Federal Court of Australia

Ewok Pty Ltd as trustee for the E & E Magee Superannuation Fund v Wellard Limited [2024] FCA 296

ORDERS

THE COURT ORDERS THAT:

Settlement approval

1.    The settlement of this representative proceeding be approved pursuant to s 33V of the Federal Court of Australia Act 1976 (Cth) (the Act) on the terms set out in:

(a)    the Deed of Settlement (Deed) included at pages 1 to 31 of Exhibit DJS-1 to the affidavit of Damian John Scattini affirmed 21 December 2023; and

(b)    the Settlement Distribution Scheme (SDS) included at Annexure A to these orders [Annexure omitted from this record of the orders made].

2.    The Applicant be authorised, nunc pro tunc, on behalf of the Group Members, to enter into and give effect to the Deed and conduct the transactions and steps contemplated by the Deed for and on behalf of the Group Members.

3.    Pursuant to s 33ZB of the Act, the persons affected and bound by the settlement of this proceeding are the Applicant, the Respondent, the Group Members, ICP Funding Pty Ltd (ICP Funding) and Investor Claim Partner Pty Ltd (ICP).

Settlement Distribution Scheme

4.    The Court approves the following deductions as described in paragraph 6.3 of the SDS (adopting the definitions in the SDS):

(a)    the ATE Premium of $1,026,466 to the Funder;

(b)    the Bookbuild and Consulting Expenses of $41,261 to the Funder;

(c)    the Applicant’s Funded Legal Costs to the Funder up to a maximum of $6,963,341, comprising:

(i)    $6,605,341 for the Applicant’s Funded Legal Costs up to and including December 2023; and

(ii)    no more than $358,000 for the Applicant’s legal fees and incurred disbursements for January and February 2024, and for the Applicant’s legal fees and disbursements for the settlement approval and distribution;

(d)    the Funder’s Commission of $4,865,510 to the Funder;

(e)    the Claim Management Fee of $513,984 to the Funding Manager;

(f)    the Applicant’s Conditional Legal Costs of $1,684,125 to Quinn Emanuel;

(g)    the RIM Reimbursement Fee of $17,748 to RIM; and

(h)    the Applicant’s Reimbursement Fee of $15,000 to the Applicant.

5.    Damian Scattini of Quinn Emanuel be appointed as the Administrator of the SDS.

6.    The Administrator has liberty to apply in relation to any matter arising under the SDS.

Confidentiality

7.    Pursuant to s 37AF of the Act, on the ground that the order is necessary to prevent prejudice to the proper administration of justice, the publication and disclosure of the following documents be restricted to the Court and authorised legal representatives for the Applicant and the ICP Entities until further order of the Court:

(a)    Annexure DS1 to the affidavit of Damian John Scattini affirmed on 8 March 2024;

(b)    the following sections of the affidavit of John Francis Walker affirmed on 8 March 2024 and Exhibit JW-1:

(i)    references to the names of group members (including their representatives or contact details) (Group Members’ Names) at paragraph 24 of the affidavit, and on pages 19–22, 50–51, 80–81, 110–111, 170–171, 200–201, 252, 258, 265–267, 287, 293, 300–301, 329–330, 394–395, 398–400, 402–403, 406–408, 410–412, 414–415, 418–420, 422–423, 426–428, 430–431, 434–435, 442–444, 446–447 and 502 of the paginated affidavit;

(ii)    references to the AmTrust Policy disclosing details of the insured sum, premium payable and deed of indemnity fee percentage rates at paragraphs 45 and 48 of the affidavit and pages 511–512, 523 and 526 of the paginated affidavit; and

(iii)    the transaction descriptions concerning payments made in respect of “Expert Fees” on 28 August 2019 and 24 June 2021 on page 506 of the paginated affidavit;

(c)    the references to Group Members’ Names at paragraphs 34, 35, 36, 38 and 39 of the affidavit of Damian John Scattini affirmed 9 March 2024;

(d)    the references to Group Members’ Names in Exhibit DJS-1 to the affidavit of Damian John Scattini affirmed 9 March 2024 at pages 109, 110, 112 and 116 of the paginated affidavit;

(e)    the following sections of the Expert Report of Ian Ramsey-Stewart dated 11 March 2024:

(i)    references to Group Members’ Names at paragraphs 2.1, 2.2 and 3.4, and item 1 of the index on page 8 of Appendix 3 (Letter of instructions from Quinn Emanuel dated 13 February 2024);

(ii)    Appendix 4 (Consolidated Spreadsheet);

(f)    the following sections of the affidavit of Damian John Scattini affirmed on 12 March 2024:

(i)    paragraphs 53 to 107;

(ii)    references to Group Members’ Names at paragraphs 12(a), 14(a), 20, 21, and the heading to paragraph 20; and

(g)    the references to Group Members’ Names in Exhibit DJS-2 to the affidavit of Damian John Scattini affirmed 12 March 2024 at pages 28, 29 and 31 of the paginated affidavit.

8.    Within 3 business days of the date of these orders, the Applicant and ICP Entities shall file and serve redacted versions of the documents referred to in order 7, with redactions applied to the confidential information described.

Proceeding dismissed

9.    The proceeding be dismissed with no order as to costs against any party.

10.    All orders pertaining to the provision of security for the Respondent’s costs be vacated, and all security returned, including any deeds of indemnity.

11.    All outstanding programming orders be vacated.

12.    All previous costs orders be vacated.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

BUTTON J:

Introduction

1    The Applicant brought an interlocutory application by which it sought orders approving a settlement pursuant to s 33V of the Federal Court of Australia Act 1976 (Cth) (the Act), and related orders approving certain deductions from the settlement sum in respect of legal costs and disbursements, after the event (ATE) insurance costs, a management fee and commission payable to the funder and its related entity, and a modest payment to the Applicant. With the deductions in question, only just over 34% of the gross settlement sum ($23 million) will be distributed to group members.

2    This settlement approval application has features which are rare in the current class action environment. In particular, the proceeding was brought by a closed class comprising only 23 members (including the Applicant). Other than the Applicant, all of the group members are institutional investors. Moreover, all of the group members entered into a funding agreement by which they agreed, by contract, for the funder to be reimbursed all “Project Costs” (which included incurred legal costs and disbursements), for the funder to receive a commission and for an entity related to the funder to receive a percentage-based management fee.

3    All of the group members have been notified of the gross settlement sum, and the very substantial deductions proposed to be levied against it. While the final figures for deductions (in respect of which Court approval is sought) differed slightly from the figures presented to group members in the first notice issued to them on 20 December 2023, the total deductions did not go up and the final figure for distribution to the group has gone up very slightly from the figure initially advised.

4    Fourteen of the group members (so 61% by number) have positively approved the proposed settlement on those terms, and none of the remaining nine members has objected. One group member has a claim accounting for more than half the total value of the groups’ claims. That group member is among those positively consenting to the settlement and proposed deductions.

