FEDERAL COURT OF AUSTRALIA

Equity Financial Planners Pty Ltd v AMP Financial Planning Pty Ltd [2024] FCA 1036

ORDERS

THE COURT ORDERS THAT:

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

(a)    the Settlement Deed, being pages 4 to 36 to Confidential Exhibit CJP–1 of the Affidavit of Christopher John Pagent sworn 18 April 2024; and

(b)    the Settlement Distribution Scheme, being pages 1 to 32 of Confidential Exhibit CJP–8 of the Affidavit of Christopher John Pagent sworn 26 June 2024 (Settlement Distribution Scheme).

2.    Pursuant to s 33V of the Act, the Court authorises the Applicant nunc pro tunc on behalf of the Group Members (as defined in the Settlement Deed) (Group Members) to enter into and give effect to the Settlement Deed and the transactions contemplated thereby for and on behalf of the Group Members.

3.    Pursuant to s 33ZB of the Act, the persons affected and bound by the Settlement are the Applicant, the Respondent, the Group Members and Augusta Pool 523 Limited (Funder).

Appointment of Administrator, Independent Barrister and Independent Senior Counsel

4.    Pursuant to ss 33V and 33ZF of the Act, the Court appoints Mr Andrew Ross and Mr Ben Mahler of KordaMentha as the administrator of the Settlement Distribution Scheme (Administrator) to act in accordance with the Settlement Distribution Scheme and be given the powers and immunities contemplated by the Settlement Distribution Scheme.

5.    The Administrator has liberty to apply in relation to any matter arising in relation to the Settlement Distribution Scheme.

6.    Pursuant to ss 33V and 33ZF of the Act, the Court appoints Mr Peter Strickland and Ms Jane Buncle, each of counsel, as the Independent Barrister as defined in the Settlement Distribution Scheme, to perform the functions set out in the Settlement Distribution Scheme.

7.    Pursuant to ss 33V and 33ZF of the Act, the Court appoints Mr Bernard Quinn KC as the Independent Senior Counsel as defined in the Settlement Distribution Scheme, to perform the functions set out in the Settlement Distribution Scheme.

Applicant and Sample Claimant Reimbursements

8.    Pursuant to s 33V of the Act, the following payments be approved as, respectively, the Applicant’s Reimbursement and the Sample Claimant’s Reimbursement, as defined in the Settlement Distribution Scheme:

a.    Applicant’s Reimbursement:

i.    Ms Kylie Braschey ($30,000)

ii.    Ms Leanne Scott ($30,000)

b.    Sample Claimant’s Reimbursement – Mr Michael Finch ($20,000).

Approval of amounts to be deducted under the Settlement Distribution Scheme

9.    Pursuant to section 33V(2) of the Act, the deductions from the Resolution Sum as outlined in the Settlement Distribution Scheme (updated as necessary to reflect the below deductions and figures) be approved, namely:

a.    the “Funder Commission” totalling $26,578,805.83, to be paid to the Funder;

b.    the “Applicant’s Paid Legal Costs” in the total amount of $10,573,022.33 (GST inclusive), to be paid to the Funder;

c.    the “Applicant’s Unpaid Legal Costs” in the amount of $509,989.98 (GST inclusive), to be paid to the Applicant’s solicitors;

d.    the “Applicant’s Future Legal Costs” in the amount of $1,009,926.02 (GST inclusive), to be paid to the Applicant’s solicitors;

e.    a further amount in respect of the “Applicant’s Future Legal Costs” up to the amount of $195,800 (GST inclusive), subject to any further order varying that amount, to be paid to the Applicant’s solicitors;

f.    the “Security Costs” in the amount of $360,259.96, to be paid to the Funder;

g.    the “Applicant’s Reimbursement” as described in Order 8(a) above, to be paid to Ms Braschey and Ms Scott;

h.    the “Sample Claimant’s Reimbursement” as described in Order 8(b) above, to be paid to Mr Finch;

i.    the “Adverse Costs Order Reimbursement” in the amount of $58,500, to be paid to the Funder;

j.    the “Contradictor’s Costs”, in the amount of up to $100,000.00, to be paid to the Contradictor and his junior, subject to any further order of the Court varying this amount;

k.    the “Costs Referee’s Costs”, in the amount of $55,000 (GST inclusive), to be paid to the Costs Referee;

l.    the “Administrator’s Costs” in the amount of $1,006,000.00, subject to any further order of the Court varying this amount;

Dismissal

10.    Pursuant to ss 22, 23 or 33ZF of the Act or r 1.32 of the Federal Court Rules 2001 (Cth) (FCR) and/or the Court’s implied jurisdiction, and with effect from the date on which the final distribution of the Resolution Sum occurs under the Settlement Distribution Scheme, the proceeding against the Respondent be dismissed:

a.    in accordance with the Settlement Deed, without prejudice to:

i.    the right of any party to the Settlement Deed to make an application to enforce the Settlement Deed in a new proceeding;

ii.    the right of any Group Member to make an application to the Court in accordance with the terms of the Settlement Distribution Scheme; and

iii.    the right of the Administrator to refer any issues relating to the Settlement Distribution Scheme to the Court for direction or determination in accordance with the terms of the Settlement Distribution Scheme; and

b.    on the basis that there be no order as to costs as between the Applicant and the Respondent and all previous costs orders in the proceeding between them are vacated.

Security for costs

11.    All orders requiring the Applicant to provide security for costs are vacated and the security provided by the Funder, pursuant to orders made on 15 December 2020 and 1 June 2022, be paid to the Administrator.

Funding equalisation

12.    Pursuant to s 33V and/or s 33ZF of the Act, the Funder Commission payable to the Funder by the Applicant and those Group Members who have entered into a litigation funding agreement with the Funder be apportioned on a pro rata basis between all Group Members and deducted from the Resolution Sum payable to all Group Members.

Confidentiality and undertakings

13.    Pursuant to ss 37AF and 37AG(1)(a) of the Act, to prevent prejudice to the proper administration of justice, the publication of each of the items listed in Annexure A to these orders (the Confidentiality Claims Schedule) be limited to the persons and, or alternatively, subject to the limitation identified.

14.    The applicant is to file by 4 pm on 10 September 2024 two consolidated PDF versions of the documents in the Confidentiality Claims Schedule, with the authorised redactions where applicable, one version containing the documents prior to the expiry of the appeal period and the other thereafter.

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

Annexure A – Confidentiality Claims Schedule

REASONS FOR JUDGMENT

MCELWAINE J:

1    AMP Financial Planning Pty Ltd (AMPFP) is a wholly owned subsidiary of AMP Ltd. AMPFP is the holder of an Australian Financial Services Licence (AFSL). Relevantly, between 2014 and 8 August 2019, AMPFP appointed many persons and corporations as authorised representatives pursuant to Part 7.6 of the Corporations Act 2001, who were then able to carry on business as financial planners. The authorised representatives provided financial services pursuant to the AFSL. AMPFP developed a substantial financial planning practice network. The authorised representatives did not own the clients or the client database attached to each business. Rather, AMPFP maintained institutional ownership of each practice client register. The consequence of this arrangement was that AMPFP retained the relationship with each client introduced to or serviced by each authorised representative. Upon termination of the appointment of an authorised representative, the clients remained with AMPFP. Expressly, by contractual provision, no authorised representative had any goodwill or other proprietary rights in relation to the clients.

2    A document incorporated with the contractual arrangements between AMPFP and each of its authorised representatives is the Buyer of Last Resort Policy (BOLR Policy). The BOLR Policy provided that AMPFP “is recognised as the owner of the registered rights” and limited the rights of the authorised representative to provide financial advice and other financial services to a client recorded in the register, to access the client files for that purpose and correspondingly to receive payments in return for the provision of such advice.

3    The BOLR Policy provided for a significant benefit to authorised representatives. Subject to certain eligibility criteria, if an authorised representative wished to exit the financial services industry then, upon satisfying a minimum qualifying period, the representative could make an application to sell their registered rights to AMPFP in exchange for a price calculated by a multiple of revenue received by the representative in the previous 12 months. Until 8 August 2019, that multiple was 4x.

