inferred that:
(a) the withdrawals were made without Mr Pearson’s knowledge or permission to cover shortfalls in the rations provided by the State to him and other people on the settlement, when the State was obligated to provide adequate rations without payment; and/or
(b) the withdrawals were fraudulent.
Mr Pearson denied making or authorising such withdrawals but there is no other evidence that withdrawals were made without Mr Pearson’s knowledge or permission for rations. It is likely the State would have contended that Mr Pearson was mistaken in his recall of everyday events from so long ago. Nor is there any direct evidence that withdrawals from the savings account in relation to Mr Pearson were fraudulent. There is material which indicates deficiencies in the administration of the savings accounts generally and that some misappropriation occurred, and the State has publicly acknowledged that some misappropriation occurred. There is though little to show misappropriation by reference to the particular savings accounts of identified class members. In each case it would have been up to the class member to prove that the general failings in the administration of the savings accounts applied in their particular case and that fraud was the explanation for particular withdrawals. Class members were likely face substantial difficulties establishing to the requisite legal standard that fraud was the explanation for withdrawals where there is little to show that other than that they do not recall making such withdrawals. Some aspects of the litigation also faced serious difficulties because of the Limitation of Actions Act 1974 (Qld) (Limitations Act).
Third, the proposed settlement is substantial, and is in addition to $56.5 million paid under the Reparations Scheme. In my view the proposed settlement falls comfortably at the high end of the range of reasonable settlements.
Fourth, the complexity and likely duration of the litigation meant that, assuming that the proceeding was ultimately successful, it would have been years before class members received any compensation absent the proposed settlement. The vast majority of living class members are elderly, with an approximate age range between 63 and 96. Many have passed away since the proceeding was commenced. The advanced age of many class members, and the importance of their receiving compensation in their lifetime, to the extent possible, is an important consideration.
Fifth, the size of the class, their ethnic and socio-economic background and frequently their remote location, would have meant that it would have been extremely expensive, difficult and time-consuming to litigate class members’ individual claims if they were successful in the initial trial. The applicant proposed to seek aggregate damages but that path would have been fraught with difficulty.
Sixth, the SDS employs a loss assessment methodology which takes into account broad differences between class members in a way that is essentially fair and reasonable, and it provides mechanisms for review and appeal of the assessment of the compensation payable.
The proposed costs of the settlement administration under the SDS are fair and reasonable. The role of the Administrator was put to tender to four accounting firms. Ultimately I appointed Mr Anthony James Jonsson and Mr Anthony Raymond Beven of Grant Thornton Australia Ltd (Grant Thornton) to the role because they possess relevant expertise including a history of working with indigenous communities, have a Cairns-based office, provided a fixed quote subject only to Court-approved increases, and the solicitor for the applicant recommended their appointment.
BELAW, or any such firm of solicitors the Administrator decides in its discretion to appoint, will act as Advisor to the Administrator. The costs of the Advisor could not be entirely fixed, largely because of difficulties in estimating at the outset the cost of communicating with class members, given the particular characteristics of the class. Instead, the orders provide for the Advisor’s costs to be the subject of ongoing reporting to the Court at three monthly intervals by Ms Elizabeth Harris, an independent legal costs expert, as a referee (Costs Referee). This would allow the Court to monitor and supervise the reasonableness and proportionality of costs charged or proposed to be charged by the Advisor under the SDS.
Seven, I was satisfied that the proposed deductions from the settlement sum for legal costs and litigation funding charges are fair and reasonable.
(a) The applicant’s legal costs are substantial, totalling $13,881,952.17. The applicant relied upon the report of an independent legal costs consultant, Mr Alan Adrian, and I appointed the Costs Referee to review aspects of the proposed charges. I was satisfied that the legal costs are reasonable for a class action of this size, novelty and difficulty and having regard to the unique challenges the case presented in terms of communicating effectively with the class.
(b) The litigation funding commission payable under the extant common fund order made on 25 August 2017 is $38 million, representing 20% of the gross settlement. To those not experienced in large, complex and strenuously defended class action litigation, $38 million may seem an extraordinary amount for litigation funding. But having given careful thought to the question, I considered the size of the charge to be fair and reasonable, including because:
(i) the funder, Litigation Lending Services Ltd (LLS), paid approximately $12.65 million in legal costs and disbursements, and I estimate it would have been required to pay close to $17 million by the end of the trial of the common issues. It was also exposed to further legal costs to be incurred in a later hearing seeking aggregate damages. I estimate that LLS faced a risk of an adverse costs order of $15 million or higher if the case was ultimately unsuccessful. The costs and risks faced by a funder are central considerations in assessing the reasonableness of the proposed funding commission, and in light of those matters, the amount is fair and reasonable;
(ii) at the time LLS agreed to fund the proceeding, a 20% funding rate compared favourably with the rates generally offered for ‘standard’ class actions in the litigation funding marketplace, and this is far from a standard class action. A 20% funding rate was (and remains) highly favourable for a high-risk case like this one which involved a large class, high costs, novel causes of action, historical claims with evidentiary problems, and real risks on liability and quantum. A higher funding rate would have been justifiable; and
(iii) the case concluded with a favourable result for the applicant and class members, and the funding commission is proportionate to the compensation the proceeding recovered. Class members will receive approximately 73% of the settlement after deduction of litigation funding charges and legal costs.
In passing I note that making the common fund order at that early stage of the proceeding meant that a seriously disadvantaged section of the Australian community were provided with greatly enhanced access to justice. The case was commenced on a ‘closed’ class basis and the applicant only sought orders to ‘open’ the class on the proviso that a common fund order was also made: see Pearson v State of Queensland [2017] FCA 1096 (Pearson) at [7]-[17]). The common fund order that was made allowed thousands more people, many of whom are elderly, not well-educated, lack commercial and legal sophistication and who live in isolated communities, to become class members and to share in the settlement. Converting the proceeding from a ‘closed’ to an ‘open’ class action also benefited the State by enabling it to approach the case on the basis that it would be able to achieve greater finality in relation to the claims made in the proceeding.
Ninth, thirteen class members raised objections to the proposed settlement on behalf of themselves and their families. One thing which stands out from the objections is the evident anguish, torment and anger which some class members still feel about the discriminatory and unjust way Aboriginals and Islanders were treated between 1939 and 1972, and the lasting legacy of economic and social hardship still felt by their families. Those objections were powerful and the emotion with which they were expressed reflected the importance of the proposed settlement to class members and the historical trauma to which it relates. The objections also show that for some class members achieving justice through the proceeding is about more than just money.
I gave the objections serious consideration but, for the reasons I explain, none of them justified refusing to approve the proposed settlement. The proposed settlement is eminently fair and reasonable having regard to the difficulties the proceeding faced on liability and quantum. I hope that the public recognition of the historical wrongs that were perpetrated, both through the settlement itself and through the Queensland government’s public announcement, will provide some closure.
The parties’ conduct of the litigation
I commend the parties and their legal representatives for the way in which they conducted the case. BELAW is a small Cairns-based law firm with no previous experience in class actions or complex commercial litigation and it relied heavily on a large team of senior and junior counsel. The difficulties of the proceeding for the applicant’s lawyers were significant, and through their work they achieved a substantial settlement. The challenges for the State’s legal team were different but also significant.
The underlying issues in the litigation are matters of public importance about which opinions differ, and may be strongly held. The legal and factual issues in the case were complex and difficult, and the amount in dispute was large. It would have been unsurprising if the parties’ lawyers became lost in the fog of such strenuously contested litigation yet the solicitors and counsel for both sides conducted themselves appropriately and responsibly while strongly representing their clients’ interests. I saw no sign that the State sought to misuse its greater resources by engaging in a war of attrition. As a result of the settlement, the parties have achieved finality in relation to an issue that has been a matter of public controversy for decades.
I now turn to consider the settlement in detail. I thank the parties for their detailed submissions, upon which I have directly drawn at some points.