5    While all group members entered into a retainer agreement with the solicitors (Quinn Emanuel), that is of less significance given that the terms on which Quinn Emanuel undertook legal work were based on the terms of its retainers with the Applicant, which varied over time (there were four retainer agreements with the Applicant).

6    I have emphasised these features at the outset because the Court is approving a settlement (and settlement distribution scheme involving deductions) in which all deductions (other than Quinn Emanuel’s conditional fees, reimbursement of initial legal costs paid by one group member, and the payment of $15,000 to the Applicant) are costs that all the group members have contracted to bear by having those amounts deducted from a settlement payment.

The Evidence

7    The Court’s Class Actions Practice Note provides guidance on the material that will usually need to be filed in support of an application for approval of a settlement:

15.5     The material filed in support of an application for Court approval of a settlement will usually be required to address at least the following factors:

(a)     the complexity and likely duration of the litigation;

(b)     the reaction of the class to the settlement;

(c)     the stage of the proceedings;

(d)     the risks of establishing liability;

(e)     the risks of establishing loss or damage;

(f)     the risks of maintaining a class action;

(g)     the ability of the respondent to withstand a greater judgment;

(h)     the range of reasonableness of the settlement in light of the best recovery;

(i)     the range of reasonableness of the settlement in light of all the attendant risks of litigation; and

(j)     the terms of any advice received from counsel and/or from any independent expert in relation to the issues which arise in the proceeding.

8    The Applicant relied on the following affidavits:

(a)    an affidavit of Damian John Scattini dated 21 December 2023;

(b)    an affidavit of Damian John Scattini dated 8 March 2024;

(c)    an affidavit of Damian John Scattini dated 9 March 2024;

(d)    an affidavit of Damian John Scattini dated 12 March 2024; and

(e)    an affidavit of Damian John Scattini dated 19 March 2024.

9    Through his various affidavits, Mr Scattini addressed: the background to the proceeding and its procedural history, the composition of the class and the steps that had been taken to notify the class of the proposed settlement, the Applicant’s proposed approach to distribution of the settlement sum, the funding arrangements in place and the Applicant’s security for costs, his opinion as to the fairness and reasonableness of the proposed settlement, and the bases for suppression orders sought by the Applicant. One of Mr Scattini’s affidavits annexed a confidential opinion of counsel, which I return to below.

10    I granted leave to the funder, ICP Funding Pty Ltd (ICP Funding) and Investor Claim Partner Pty Ltd (ICP) (together, the ICP Entities) to intervene at the hearing of the settlement approval application. They relied on three affidavits of the CEO of ICP, John Francis Walker, dated 8 March 2024, 19 March 2024 and 22 March 2024. In his first affidavit, Mr Walker addressed: the structure of the funding agreements entered into by the group members, the payment of the “Project Costs” by the ICP Entities, the ATE insurance policy entered into by the ICP Entities, and the calculation of the funding commission and the management fee payable to the ICP Entities. Mr Walker’s second affidavit (19 March 2024) addressed the bases for the revised suppression orders sought over materials filed on behalf of the ICP Entities. Mr Walker’s third affidavit (22 March 2024) was filed in response to a request that the Applicant and/or ICP Entities provide clarification regarding the approach to calculation of the supplemental premium payable pursuant to the ATE Insurance Policy, to which I return below.

11    In view of the unusual features of this settlement approval application, I did not consider it necessary to appoint a contradictor, but did require that the Applicant obtain an independent expert report on whether the legal costs to date, and the expected costs of settlement approval and distribution costs, were fair and reasonable. An opinion on those matters was provided by a report of Ian Ramsey-Stewart, Principal Consultant of Stewart Lawyers, dated 11 March 2024, and filed on 12 March 2024 (the Costs Report). The upshot of the Costs Report was that Mr Ramsey-Stewart considered that $431,493.73 should be deducted from the total fees, disbursements, uplift and GST of $10,055,083.38.

12    The Respondent did not put on any evidence or seek to be heard on the settlement approval, beyond addressing one matter regarding the suppression orders sought.

The course of the proceeding

13    The Applicant commenced this proceeding on 9 March 2020 on its own behalf and on behalf of a closed class of 22 other group members pursuant to Pt IVA of the Act.

14    The proceeding concerns claims for loss and damage suffered by the Applicant and group members by reason of their acquisition of ordinary shares and equity swap interests in the Respondent during the period 8 December 2015 to 31 August 2016 (Relevant Period). The claims against the Respondent fall into three categories, summarised as follows: first, that the Respondent published a misleading profit forecast in contravention of s 728 of the Corporations Act 2001 (Cth) (the Corporations Act); second, that the Respondent contravened s 1041H of the Corporations Act, s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth) and s 18 of the Australian Consumer Law (being Sch 2 to the Competition and Consumer Act 2010 (Cth)) by issuing and failing to correct the misleading profit forecast; and third, that the Respondent contravened s 674(2) of the Corporations Act in failing to notify the Australian Securities Exchange of material information of which it was, or ought to have been, aware.

15    The Respondent denied liability in relation to each of the allegations.

16    Between April 2020 and July 2022, the parties were engaged in a number of contested interlocutory applications. In April 2020, the Respondent filed a strike out application which was heard and dismissed on 8 May 2020 by Middleton J. An interlocutory application seeking discovery of documents responsive to 14 categories was filed by the Applicant in August 2020 and heard and determined on 9 December 2020. In November 2020, the Applicant filed an interlocutory application seeking orders that the Respondent produce further documents held in two accounting databases. Extensive conferral regarding the exchange of information contained in the accounting databases continued through to October 2021. The discovery process was long and protracted, spanning over three years, the last of the Respondent’s discovery being provided to the Applicant in September 2023.

17    On 14 November 2022, opt-out notices were issued to group members notifying them of their right to opt out of the proceeding by 21 December 2022. No group member has opted out of the proceeding.

18    The case is factually and technically complex. The parties filed extensive lay and expert evidence addressing their respective claims.

19    In support of its claims, the Applicant filed an affidavit of Dr Erik Magee, a director of the Applicant and expert reports including reports of:

(1)    Matthew Dalgleish, a cattle industry expert whose evidence addressed the condition of the live export cattle markets in Australia and South East Asia in the Relevant Period;

(2)    John Temple-Cole, a forensic accountant who opined on the Respondent’s forecast methodology and derived counterfactual net profit after tax;

(3)    Rowan Johnston, who reviewed the reports of Mr Dalgleish and Mr Temple-Cole and opined on whether the Respondent’s initial public offering would have gone ahead having regard to the issues identified in those reports; and

(4)    Ramsey Zein, an econometrics expert whose report addressed the alleged inflation in the Respondent’s share price resulting from the pleaded contraventions.