4    On 8 August 2019, AMPFP unilaterally purported to amend the multiple with immediate effect. In the case of continuing revenue, other than grandfathered commission revenue, the multiple was reduced to 2.5x and in the case of grandfathered commission was reduced to 1.42x with a continuing reduction of 0.833 per month from 1 September 2019 to 1 January 2021, by which time the multiple would be zero.

5    Understandably, a very large number of financial planners who were authorised representatives of AMPFP were upset with this alteration. A representative proceeding was commenced in this Court under Part IVA of the Federal Court of Australia act 1976 (FCA Act) on 28 July 2020. Equity Financial Planners Pty Ltd is named as applicant for the Group Members who as at 8 August 2019 were party to an authorised representative agreement and had not received a confirmed exercise date of 8 August 2019 or earlier.

6    The proceeding was heard by Moshinsky J in October and November 2022. His Honour also heard the claim of one sample Group Member, WealthStone Pty Ltd. His Honour heard and determined all issues of liability and damages in each case. For reasons published on 5 July 2023, his Honour upheld each claim: Equity Financial Planners Pty Ltd v AMP Financial Planning Pty Ltd [2023] FCA 741 (primary reasons). His Honour ordered the parties to file a minute of proposed orders to give effect to his reasons or, absent agreement, a short outline of submissions in support of any competing orders. The parties filed submissions. On 29 August 2023, his Honour published supplementary reasons as to the form of orders, together with the formulation of the common questions and the answers thereto: Equity Financial Planners Pty Ltd v AMP Financial planning Pty Ltd (No 2) [2023] FCA 1033 (supplementary reasons). In that decision, his Honour ordered AMPFP to pay $814,944.76 by way of damages and $151,138.42 for interest to Equity Financial and $115,533.51 for damages and $17,177.84 for interest to WealthStone.

7    AMPFP appealed to the Full Court. Equity Financial cross-appealed and filed a notice of contention. The appeal has not been heard.

8    On 8 and 22 November 2023, the parties attended a mediation. In the result, the parties entered into a binding heads of agreement to settle the proceeding, subject to the approval of the Court. They subsequently entered a more formal deed of settlement. The headline effect is that AMPFP agrees to pay $100 million (Resolution Sum) in full and final settlement in exchange for a release of liability.

9    By interlocutory application filed on 19 April 2024, Equity Financial seeks approval pursuant to s 33V of the FCA Act of the settlement of the proceeding in the terms of a proposed settlement, as contained in a Settlement Deed dated 20 March 2024 and a Settlement Distribution Scheme, to provide for distribution the amount of the Resolution Sum plus interest thereon, after deduction of a commission payable to the litigation Funder, legal costs and disbursements and other expenses.

10    The parties to the Settlement Deed are Equity Financial, AMPFP, Augusta Pool 523 Ltd (Funder) and Corrs Chambers Westgarth Solicitors (solicitors in the proceeding). Performance of the settlement is conditional upon this Court’s approval.

11    There are 475 Group Members. I made preliminary orders on 30 April 2024 to the following effect:

(a)    Leave was granted to the Funder to intervene in the proceeding;

(b)    Pursuant to s 33X of the FCA Act, the Group Members be given notice of the proposed settlement, the date time and place of the hearing of the application for orders approving the settlement and their right to oppose the application;

(c)    Pursuant to s 33Y(2) of the FCA Act, the form and content of the notice of the proposed settlement be in accordance with annexure A to the orders in redacted form, but be made available to Group Members, upon signing confidentiality undertakings, in unredacted form;

(d)    Providing for the procedure for the giving of notice, including the placement of an advertisement on the Court’s website;

(e)    Providing a mechanism for the lodgement of objections by notice of objection to be given by 22 May 2024 to Corrs;

(f)    For the appointment of Ms Liz Harris as the independent Costs Referee, to assess and to provide an opinion as to the reasonableness of the in incurred and estimated future legal costs of Equity Financial;

(g)    For the appointment of Mr Jonathan Kirkwood SC as Contradictor;

(h)    For the timetabling of written submissions; and

(i)    For confidentiality and non-publication orders pursuant to ss 37AF and 37AG (1)(a) of the FCA Act.

12    The orders have been complied with. There are 92 objectors who strongly oppose approval of the settlement. That represents approximately 20% of the Group Members. I heard from each individual who wished to speak in support of his or her objection, without limitation as to time, at the hearing of this matter. Each person who addressed the Court spoke passionately and with conviction. Many were quite distressed in explaining their deeply personal reasons for opposing the settlement. Each courageously explained how their personal and professional lives have been shattered by the decision to alter the BOLR Policy. Many remain in significant debt. Most have experienced deep personal trauma and anxiety. Some have suffered with suicidal ideation. These are broken individuals who cannot accept that payment of $100 million is adequate to compensate for their individual and collective suffering. Nor is it an amount that is adequate to hold AMPFP to account for its actions. They seek solace in a public trial of more of their claims, particularly their contentions that AMPFP behaved unconscionably and in breach of the trust, confidence and goodwill that once existed between AMPFP and its network of authorised representatives.

13    As I explain, the concerns of each objector have weighed heavily on my mind in considering whether the settlement as proposed is fair and reasonable.

14    Ultimately, with certain amendments, I am satisfied that the settlement should be approved and that orders should be made with respect to the distribution of the Resolution Sum.

15    Doubtless the objectors will be bitterly disappointed. In these reasons, I set out in considerable detail why I am satisfied that in broad terms the settlement scheme should be approved. This is not because I am insensitive to the views of the objectors, that I disbelieve them or that I give their views little weight. I accept their accounts as truthful, their concerns valid and that each has properly put matters that are relevant upon this application. The principal reason why I have not acceded to their individual and collective position, is that I have objectively assessed all the material which I am satisfied provides a proper basis to exercise the statutory discretion to approve.

BACKGROUND

16    On 8 November 2021, Moshinsky J made an order fixing 28 January 2022 as the date by which a Group Member may opt out of the proceeding pursuant to s 33J(1) of the FCA Act. His Honour made consequential orders as to the form and content of the notice, its method of service and for public notification. A number of Group Members did opt out.

17    On 31 August 2022, the parties unsuccessfully attended a mediation, at a point when each case had been substantially worked up. Thereafter, the trial proceeded for 21 days.

18    His Honour pellucidly summarised the claims and his conclusions in the introductory part of his primary reasons at [3] – [22] which I gratefully reproduce (without original emphasis):

The proceeding relates to changes made (or purportedly made) by AMPFP to the valuation methodology under its BOLR Policy on 8 August 2019. The BOLR Policy formed part of the contractual relationship between AMPFP and each financial planning practice in its network. As at August 2019, there were approximately 542 practices in the AMPFP network (described below). The BOLR Policy gave practices in the AMPFP network that wanted to exit the network the ability to sell back their register rights (defined below, but broadly the contractual relationships with customers including the right to commissions) to AMPFP on 12 months’ notice (or less in some cases). Under the BOLR Policy as it stood before the 8 August 2019 changes, subject to certain exceptions and qualifications, the register rights were to be valued on the basis of a multiple of 4x ongoing revenue (i.e. ongoing revenue received by the practice in the prior 12 months) and the practice would be paid that amount by AMPFP.

On 8 August 2019, AMPFP amended (or purported to amend) the valuation methodology under the BOLR Policy (the 8 August 2019 Changes) with immediate effect. The changes were broadly as follows:

(a)     changing the multiple for the purposes of the BOLR Policy from 4x to 2.5x in respect of ongoing revenue other than grandfathered commission revenue; and

(b)     changing the multiple for grandfathered commission revenue:

(i)     initially, from 4x to 1.42x; and

(ii)     then, reducing by 0.8333 per month (referred to as a “glide path”) from 1 September 2019, such that the multiple would be zero by 1 January 2021.

The changes to the multiples were applied by AMPFP not only to practices that submitted a BOLR application after 8 August 2019, but also to practices that had submitted a BOLR application before 8 August 2019 with an exercise date after 8 August 2019. Under the terms of the BOLR Policy, those practices could not withdraw their application once it had been submitted unless AMPFP consented.