THE EVIDENCE
The applicants relied on the following evidence in the application:
(a) Eight affidavits of Ms Jerry Mae Tucker, an associate with the solicitors for the applicant, Bottoms English Lawyers (BELAW), who had the day-to-day conduct of the proceeding, affirmed:
(i) 25 August 2019;
(ii) 26 August 2019;
(iii) 27 August 2019;
(iv) 15 November 2019;
(v) 19 November 2019;
(vi) 20 November 2019;
(vii) 10 December 2019; and
(viii) 17 December 2019;
(b) Seven affidavits of Mr John Raymond Reis Bottoms, the principal of BELAW responsible for the supervision and conduct of the proceeding, affirmed:
(i) 15 November 2019;
(ii) 15 November 2019;
(iii) 19 November 2019;
(iv) 21 November 2019;
(v) 10 December 2019;
(vi) 13 December 2019; and
(vii) 18 December 2019;
(c) Three affidavits of costs consultant, Mr Alan Adrian affirmed:
(i) 15 November 2019;
(ii) 20 November 2019; and
(iii) 21 November 2019.
The State filed an affidavit of Yvonne Carol Little of the Department of Aboriginal and Torres Strait Islander Partnerships sworn 17 December 2019.
LLS relied on affidavits of Mr Stuart Price affirmed on 15 November 2019 and 16 and 18 December 2019.
The Court has also been provided with four reports by the Costs Referee, Ms Elizabeth Harris, which were filed on 13 and 16 December 2019, and following settlement approval on 28 January and 23 March 2020.
THE CLASS
The class member registration process
The proceeding was commenced as a ‘closed’ class action in September 2016, on behalf of all persons who met the class definition and had entered into a litigation funding agreement with LLS.
In 2016 and the first half of 2017 BELAW undertook an extensive outreach program to indigenous communities including the following: Cairns, Kuranda, Mareeba, Mossman, Ravenshoe, Mount Garnet, Hopevale, Wujal Wujal, Yarrabah, Palm Island, Innisfail, Tully, Cardwell, Townsville, Ayr, Bowen, Aurukun, Mapoon, Weipa, Napranum, Normanton, Burketown, Doomadgee, Camooweal, Cloncurry, Mount Isa, Dajarra, Boulia, Rockhampton, Woorabinda, Cherbourg, Murgon, Ipswich, Logan, Zillmere, Jagera, Horn Island, Mer/Murray Island, Darnley Island, Yorke Island (Masig), Badu Island, Saibai, Boigu, Warraber, Yam Island (Iama), Moa Island (Kubin and St Pauls), Mabuiag, Hammond Island and Thursday Island. Mr Bottoms and his staff met with approximately 3,267 persons during that time whom Mr Bottoms considered would qualify as class members, and recommended to them that they register their claims with BELAW.
In 2017, following the decision in Money Max Int Pty Limited (Trustee) v QBE Insurance Group Limited [2016] FCAFC 148; (2016) 338 ALR 188 (Money Max), the applicant applied for orders to ‘open’ the class. On 25 August 2017 I made the orders sought, with the result that it was no longer a requirement for class members to enter into a litigation funding agreement with LLS if they wished to be class members in the class action.
Pursuant to a Court-ordered notice regime undertaken between December 2017 and March 2018, class members were notified of the common fund order and their right to opt out of the proceeding, and also notified that BELAW would conduct meetings in 29 indigenous communities to provide further information about the case. By use of an electronic database created by the State for the Reparations Scheme called the “Community and Personal Histories database” (CPH database) class members were sent a notice and those who had not already registered their claims with BELAW were also sent an information brochure titled “Join the Stolen Wages Class Actions – Let’s do this together”. The information brochure invited class members to register their claims with BELAW and I infer that BELAW advised class members attending the information meetings to register their claims.
In July 2019, the parties reached the in-principle settlement which is the subject of the present application. Ms Tucker deposed that at around the time of settlement 6,846 class members had registered their claims with BELAW.
On 26 August 2019 the applicant applied for orders which required class members to register their claims with BELAW if they wished to share in the compensation under the proposed settlement, and provided that class members who neither opted out nor registered their claim would be bound by the settlement but precluded from sharing in the compensation under the settlement.
In the present case there was no suggestion that the class member registration orders were for the purpose of facilitating settlement because an in-principle settlement had already been reached. I considered it was appropriate to ensure justice was done in the proceeding pursuant to s 33ZF of the FCA to make the orders because:
(a) the vast majority of living class members are elderly, with an approximate age range between 63 and 96. Many had passed away since the proceeding was commenced. There was (and there remains) a need for expedition in getting settlement monies to class members within their lifetimes. The information proposed to be gathered through the registration process was the basic information required to identity and verify class membership, date of birth, gender (being either male or female) and ethnicity (being either Aboriginal or Islander) which was the information by which the proposed SDS distinguished between the respective claims of class members. It was more efficient to collect that data at that point than later, and doing so was likely to ensure more speedy distribution of settlement monies;
(b) if a registration process was not immediately undertaken there would have been two notice procedures in connection with the settlement: one in advance of the settlement approval hearing and another in the course of the settlement administration. Because of the characteristics of the class, many of whom are elderly, not well-educated, lack commercial and legal sophistication and live in relatively isolated communities, the necessary notice procedures would be time-consuming and expensive, including because of the requirement for outreach programs. A process which involved two separate notice procedures was likely to cause substantial delay and extra cost and also had the potential to confuse class members;
(c) the registration requirements were not onerous and thus were unlikely to act as a disincentive, particularly having regard to the outreach program and the telephone registration service provided for class members who could not read or write;
(d) undertaking class member registration at that point would allow the applicant’s legal representatives to more accurately model class members’ likely recoveries under the proposed settlement, and therefore assist the Court in deciding whether the proposed settlement is fair and reasonable; and
(e) in any open class action it is necessary for class members to come forward at some point and register in order to claim compensation under a settlement or judgment.
On 4 September 2019 I made orders providing that any class member who wished to seek any benefit pursuant to the proposed settlement must register his or her claim with BELAW by 8 November 2019. Any class member who was already a client of that firm in relation to the proceeding or who had already registered their claim with that firm was to be accepted as having registered already. Any class member who neither opted out nor registered for the proceeding would remain a class member for all purposes of the proceeding, but shall not be permitted to seek any benefit under the proposed settlement (the class member registration and class closure orders).
The orders included a comprehensive notice regime, requiring that:
(a) a notice (Notice of Proposed Settlement) be posted by 18 September 2019 to all persons whose details were contained within the CPH database, de-duplicated to remove the names of persons who had previously registered;
(b) the Notice of Proposed Settlement be sent by 11 September 2019 to 68 Aboriginal and Islander communities and towns and, where applicable, to the Councils thereof, in the manner best calculated by BELAW to bring the notice to the attention of class members;
(c) information meetings be conducted by BELAW at 22 specified Aboriginal or Islander communities by 18 October 2019, with the object of bringing the Notice of Proposed Settlement to the attention of class members and explaining its content. This community outreach program had a broad geographical spread, including information sessions at six large centres and 16 smaller, remote indigenous communities whose residents were considered unlikely to travel to the larger centres around the areas of Cape York, Torres Strait Islands, North and Central Queensland, South East Queensland and Western and North-Western Queensland;
(d) the Notice of Proposed Settlement be posted by 6 September 2019 on the Federal Court of Australia website and made available for inspection at each registry;
(e) a short version of the Notice of Proposed Settlement (Settlement Advertisement) be published at least once by 11 September 2019 in each of the following newspapers: Cape York News, Courier Mail, Koori Mail and National Indigenous Times; and
(f) a radio advertisement (Settlement Radio Announcement) be broadcast at least once in the months of September and October 2019 on each of six radio stations, being: 4BSN Black Star based in Cairns which reaches 30 remote communities, 4MUR (Murri FM) based in Mackay, BIMA 98.9 based in Brisbane, 4RR FM in Mid-West Queensland, 4KIG (TAIMA) based in Townsville and 4UM based in Cherbourg.