20    The Respondent filed six lay affidavits and six expert reports.

21    The Respondent’s lay evidence consisted of affidavits of current and former employees of the Respondent, including Gregory James Wheeler (CFO of Wellard Group Holdings in the Relevant Period), Mauro Balzarini (Managing Director and CEO of the Respondent in the Relevant Period), George Anthony Nicholls (Group Financial Controller of the Respondent in the Relevant Period), Scott Braithwaite (COO and Chief Business Development Manager of the Respondent in the Relevant Period), Bradley Mervyn Gosling (General Manager – Planning of the Respondent in the Relevant Period) and Richard James Bond (employed by the Respondent and Wellard Group Holdings as a commissioned buyer in the Relevant Period).

22    The Respondent filed expert reports of:

(1)    Peter Watkins, whose report addressed the report of Mr Dalgleish;

(2)    Campbell Jackson, whose report responded to the evidence of Mr Temple-Cole;

(3)    John Holzwarth, whose report responded to the evidence of Mr Temple-Cole, Mr Dalgleish and Mr Zein;

(4)    Richard Armstrong Slaney, whose report addressed the evidence of Mr Dalgleish; and

(5)    two reports of Dr Sanjay Unni, one addressing the report of Mr Dalgleish, the second addressing the report of Mr Johnston.

23    In reply, the Applicant filed a further affidavit of Dr Magee. Each of the Applicant’s experts also prepared reports which were filed in reply.

24    In May 2023, the proceeding was fixed for trial commencing 17 June 2024 on an estimate of six weeks. The parties were ordered to commence a mediation by 17 November 2023.

25    Thereafter, a mediation took place on 17 November 2023 which culminated in the parties agreeing to settle the proceeding. A Deed of Settlement was executed on 18 December 2023.

26    On 20 December 2023, group members were issued with a notice (First Notice) advising them of the settlement and setting out the settlement sum, the proposed deductions and providing an estimate of the net settlement sum expected to be available for distribution amongst the group members. The First Notice invited group members to raise any objection to the settlement by 26 January 2024.

27    On 5 February 2024, I ordered that a further notice be issued to group members and approved the form of that notice (Second Notice). On 9 February 2024, the Second Notice was delivered to group members, confirming the date and time of the settlement approval hearing, and setting out the method proposed to be used to calculate each group member’s entitlement. The Second Notice gave group members a further opportunity to object to the settlement by 5 March 2024.

28    Both Mr Scattini and Mr Walker deposed to that fact that no group member has objected to the settlement, and 14 group members have provided their positive consent.

Funding arrangements and “Project Costs”

29    The evidence established that each of the group members has entered into a funding agreement. A sub-set of group members entered into funding agreements with ICP Capital Pty Ltd (ICP Capital), but these agreements were novated to ICP Funding pursuant to a clause in the funding agreements entered into by those group members with ICP Capital.

30    Funding agreements with the balance of the group members were entered into with ICP Funding.

31    ICP was a party to all the funding agreements, which included the management services that ICP was to provide, and provision for its commission (3%) for the provision of those services.

32    The funding agreements entered into by each group member obliged the funder to pay the external costs associated with the “Claims”. Those costs included, not only legal fees and disbursements, but “the costs of any insurance covering Adverse Costs Orders”. The funding agreements also provided for the funder to be paid an amount from “Claim Proceeds” equal to that group member’s share of the “Project Costs” paid by the funder. The term “Project Costs” was broadly defined so that it included all legal costs and disbursements paid by the funder, including the expenses associated with obtaining ATE insurance against adverse costs orders.

33    The two groups of funding agreements differed in that some provided for a commission of 22%, or 3 x “Project Costs” (whichever was the greater) and others provided for a commission of 32%. However, this difference was ultimately of no relevance as all agreements included a guarantee clause by which each group member would receive at least 50% of the “Net Claim Proceeds” (which term was defined as “Claim Proceeds” less “Project Costs”). The effect of this clause was to cap the maximum amount payable to ICP and the funder to the extent necessary to ensure that group members received 50% of the “Net Claim Proceeds”.

34    Given the quantum of the settlement sum, and the “Project Costs” to date, that guarantee clause was triggered, meaning that the commissions claimed by the funder, and which are sought to be approved as part of the orders approving the settlement, have been calculated by reference to that guarantee. As Mr Walker explained in his affidavit, that guarantee clause overrides the differential funding commission rates set out in the two different groups of funding agreements.

35    The commission sought to be approved as a deduction from the settlement sum is $4,865,510 which equates to 21.15% of the gross settlement sum.

36    Pursuant to the funding agreements, and over the course of the nearly seven years since the first funding agreements were entered into in 2017, the funder has paid the following in “Project Costs”:

(a)    Quinn Emanuel invoices for legal costs: $6,605,341.47;

(b)    bookbuilding and expert consulting fees: $41,261.00

(c)    ATE insurance costs: $1,026,466.00.

37    Approval is also sought for legal costs for January and February 2024, and for the anticipated costs of the settlement approval hearing and distribution costs (being amounts not yet paid by the funder).

38    In respect of ATE insurance, ICP Funding took out a portfolio policy which operated in respect of specific “Insured Liabilities” associated with “Portfolio Cases” declared under the terms of the policy. Mr Walker arranged for several Deeds of Indemnity to be issued by AmTrust Europe Ltd (AmTrust), for the benefit of the Respondent and the Applicant. $30,000 was also paid into Court as security in respect of the Respondent’s costs in enforcing its rights under the Deeds of Indemnity issued by AmTrust. Under the terms of the ATE Policy, a supplemental premium was payable. This supplemental premium was payable in addition to the premiums paid for the issue of each of the three Deeds of Indemnity. Mr Walker deposed that, as calculated according to the formula in the ATE Policy, the supplemental premium due was $885,000 plus stamp duty, being a percentage of the sum insured, but the insurer agreed to accept a reduced supplemental premium, for which the insurer rendered, and ICP Funding paid, a supplemental premium of $593,861.00 (which included withholding tax). At the Court’s request, Mr Walker provided a further explanation (by his third affidavit) regarding how the supplementary premium was calculated having regard to various clauses of the ATE Policy.

39    The interlocutory application and the First Notice issued to group members stated that the costs to be deducted from the settlement sum included ATE insurance costs of a total of $1,028,247.00. The notes to the First Notice to group members explained that the ATE insurer had agreed to take less in the deferred and contingent component of its fees than it was entitled to. This was said to be a discount of 32% of the amount that would otherwise be payable as that contingent fee.

Retainer agreements and conditional legal costs

40    Quinn Emanuel undertook legal work pursuant to a series of retainer agreements with the Applicant. Four retainer agreements were entered into by the Applicant, the latest of which was entered into on 1 February 2023.

41    According to Mr Scattini’s initial (21 December 2023) affidavit, each of the group members has entered into a retainer agreement with Quinn Emanuel “in substantially similar form” to the first and second retainers entered into by the Applicant. I infer that none of the other group members entered into retainer agreements in the form of the third or fourth retainers entered into with the Applicant.