The central issue in this proceeding is whether the 8 August 2019 Changes were effective. The BOLR Policy had been in place for many years, and had been revised from time to time. The latest version of the policy as at 8 August 2019 was the version of the policy that commenced on 1 June 2017 (the 2017 BOLR Policy). That version of the policy contained a term relating to amendments that had been agreed between AMPFP and the AMP Financial Planners Association Ltd (ampfpa), which was an organisation representing financial planning practices in the AMPFP network (described below). The amendment term (on page 5 of the policy) was as follows:

Changes to this policy

The AMP Financial Planners Association Ltd Board (ampfpa) and AMPFP have agreed in writing to the terms of this policy effective 1 June 2017.

-    Unless a shorter period of notice is agreed to by the ampfpa, AMPFP will give 13 months’ notice of a change to the valuation methodology for registers and to any other change having a materially adverse financial or other significant effect on a practice.

-    Subject to the above, AMPFP may make any other changes to this policy following consultation with the ampfpa.

-    AMPFP has the right to make any change to this policy should legislation, economic or product changes render any part of this policy inappropriate following consultation with the ampfpa. In particular, where AMPFP believes that any provision contained in this policy will, or may, cause it to breach or be subject to a penalty under any laws.

-    The Buyer of last resort terms that apply are those terms in force on the Buyer of last resort exercise date or the date the practice surrenders its AR [Authorised Representative] Agreement, whichever is the later.

I will refer to the third indented paragraph, which refers to “legislation, economic or product” changes, as the LEP Provision. (The paragraph was referred to as the “LEP Exception” in Equity’s submissions and as the “LEP Provision” in AMPFP’s submissions. Whether the paragraph constitutes an exception forms part of an issue in the proceeding, namely the issue of onus. I will therefore adopt the neutral expression, “LEP Provision”.)

Equity contends that the 8 August 2019 Changes were not authorised by the LEP Provision (or otherwise authorised by the amendment term). In summary, Equity contends that:

(a)     AMPFP did not consult with ampfpa in relation to the changes as required by the LEP Provision and the Master Terms (referred to below);

(b)     AMPFP did not identify the economic or legislation changes it was relying on in making the changes, and did not state how these rendered the policy inappropriate;

(c)     There was no “economic change” or “legislation change” within the meaning of the LEP Provision;

(d)     If (contrary to the above) there was an economic or legislation change, it did not render any part of the policy “inappropriate” within the meaning of the LEP Provision; and

(e)     If (contrary to the above) there was an economic or legislation change that rendered a part of the policy inappropriate, the changes to the multiples were not reasonably necessary to address that circumstance (Equity contends that this is a requirement of the LEP Provision, properly interpreted).

Accordingly, Equity contends that the 8 August 2019 Changes were ineffective and that AMPFP acted in breach of contract in putting forward BOLR valuations based on those changes. Equity seeks a declaration that the changes were ineffective and claims damages for loss and damage. In the alternative, Equity claims that AMPFP acted in breach of a contractual obligation of good faith in relation to the changes. In the further alternative, Equity contends that AMPFP engaged in unconscionable conduct within the meaning of s 21 of the Australian Consumer Law, being Sch 2 to the Competition and Consumer Act 2010 (Cth) (the Australian Consumer Law), in relation to the changes. Further, Equity contends that AMPFP engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in connection with the changes in contravention of s 18 of the Australian Consumer Law.

In response, AMPFP contends that the 8 August 2019 Changes were authorised by the LEP Provision (and were effective immediately). In summary, AMPFP contends that:

(a)     while there was a contractual obligation upon AMPFP to consult (within the meaning of cl 1.4 of the Master Terms) with ampfpa, the obligation was not “jurisdictional”; that is, a breach of the obligation does not have the effect that the changes are ineffective; the breach merely sounds in damages for the loss of opportunity to consult, but this results in an award of only nominal damages;

(b)     In any event, on the facts, AMPFP did consult (within the meaning of cl 1.4 of the Master Terms) with ampfpa in relation to the changes;

(c)     It is not a requirement of the LEP Provision that AMPFP identify the economic or legislation change that it relies on; nor is it a requirement that it state how these render the policy inappropriate;

(d)     There was an “economic change” that rendered the policy inappropriate, namely either:

(i)     A sustained and quantifiable decrease in the market value of register rights linked to ongoing revenue; or

(ii)     a material change in the supply of and demand for financial advice services and practices;

(e)     Further, in relation to the changes to grandfathered commission revenue, there was a “legislation change” that rendered the policy inappropriate; and

(f)     The changes that were made were responsive to the economic and/or legislation changes (this being the relevant requirement, on AMPFP’s interpretation of the LEP Provision).

In the alternative, AMPFP contends that the 8 August 2019 Changes were effective 13 months later, that is, on 8 September 2020.

The hearing of this proceeding in October and November 2022 involved the trial of Equity’s claim against AMPFP on all issues of liability and the amount of any damages. Equity did not enter into a buy-back agreement with AMPFP and still holds its register rights.

The hearing also involved the trial of the claim of one sample Group Member, WealthStone Pty Ltd (WealthStone), on all issues of liability and the amount of any damages. Unlike Equity, WealthStone did enter into a buy-back agreement with AMPFP. That agreement contained a release in favour of AMPFP. AMPFP contends that the release defeats WealthStone’s claim against it. In response, Equity Financial contends that:

(a)     The condition precedent to the operation of the release – the payment of the BOLR benefit (properly calculated) – has not been satisfied;

(b)     The release is void under s 23 of the Australian Consumer Law, which applies to unfair terms of small business contracts; and

(c)     AMPFP’s conduct in procuring the release was, in all the circumstances, unconscionable within the meaning of s 21 of the Australian Consumer Law.

I was informed by AMPFP that approximately 135 Group Members have signed buy-back agreements with AMPFP. About 120 of those agreements contain releases, but they are not all in the same form.

In summary, for the reasons that follow, I have concluded as follows:

(a)     the 8 August 2019 Changes were not authorised by the LEP Provision on the basis of AMPFP’s first alternative economic change contention;

(b)     the 8 August 2019 Changes were not authorised by the LEP Provision on the basis of AMPFP’s second alternative economic change contention;

(c)     the changes to the multiple for grandfathered commission revenue (which were part of the 8 August 2019 Changes) cannot be supported on the basis of a “legislation change”;

(d)     the requirement to consult (within the meaning of cl 1.4 of the Master Terms) is a precondition to the effectiveness of the change;

(e)     AMPFP failed to consult within the meaning of cl 1.4 of the Master Terms in relation to the proposed changes; and

(f)    It is unnecessary to determine whether AMPFP breached a contractual obligation of good faith.

It follows from the above that the 8 August 2019 Changes (with immediate effect) were not authorised by the LEP Provision and were ineffective.

Insofar as AMPFP contends, in the alternative, that the 8 August 2019 Changes were effective 13 months later (on 8 September 2020), I reject that contention.

In light of the above conclusions, it is unnecessary to determine whether AMPFP engaged in unconscionable conduct in relation to the 8 August 2019 Changes.

It is not necessary to resolve the misleading or deceptive conduct claim to determine the individual claims of Equity or WealthStone, and I therefore prefer not to do so at this stage.

In relation to Equity’s claim, I am satisfied that Equity has suffered loss and damage as a result of AMPFP’s breach of contract, and is entitled to damages in the sum of $813,560 (subject to the possible need to adjust this figure as discussed in [675] below).

In relation to WealthStone’s claim, I have concluded in summary that:

(a)     the condition precedent to the operation of the release has been satisfied;

(b)     the release is not void under s 23 of the Australian Consumer Law; and

(c)     AMPFP’s conduct in procuring the release was, in all the circumstances, unconscionable.

WealthStone is entitled to an order declaring the release void to the extent that it would preclude its claims in this proceeding. Further, WealthStone is entitled to damages in the sum of $115,533.51 (subject to the possible need to adjust this figure as discussed in [719] below).

19    Relevant for present purposes, in the supplementary reasons, Moshinsky J ordered that:

(1)    The common questions raised in this proceeding set out in Schedule A to these orders be answered in the terms set out in Schedule A.

(2)    Pursuant s 33ZB of the FCA Act, all persons who were Group Members in the proceeding as at the date of these orders (other than persons who had opted-out of the proceeding by that date) are bound by the answers to the common questions as specified in Schedule A to these orders.