Late registrants
I considered that it was appropriate to take a flexible approach to class members’ compliance with the deadline for registration because of the characteristics of the class. Ms Tucker deposed that:
(a) BELAW received a total of 210 registration forms between 9 November 2019 and 20 November 2019. On 21 November 2019 I made orders to extend the deadline for class member registration to 21 November 2019, such that those 210 class members were accepted as registered in accordance with the orders of 4 September 2019;
(b) there were 1,816 persons who provided their registration information orally to BELAW. On 21 November 2019 and 10 December 2019 I made orders that those persons be deemed to have registered in accordance with the orders of 4 September 2019;
(c) there were 1,539 persons who provided registration forms but did not sign them as required. On 21 November 2019 and 10 December 2019 I made orders that persons who provided information by means of an unsigned registration form be deemed to have registered in accordance with the orders of 4 September 2019.
Potential Papua New Guinean class members
Another cohort of potential class members whose registration deadline was extended was Papua New Guineans who claimed to have worked in the Torres Strait during the period 1939 to 1972 and to have been controlled under the Protection Acts.
On 9 December 2019 BELAW received correspondence from Mr Kebei Salee Koeget, the elected member for Sigabaduru in the Forecoast Kiwai Local Level Government, South Fly District, Western Province of Papua New Guinea. Mr Salee said that his father was one of approximately 300 persons who came from the Australian Territory of Papua (as it then was) to work in Torres Strait during the claim period. He said that they were classified by the Queensland government as Torres Strait Islanders and their employment and their wages were controlled by the Queensland government in the same way as Islanders. BELAW provided Mr Salee with information regarding eligibility to register and invited him to notify potential class members that they should register their claims soon as possible, and in any event prior to 18 December 2019.
Such persons may be eligible to claim under the SDS as the definition of “islander” under the 1939 Islander Act is broad. Relevantly that definition of an “islander” is:
(a) One of the native race to the Torres Strait islands;
(b) A descendant of the native race of the Torres Strait islands and is habitually associating with islanders as defined in paragraph (a) of this definition; or
(c) A person other than an islander as defined in paragraph (a) or (b) of this definition who is living on a reserve with an islander as so defined as wife or husband or any such person other than an official or person authorised by the protector who habitually associates on a reserve with islanders as so defined.
Similar considerations apply under the legislation that followed the Islander Act, being the 1965 Act. Whether a Papuan (or indeed any other person who is neither an Aboriginal nor Islander) meets the relevant criteria to participate in the compensation payable under the SDS will be a matter to be determined by the Administrator.
Because some Papuan claimants were initially given inaccurate advice as to their eligibility to participate in the class action, I made the following orders to permit them to register their claims out of time:
(a) as at 17 December 2019 BELAW had received registration forms from a total of 168 Papuans. On 17 January 2020 I made orders that those persons be deemed to have registered in accordance with the orders of 4 September 2019. I also made orders directing BELAW to write to Mr Salee to inform him that registration forms will be accepted from Papuans who asserted that they are class members until 4.00 pm on 7 February 2020, and that persons that register by that date be deemed to a registered in accordance with the orders of 4 September 2019;
(b) on 7 February 2020 BELAW wrote to chambers advising that Mr Salee had encountered difficulties assisting the communities in Papua New Guinea with obtaining registration forms due to the remoteness of the relevant villages, no fuel having been available at the distribution centre until 28 January 2020 for Mr Salee’s transport by boat to the relevant villages, limited electronic communication means with potential class members, and anticipated border closures due to control measures in relation to the COVID-19 pandemic; and
(c) on 18 February 2020 I varied the earlier orders such that the registration forms of Papuans received by BELAW after 7 February 2020 that were post-marked on or before that date are deemed to have been provided in accordance with the orders of 4 September 2019.
The composition of the class
Following the class member registration process 19,082 persons registered to make a claim under the proposed settlement (Registered Representatives) on behalf of 11,948 class members. 6,503 of the Registered Representatives claimed in respect of more than one class member. Those figures were subject to further verification and de-duplication of the data.
The class of 11,948 class members (i.e. not counting Registered Representatives) comprised 3,760 male Aboriginals, 3,791 female Aboriginals, 1,533 male Islanders, 1,358 female Islanders and 1,506 people of unknown ethnicity (i.e. those who had not indicated ethnicity or had indicated both Aboriginal and Islander). By extrapolating the known gender and ethnicity proportions of the class members to the cohort of unknown ethnicity, it was assumed for the purposes of settlement approval that the class members comprise:
(a) 4,302 male Aboriginals being 36% of the class;
(b) 4,338 female Aboriginals being 36.3% of the class;
(c) 1,754 male Islanders being 14% of the class; and
(d) 1,554 female Islanders being 13% of the class.
In relation to being living or deceased, of the 11,948 class members:
(a) of the Aboriginal males, 858 are living and 2,902 are deceased;
(b) of the Aboriginal females,1,285 are living and 2,506 are deceased;
(c) of the Islander males, 406 are living and 1,127 are deceased;
(d) of the Islander females, 454 are living and 904 are deceased; and
(e) there were 1,506 persons for whom the information is not available to categorise whether they are living or deceased.
After extrapolating the known proportion of living and deceased class members to the 1,506 persons for whom that information was not available, it was assumed for the purposes of settlement approval that the class members comprised:
(a) 982 living male Aboriginals and 3,321 deceased male Aboriginals;
(b) 1,470 living female Aboriginals and 2,867 deceased Aboriginal females;
(c) 465 living male Islanders and 1,290 deceased male Islanders; and
(d) 519 living female Islanders and 1,034 deceased female Islanders.
Thus it is estimated that 8,512 or approximately 71% of claims in the proceeding are claims on behalf of deceased estates.
OVERVIEW OF THE APPLICANT’S CASE
The Stolen Wages Case
During the claim period Aboriginals and Islanders in Queensland, who had not been granted an exemption from statutory control under the Protection Acts, were required to live on a settlement and were under the control of the relevant Superintendent or Protector. The control extended to their ability or capacity to earn income, own property, move to or live at an area outside the relevant settlement or travel outside such places, marry, and engage in customary native practices. Aboriginals and Islanders living on settlements were reliant upon the State, through the Superintendent or Protector, for the necessities of life including food, housing and medical services.
It was unlawful for Aboriginals and Islanders under such control to be employed without the permission of a Superintendent or Protector, and the Protection Acts required a written employment agreement which contained the wages or other remuneration to be paid, any pocket money to be paid, the nature of the food and accommodation to be provided, the period of the employment and the occupation or work to be performed. The system provided for employers to directly pay a percentage of wages to the employees as ‘pocket money’, and to pay the balance of the wages to the Superintendent or Protector to be paid into the communal savings accounts created and maintained by the State to hold those wages.
Mr Pearson’s claim
It is useful to explain this part of the proceeding through the prism of Mr Pearson’s claim. I have drawn this summary from the pleadings and his outline of anticipated evidence.
Mr Pearson is an Aboriginal man, born at Spring Hill Mission, in Far North Queensland on 17 April 1939, and is a member of the Bargarrmuga clan. He was subject to control under the Protection Acts during the claim period.
During the Second World War, when he was only a small child, his family was forcibly removed from Spring Hill Mission to a government-run Aboriginal settlement at Woorabinda, some 230 kms west of Rockhampton. They lived there for about eight years, and life was primitive and hard.
Move to Hopevale
In 1950 Mr Pearson’s family moved to Hopevale, about 45 kms north of Cooktown, which was a mission run by the Lutheran Church. It was a restricted community and the inhabitants could not leave without the permission of the Superintendent, who was the Lutheran pastor. They lived in a house which his father and others built from local timber. The house was very modest; there was an outdoor drop toilet, and it had no septic system, running hot water or electricity.