42    The retainer agreements entered into with the Applicant provided for Quinn Emanuel to carry a portion of their fees, and to receive a 25% uplift on the conditional fees. In other words, the funder would only pay a portion of Quinn Emanuel’s fees. As the retainer agreements progressed, the portion of the fees being carried by Quinn Emanuel increased, as did their fee rates. Consequentially, the (contingent) cost to group members of this split fee arrangement increased as the 25% uplift applied to all carried fees and the proportion of fees being carried increased.

43    At the time that Mr Scattini swore his first affidavit (21 December 2023), the amount of Quinn Emanuel’s conditional fees (including uplift) was put at $1,555,038.76. That figure constituted approximately 68% of the amount of the conditional fees with the full 25% uplift applied. The figure in the final settlement distribution scheme (SDS) payable to Quinn Emanuel for the conditional fees (with uplift) is $1,684,125. As explained by Mr Scattini in his 12 March 2024 affidavit, that amount reflects Quinn Emanuel not seeking to recover over $850,000 that the terms of its retainer agreements with the Applicant would otherwise have permitted it to charge (if approved by the Court).

The in-principle settlement and proposed settlement distribution scheme

44    Each of the Applicant, the Respondent, ICP, ICP Funding and Quinn Emanuel were parties to the Deed of Settlement, dated 18 December 2023. The Deed of Settlement was executed following a successful mediation conducted by the Hon Wayne Martin AC KC on 17 November 2023.

45    There is nothing unusual about the terms of the Deed of Settlement. It provided for the payment of a settlement sum in the amount of $23,000,000 upon Court approval of the settlement being obtained. Mutual releases are also provided for by the Deed of Settlement. The Deed of Settlement provided for there to be a “Settlement Scheme” with certain features, but did not attach a proposed SDS. Two iterations of the draft SDS were in evidence, a third was provided on the day of the settlement approval hearing, and (following discussion with counsel regarding further amendments that ought to be made), a fourth, and final, version was submitted to the Court by email on 19 March 2024, on the basis that it would be an annexure to the settlement approval orders.

46    Mr Scattini deposed that it had been agreed between Quinn Emanuel and the ICP Entities at the mediation that the settlement sum should be divided by calculating the balance of the settlement sum once paid “Project Costs” (and the proposed Applicant’s reimbursement payment) were deducted, and then dividing the remainder in half, with that half of the remainder being set aside for group members ($7,872,565) and the other half of the remainder being shared by Quinn Emanuel and the ICP Entities. This required that Quinn Emanuel and the ICP Entities accept a discount on their contractual entitlements given that the remaining half of the settlement sum (after deduction of “Project Costs”) would be insufficient to cover their contractual entitlements. Mr Scattini also explained that Quinn Emanuel and the ICP Entities had also agreed a further discount to their contractual entitlements to preserve the amount earmarked for group members, and which figure had been advised to them by the First Notice and the Second Notice.

47    The final form of the proposed SDS was submitted to the Court by email on 19 March 2024.

48    The key clause of the SDS identifying the deductions against the gross settlement sum is cl 6.3 which provides as follows:

6.3    As soon as practicable after payment of the Settlement Sum into the Settlement Distribution Account, the Administrator will cause the Settlement Sum to be distributed in the following priority, in accordance with the orders of the Court:

(a)    an amount of $8,031,068 is to be paid to the Funder, comprising:

(i)    $1,026,466 as reimbursement for the ATE Premium;

(ii)    $41,261 as reimbursement for the Bookbuild and Consulting Expenses;

(iii)    an amount not exceeding $6,963,341 for the Applicant’s Funded Legal Costs, being:

(A)    $6,605,341 for the Applicant’s legal fees and disbursements up to and including December 2023; and

(B)    no more than $358,000 for the Applicant’s legal fees and disbursements for January and February 2024, and for the Applicant’s legal fees and disbursements for the settlement approval and distribution.

(b)    an amount of $7,063,619 is to be paid as follows:

(i)    $4,865,510 to the Funder, for the Funder’s Commission;

(ii)    $513,984 to the Funding Manager for the Claim Management Fee; and

(iii)    $1,684,125 to Quinn Emanuel, for the Applicant’s Conditional Legal Costs;

(c)    an amount of $17,748 is to be paid to RIM for the RIM Reimbursement Fee;

(d)    an amount of $15,000 is to be paid to the Applicant as the Applicant’s Reimbursement Fee; and

(e)    the Net Settlement Sum, being an amount of $7,872,565, is to be paid to Claimants, with each Claimant’s share calculated in accordance with the formula described in paragraph 7.1, and distributed in accordance with paragraph 8.    

49    The sum referred to in cl 6.3(c) represents legal costs borne by one group member before the investigation and the proceeding were funded, and before the Applicant agreed to be the named applicant in the proceeding.

50    The key clause concerning how the “Net Settlement Sum” is to be distributed between group members is cl 7.1. That clause provides as follows (footnotes omitted):

7.1    Each Claimant will be paid a share of the Net Settlement Sum calculated in accordance with the following methodology:

(a)    For each Claimant, transactions are matched on a first-in-first-out (FIFO) basis. Any remaining parcels that are not matched as of 1 September 2016 are deemed to be closed out at 25¢ per share.

(b)    The profit or loss for each matched transaction is calculated as the sale price less the buy price multiplied by the quantity traded for each transaction parcel.

(c)    The total profit or loss for each Claimant is calculated by summing the profit or loss from all transaction parcels belonging to that Claimant. The aggregate of the capital loss for each Claimant constitutes each Claimant’s capital loss. Pre-judgment interest is not included in each Claimant’s capital loss.

(d)     The total loss (TL) is calculated by summing the capital loss for each Claimant (𝐶𝑃𝐿𝑠).

(e)     Each Claimant’s individual loss is translated into a share of the Net Settlement Amount by:

(i)     calculating each Claimant’s fraction of the Net Settlement Amount as the loss suffered by that Claimant relative to the loss suffered by all Claimants. For the Claimant (s) the fractional share (FS) is calculated as 𝐹𝑆𝑠 = 𝐶𝑃𝐿𝑠⁄𝑇𝐿; and

(ii)     multiplying each Claimant’s fraction of the aggregate loss of all Claimants by the Net Settlement Amount. For the Claimant (s), the dollar amount of their share (CD) is calculated as 𝐶𝐷𝑠 = 𝐹𝑆𝑠 × 𝑁𝑒𝑡 𝑆𝑒𝑡𝑡𝑙𝑒𝑚𝑒𝑛𝑡 𝐴𝑚𝑜𝑢𝑛𝑡.

Reasons for approval

51    Section 33V of the Act provides as follows:

33V     Settlement and discontinuance—representative proceeding

(1)     A representative proceeding may not be settled or discontinued without the approval of the Court.

(2)     If the Court gives such an approval, it may make such orders as are just with respect to the distribution of any money paid under a settlement or paid into the Court.