20    Schedule A provides:

21    On 26 September 2023, AMPFP filed a notice of appeal to the Full Court. On 18 October 2023, Equity Financial filed a notice of contention and a notice of cross-appeal. The notice of appeal contends that his Honour erred on five grounds:

1.     The learned primary judge erred in holding that AMPFP did not effectively amend the BOLR Policy to introduce the 8 August 2019 Changes as of 8 August 2019 (Reasons[16], [602], [644]). His Honour should have held that AMPFP effectively amended the BOLR Policy to introduce the 8 August 2019 Changes as of 8 August 2019.

2.     Further and more particularly as to paragraph 1 above:

(a)     The learned primary judge erred in holding that the economic change he found(at Reasons [580], referred to as the First Alternative Economic Change) was not one that rendered any part of the BOLR Policy inappropriate within the meaning of the LEP Provision (Reasons [582]). His Honour should have held that the First Alternative Economic Change rendered the BOLR Policy’s valuation multiple inappropriate.

(b)     The learned primary judge erred in holding that any changes to the BOLR Policy under the LEP Provision must be proportionate to the economic change that renders the Policy (or any part of it) inappropriate (Reasons [560]). His Honour should have held that any changes to the BOLR Policy under the LEP Provision must be responsive to that economic change, and that the 8 August 2019 Changes were responsive to the First Alternative Economic Change.

(c)     Alternatively to sub-paragraph (b), the learned primary judge erred in finding that the 8 August 2019 Changes were not proportionate to the First Alternative Economic Change (Reasons [583]).

(d)     The learned primary judge erred in holding that consultation (within the meaning of cl 1.4 of the Master Terms) with ampfpa was a pre-condition to the effective exercise of the power to amend the BOLR Policy pursuant to the LEP Provision (Reasons [610], [615]).

(e)     Further or alternatively to sub-paragraph (d), the learned primary judge erred in finding that AMPFP did not provide ampfpa reasonable prior notice of the 8 August 2019 Changes and thereby failed to comply with the obligation in cl 1.4(a) of the Master Terms in respect of those Changes (Reasons [634], [636], [642]).

3.     Alternatively to paragraphs 1 and 2 above, the learned primary judge erred in holding that the announcement of the 8 August 2019 Changes on that date did not constitute 13 months’ notice so as to render those Changes to the BOLR Policy effective from 8 September 2020 (Reasons, [17], [647]).

4.     The learned primary judge:

(a)     erred in holding that AMPFP’s conduct in entering the buy-back agreements was conduct in connection with the acquisition of services within the meaning of s 21(1)(b) of the Australian Consumer Law (Reasons [702]);

(b)     should have held that the buy-back agreements were not contracts for the supply or acquisition of services within the meaning of s 21(1) of the Australian Consumer Law.

5.     The learned primary judge erred in holding that AMPFP’s conduct in procuring the release in the WealthStone buy-back agreement was unconscionable within the meaning of s 21 of the Australian Consumer Law (Reasons [21], [716]-[717]).

22    The notice of cross-appeal contends that his Honour erred on four grounds:

1.    The learned primary judge erred in holding that the First Alternative Economic Change was an “economic change” within the meaning of the LEP Provision (Reasons, [581]). His Honour should have held that the First Alternative Economic Change was not an “economic change” within the meaning of the LEP Provision.

2.    The learned primary judge erred in holding that, on the proper construction of the WealthStone Buy-Back Agreement (and the buy-back agreements of other group members who fall within [58] of the statement of claim), AMPFP, by paying a BOLR Benefit calculated based on the 8 August 2019 Changes, had paid the “BOLR Benefit” within the meaning of the agreement so as to satisfy the condition precedent to the operation of the release in those agreements (Reasons, [687]-[688]). His Honour should have held that AMPFP had not paid the “BOLR Benefit” within the meaning of the agreements, and that the condition precedent to the operation of the release in each such agreement was not satisfied.

3.    The learned primary judge erred in holding that, where the buy-back agreements of WealthStone and the group members in paragraph [58] of the statement of claim provided for payment of the BOLR Benefit in the form of an initial payment and a deferred payment (however described), the “upfront price” payable under those contracts, within the meaning of s 23(4)(c) of the Australian Consumer Law was the (entire) BOLR Benefit (Reasons, [695(c)(i)]). His Honour should have held that the “upfront price” was the initial payment (however described).

4.    The learned primary judged erred in holding that the WealthStone Buy-Back Agreement is not a “standard form contract” within the meaning of s 23(1) of the Australian Consumer Law (Reasons, [698]). His Honour should have found that the release in the WealthStone Buy-Back Agreement is:

a.    a “standard form contract” within the meaning of s 23(1) of the Australian Consumer Law;

b.    “unfair” within the meaning on s 23(1) of the Australian Consumer Law; and

c.    void under s 23(1) of the Australian Consumer Law.

23    The notice of contention is to the effect that his Honour’s answer to common question (1) should be affirmed on three grounds, which need not be reproduced.

24    On any view, the trial was a hard-fought contest and the appeal, if it proceeds, will be likewise litigated.

EVIDENCE AND SUBMISSIONS RELIED ON

25    Equity Financial primarily relies on:

(1)    Affidavits of Christopher Pagent, solicitor and partner of Corrs who has primary carriage of the proceeding, made on 18 and 23 April and 26 June and 30 August 2024, portions of which are redacted in accordance with confidentiality orders;

(2)    Counsel’s submissions of 5 July 2024;

(3)    Counsel’s Confidential Opinion on the settlement application of 25 June 2024.

26    The Funder relies on:

(1)    An affidavit of Christopher Martin, an investment manager employed by Augusta Ventures Ltd (the holding company of the Funder) made on 4 July 2024. Mr Martin is employed in the London office of the holding company;

(2)    An affidavit of Thomas Riddell, the Funder’s solicitor, made on 19 July 2024; and

(3)    Counsel’s submissions of 19 July and 23 August 2024.

27    AMPFP relies on counsel’s submissions of 23 August 2024.

28    The Contradictor, Mr Kirkwood SC with Mr Nanlohy, has provided written submissions of 9 August 2024.

29    The Costs Referee, Ms Harris has provided her referee reports of 31 May and 19 June 2024.

30    Three objecting parties have filed interlocutory applications, supported by affidavits.

31    Pinnacle Financial and Investment Services Pty Ltd by interlocutory application dated 23 August 2024, seeks leave to be heard together with orders that it not be bound by or otherwise affected by the Settlement Deed, but otherwise be bound by any settlement of the proceeding that is approved by the Court and, for the avoidance of doubt, that it remains bound by orders 1 and 2 made on 29 August 2023 on the common questions.

32    Entire Financial Solutions Pty Ltd by interlocutory application dated 2 August 2024, seeks leave to bring the application and orders that it is not bound or affected by the Settlement Deed, any settlement Distribution Scheme that is approved by the Court or any orders approving the settlement of this proceeding. In the alternative it seeks orders that it “be opted out” of this proceeding.

33    Investment, Retirement, Insurance & Superannuation Pty Ltd (IRIS) by interlocutory application dated 23 August 2024, seeks leave to be heard and to bring the application together with orders that it not be bound by any settlement of the proceeding as approved by the Court, not be bound by the Settlement Deed, not be bound by any settlement Distribution Scheme approved by the Court but, for the avoidance of doubt, that it remains bound by orders 1 and 2 made on 29 August 2023 on the common questions. In the alternative it seeks an order that the time to file an opt-out notice be extended to a date to be fixed and that, upon such filing, that it ceases to be a Group Member and thereby not be bound by any settlement of the proceeding.

34    Those interlocutory applications were not ultimately pressed, for reasons that I explain relating to the scope of the release clause in the Settlement Deed.

35    All affidavits were formally read without objection and no application was made for leave to cross-examine any deponent.