Mr Pearson and his family survived on rations which consisted of basic items such as flour, tea, treacle and soap. No meat or vegetables were provided, and the family supplemented the rations by what they could grow, fish or hunt. At Christmas time the Lutheran Church sent second-hand clothes for the mission inhabitants. There was a settlement store which contained basic items, and which operated principally through a voucher system. There was no doctor at the mission only a nursing sister who had rudimentary training.
Mr Pearson was educated until he was approximately 14 years old and completed the equivalent of grade 3, which was the highest level of education then available at Hopevale. He remained at Hopevale until he was 14 or 15 years old, whereupon he commenced employment.
External employment
In 1954, after obtaining the consent of the Superintendent, Mr Pearson obtained his first job working externally from the mission, as a stockman at Starcke Station which was 15 to 20 kms north. He did not sign any written employment agreement prior to commencing work, and there was no discussion with the Superintendent regarding what the wages would be, or what pocket money he was to receive.
He was told by the Superintendent and also by Mr Foster of Starcke Station that his wages were being paid to the Department of Native Affairs (the Department). The amount of his wages was not discussed with him and he did not ask about it as that was not something that an Aboriginal worker in his position would do and he trusted that the Superintendent and his employer would look after his interests. However, other workers at the camp told him that he would be paid £3 per week as a 15 year-old, increasing to £5 per week when he turned 16.
He worked for about seven or eight months on Starcke Station, until the beginning of the wet season. When he finished working at Starcke Station he returned to Hopevale where he continued to reside in his parent’s house.
In the years between 1954 and 1962 he worked each season for different head drovers and cattle stations for various periods, each time obtaining the permission of the Superintendent before doing so. Understandably given the passage of time, Mr Pearson was only able to supply approximate dates and times in relation to these jobs. He stated that he worked as a stockman or drover as follows:
(a) for Len Elmes, head drover, for nine or 10 weeks in approximately 1955, meeting cattle halfway from stations up near Coen (including Maloona Station, Rokeby Station and Merpa Station) and driving them to the sale yards at Mareeba. There was no written employment agreement for this employment and again Mr Pearson did not enquire about the money that he was to be paid for this job, as this was not something that Aboriginals workers were in a position to do. He said that Aboriginal men did not speak up for themselves in the presence of white men and there was an underlying threat of being sent to Palm Island as a punishment if an Aboriginal person stepped out of line. Such a punishment was particularly harsh including because it often meant the person’s family was split up;
(b) at Starcke Station again for two or three months very shortly after returning from droving with Len Elmes;
(c) at Laura Station for two or three months in 1956 or 1957. This was the only place where he ever received some money. He was not paid wages but the manager of the station gave him a cheque for £5 at the conclusion of the job, which he gave to his mother;
(d) at Lakefield Station for six or seven months until the wet season. Lakefield Station and Laura Station were owned by the same company and were adjoining properties, and he went straight there after leaving Laura Station, without returning first to Hopevale;
(e) at Kings Plains Station for about three or four weeks. He received no pocket money or wages for this work;
(f) at Starcke Station again for a period of approximately three or four months, after which he returned to Hopevale. He received no pocket money or wages for this work;
(g) at Laura Station and Lakefield Station again for approximately another two or three months, for which he received no wages or pocket money;
(h) for Phil Parsons, head drover, on two or three occasions for five or six weeks each time, driving cattle down to the saleyards at Mareeba. He never saw a written employment agreement for this work, nor was there any mention of money. He received no wages or pocket money for this work; and
(i) for Bill Wallace, head drover, on two or three occasions the shortest of which was four and a half to five weeks in duration and the longest about six weeks. He received no wages or pocket money for this work.
Except where otherwise indicated, Mr Pearson would return to Hopevale when he finished a job.
He said that work as a stockman generally involved long hours and arduous work; working six days a week with a day off on Sunday, except when droving which required working seven days a week, rising at 5:00 am to muster the horses and get them ready to commence mustering cattle at 6:00 am, and then working until dusk. He was often in the saddle for 10 to 12 hours per day. This work routine essentially remain unchanged for all of the stock work and droving work that he did during the years 1954 to 1962. His employers provided him with food, a cook to prepare the food, horses, a saddle and other equipment necessary for him to perform his work duties.
The accommodations and working conditions for his work in the Cape York Peninsula were much harsher than were the jobs at Hughenden. When Mr Pearson was not mustering or driving cattle and sleeping out in the bush, he would sleep at the cattle stations. There, he would be given a wire bed with no mattresses, in a tin shed with a dirt floor. In some cases, no bathing facilities were provided, and if he wanted a shower, he had to go down to the creek to wash himself. The food he was provided was usually damper and grisly corned beef and he was rarely given vegetables. As an Aboriginal worker, he was not trusted by his employers to handle certain items like sugar or butter, and if he wanted some sugar with his tea, a teaspoon of sugar would be paced in his tea by someone else.
Move to Palm Island
In around late 1958 or 1959 Mr Pearson visited Palm Island where he met his future wife, Anna May Prior. He ended up living on Palm Island for most of 1960 and until about July or August 1961.
In September 1960, after first having obtained the permission of the Superintendent of Palm Island Aboriginal Settlement, he married Ms Prior on Palm Island. He adopted his wife’s child, Julie-Anne Teresa who was born in 1959 and he and his wife had seven children between 1961 and 1971.
In the next few years, with the permission of the Superintendent of Palm Island, he worked at the following cattle stations as a stockman:
(a) Dunraven Station, near Hughenden, for about five or six weeks in about April or May 1960, after which he returned to Palm Island. The owner of the station told him he was to be paid £14 per week but he did not receive any wages directly and assumed they were paid directly to the Superintendent of Palm Island, who had arranged the job;
(b) Rokeby Station, near Coen, for about six months, during which he ran one of the stocks sub-camps. His wife and child accompanied him, they stayed in an uncomfortable shed and they had to make do with the rations they were provided for food. It was his understanding that his wages were being sent to the Superintendent at Palm Island; and
(c) Kalinga Station, north of Laura, for approximately six or seven months after finishing work at Rokeby Station, and without first returning to Palm Island. He was not paid for this work and presumed that payment was being made to the Superintendent of Palm Island. On occasion, he would shoot crocodiles with one of the other fellows in the station, and then skin and salt the crocodile hides before selling them to the owner of Kalinga station for cash. In early 1962 Mr Pearson was exempted from the 1939 Act, but he did not directly receive any wages for his work at Kalinga Station because that employment had been arranged prior to his exemption being granted.
Employment on the missions
Mr Pearson also undertook work at Palm Island and Hopevale between his external jobs. He did not sign or otherwise enter into employment agreements in relation to that work either.
While living on Palm Island he worked at the settlement in jobs arranged by the Superintendent which included working as a ringer and at the butcher shop. He only received £1 or £2 per fortnight for that work, irrespective of the nature of the work undertaken. He was paid those amounts cash in hand from the Superintendent. He stated that there was never any discussion about payment for the work, he was simply required to work and that was the end of it, and that in those times Aboriginals could not speak up for themselves.
When he was at Hopevale he was required to do work directed by the Superintendent within the community, including helping out with the stock work, clearing land and working in the sawmill. Everyone at Hope Vale was given work to do and that no one was allowed to be idle. This work was unpaid and he was not given any pocket money for it.
The employment arrangements generally
Although he was employed by many external employers between 1954 and 1962, he never signed or otherwise entered into a written employment agreement as required under the 1939 Act, he was not told the wages he was to be paid. Except for three instances, he was never paid directly. He did not receive pocket money from his various employers, which he believed to be because he did not smoke, drink or gamble and therefore was believed to have no need for such money. When he would return to Hopevale or Palm Island, the Superintendents would never ask whether he had been paid pocket money or how much he had received.