52    As has often been observed, the Court’s task in a settlement approval application under s 33V(1) is to assess whether the settlement is fair and reasonable and in the interests of group members, considered as a whole and inter partes: see Webb v GetSwift Limited (No 7) (2023) 165 ACSR 560; [2023] FCA 90 at [15]–[17] (Murphy J) and the cases cited therein.

53    Section 33V(2) refers to the Court making “such orders as are just” with respect to distribution of funds paid under a settlement. What is “just” is responsive to the factual circumstances. Likewise, the assessment of whether a settlement is, for the purposes of Court approval under s 33V(1), fair and reasonable and in the interests of group members, is an assessment that is responsive to the factual circumstances.

The settlement sum

54    What is fair and reasonable is not a single outcome; a number of different outcomes may fall within the range of reasonable outcomes: Kelly v Willmott Forests Ltd (in liq) (No 4) (2016) 112 ACSR 584; [2016] FCA 323 (Murphy J) at [74]. It is not the function of the Court to second-guess the risk assessment of the lawyers (solicitors and counsel) with carriage of the proceeding, or the risk appetite of the Applicant and its lawyers: Luke v Aveo Group Ltd (No 3) [2023] FCA 1665 (Murphy J) (Aveo) at [9].

55    It is not inevitably the case that a modest, or even poor, return to group members indicates that a settlement is not fair and reasonable or in the interests of group members. As Murphy J pointed out in Aveo at [8], litigants often come to appreciate that their claims (or defences) are not as strong as they thought, and settle on unfavourable terms.

56    The confidential opinion of counsel sets out, candidly and on an informed basis, some significant challenges the Applicant may have faced, had the matter proceeded to trial. An affidavit of the solicitor with carriage of the proceeding likewise elucidates a number of challenges that were taken into account in assessing what would constitute a reasonable settlement figure.

57    I will, for obvious reasons, not delve into the specifics of their opinions as to the hurdles in the way of successful prosecution of the case to trial. Those opinions were formed in circumstances where the proceeding was at an advanced stage when the in-principle settlement was agreed; lay and expert evidence had been filed, and the matter was set down for trial in June 2024. Counsel and the responsible solicitor had all been deeply engaged in the preparation of the case and were intimately familiar with the evidence and the hurdles that a successful prosecution of the case at trial would have had to overcome.

58    In view of those matters, and while still taking into account the quantum of the “best case” scenario against which the settlement sum may be compared, in my view the settlement sum is a reasonable settlement figure. I have no hesitation in concluding that, subject to matters concerning the deductions proposed to be made, the settlement is fair and reasonable and in the interests of group members. The settlement sum exceeds the amount that would have been secured on many hypotheses involving “success” in the proceeding, but success falling short of the “best case” on liability and damages. The settlement sum is clearly within the range of reasonable outcomes.

59    I am also satisfied that the settlement proposed is fair and reasonable, considering the interests of the group members inter partes. The proposed settlement scheme adopts a straightforward approach to calculating each group member’s individual loss (on a FIFO basis) and calculating each group member’s proportionate share of the Net Settlement Amount (as defined in the SDS). This approach involves allocating the deductions so that each member bears a share of the deductions that is proportionate to that group member’s proportionate share of the settlement sum. Analysis undertaken and put into evidence showed that applying a LIFO approach would not have made any material difference.

60    In addition, the majority of the closed class members have positively stated their support for the settlement and none has opposed the settlement and approval of the SDS. Those approvals, and the absence of any objection, is significant in circumstances where the Second Notice to group members detailed how each individual group member’s distribution would be calculated and invited any group member who wanted an estimate of the distribution to contact the solicitors.

Deductions from the settlement sum

61    Of course, the proposed deductions will see the lion’s share (66%) of the gross settlement sum go to the lawyers, the funder and ICP. I turn, then, to whether it is “just” that the Court approve the payment of all the sums to be deducted from the settlement sum.

Funding commission and ICP’s management fee

62    Here, as already indicated, the factual circumstances are unusual involving, as they do, a small closed class, where all members have entered into funding agreements and where all members (barring the Applicant) are institutional investors. These features are, in my view, of vital importance in relation to the deductions proposed to be made for management fees and the funder’s commission. For reasons which I will come to, different considerations arise in respect of legal costs.

63    The commission arrangements provided for a commission structure by which the funder would receive up to 50% of the net settlement after deduction of costs including ATE insurance costs (cf up to 50% of the gross settlement sum). In other words, the commission was in addition to being refunded out of pocket costs, including premiums for ATE insurance. A separate commission of 3% was to be paid to ICP for “management services”. The funding agreements were entered into on various dates between 2017 and February 2020. Given the application of the clause guaranteeing a return of 50% of the Net Claim Proceeds to group members, and the further concessions made in respect of the commissions claimed, the combined commission and management fees account for 23.38% of the gross settlement sum.

64    In other circumstances, it might be necessary to consider whether such commission arrangements were significantly “over the odds” relative to the market at the time — noting that class action funding rates have become much more competitive in recent years — and to undertake that assessment also having regard to the risk taken on by the funder. However, here, the funder’s commission and the management fee were agreed to by contract by each and every group member and it is, in my view, just that the contractual arrangements entered into by the 23 group members be respected.

65    The Applicant’s written submissions drew attention to an unresolved question regarding whether s 33V(2) empowers the Court to make orders for distribution that depart from contractually agreed terms. Those submissions referred to the differences of view taken by judges of this Court at first instance, and the absence of any Full Court decision addressing the point, as follows:

[T]here is a long-standing unresolved question as to whether s 33V(2) would authorise the Court to make orders for distribution of a settlement in a manner which departs from the contractually agreed terms. In Liverpool City Council v McGraw-Hill Financial, Inc [2018] FCA 1289 (Liverpool), Lee J doubted (in obiter dicta) that the Court had such power, absent an established legal or equitable basis for doing so, given the funding agreements were to be seen as a common enterprise with a shared economic purpose where any alteration in favour of one participant would be to the detriment of another (at [47]-[48]). A different view as to the breadth of s 33V(2) was expressed by certain other justices of the Court in obiter dicta (see, eg, Earglow Pty Ltd v Newcrest Mining Limited [2016] FCA 1433 at [113]-[132] per Murphy J). That debate has never been resolved. In the Full Court’s most recent consideration of the breadth of s 33V(2) in Elliott-Carde v McDonald’s Australia Ltd [2023] FCAFC 162, Lee J adhered to his view as expressed in Liverpool (at [396]), and the other members of the Court did not express a view.

66    Given that, in my view, it is just in this case to approve deductions in accordance with the contractual terms agreed by the Applicant and the group members (who are institutional investors), and given the overall percentage of the settlement sum and concessions made in respect of the commission claimed, it is, accordingly, not necessary to venture into the question of whether the Court has the power to disregard or adjust those contractual arrangements pursuant to s 33V(2) of the Act.