36    A total of 92 written objections were lodged, and of those the following 19 persons made an oral submission in person or by Teams:

37    Of the 477 Group Members,101 are in Group 1 and 326 in Group 2 (each as categorised in the Distribution Scheme). Statistically, the objectors comprise approximately 20% of all Group Members. Mr Kirkwood acknowledges that the number of objectors, as a proportion of the Group Members, is “higher than in many settlement approval applications” in his experience. However, that fact is not of itself evidence that the settlement is unfair or unreasonable, nor is the corresponding fact that a larger proportion of Group Members have not objected: Kelly v Willmott Forests (in liq) (No 4) (2016) 335 ALR 439; [2016] FCA 323 at [55] – [61], Murphy J.

38    I record that I have carefully considered all the affidavits and submissions (written and oral), including material that is the subject of confidentiality orders.

Principles

39    Section 33V of the Act provides:

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.

40    The Court’s function is well understood. Recently, the Full Court emphasised the importance of maintaining vigilance in representative settlement applications to ensure compliance with the overarching purpose of the civil practice and procedure of the Court at ss 37M and 37N of the Act: Galactic Seven Eleven Litigation Holdings LLC v Davaria (2024) 302 FCR 493; [2024] FCAFC 54 at [10], Murphy J.

41    In this application, the parties, the Funder and the Contradictor proceeded accordingly, and the Court is grateful for the assistance received.

42    The task is to assess whether the proposed settlement is fair and reasonable and in the interests of Group Members, considered as a whole and inter se. As summarised by Murphy J in Webb v GetSwift Ltd (No 7) (2023) 414 ALR 500; [2023] FCA 90 at [15]-[17]:

The applicable principles in relation to settlement approval under s 33V of the FCA Act are now well-established. The Court’s fundamental task is to determine whether the settlement is fair and reasonable and in the interests of the group members who will be bound by it, including as between the group members inter se [citations omitted].

In undertaking that task, the Court:

(a)     assumes an onerous and protective role in relation to group members’ interests, in some ways similar to Court approval of settlements on behalf of persons with a legal disability;

(b)     must be astute to recognise that the interests of the parties before it, and those of the group as a whole (or as between some members of the group and other members), may not wholly coincide;

(c)     relatedly to the second point, should be alive to the possibility that a settlement may reflect conflicts of interest or conflicts of duty and interest between participants in the common enterprise which has conducted the representative proceeding;

(d)     should understand that at the point of settlement approval, the interests of the parties will ordinarily have merged in the settlement. It is likely that they both will have become “friends of the deal”. As a result, both sides may not critique the settlement from the perspectives of any group members who may suffer a detriment or obtain lesser benefits through the settlement; and

(e)     must decide whether the proposed settlement is within the range of reasonable outcomes, rather than whether it is the best outcome which might have been won by better bargaining.

The Class Actions Practice Note (GPN-CA) at [15.5], sets outs the factors that are ordinarily required to be addressed in the material filed in support of an application for settlement approval. These factors, drawn from the remarks of Goldberg J in Williams v FAI Home Security Pty Ltd (No 4) (2000) 180 ALR 459 at [19], are to be approached as a guide, insofar as they are relevant to the circumstances of the case and not as a mandatory requirement: Caason at [13]; Davison v Commissioner of Police, NSW Police Force [2021] FCA 1324 at [47].

43    See also the detailed analysis and summary of principles by Lee J in Fowkes v Boston Scientific Corporation [2023] FCA 230 at [11]-[15], particularly his Honour’s commencing statement about the “Court’s supervisory and protective role.”

44    The material relied on addresses the non-mandatory and non-exclusive factors at [15.5] of The Class Actions Practice Note (GPN-CA):

(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 AMPFP 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.

45    In what follows, I address these and other factors. The statutory requirement to make orders that are “just” with respect to the distribution of the Resolution Sum is necessarily fact sensitive and fact intensive.

46    However, before doing so, and so that the objectors may have a full understanding of the process, I commence with a summary of the Court’s protective function, the important role of the objectors, the obligations of counsel for Equity Financial and the function of the Contradictor.

ROLES AND OBLIGATIONS

47    Justice Lee, as a member of the Full Court in Dyczynski v Gibson (2020) 280 FCR 583 likened the function of the Court to the protective jurisdiction of the Chancery Courts. At [402] he stated:

It is well established that the Court has a protective and supervisory role in relation to the interests of Group Members. It is a modern and far more specific mirror of Chancery’s parens patriae jurisdiction, whereby courts of equity could make a diverse range of orders for the protection of children and persons historically regarded as incapable (who could not be heard in a suit before the Court). 

48    For the benefit of the objectors, I explain what is meant by that reference. Very briefly, it may be traced to the Crown’s prerogative to care for those who have no other guardian or protector: the King is bound to protect his subjects: Wellesley v Duke of Beaufort (1827) 2 Russ 1 at 20 (38 ER 236 at 243). There is debate whether this is the true origin of the jurisdiction: Story, Commentaries on Equity Jurisprudence (1884, first English ed) at 919-921. In any event, in exercising parens patriae jurisdiction, the Court of Chancery assumed direct responsibility for persons incapable of protecting their own interests. The proceeding was not adjudicative as explained by Viscount Haldane LC in Scott v Scott [1913] AC 417 at 437:

[T]he judge who is administering their affairs, in the exercise of what has been called paternal jurisdiction delegated to him from the Crown through the Lord Chancellor, is not sitting merely to decide a contested question. His position as an administrator as well as judge may require the application of another and over-riding principle to regulate his procedure in the interest of those whose affairs are in his charge.

49    The analogy is neither direct nor perfect, but informs the role of counsel for Equity Financial, the Contradictor and the Court in the exercise of the jurisdiction to approve conferred in the modern context by s 33V of the FCA Act. It explains why I permitted each objector to address the Court in the form of oral submissions by way of elaboration of their written objections and unconstrained by the need to verify any factual matters by affidavit or sworn evidence. The parties raised no objection to this procedure. In other cases, it may be appropriate to receive the objections into evidence, which was done by Lee J in Fowkes at [56]-[58]. I did not consider that to be necessary in this proceeding. I will treat the objections as opposition to the settlement and as submissions in support. As I explain, one must distinguish between the subjective views of the members and the statutory assessment that the Court undertakes.

50    This is not to gainsay the importance of permitting each objector to articulate their concerns. As Lee J also observed in Fowkes at [50]: “It must always be borne firmly in mind that we are dealing with real people who perceive they have real claims, and any approved settlement would compromise those claims.”

51    Which brings me to the respective roles of counsel for Equity Financial and the Contradictor. Mr Craig KC, Mr Rozenberg and Ms Nikolic in authoring the Confidential Opinion expressly recognised and proceeded in accordance with their obligation, as officers of the Court, to candidly and frankly analyse the facts, to expose the basis for their risk analysis and not to act as advocates for Equity Financial: Galactic Seven at [94], Murphy J; [158] Colvin J. I am well-satisfied that this obligation has been complied with.

52    Mr Kirkwood has likewise proceeded in accordance with his important obligation to ensure that there is a real contest between conflicting interests, which role Dixon J explained in Bolitho v Banksia Securities Ltd (No 6) [2019] VSC 653 at [110]:

The Contradictor’s role is conceptually distinct from that of an amicus. The Contradictor’s role should be fundamentally understood as ensuring there is a real contest between conflicting interests where the outcome will be a res judicata. It is a role more closely aligned with that of an intervener than an amicus because the contradictor best assists the court when armed with the rights and powers of a party in the proceeding. The analogy to a party is to the position of group members whose rights will be determined by the approval of the settlement.

53    I turn now to the settlement.

THE SETTLEMENT DEED

54    Clause 2.1 of the Settlement Deed required Equity Financial to apply to the Court for orders approving the form and content of a notice to Group Members informing them of the main provisions of the settlement. The orders that I made on 30 April 2024 approved the form of that notice, summarised the proposed settlement, the primary provisions of the Settlement Deed and the Distribution Scheme. With limited interpolation, I reproduce following.