Mr Pearson stated that between 1954 and 1962 he received nothing on account of his wages other than some small withdrawals he was permitted to make and the three occasions he was paid directly as mentioned above. He made only modest withdrawals from the savings account, being no more than £10 a year, with such withdrawals being arranged through the relevant Superintendents. He cannot now recall any specific withdrawals, but that he may have withdrawn £5 or £10 in 1957 at Hopevale to pay for a second-hand horse saddle, and he may have made other withdrawals at Hopevale to pay his parents for board. He also recalls that he made withdrawals to attend the horseraces in Laura and Coen when he was working nearby, and he withdrew money through the local Protector so he had money for food at the races. He was not provided with any statements or written accounts which set out how much money had been paid into the savings account on his behalf or how that money had been spent.
Mr Pearson recalled witnessing a police sergeant, acting as a Superintendent, taking advantage of illiterate Aboriginal workers by recording amounts of withdrawals in excess of what he was written in the book recording the transactions, meaning that those workers were being short-changed. He saw that occur about three or four times. Although he saw it happening, he was too scared to say anything so he stayed quiet, and none of the workers spoke about it because they were all too scared to do so.
Move to Innisfail
After Mr Pearson finished work at Kalinga Station he went on a cattle drive for five weeks and afterwards he moved with his family to Innisfail. For all of his subsequent employment, Mr Pearson was paid directly by his employer for his work.
He and his family lived in Innisfail for about three years, and after a period of living in Ingham for several years, they moved to Townsville where he worked for around 28 years at a meat works. For a short period Mr Pearson worked at the meat works in Ipswich, which was run by the same company.
At the time Mr Pearson and his wife were living in Innisfail, he believed that the savings account held on his behalf should have contained substantial monies from wages paid by his various employers for the work he had completed. He and his wife estimated that the amount due was around £7,000, which they thought would be sufficient to purchase a family home. They commenced to plan the purchase and went so far as to narrow their search down to two houses in Innisfail that they considered to be suitable to buy. However, when he went to speak to Sergeant Hegarty, the Protector at Innisfail, he was extremely surprised to be told that the Department only held a very small sum on his behalf. That was devastating to him and his wife, and he felt badly “ripped off”.
Not being paid his wages was an enormous setback for Mr Pearson, especially given that he ended up having a very large family and was responsible for looking after eight children. He considers that it was outrageous that he undertook a large volume of hard work from 1954 until 1962 and then when he went to access the wages he had fairly earned, his savings account held only a small amount of money. To this day he wonders where all the money went and he described the State’s conduct as dehumanising.
Mr Pearson alleged that, by the prevailing legislative system of wage controls and forced savings under the Protection Acts, the State imposed on itself a statutory trust with certain express and implied duties. He seeks an account of money held by the State for him, being either an account on the basis of a wilful neglect or default, or a common account.
Further and alternatively, Mr Pearson alleged that the combined effect of:
(a) the provisions of the Protection Acts and the fact that the State through its servants or agents (principally, the Director of Native Affairs and legislative successors, who I will call the Director, and Superintendents and Protectors) held or managed Aboriginals’ and Islanders’ wages;
(b) the relationship of trust and confidence which existed between ‘controlled’ Aboriginals and Islanders and the State and its servants or agents;
(c) the inequity of power between ‘controlled’ Aboriginals and Islanders and the State and its servants or agents;
(d) the ability of the State and its servants or agents to unilaterally exercise the rights of ‘controlled’ Aboriginals and Islanders in relation to their employment or wages; and
(e) the particular vulnerability of Aboriginals and Islanders to the State in the circumstances,
meant that the State owed a continuing fiduciary duty to class members to act in their best interests with regard to their treatment, the payment of their wages and pocket money, and the care and control of the money the State received from their employers.
Mr Pearson alleged that the State through its servants and agents, including the Director and/or the Superintendents of Hopevale and Palm Island, breached the trustee and fiduciary duties they owed to him by, amongst other things:
(a) failing to ensure that:
(i) his employment only took place with the permission of the relevant Superintendent or Protector and when there was an employment agreement in place between him and the employer as required by the Protection Acts;
(ii) appropriate recovery action was taken against any employer who failed to pay him wages or pocket money in accordance with any employment agreement;
(iii) all money owed to him had been identified by an examination of the relevant employment agreement and pocket money book and paid by the employer either into the savings accounts or, in the case of pocket money, directly to him;
(iv) he was paid for the full time he spent working for each of his employers; and
(v) all monies owed by an employer to him pursuant to an employment agreement were collected and paid into the savings accounts;
(b) failing to keep and maintain records concerning his employment and relevant payments;
(c) failing to pay all money received from employers as wages into the savings account or any other account into which his wages were placed;
(d) failing to preserve the corpus of money which was paid into the savings accounts;
(e) failing to take reasonable care, diligence and prudence with regard to investing or dealing with the money held on his behalf on trust, including by:
(i) permitting money held on trust to be paid into the Welfare Fund;
(ii) permitting money held on trust to be intermingled with money held in the Welfare Fund;
(iii) permitting money held on trust to be used to pay for the maintenance of Aboriginal families, settlements and communities;
(iv) permitting trust money to be used to pay for rations which the State had an obligation to provide in any event;
(v) withdrawing money from the savings accounts in order to either make up a shortfall in government revenue or expenditure or to save the State from having to make a payment from its own funds;
(vi) failing to pay or otherwise credit to the savings accounts all of the interest which has accrued on the accounts;
(vii) permitting loans to be made from the savings accounts for the building of hospitals in Queensland where the interest on those loans was not paid to the accounts; and
(viii) forgiving loans made from the savings accounts for the building of hospitals in Queensland;
(f) failing to act in good faith with regard to the investment of money held on trust including because:
(i) interest on investments made with trust money was classified as “surplus interest” and was not paid to the savings accounts or otherwise held on trust, but instead paid to the Welfare Fund; and
(ii) investments from the savings accounts were loaned to build hospitals in Queensland were for the benefit of the State only and not for his direct benefit or commercial advantage;
(g) failing to act in good faith when accounting to him about money held by the State on trust for him;
(h) failing to act in good faith with regard to the payment of money to him from the savings accounts;
(i) failing to account to him with regard to payments which were made to and from the savings account, and amounts paid directly to him as pocket money;
(j) failing to invest the money held on trust only for his benefit;
(k) failing to place his interests ahead of their own interests with regard to the investment and use of the money held on trust;
(l) failing to take action once misappropriation of money from the trust fund was drawn to their attention;
(m) failing to have in place proper or adequate control systems which would have operated to avert or check any fraudulent withdrawal of money from the accounts;
(n) failing to act with reasonable skill and diligence with respect to the administration of the trust; and
(o) requiring, deducting or retaining payments made to the Welfare Fund and/or investment returns from the savings accounts paid to the Welfare Fund.
Mr Pearson also alleged that the State breached the trust and fiduciary duties that it owed to class members. Further particulars in relation to those breaches were to be provided following the initial trial of his claims.