Reimbursement of costs paid and payment of an amount in respect of anticipated costs

67    The proposed settlement approval orders sought approval of the following amounts paid out to the funder:

(a)    $6,605,341 on account of legal costs and disbursements (being legal costs that are distinct from the conditional fees of Quinn Emanuel, addressed separately below);

(b)    $41,261 for bookbuilding costs and certain consulting expert fees; and

(c)    $1,026,466 for ATE insurance costs.

68    Approval was also sought for a deduction of $358,000 on account of legal costs for January and February 2024, and estimated legal costs and disbursements to the end of the settlement approval hearing, and the costs of distribution.

ATE insurance costs

69    I will first address the costs of the ATE insurance. The costs of obtaining ATE insurance were significant. They were costs paid by the funder. The funding agreements, being the contract between each group member and the funder, and ICP, expressly identified the cost of obtaining ATE insurance as a cost “associated with preparing for, prosecuting and resolving the Claim”. As set out above, the cost of ATE insurance was within the ambit of the “Project Costs” that each group member agreed would be paid (proportionally) from the “Claim Proceeds”.

70    There are several cases in which judges of this Court have expressed reservations about funders seeking reimbursement of ATE insurance costs in addition to risk-based commissions: see, eg, Ghee v BT Funds Management Ltd [2023] FCA 1553 (BT Funds Management) at [147]–[152] (Murphy J) and the authorities referred to therein. Those cases highlight the need to consider whether an additional deduction for ATE insurance costs is justifiable where a risk-based commission is also sought, which can make it appropriate in some cases to consider the combined total.

71    However, in this case a group of institutional investors (and the Applicant) have contracted with the funder that ATE insurance costs be reimbursed in addition to the commission. In addressing the commission and management fee deductions above, I have emphasised the importance, in this case, of the terms of the contracts concluded with each group member and why it is just that the terms of those contracts be respected. The same considerations apply in respect of the ATE insurance costs. Even if I would, in the absence of a contractual commitment by all group members to reimburse those costs, have been disinclined to approve recovery of ATE insurance costs in addition to a commission calculated after reimbursement of legal costs, that is not the case before me. I consider that it is just that the ATE insurance costs be approved as a deduction from the settlement sum because that is what the entire group agreed to.

72    Moreover, most of the group members have positively consented to the proposed settlement, having been informed of the deductions to be made, and none of the remaining group members opposed approval of the settlement on that basis. The absence of any opposition is particularly important in this case as the limited size of the closed class, and the fact that all group members had a retainer agreement with Quinn Emanuel, means that notice of the proposed settlement came to the attention of every group member (cf the situation that may arise in a proceeding where it is necessary to rely on imperfect means of notification, such as newspaper advertisements and notices on solicitors’ websites).

Legal costs and disbursements

73    In respect of the legal costs paid by the funder, the reimbursement of these costs again has a firm foothold in the contract between the group members and the funder. In addition, subject to a wrinkle I will come to, the independent costs expert, Mr Ramsey-Stewart, opined that the costs were reasonable on a solicitor and own client basis.

74    The wrinkle is that Mr Ramsey-Stewart addressed all of the legal costs and disbursements, without distinguishing between the portion of the legal costs and disbursements that the funder actually paid, and the portion of the legal costs that were carried by Quinn Emanuel as conditional fees. Nevertheless, I consider that Mr Ramsey-Stewart’s report overall supports a conclusion that the combined total of the legal costs and disbursements being sought by the funder (by way of reimbursement as part of the reimbursement of “Project Costs”) and by Quinn Emanuel (as conditional fees) are reasonable.

75    When looking at what costs would be reasonable solicitor-client costs, Mr Ramsey-Stewart put that figure at $9,623,589.65, which figure applied a reduction of $431,493.73 (approximately 4.3%) to the total (including all legal fees (paid and conditional), disbursements, uplift and GST) of $10,055,083.38.

76    However, as the sum that Mr Ramsey-Stewart considered to be reasonable is higher than the combined sum sought to be deducted from the settlement sum for legal costs and disbursements (which is $8,601,115.00), it is not necessary to detail the basis upon which Mr Ramsey-Stewart considered that a reduction of $431,493.73 was appropriate.

77    Further, having regard to the opinion set out in the Costs Report, I am satisfied that the legal costs and disbursements set out in the SDS, to be deducted from the settlement sum, are fair and reasonable. As I have said, those amounts are lower than the total amount Mr Ramsey-Stewart opined constituted the reasonable solicitor and own client costs of the Applicant.

78    It is important, when assessing a claim for legal costs in cases such as the present, to “keep in mind the realities of litigation and to avoid hindsight bias”: Aveo at [135] (Murphy J); see also Blairgowrie Trading Ltd v Allco Finance Group Ltd (Receivers & Managers Appointed) (In Liq) (No 3) (2017) 118 ACSR 614; [2017] FCA 330 at [181]–[183] (Beach J). While the amount of the costs incurred appear high at first glance, it is apparent from the detailed evidence presented concerning the course of the investigation and litigation that there was considerable complexity, particularly in relation to the expert evidence. This is reflected in the fact that the disbursements paid accounted for approximately 45% of the reasonable solicitor and own client costs and disbursements, as assessed by Mr Ramsey-Stewart.

79    It is also apparent from other evidence that, although the period over which the potential proceeding was investigated was protracted, the legal costs relating to the pre-commencement period were modest.

80    It is also clear from the confidential opinion of counsel that many of the challenges that were ultimately encountered in relation to the preparation of the case for trial, and, in particular, the expert evidence, emerged as the case progressed and could not have been readily anticipated at a much earlier point in time.

81    The legal costs must also be approached having regard to the fact that the proceeding only settled once all the evidence — lay and expert — was in. While additional legal costs would clearly have been incurred in preparing for, and running, a trial (had the matter not settled when it did), the overall preparation of the case was very advanced. The legal costs reflect this and so the case cannot be regarded as one in which large legal costs have been run up with little to show for it.

82    For completeness, I also note that, in his report, Mr Ramsey-Stewart considered that the disclosures in the retainer agreements with the Applicant were adequate and complied with the applicable New South Wales requirements. Mr Ramsey-Stewart confirmed that the hourly rates charged by solicitors and counsel were within the ranges charged by others in the market, and were reasonable. He considered that the team structure adopted and the way in which work was delegated was appropriate. Mr Ramsey-Stewart reviewed the disbursements (largely accounted for by fees charged by experts), and concluded they were reasonable (subject to some minor adjustments he proposed to make).

83    The approval of a deduction, in favour of the funder, of the paid legal costs and disbursements is just as the reimbursement was provided for by the contractual arrangements. The Costs Report provides additional comfort as to the reasonableness of the legal fees as a whole (to the extent that reasonableness remains a consideration when the reimbursement is driven by the contracts between the funder and the group members, as distinct from being approved as a settlement-stage common fund order).