55    The Settlement Deed provides:

(a)    Clause 2.4: If the proposed settlement is approved, AMPFP must pay the Resolution Sum into an interest-bearing holding account for distribution in accordance with the Settlement Deed;

(b)    Clause 2.5: Upon payment of the Resolution Sum, Equity Financial on its own behalf and on behalf of each Group Member releases and discharges AMPFP, and its present and former directors, officers, employees, partners, servants, contractors and agents (related parties) from:

(i)    the claims made by Equity Financial and any Group Member in the proceeding;

(ii)    any other claim by Equity Financial or any Group Member which is in respect of, or arises out of, the same or related circumstances to those raised in the proceeding;

(iii)    any claim that Equity Financial or any Group Member could have raised in the proceeding relating to, or arising out of, or in respect of (either directly or indirectly) the matters the subject of the proceeding, or any part of it, or which are raised in the proceeding, or which are in respect of, or arise out of, the same or related circumstances to those raised in the proceeding and anything related to the proceeding, including any damage, loss, cost or expense suffered as a result of the matters the subject of the proceeding or any part of the proceeding or which are raised in the proceeding;

(c)    Clause 2.5: AMPFP releases Equity Financial and each Group Member (the Claimants) together with their related parties, who entered into either a buy-back agreement, institutional release or settlement deed (as each of those terms were defined in the amended defence) from any claim which AMPFP might have relating to, or arising out of, or in respect of, those Group Members obligations pleaded in paragraph 100A and schedule three of the amended defence filed by AMPFP in the proceeding;

(d)    Clause 3.2: Equity Financial must prepare a Distribution Scheme.

(e)    Clause 3.2: The Administrator is to distribute the Resolution Sum in accordance with the Distribution Scheme.

(f)    Clause 5.5: If, after the Settlement Deed has been executed, the Court allows an existing Group Member to opt out of the AMPFP BOLR Class Action (and if that development does not entitle AMPFP to terminate the Settlement Deed or if AMPFP elects not to do so), the parties agree that the Resolution Sum is to be reduced by an amount equal to the amount that the Administrator determines would have been distributed to such Group Member or Group Members pursuant to the Distribution Scheme had they remained Group Members.

(g)    Clause 6.1: Equity Financial is not to make any public statement about the terms recorded in the Settlement Deed, except with AMPFP’s consent, or except for the purpose of preparing or providing to the Court evidence in support of its application for approval of the Proposed Settlement, or if another exception provided for in the Settlement Deed applies.

(h)    Clause 7.1: Equity Financial and Group Members are not entitled to seek any costs from AMPFP, including their legal costs and the costs of administering the settlement. AMPFP is not entitled to seek any costs from Equity Financial or the Group Members, including its legal costs.

56    It is proposed by Equity Financial and the Funder that the following amounts will be deducted from the Resolution Sum, comprising the Funder’s entitlements pursuant to litigation funding agreements it entered into with Equity Financial and 378 Group Members. In those agreements, Equity Financial and the contracting Group Members are obliged to pay the Funder an amount equal to the Project Costs and the Commission (each as defined in the agreements). The Project Costs comprise:

(1)    The Funder Commission of $26,578,805.83;

(2)    Paid legal costs of $10,573,022 (GST inclusive) to be paid to the Funder;

(3)    Unpaid legal costs in the amount of $509,989.98 (GS T inclusive) to be paid to Corrs;

(4)    Future legal costs of $1,009,927 (GST inclusive) to be paid to Corrs;

(5)    A further amount in respect of future legal costs of $216,493.92 to be paid to Corrs;

(6)    The security costs sum in the amount of $360,259.96 to be paid to the Funder;

(7)    Reimbursement costs of $30,000 each to be paid to Ms Braschey and Ms Scott and the sample claimants reimbursement in the amount of $20,000 to be paid to Mr Finch;

(8)    The adverse costs order reimbursement of $58,500 to be paid to the Funder;

(9)    The costs of the Contradictor in an amount of up to $100,000 to be paid to the Contradictor and his junior, subject to any further order of the Court varying this amount;

(10)    The costs of the Costs Referee of $50,000 (excluding GST);

(11)    An adverse costs insurance premium (ATE costs) paid by the Funder of $2,134,924.96 to be paid to the Funder;

(12)    An amount of $567,355 characterised as administrative fees to be paid to the Funder;

(13)    The Administrator’s Costs of administering the Distribution Scheme of $1,006,000.

57    In the result, the total amount claimed for Project Costs by the Funder is $42,009,278.65. This amount excludes items (7), (9), (10) and (13) which total $1,236,000.

58    Items (6), (7), (8), (9), (10) and (13) are not controversial and may be shortly dealt with as there is no issue about whether they were reasonably incurred, or will be, if the settlement is approved.

59    The balance of the Resolution Sum will be distributed to Group Members in accordance with the Distribution Scheme.

THE DISTRIBUTION SCHEME

60    The Administrator will invite all Group Members to seek to participate in the Distribution Scheme, and to provide certain information for that purpose. The Administrator will then assess the claims of all such Group Members and determine the value of each claim on the assumption it would have succeeded (Gross Value).

61    The approach to calculating the Gross Value of Group Member’s claims is intended to reflect the approach the Court would have likely adopted in valuing those claims.

62    Interest will be added to the Gross Value of each Group Member’s claim.

63    Discounts will then be applied to the Gross Value (and interest) of the claims, reflecting an assessment of the risks involved in pursuing them. Different discounts apply to different cohorts of Group Members to reflect the legal strengths and weaknesses of the claims of each cohort.

64    For the purpose of determining the Gross Value of Group Members’ claims and the applicable discounts, Group Members will be categorised into one of two categories:

(a)    Group 1 Members – Group Members who have been paid a benefit under a BOLR Policy; and

(b)    Group 2 Members – all other Group Members.

65    All Group 1 Members will be entitled to participate in the Distribution Scheme.

66    The Gross Value of a Group 1 Member’s claim will be calculated by the Administrator as:

(a)    the amount that the Group 1 Member should have received under the BOLR Policy based on the primary reasons (ie, the multiple set out below for Grandfathered Commission and 4x for all other revenue);

minus

(b)    the amount of the benefit that the Group 1 Member actually received under the BOLR Policy.

67    In calculating the amount that the Group 1 Member should have received under the BOLR Policy, the multiple to be applied to Grandfathered Commission is:

68    Interest will then be added to the Gross Value of each Group 1 Member’s claim.

69    Provision is made for a discount to be applied in the case of Group Members who have provided a release to AMPFP relating to the claims made in the proceeding.

70    Group 2 Members will be entitled to participate in the Distribution Scheme if, by the due date set out in the Distribution Scheme they provide, or a representative authorised by them to do so provides, a Statutory Declaration to the Administrator stating that, had it not been for AMPFP’s alleged misleading or deceptive conduct in relation to the changes to the BOLR Policy on 8 August 2019, they would have:

(a)    lodged and completed a BOLR application; or

(b)     completed (and not withdrawn) a BOLR application which they did lodge.

71    The Statutory Declaration must also state:

(c)    the date when the Group 2 Member lodged, or would have lodged, a BOLR application (Intended Application Date);

(d)    if the Intended Application Date was before 1 January 2020, whether the Group 2 Member would have sought a reduced notice period of 6 months on the basis of a willingness to accept a discount to their register value or due to the Group 2 Member’s Tenure (being the period of time for which the Group 2 Member was appointed as an Authorised Representative of AMPFP, as provided for in the BOLR Policy), and if so, the Tenure the Group 2 Member would have had by their Exercise Date.

72    Group 2 Members who do not provide the required Statutory Declaration are not entitled to participate in the Distribution Scheme. A formula is provided to determine the quantum of payments to Group 2 members who provide the required Statutory Declaration, being the amount a member should have received under the BOLR Policy based on the findings in the primary reasons, less the amount they would have received if they had lodged an application prior to 8 August 2019. A further calculation mechanism is provided to determine those amounts. There is an entitlement to receive interest on the amounts so determined.

73    After calculating the Gross Value of each Group Member’s claim, adding interest and then applying any applicable discounts, the resulting amount is the Group Member’s Claim Value.

74    Once the Claim Value of all claims has been calculated, the Administrator will distribute the available balance to the Group Members, determined proportionately by reference to the greater of a fixed percentage.

75    There is a provision which allows for a Group Member to appeal the assessment made by the Administrator of the claim value to an independent senior counsel.

Funding equalisation order

76    The interlocutory application for settlement approval gave notice that Equity Financial intends to apply for a funding equalisation order to apportion the cost of the Funder’s entitlements pursuant to the litigation funding agreements equally as between the Group Members, regardless of whether a Group Member entered into a funding agreement.