The Welfare Fund
Regulations 6 to 11 of the 1945 regulations required all Aboriginal workers who were earning wages in controlled employment under the 1939 Act to contribute amounts from their gross earnings of 2.5%, 5% or 10%, depending on the workers’ circumstances, including whether they lived on a settlement or mission and whether they had dependants. The State alleged, I assume on the basis of records, that it made the following deductions from the savings account in relation to Mr Pearson for this purpose:
Date
Particulars
Withdrawal
30/09/1954
[indecipherable] A.P.F
£1/4/8
30/11/1954
Sh 50 A.P.F
£2/12
31/03/1955
Sh 15 A.P.F
£-/14/4
31/10/1955
Sh 25 A.P.F
£2/9/-
31/05/1956
Sh 31 A.P.F
£-/4/8
31/08/1956
Sh 34 A.P.F
£2/11/11
31/10/1956
Sh 56 A.P.F
£2/12/6
31/08/1957
Sh 48 A.P.F
£2/1/8
30/11/1957
Sh 1 A.P.F
£-/18/4
31/05/1958
Sh 13 A.P.F
£-/8/9
31/07/1958
Sh 15 A.P.F
£-/19/10
31/07/1958
Sh 15 A.P.F
£-/8/6
31/07/1958
Sh 14 A.P.F
£2/18/1
31/12/1958
Sh 19 A.P.F
£3/10/10
31/01/1959
Sh 24 A.P.F
£1/14/-
31/08/1959
Sh 29 A.P.F
£1/0/7
30/09/1959
Sh 29 A.P.F
£2/18/7
30/11/1959
Sh 31 A.P.F
£-/14/2
31/01/1960
Sh 33 A.P.F
£1/1/3
TOTAL
£31/3/8
The applicant alleged that:
(a) the Welfare Fund deductions amounted to a compulsory exaction of money for public purposes which was enforceable by law, and that they were invalid as they amounted to a tax which had not been authorised by Parliament. Aboriginal workers already paid income tax on the wages they earned and by requiring these additional payments based on the amount of money they earned, the regulations imposed an additional tax which was invalid; and
(b) by making deductions prior to the introduction of the 1945 regulations, the State acted unlawfully and for an improper purpose.
The applicant further alleged that the State also wrongfully took for itself any excess return gained through interest and investment of the money held in the savings accounts (described as “surplus interest”), for which payment the regulations provide no support.
The Racial Discrimination Case
In 2002 the State offered to pay reparations to Aboriginals, Islanders, South Sea Islanders and Papua New Guineans who were subjected to control under the Protection Acts. The Reparations Scheme was established after consultations with indigenous communities and was administered by the Department of Aboriginal and Torres Strait Islander Policy and its successors.
The Department established a panel of legal practitioners who were required to provide legal services on an individual basis to eligible claimants. The stated purpose of the panel was to ensure that each claimant understood his or her rights including the contents and effect of the claim form and the applicable deed of settlement, and was fully informed having regard to all the relevant circumstances. The applicant however asserted that the duties that the legal practitioners employed by the State were required to perform were limited, and it appeared that they were merely required to ensure that matters raised in a checklist were followed.
In order to receive a payment under the Reparations Scheme claimants were required to execute a deed of settlement (Reparations Deed) which contained a release which stated:
…the claimant acknowledges and agrees that he/she accepts the payment in full and final satisfaction and discharges of all actions, suits, claims, costs and demands which the claimant, and all other persons claiming through or under the claimant may now have or could have, whether pursuant to common law or under the protection of acts, against the State, its servants or agents, arising out of or in any way related to the controls, and this deed may be pleaded as a bar to any such claim.
: (the release).
The State pleaded the release as a bar to claims in the Stolen Wages Case by class members who had signed a Reparations Deed and received compensation under the Reparations Scheme.
The applicant alleged that the State failed to ensure that appropriate and complete legal advice was provided to the applicant and class members so as to enable them to make an informed decision as to whether to sign a Reparations Deed, including by failing to equip the panel of legal practitioners with the requisite information to enable them to give full and independent advice.
The applicant argued that such conduct amounted to unlawful racial discrimination in contravention of s 9 of the RDA in that:
(a) the class members share a race; and
(b) the conduct of the Reparations Scheme including the provision of legal advice:
(i) involved a distinction, exclusion, restriction or preference which was based on race; and
(ii) had the effect of nullifying or impairing the recognition, enjoyment or exercise of the applicant’s and class members’ rights and freedoms.
The applicant also contended that the conduct of the State was in contravention of s 10 of the RDA which provides as follows:
(1) If, by reason of, or of a provision of, a law of the Commonwealth or of a State or Territory, persons of a particular race, colour or national or ethnic origin do not enjoy a right that is enjoyed by persons of another race, colour or national or ethnic origin, or enjoy a right to a more limited extent than persons of another race, colour or national or ethnic origin, then, notwithstanding anything in that law, persons of the first‑mentioned race, colour or national or ethnic origin shall, by force of this section, enjoy that right to the same extent as persons of that other race, colour or national or ethnic origin.
(2) A reference in subsection (1) to a right includes a reference to a right of a kind referred to in Article 5 of the Convention.
(3) Where a law contains a provision that:
(a) authorizes property owned by an Aboriginal or a Torres Strait Islander to be managed by another person without the consent of the Aboriginal or Torres Strait Islander; or
(b) prevents or restricts an Aboriginal or a Torres Strait Islander from terminating the management by another person of property owned by the Aboriginal or Torres Strait Islander;
not being a provision that applies to persons generally without regard to their race, colour or national or ethnic origin, that provision shall be deemed to be a provision in relation to which subsection (1) applies and a reference in that subsection to a right includes a reference to a right of a person to manage property owned by the person.
The applicant did not particularise the asserted breach of s 10 of the RDA and it is unclear precisely how this alleged contravention was proposed to be argued.
In respect of these alleged breaches of the RDA, the applicant sought damages and aggravated damages pursuant to s 46PO of the Australian Human Rights Commission Act 1986 (Cth) (AHRC Act).
Again, it is useful to explain this part of the case through the prism of Mr Pearson’s claim. Mr Pearson said that in about 2002 he went to a meeting at the Aitkenvale Aboriginal Reserve near Townsville, with about 30 other attendees, to discuss proposed payments to be made under the Reparations Scheme. He said that the meeting was rowdy and noisy and people were unhappy with what was happening. He recalled someone at the meeting saying that if a person signed the agreement under the Reparations Scheme they would not be able to sue the government. However, he was living in a Housing Commission house and from pension payment to pension payment, and did not have the wherewithal or resources to sue the government in any event. Mr Pearson said that no one told him the amount of missing wages he was owed by the State. He and his wife thought that at least he could get something through the Reparations Scheme so he kept quiet and decided to take what was being offered.
Subsequently Mr Pearson met with a solicitor in Townsville concerning the documents that he was asked to sign. The solicitor did not produce any documents showing what had been paid to the State on account of his wages and gave him no advice about what may have actually been owed on account of his wages. He signed the Reparations Scheme documents, including the Reparations Deed, as requested and he subsequently received $9,200 in three payments between 2003 and 2016.
Mr Pearson alleged that the conduct of that State in providing the legal advice in the way that it did, as part of the Reparations Scheme, was in breach of ss 9 and 10 of the RDA. It pleaded a number of acts as the basis for this claim, which can be summarised as follows:
(a) the State did not provide Mr Pearson (or ensure that the was provided with) legal services which would enable him to make an informed decision on whether to sign the Reparations Deed, in that he was not informed about:
(i) the amount of money that had, or ought to have been paid, into the savings account on his behalf;
(ii) the State’s duty to keep records with regard to the account into which his wages were paid, and of payments out;
(iii) the amount of interest and other accretions earned on that money;
(iv) whether the State as a trustee or otherwise owed a fiduciary duty to him with regard to the way in which the savings account was operated (and whether the State was in breach of any trust or fiduciary duty); and
(v) the quantum of any legal claim he may have against the State;
(b) the State mandated legal advice that was “pro forma” in nature and did not include any matters which were relevant to the determination of Mr Pearson’s personal claim against the State;
(c) the State did not provide documents or other information which would have assisted Mr Pearson in making a proper determination of the monies held by the State on his behalf and/or his legal rights and remedies against the State; and
(d) the State failed to ensure that Mr Pearson received full independent legal advice and did not provide information to the solicitor he met with to enable the solicitor to provide appropriate independent legal advice.