Anticipated legal costs and disbursements

84    In relation to the estimated costs for the approval hearing and settlement distribution, Mr Ramsey-Stewart considered that the estimated costs were reasonable. A deduction in respect of those costs is appropriate in the circumstances, but I did suggest to counsel for the Applicant that the terms of the proposed SDS be amended to ensure that the sum specified was a maximum, so that, if the costs are ultimately lower than anticipated, the benefit will flow to the group members, rather than being retained by the funder. That suggestion was adopted in the final form of the SDS proffered after the conclusion of the settlement approval hearing.

Conditional fees of Quinn Emanuel

85    Whereas reimbursement of the legal costs and disbursements paid by the funder is supported by the contracts (the various funding agreements), the Applicant accepts that approval of a deduction for conditional fees of Quinn Emanuel (including uplift) was to be approached on the basis that they were authorised by the retainer agreement between the Applicant and Quinn Emanuel, but a common fund, or funding equalisation, order was required to spread that burden among the group members as a whole. As I have mentioned, the group members did not all have retainer agreements with Quinn Emanuel in the same terms as the retainer agreements of the Applicant. The conditional fees of Quinn Emanuel were, however, calculated by reference to the terms of its retainer agreements with the Applicant, from time to time.

86    The terms “common fund orders” (CFOs) and “funding equalisation orders” (FEOs) are not terms of art: BMW Australia Ltd v Brewster (2019) 269 CLR 574; [2019] HCA 45 (BMW v Brewster) at [178] (Edelman J); Davaria Pty Ltd v 7-Eleven Stores Pty Ltd (2020) 281 FCR 501; [2020] FCAFC 183 (7-Eleven) at [57] (Lee J, with whom Middleton J and Moshinsky J agreed). The term “common fund orders” is now used to refer to orders made at the settlement stage of proceedings (cf those made at an earlier stage in the proceedings, which were disapproved in BMW v Brewster and described as “Commencement CFOs” in 7-Eleven).

87    Both CFOs and FEOs address the “free rider” problem that would otherwise result in group members with contractual obligations to funders bearing the costs of bringing litigation that benefitted the whole group, including group members with no such contractual obligations. It is not presently necessary to go into the differences between CEOs and CFOs. That is because, as counsel for the Applicant submitted, in the present case there was no real difference arising from whether an order authorising the deduction from the settlement sum of the conditional legal costs is regarded as being a settlement stage CFO, or an FEO.

88    The salient points are that: the conditional fees of Quinn Emanuel were accrued pursuant to agreements reached by the Applicant, within the bounds of its role as the named applicant in a class action; the fees were in respect of work to the benefit of the group as a whole; and the costs are supported as reasonable by the expert, Mr Ramsey-Stewart (albeit on the global basis referred to above).

89    In addition, it should be noted that Quinn Emanuel has not sought a deduction of the full amount of the conditional fees that would otherwise have been calculated under the terms of its retainer agreements with the Applicant. The amount sought represents a concession of something over $850,000 from that amount (albeit the significance of that concession has to be assessed taking into account the amount by which Mr Ramsey-Stewart would have reduced the bills on a solicitor and own client basis).

90    Having regard to these matters, I consider it just that a deduction against the settlement sum be approved in respect of the conditional fees of Quinn Emanuel, in the amount of $1,684,125.

91    As with other deductions, the conditional fees payable to Quinn Emanuel were referred to in the First Notice to group members. Accordingly, the deduction is also supported by the fact that the group members have all either positively consented to the settlement (with disclosed deductions) or have not opposed it.

Two small payments

92    Approval was also sought for deductions from the settlement sum to be paid to:

(a)    the Applicant, in the amount of $15,000; and

(b)    to a group member (RIM), in the amount of $17,748.

93    The proposed payment to the Applicant was disclosed in the First Notice to group members, and is modest both in absolute terms, and in relation to the settlement sum (0.065%). The affidavit evidence of Mr Scattini details the involvement of the Applicant in meetings, calls and video conferences and attendances to prepare evidence, all of which occurred over more than six years. I accept Mr Scattini’s evidence that a payment of $15,000 is reasonable to compensate the Applicant for the time expended, which benefitted the group through pursuit of the proceeding. Payments of a similar kind have been approved in many other cases: see, eg, Yasmin v Commonwealth of Australia [2023] FCA 1661 at [7] and [85] (Horan J); BT Funds Management at [156]–[157] (Murphy J); Sadie Ville Pty Ltd v Deloitte Touche Tohmatsu (A Firm) (No 7) [2023] FCA 1273 at [51] (Moshinsky J); Bradshaw v BSA Ltd (No 2) [2022] FCA 1440 at [232] (Bromberg J).

94    The proposed payment to RIM is provided for in the SDS. It is a proposed reimbursement of legal costs paid by RIM at a time before the proceeding was funded, and before the Applicant agreed to assume the role of lead applicant. As those costs were for the benefit of the group as a whole, I consider it just that a deduction be approved to reimburse the group member concerned. While this amount was not specifically referred to in the notice to group members, it is a modest sum both in absolute terms, and in relation to the settlement sum (0.077%).

Suppression orders

95    As is common in settlement approval applications, the Applicant anticipated submitting evidence over which it would wish to seek suppression orders under ss 37AF and 37AG of the Act. Interim orders were made on 5 February 2024, pursuant to s 37AI of the Act, to permit the Applicant to file material on a confidential basis, while also filing versions which redacted the portions over which the Applicant intended to seek suppression orders. Material was filed by the Applicant according to this scheme.

96    The ambit of the documents and portions of the evidence over which suppression orders were initially sought was not only inconsistent (in that some information was sought to be suppressed in some documents, when it had already been revealed in publicly available documents such as the interlocutory application) but also overly wide. I refer to, and echo, the observations that have been made by judges of this Court, particularly Murphy J and Lee J, concerning the wasteful and unwelcome practice of overly broad confidentiality and suppression claims being made in settlement approval applications: see, eg, Liverpool City Council v McGraw-Hill Financial, Inc (now known as S&P Global Inc) [2018] FCA 1289 at [102] (Lee J) and Coatman v Colonial First State Investments Ltd [2022] FCA 1611 at [8]–[9] (Murphy J). Given the public nature of, and interest in, applications of this kind, the “need to keep a tight rein on confidentiality orders is heightened”: Aveo at [159] (Murphy J). The making of overly broad applications for suppression orders out of an abundance of caution is to be discouraged. The making of such claims wastes significant, and limited, Court resources.