CONSIDERATION

77    In what follows, I express some of my findings and reasons at a level of generality so as not to disclose material that is subject to confidentiality orders.

MATTERS RAISED IN THE OBJECTIONS

78    In assessing a settlement, the views of objecting Group Members “provide a convenient focus for the Court” in the identification “of any features of a settlement that are obviously unreasonable or unfair: Fowkes at [38] per Lee J. In this proceeding, the objectors are all people, some with long-standing commercial and professional relationships with AMPFP, either individually or through corporate structures.

79    In summary, 92 notices of objection have been provided from 86 Group Members. A convenient summary of the objections is contained in the third affidavit made by Christopher Pagent, which I am satisfied is accurate and which I adopt:

80    I have considered the terms of each objection. Many are deeply personal: some attach documents in support of a claim that the likely amount to be received pursuant to the Distribution Scheme is less than the objector’s “contractual entitlement”.

81    Disappointment, grievance and personal suffering are common themes. For example, one objector in part says:

This entire process has seen AMP duck and weave their way around their responsibility. This responsibility sits at a professional, ethical, and human level and I believe AMP have missed the mark in relation to the settlement.

We have heard from AMP executives regarding this settlement and how it is a material step forward in restoring the relationship between the adviser network and licensee, yet this offer comes with the bitter pill that it is AMP walking away unaccountable for the irreplaceable losses, grief, distress, anger, and pain they have caused even though the Courts have already found them guilty.

We all know stories where advisers, businesses, families, and other relationships have fallen or been torn apart while the corporate juggernaut, being AMP, continues to forge ahead seemingly oblivious or undeterred by these ramifications.

In my opinion, the offer made continues to support this view, as it does not adequately compensate those impacted on any of these levels.

82    On that theme another says:

I have submitted BOLR prior to the changes, AMP terminated me and did not execute BOLR for me post the change. I had EVERYTHING stolen from me: my business, my reputation, my career! My health was destroyed, my relationship tested, my family put through HELL and yet, I am not even in Group 1.

The Resolution Sum is grossly inadequate, unfair and takes no consideration of the damage caused by AMP.

I am sickened and insulted by the fact that this was even entertained as adequate.

83    Another states:

I went through 7 years of hell trying to get away from the nightmare [AMPFP] had made my life. I was so close to suicide… That I was calling my [Respondent representative] and except contact… Sobbing so hard I couldn’t even tell them who I was, or speak. I got the feeling they were used to this. I worried every minute of every day about losing my house (my only safe place in the world) and having nowhere for [my family] to live.

84    A very large proportion of the objectors are unclear as to how their entitlements pursuant to the Distribution Scheme will be calculated. For example:

I do not believe that the proposed $100 million settlement is sufficient or represents fair compensation for damages incurred by the collective Group Members participating in [the proceeding]….No doubt the Court will be aware the suggested Legal and Funder costs are approx. $42 million and will likely exceed $50 million by the time this matter is finally resolved. Based on the number of potential Group Members this results in the compensation to be approx $100,000, however the reality is this figure is significantly reduced based on the proposed settlement Distribution Scheme. Personally, my BOLR shortfall is approximately $1.6 million (excluding GST) [and] I do not believe the prospect of settling for less than $100,000 is a fair or reasonable result.

It is nearly impossible to derive a fair calculation on the individual outcome of the proposed distribution settlement scheme with the information provided, therefore how can we be reasonable (sic) expected to decide whether this offer is in fact fair and reasonable. The construction of the offer requires knowledge of how many participants are in each group and collective BOLR shortfall after factoring in the many discounts impacting on any potential payout.

85    The last point is elaborated in another objection:

For me to accept any offer I need to know the facts. Facts such as: what will I be getting, what is expected of me after I receive the benefit, is the benefit worthwhile given the circumstances, is the offer fair for all my impacted colleagues who continue within the profession and is there room for negotiation.

86    And similarly, in another:

Logic dictates, and it is imperative that all class-action participants be provided with the total of all BOLR Claims to enable an informed decision as to whether the proposed settlement amount is fair and reasonable.

In the absence of critical information such as the total BOLR payments outstanding to all class-action participants, I am unable to verify the amount of settlement that I am likely to receive. However, I am very aware the proposed settlement amount of $100 million falls significantly short of this total – possibly by a factor of at least four or five times.

I have not been provided with a definitive answer as to whether I am in Group 1 or Group 2 for settlement calculations.

87    There are many objections that focus on the discounts to be applied by the formulaic provisions of the Distribution Scheme and the absence “of any certainty” that any distribution will be received, particularly in the case of the Group 2 Members. One objector states:

AMP has been found to have been in breach of its contract with its planners. On this basis alone, one would expect that a settlement is appropriate and proportional to all that are entitled to (sic) under the contractual agreement.

I acknowledge that the current offer is a better outcome if the collective is a total loss via an appeal.

However, at this point in time, I cannot determine if I’m going to receive anything under the proposed settlement as a group two member and to also give up my right to seek further records if desired is not acceptable.

88    Other objectors have gone to considerable effort in order to estimate what is likely to be received pursuant to the settlement distribution. One calculation puts the estimate at 54% “of what I am owed” adding:

If I accept this settlement offer, I will be paid only a small fraction of what was contractually and unconscionably stolen from me by [AMPFP]. Under BOLR terms [AMPFP] owe my company $159,103 as well as damages for my stress to myself and my family. I would also like the interest on the outstanding debt owed to me to be paid as these funds are for my retirement.

89    Some objectors raise philosophical and ethical concerns. An example is:

There is a broader ethical issue at play. It is unacceptable for a corporation, especially one with the extensive resources of AMP, to exploit a power imbalance to the detriment of its advisers, who are less equipped to defend their rights. Despite the Court’s findings of breach of obligation, this settlement falls far short of rectifying the harm caused or compensating for the value that has been unjustly taken from the planners. The August 2019 BOLR changes have had devastating effects on financial advisers, many of whom have dedicated years to building their businesses under the expectation of fair treatment and contractual adherence by AMP. The abrupt and unilateral changes imposed by AMP have resulted in significant financial and professional harm, which this settlement fails to adequately address.

We urge you to reconsider the terms of the settlement to ensure that it fully compensate all affected advisers, including those who have been forced out and left uncompensated. A fair resolution must acknowledge and address the complete scope of AMP’s misconduct and the resultant damage to its planners.

90    In oral submissions, rarely did an objector state that he or she took issue with the Funder Commission, the quantum of incurred legal costs or the estimates of future legal costs. There were some submissions at the margin of those claims, particularly that GST appeared to have been double counted, which is an issue that I deal with separately. By way of example, as stated to me by one of the lead objectors (a person who signed a litigation funding agreement):

I did sign a funding agreement. I have no money. I had to borrow money off my daughter the other day to put towards a GoFundMe campaign. We’re all in the same boat, your Honour. Lots of people contacted me and said, “I put up money. I can’t even afford $5.” So we do understand that Augusta came to the party, and they enabled us to take on this class action, and we thank them for that. So we’re not querying what was in the Funder’s agreement, even though the Contradictor has kindly, on our behalf, tried to query it for us.

91    Universally, the objectors submitted that $100 million is a totally inadequate sum to compensate for the entirety of AMPFP’s conduct and that, if the settlement is approved, the likely return to Group Members, in particular Group 2 Members, is insignificant. Many explained to me that they would rather receive nothing under this settlement and take the risk of pressing ahead with the litigation to hold AMPFP to proper account. This was put in various ways: AMPFP has negotiated a settlement for a fraction of the true cost of its actions, the settlement is morally wrong, and it prioritises the interests of AMPFP over those whom it has harmed. Another matter that was often put to me is that if the settlement is approved, the Group Members will lose their opportunity to test the broader unconscionable conduct and misleading and deceptive conduct claims that were not decided by Moshinsky J. There is a general view that the release clauses in the Settlement Deed are too broad and will forever bar the Group Members from agitating their individual claims of unconscionable conduct.

