Tredrea v KPMG Financial Advisory Services (Australia) Pty Ltd (No 3)

In the Federal Court of Australia, the case of Tredrea v KPMG Financial Advisory Services (Australia) Pty Ltd (No 3) involved a representative proceeding initiated by the plaintiff against the defendant, a financial advisory firm. The dispute centred around the settlement of claims made by a group of clients who had allegedly been misled by the defendant's financial advice. The primary legal issues the court had to address were the appropriateness of a common fund order to manage the settlement proceeds and the distribution of these funds among the group members, particularly in relation to the deduction of legal costs.

The court was tasked with determining whether the funder, who played a significant role in the development of the representative claim, was entitled to a commission that should be capped by a multiple of the costs advanced. Additionally, the enforceability of the funding agreements was brought into question, and the court considered whether the absence of a respondent or contradictor would impact the decision. The court also had to examine the principles governing the distribution of settlement proceeds, ensuring that the deduction of legal costs was equitable and transparent.

In its reasoning, the court concluded that the funder's role in devising the representative claim justified a capped commission, reflecting the costs advanced. However, due to uncertainties about the enforceability of the funding agreements, the court opted for a cautious approach. The court found that the absence of a respondent or contradictor was a significant factor, as it would have provided valuable input on the fairness and reasonableness of the proposed distribution. Ultimately, the court ruled that the settlement proceeds should be distributed among the group members, with legal costs deducted in a manner that ensured fairness and transparency.

The court's final orders included the approval of the settlement terms, with specific provisions for the capped commission for the funder and the transparent deduction of legal costs. The court also noted the importance of having a respondent or contradictor in future representative proceedings to ensure that the interests of all parties are adequately represented and considered.