Second, the Court accepted in 2017 that a funding rate of 20% of the gross settlement compared favourably with the rates generally offered in the litigation funding marketplace and that, at least in part, LLS offered that rate because of its interest in the social justice aspect of the case: Pearson at [24]. In my view 20% of the gross settlement (which equates to approximately 21.58% of the net settlement after deduction of approved legal costs) continued to compare favourably with the rates offered in ‘standard’ class actions. For class actions which settled during the period January 2013 to December 2018 the median funding rate was in the range of 25.5 to 26.0% of the gross settlement: Kuterba v Sirtex Medical Ltd (No 3) [2019] FCA 1374 at [10] (Beach J). But the present case is far from a ‘standard’ class action; it was novel and complex, it involved a high level of risk and uncertainty as to the outcome and it posed unique challenges and expense. Those matters would justify a funding rate above the median, and well-above the 20% set under the common fund order.
Third, the evidence tends to show that most class members accept that 20% is a reasonable funding rate. 3,766 class members entered into a funding agreement with LLS and thereby accepted a 20% funding rate, the balance of the participating class members registered to share in the compensation after being informed of the 20% funding rate. Only four class members objected to settlement approval on the basis that the funding commission was excessive, and in my view those objections had little force and displayed hindsight bias. Mr Savo asserted that a 10% funding rate was appropriate but, with respect, that funding rate appeared to be plucked from thin air and it failed to take into account the substantial costs and risks LLS assumed and the funding rates generally available in the litigation funding marketplace. At the outset of this proceeding no commercial litigation funder would have taken on its costs and risks for a funding commission of 10%.
Fourth, the $190 million result achieved in the litigation is excellent given the difficulties in the case. It could not have been achieved without the funding provided by LLS and it is important that the courts approve funding rates that “recognise the important role of litigation funding,…are commercially realistic and properly reflect the costs and risks taken by the funder”, without hindsight bias: Money Max at [120]. I consider the aggregate funding commission of $38 million to be proportionate to the amount recovered in the proceeding and the risks assumed by LLS. It does not constitute a windfall gain for LLS and it results in a reasonable and proportionate outcome for class members. After deduction of litigation funding charges and legal costs, class members will receive approximately 73% of the settlement achieved.
Finally, it is perhaps worth noting that, while I considered it unnecessary to revisit the extant common fund order, had I done so the result is unlikely to been any different. In the circumstances of this case it would have been appropriate to make an order under s 33V(2) of the FCA to distribute the burden of costs, fees and all other expenses, including litigation funding charges, equitably among all persons who have benefited from the class action from the common fund of their recoveries, as provided under Class Actions Practice Note (GPN-CA) at [15.4]. For similar reasons to those set out above I would have been satisfied that it fell comfortably within the concept of “justness” in s 33V(2) to order that 20% of the gross settlement be paid to LLS from the settlement fund.
The reasonableness of the settlement administration costs
Unfortunately, the tender documents provided to the four accounting firms inviting them to tender for the role of Administrator failed to clearly delineate the respective roles of the Administrator and BELAW as the proposed Advisor. The tenderers proposed a wide range of fee estimates but they reflected different assumptions as to the costs likely to be incurred by the Advisor. For example, one tender provided a quote of $2.9 million which included $1.2 million in fees charged by the Advisor, and another tender provided a quote of $950,000 which allowed only $50,000 for the Advisor’s fees.
In an affidavit made 15 November 2019 Mr Bottoms deposed that the following work was likely to be required to be undertaken by BELAW as Advisor:
(a) Completing data entry of Claimants to Database;
(b) Transfer of database to Administrator;
(c) Consultation with Administrator regarding verification process and missing data needed;
(d) Preparation of court applications and directions;
(e) Adding late registrants to the database;
(f) Correspondence with claimants regarding further information required;
(g) Notification and correspondence with ineligible claimants;
(h) Conferring with Administrator regarding the settlement distribution calculation;
(i) Correspondence with claimants regarding distribution statements;
(j) Correspondence with claimants regarding distribution amounts;
(k) Handling inbound correspondence with claimants throughout scheme process.
In an affidavit made 21 November 2019 Mr Bottoms estimated BELAW’s charges as Advisor in the amount of $827,531.60.
Initially BELAW’s proposed role as Advisor extended well beyond advising the Administrator on legal issues in relation to the SDS, and it was proposed to have the primary role in communicating with class members, inputting claims information into a database and corresponding and communicating with class members. I considered there were likely to be advantages in having BELAW as the primary point of contact with class members given its long history of acting for indigenous communities in Queensland, that it was well known to the class through the proceeding and had developed a good relationship with many class members, and that it had successfully communicated with class members throughout the proceeding. But having regard to the tender documents, there appeared to be a significant overlap between the respective roles of the Administrator and the Advisor and I was concerned that some of the estimated costs may have been double counted. There was also potential for wasted costs to arise from the lack of clarity about the respective roles.
By orders made 21 November 2019 I directed the Costs Referee to inquire and report to the Court regarding the reasonableness of BELAW’s estimate of its fees for acting as the Advisor. On 10 December 2019 the Costs Referee advised that she was unable at that point to provide a report because the SDS was not finalised and because the tenders took different positions as to the role of the Advisor and the assessment therefore depended on which firm was appointed as Administrator.
Initially Grant Thornton provided a fixed fee estimate of $762,300 (exclusive of BELAW’s costs as Advisor) subject only to Court-approved increases. Subsequently, in light of the increased number of participating class members revealed as more claimant data was entered into the database, Grant Thornton increased its fixed cost estimate to $1.07 million, subject to any Court-approved increase. That increase seemed reasonable enough but BELAW made a dramatically increased estimate of its proposed charges as Advisor – up to a total of $4.54 million. That increase would have meant total settlement administration costs in the order of $5.6 million.
At the resumed settlement approval hearing on 19 December 2019 I informed the applicant that I had concerns regarding the substantial increase in the Advisor’s fee estimate and I was not prepared to approve settlement administration costs of $5.6 million. I said that I would not approve the SDS (which proposed the appointment of BELAW as Advisor) until I could be satisfied that BELAW’s proposed charges were reasonable.
On 20 December 2019 I held a telephone mention with Mr Bottoms together with Mr Jonsson and Mr Beven. Mr Bottoms expressed various difficulties with providing a more accurate and lower estimate of the likely charges, essentially because he considered the characteristics of the class meant that there were likely to be many repetitive communications with class members regarding compensation entitlements, and a high level of disputation. I informed Mr Jonsson and Mr Beven that the appointment of an appropriate Advisor was a matter for the Administrator, the tasks necessary to be performed by the Advisor were a matter for the Administrator, and that it was the Administrator’s responsibility to ensure that the settlement administration was conducted efficiently, including by ensuring that the cost of communication with class members was reasonable and proportionate. I directed Grant Thornton and BELAW to propose a better delineation of their respective roles under the SDS and requested them to reconsider the fee estimates they had provided.
On 6 January 2020 Grant Thornton wrote to my Chambers and said that in consultation with BELAW it had reviewed the proposed scope of works to be undertaken under the SDS and clarified the responsibilities of Grant Thornton as Administrator, including by:
(a) assuming responsibility for many of the tasks previously allocated to be undertaken by BELAW;
(b) reassessing the tasks that could be undertaken at lower levels, particularly in regard to the verification of claimants and standard communications with claimants; and
(c) avoiding duplication and monitoring the reasonableness of the Advisor’s charges through an oversight mechanism, including a recent legal costs agreement with BELAW.
Based on its assumption of the increased work it would undertake Grant Thornton revised its quote upward to $1.81 million, subject only to Court-approved increases. BELAW revised its fee estimate downwards to $2.22 million. The revised total was therefore $4.03 million, a reduction of about $1.57 million on the previous estimate.
I accepted that there were difficulties for Mr Bottoms in reaching a reasonably accurate estimate of BELAW’s likely fees but I was not satisfied that the estimate of $4.03 million was reasonable. Given the Costs Referee’s difficulties in making an assessment at that point I decided not to approve any estimate for the Advisor’s fees and instead:
(a) to amend the SDS to provide for the Costs Referee to assist the Administrator to assess the reasonableness and proportionality of the Advisor’s charges on an ongoing basis; and
(b) to direct that the Costs Referee inquire and report to the Court at three monthly intervals as to the reasonableness and proportionality of settlement administration costs charged or proposed to be charged by the Advisor.