97    Some of the claims initially made by the applicant and the ICP Entities appeared to confuse a desire to keep information private (which is understandable) with the very high threshold that must be satisfied in demonstrating that it is “necessary” to prevent prejudice to the proper administration of justice. Necessary is a “strong word”. It is not enough that the making of the order is “convenient, reasonable or sensible” or that it serves “some notion of the public interest”: Hogan v Australian Crime Commission (2010) 240 CLR 651; [2010] HCA 21 at [30]–[31]; see also Country Care Group Pty Ltd v Director of Public Prosecutions (Cth) (No 2) (2020) 275 FCR 377; [2020] FCAFC 44 at [8]–[9] (Allsop CJ, Wigney and Abraham JJ).

98    It should also be recalled that what is “necessary” may also require that attention be given to the duration of a suppression order so that it avoids prejudice to the proper administration of justice, but does not endure longer than is necessary to secure that end: J & J Richards Super Pty Ltd v Linchpin Capital Group Limited (Settlement Approval) [2023] FCA 656 at [105] (Lee J).

99    During the settlement approval hearing, I raised these concerns with counsel. In order to provide the Applicant (and the ICP Entities) an opportunity to reflect on the ambit of their suppression application, I permitted them to review and, as counsel for the Applicant put it, take an “axe” to the claims and re-submit them.

100    Following the conclusion of the hearing, the Applicant and the ICP Entities significantly narrowed their suppression application, and also submitted further affidavits in support of the narrowed application: an affidavit of Mr Scattini dated 19 March 2024, and an affidavit of Mr Walker dated 19 March 2024.

101    A suppression order was sought in respect of the Settlement Deed until approval orders are made. However, as orders will be made approving the settlement at the same time as dealing with the orders sought under s 37AF, there is no need to make any suppression order in respect of the Settlement Deed.

102    Orders were also sought under s 37AF in respect of the names of individual group members and the opinions of counsel and the responsible solicitor as to the prospects of the proceeding and the reasonableness of the settlement. I am satisfied that orders in respect of these two categories of information are necessary to prevent prejudice to the proper administration of justice.

103    In settlement approval proceedings, the Court is much assisted by the responsible counsel and solicitors expressing their views on the proceeding in frank and candid terms. It would be inimical to the interests of the administration of justice for counsel and solicitors providing those opinions to be reticent in what they say, lest their opinions be disseminated to the world at large. In addition, orders in respect of the confidential opinions are warranted on the basis that they disclose information that is the subject of legal professional privilege claims. I do not consider that any time limit needs to be imposed on orders in respect of these two categories of information in order to ensure that the orders only go as far as is necessary to prevent prejudice to the proper administration of justice.

104    An indefinite suppression order was also sought in respect of Appendix 4 to the Costs Report on the basis that it contained information that could reveal privileged information. Appendix 4 is a consolidated excel spreadsheet prepared by Mr Ramsey-Stewart, analysing Quinn Emanuel’s professional fees, disbursements and the anticipated costs and disbursements associated with the settlement approval and administration processes. It contains time entries and narratives describing the work undertaken by Quinn Emanuel. I accept that suppression of this information is necessary to prevent prejudice to the proper administration of justice.

105    This accounts for the totality of the suppression orders sought by the Applicant and some of the suppression orders sought by the ICP Entities.

106    The ICP Entities also sought an indefinite suppression order under s 37AF over the “ICP Management Agreement” between ICP, ICP Funding and Mr Walker. In his affidavit dated 8 March 2024, Mr Walker described the purpose of that agreement being to set out the terms under which ICP, assisted by Mr Walker, would provide its shareholder claims management services and ICP Funding would provide funding for the claims. In his affidavit dated 19 March 2024, Mr Walker said as follows as to why a suppression order would be appropriate: “the document is commercially sensitive to ICP and does not directly concern nor weigh on the terms of the proposed settlement.”

107    While the management fee claimed, approved as a deduction in favour of ICP, is provided for in the funding agreements and, in that sense, the document in question is not one that “weighs on the terms of the proposed settlement” (as Mr Walker put it), that contention wrongly supposes that documents will be suppressed if they have no, or limited, relevance to the issues at stake. Sections 37AF and 37AG of the Act do not operate in that way. Rather, material will only be suppressed where an order suppressing that material is “necessary to prevent prejudice to the proper administration of justice”. It should also not be necessary to point out that commercial sensitivity is not, in and of itself, sufficient to warrant a suppression order. Mr Walker did not depose to any prejudice or harm to the administration of justice that would render suppression of the document necessary. Accordingly, no suppression order will be made over that document.

108    The ICP Entities also sought a suppression order over the sum insured pursuant to the policy taken out with AmTrust, the amount and structure of the premium payable, the deed fee and percentage rates. A suppression order was sought on the basis that the Am Trust policy is a portfolio policy, covering other claims (ie not just the present claim), some of which are ongoing and that disclosing the proposed suppressed information “could result in the disclosure of information in the nature of war chest information, thus potentially prejudicing the proper administration of justice”.

109    The specific documents over which the suppression order was sought are:

(a)    paragraph 45 of Mr Walker’s 8 March 2024 affidavit, which reveals features of the premium structures, rates and calculations for the portfolio policy, including how the “Supplemental Premium” is calculated;

(b)    paragraph 48 of Mr Walker’s 8 March 2024 affidavit, which refers to the specific calculations of the “Supplemental Premium”, which result in the contractual figure being $885,000 (which figure as set out in paragraph 50) is no longer the subject of a suppression application;

(c)    two pages of the AmTrust policy, which detail the premium payment clauses;

(d)    one page of the AmTrust policy, being the first page of Schedule 1 to that policy, which sets out matters such as the inception date, maximum case limit, excess, aggregate limit, premiums (including formulae) and other fees; and

(e)    one page of Schedule 2, being part of the Declaration Format, which sets out a calculation for the budgeted exposure via indemnity in the litigation funding agreement.

110    The ATE policy is a portfolio policy with no specific end date. If not suppressed, the information referred to in paragraph 108 would be available to litigants in other proceedings covered by this policy, and would reveal information that may alter the dynamics of those proceedings and any future settlement discussions. Accordingly, I accept that the suppression of the information referred to in paragraph 108 above is necessary to avoid prejudice to the proper administration of justice.

111    However, I do not accept that the figures referred to in a list of invoices at p 507 of the exhibit to Mr Walker’s 8 March 2024 are properly the subject of a suppression order. Those figures are referred to in paragraph 51 of the body of that affidavit, and no suppression application was pressed in respect of those figures, which reveal the component parts of the ATE insurance costs paid, in respect of which approval for a distribution is sought.

112    The last discrete category of information in respect of which the ICP Entities sought suppression orders comprises transaction descriptions concerning payments made in respect of expert fees on two dates. In his 19 March 2024 affidavit, Mr Walker deposed that the suppression orders were sought to conceal the identity of two consulting experts who only assisted the Applicant on the basis that their identities would not be revealed. I accept that the statutory basis for a suppression order has been made out in respect of that information.

113    Orders will be made accordingly. The Applicant is to file and serve further versions of the affidavits and the Costs Report that redact only the information in respect of which orders have been made.

Associate:

Dated:    28 March 2024