On 17 January 2020 I made such orders.
The early signs are that this regime to supervise and control settlement administration costs is working. On 1 May 2020 the Costs Referee informed chambers that the communication with class members was proceeding in an effective and an efficient manner and that a formal arrangement has been implemented whereby the Administrators provided clear instructions to the Advisor setting out the scope of advice and assistance required. Where necessary, the Advisor contacted the Administrators to seek to expand the scope of the work. The Costs Referee reported that this arrangement was working well.
The reimbursement payment to the applicant
It is established that that an applicant in a class action who has sacrificed time and/or incurred expenses in prosecuting the action on behalf of the class may be entitled to some reimbursement from the corpus of any settlement or judgment. The compensation is for the time and expense attributable to the representative features of the applicant’s involvement as a party in the litigation, not to compensate the applicant for the time and expense which are an ordinary incident of the applicant’s involvement in his, her or its own interests: Caason at [176] and the cases there cited.
The applicant sought a payment of $35,000 for the time, cost and inconvenience of his acting as the lead applicant in the proceeding, for the benefit of the class members.
Mr Bottoms deposed to the significant amount of work that Mr Pearson undertook throughout the proceeding, which included significant time giving instructions and receiving advice, many days spent providing a detailed statement for use in the trial on the common issues, attending case management hearings and interlocutory hearings held in Brisbane in 2016 and 2017 as well as the two-day preservation of evidence hearing in Cairns, and attending six of the seven one to two-day mediations. These attendances required Mr Pearson to travel from his home in Townsville and stay in Brisbane and Cairns.
Mr Pearson also spent significant time and effort in explaining the class action to class members and his role as an elder in the Aboriginal community in North Queensland was important in drawing class members’ attention to the class action and in building trust with the community in relation to it. He attended Court-ordered information meetings where he spoke with and answered class members’ questions at Murgon in 2016, and at Cherbourg, Palm Island and Townsville in 2018 and 2019, and throughout the duration of the proceeding he also fielded telephone calls from class members. Following the announcement of the settlement he was so inundated with telephone calls that he ultimately decided to change his telephone number. Mr Bottoms deposed that Mr Pearson’s importance to the proceeding was such that he became a focal point for the indigenous community in relation to the class action.
Such a high level of time, travel and personal involvement must have been very onerous for a man who is now aged 80, and I considered it to be fair and reasonable that he receive the proposed reimbursement payment for his work on behalf of the class.
Financial counselling
Having regard to the fact that many of the class members are not well-educated and lack commercial and legal sophistication, I had a concern that upon receipt of lump sum compensation some might be might be vulnerable to exploitation. I asked the applicant to consider whether the SDS should include provision to set aside an amount so that those class members who wish to do so can be provided with financial counselling, advice and assistance.
Ultimately both parties admitted that it was appropriate to set aside an amount for the purpose of providing class members with financial counselling and advice. BELAW approached national accounting firms BDO, Grant Thornton, and KordaMentha, and also the Indigenous Consumer Assistance Network (ICAN), regarding their preparedness and capacity to provide financial counselling services to class members who are to receive compensation under the SDS. Each of the firms said that from their experience there was a legitimate concern that class members may be vulnerable to exploitation, and each indicated a preparedness and capacity to provide financial counselling, advice and assistance.
Ultimately the applicant proposed ICAN to undertake this work. It is a not-for-profit charity that has been operating in North Queensland and the Torres Strait since October 2007, with the objective of empowering indigenous consumers. It is structured as a public company limited by guarantee, with six directors and 20 employees across four offices located in Cairns, Townsville and the Yarrabah and Palm Island Aboriginal communities, and funded by the federal government. It is registered with the Australian Charities and Not for Profits Commission and has experience in delivering financial counselling and capability services to indigenous communities across Queensland. The materials state that it delivers financial counselling, and financial capability and training services to indigenous people with a particular focus on delivering these services to remote communities. It was recently appointed to provide financial counselling and advice to the Palm Island Aboriginal community in relation to the Palm Island class action settlement: see Wotton v State of Queensland (No 11) [2018] FCA 1841 (Wotton).
In response to BELAW’s approach ICAN said:
Remote and discrete Indigenous communities experience a combination of geographical, historical and cultural factors which increase situational vulnerability to consumer detriment, when coupled with lower literacy rates and limited access to financial counselling services. The combination of these factors presents a ‘unique set of circumstances’ for Indigenous-specific consumer exploitation to occur.
Over its 11 years of financial counselling and capability service delivery to Aboriginal and Torres Strait Islander peoples, ICAN has uncovered a number of systemic consumer issues where traders were found to be targeting Indigenous consumers through practices of telemarketing, door-to-door trading of goods and services at inflated prices and signing residents up to inflated and illegal consumer credit contracts. Usually, Indigenous consumers do not have the financial capacity to enforce their legal rights in respect of these predatory behaviours. ICAN’s consumer advocacy work in the above areas has led to a number of enforcement actions by state and federal consumer regulators against various traders who were found to be operating unconscionably or in direct breach of consumer credit laws.
There are potential financial implications for Queensland Stolen Wages settlement recipients, which can have short and longer-term impacts. Historically, where lump-sum payments have been available to residents of the Yarrabah Aboriginal community (located 45 minutes south-east of Cairns), ICAN notes there were significant longer-term financial implications.
ICAN then set out several examples in which members of indigenous communities that had received lump-sum payments were allegedly exploited by predatory traders and credit providers.
ICAN set out an overview of the financial counselling and advice services it proposed to provide to claimants under the SDS, namely:
(a) specialist advice about the implications of the settlement on existing government payments and entitlements;
(b) specialist advice on dealing with creditors wanting payments for existing debts;
(c) referrals to ethical investment advice, including Indigenous Business Australia home ownership;
(d) referral and linkages to the Queensland Public Trustee for people that are wanting to create a will or have a disability which impacts their capacity to make reasoned financial judgements;
(e) support to prevent economic abuse by family or friends; and
(f) financial literacy education/advocacy to prevent/address exploitative trader behaviour.
Because of the much greater number of claimants in the present class action and the breadth of their geographical spread across Queensland, ICAN did not offer the same face-to-face financial counselling services as it offered in relation to the Palm Island class action settlement service. It instead proposed that the service to be provided through a telephone hotline service.
The applicant sought an order that ICAN be appointed to provide financial counselling and advice to recipients of compensation under the SDS who wish to receive it, for a fixed amount of $200,000. I was satisfied that it is fair and reasonable to make that order, for similar reasons to those I expressed in Wotton at [15]-[18]. In summary, because:
(a) many of the class members are likely to be vulnerable to exploitation;
(b) class members who receive a lump sum may benefit from the provision of access to impartial advice from financial counsellors who have expertise in providing advice to members of indigenous communities. It will be the class member’s choice as to whether he or she accesses the available advice;
(c) some Registered Representatives have more than one claim, and thus some families may receive an amount of compensation which provides an opportunity to make a significant change to their situation. Given their possible vulnerability to exploitation that might not occur unless they receive advice directed to putting the compensation to their best use; and
(d) the recoveries by class members will not be materially diminished by setting aside this amount. The cost will be more than offset by interest on the settlement fund.
CONCLUSION
This case was a good example of the successful operation of the Part IVA and analogous regimes. It shows, yet again, that when class actions are properly conducted and appropriately managed by the courts, many affected persons can recover compensation for civil wrongs which they would not otherwise have been able to obtain, including people suffering from substantial disadvantages in terms of economic capacity, education, geographic location and cultural issues, which otherwise present significant barriers to their access to justice.
I certify that the preceding two hundred and ninety-seven (297) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Murphy.
Associate:
Dated: 8 May 2020
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