92    The personal and economic harm claimed by many individuals was emphasised. As put to me by one objector:

I wish to make this oral presentation to assist the Court in considering the proposed settlement terms and Distribution Scheme. The proposed settlement of AMPFP BOLR class action is a gross injustice that fails to adequately compensate Group Members for the significant financial, personal and emotional harm caused by AMPFPs actions. The settlement prioritises the interests of AMPFP over those of the affected individuals, and it fails to hold the company accountable for its misconduct. I unequivocally reject the proposal settlement in the AMPFP BOLR class action. Your Honour, you might find yourself considering the settlement proposal as it could be an easy solution, but does easy make it right? Does it take into consideration the financial losses of all advisers in the class action, the loss of identity, the effect on the mental health of advisors, the family breakups that have occurred?

…

The release clauses in the agreement bind all Group Members, regardless of if compensation is received or not, so how is this fair? The clauses are unethical and enable AMP to bypass their obligation to all class members. Every individual Group Member has suffered financial, personal and mental anguish as a result of AMPFP’s actions, and the proposed settlement fails to adequately address the needs of all Group Members. For me personally, this settlement means the unconscionable conduct of AMP’s actions will remain unaddressed. My mental health has been affected, and I haven’t been able to work since I was terminated.

A couple of days after the initial announcement, I had gone out and I actually turned my phone off for a couple of hours. I turned my phone off – on, and I had a message from a close friend, an advisor. The message was a goodbye. They were actually in the process of committing suicide, as they couldn’t see how they were going to survive financially. Very fortunately, they weren’t successful. Subsequently, I no longer turn off my phone, because just in case.

Since then, I have known a number of advisors who have attempted suicide, and are aware of others who are waiting on the outcome of this class action. And if this proposal proceeds, they will be financially ruined, and they cannot see any other way out of the mess than to use their life insurance to pay out – pay their families, so that they can actually survive. This is the truth and reality of AMPFP’s actions, and why despite the fact that AMPFP have deep pockets and are a big business, that they must be held accountable for their illegal actions, and a fair and reasonable payment made – be made to fully compensate all Group Members for their losses, both financially and personally.

93    This is not an isolated account. All objectors spoke with sincerity, passion and to the best of their ability in an unfamiliar environment to ensure that I was fully appraised of the strongly held basis for the objections. Almost all objectors stated that they were prepared to assume the risk of further litigation even if that means the ultimate outcome is less favourable than the settlement terms. As put by one:

So we are prepared to take that risk. There is more risk, as I say, to AMPs reputation. You’ve asked about the risk of time because if we go back to court, we’re going to delay this longer. And we understand that, and I’ve already outlined for you why time actually works for us and not against us. And we’ve already gone five years since this announcement. It has been hell. Another few years, it makes absolutely no difference. We went to court thinking we wouldn’t win. We did. Now, we’re back in court again. We’re no worse off. So time works in our favour, not against us.

94    There is one matter, raised by several objectors, which requires correction. The submission was that AMPFP made provision in its accounts of $1.2 billion for this litigation and that, a settlement for approximately 10% of that amount is objectively unfair. That figure is not correct. At [124] of the primary judgment, Moshinsky J referenced an internal memorandum of July 2018, which addressed the financial impact of the proposed changes. The author stated that the total BOLR liability is $1.2 billion across 800 practices, which is clearly not an estimate of the potential liability to pay damages to the Group Members in this proceeding and Moshinsky J made no such finding.

95    Of course, what each objector has put, in writing and orally, is not evidence of the facts but raises matters of substance to consider in the protective supervisory jurisdiction of the Court. That these claims have not been publicly litigated must not be overlooked.

96    In consideration of the settlement terms, I proceed informed by the objections, particularly the strength of grievance held by the objectors and the uncertainty of outcome that they express, though mindful of the risks, cost and complexity of further litigation and “where a group member does object to the settlement, an important further question is whether the objector is prepared to assume the role – and risks – of being a lead plaintiff”: Camilleri v The Trust Company (Nominees) Ltd [2015] FCA 1468 at [5(g)], Moshinsky J.

THE RESOLUTION SUM

97    Counsel for Equity Financial in the Confidential Opinion have analysed in detail each matter considered in concluding that the Resolution Sum is fair, reasonable and in the interests of the Group Members. In doing so, they address each of the factors identified in GPN-CA.

98    I am satisfied that the Confidential Opinion comprehensively addresses all relevant facts and identifies and interrogates each issue that is relevant to consideration of the settlement. Without disclosing what is in the Confidential Opinion, I am satisfied that it correctly identifies and addresses the following:

(a)    The scope and effect of the Settlement Deed, and in particular the scope and operation of the release clauses;

(b)    The scope and operation of the Distribution Scheme, in particular the basis for and the means of identifying the Group 1 and Group 2 members, the methodology for the calculation of the gross value of the respective claims and the application of identified and logical discounts;

(c)    The complexity of the litigation;

(d)    The issues and the assessed risks of the appeal, the cross-appeal and the notice of contention;

(e)    The objections;

(f)    The liability risks for claims that have not been litigated;

(g)    The risks of establishing causation, damage and damages for claims that have not been litigated;

(h)    The risks faced by Group Members who signed releases, and those who signed institutional releases when their practice was permitted to be transferred to another authorised representative;

(i)    The scope of potential unconscionable conduct claims by other Group Members;

(j)    quantification risks for Group Members, informed by independent advice and analysis from KordaMentha;

(k)    The range of a reasonable settlement, based on hypothetical scenarios;

(l)    The mechanism for discriminating between Group 1 and Group 2 Members in the Distribution Scheme and the methodology to be applied for discounting individual claims;

(m)    The Funder Commission; and

(n)    The other Project Costs.

99    I have considered that analysis and have made my own assessment of the complexity of the proceeding informed by the pleadings, the primary reasons, the supplementary reasons and the issues in the appeal. I am greatly assisted by the analysis in the Contradictor’s written and oral submissions. My views may be shortly expressed by reference to the following factors.

COMPLEXITY, STAGE AND LIKELY DURATION OF THE LITIGATION

100    The proceeding was commenced on 28 July 2020. Prior to the allocation of the proceeding to my docket in April 2024, 60 procedural and final orders had been made. To the date of publication of the primary reasons on 5 July 2023, no less than 120 pleading documents (some amended multiple times) and affidavits had been filed. The trial before Moshinsky J ran for 21 days in October and November 2022. Equity Financial produced evidence from eight lay witnesses and three experts. AMPFP adduced evidence from four lay witnesses and three experts. A large Court book of agreed documents was received in evidence.

101    His Honour delivered judgment in the form of the primary reasons on 5 July 2023, extending to 722 paragraphs over 194 pages. The summary of the reasons of his Honour that I have set out demonstrates the complexity of the issues for determination.

102    The appeal grounds, the cross-appeal and the notice of contention raise material issues for consideration upon an appeal by way of rehearing. Counsel for Equity Financial have conducted a rigorous, thorough and objective analysis of the appeal risk, the risks should there be a retrial and the individual risks attendant upon establishment of individual claims conformably with resolution of the common questions. The result of that analysis is summarised in the open submissions of counsel for Equity Financial where it is submitted:

For the purpose of this open outline of submissions, it is submitted that the Proposed Settlement is fair and reasonable on an inter partes basis for at least the following reasons:

First, the complexity of the litigation is reflected in the duration of the litigation (which commenced in 2020), the number of witnesses relied on by each party, the length of the initial trial before Moshinsky J and the subsequent Appeal. By the Proposed Settlement, the parties will avoid the potentially significant costs associated with the Appeal, and any further hearings that may be necessary to determine outstanding issues in the Proceeding after the Appeal.

Second, the Proposed Settlement was reached with the benefit of the Judgment and Judgment (No 2), and following the commencement of the Appeal, in circumstances where the parties and their legal representatives were in a good position to appreciate the risks associated with litigating the Proceeding to its conclusion.

Third, taking account of our confidential assessment of the risks of establishing liability and the risks of establishing loss or damage in sections E.3 -E.7 of the Confidential Opinion, the Proposed Settlement represents a fair compromise of the claims made in the Proceeding.

Fourth, the Resolution Sum that would be available for distribution under the Proposed Settlement represents an outcome that sits within the range of reasonable outcomes having regard to all the attendant risks of litigation.

Further, it is also submitted that, having regard to the terms of the Settlement Distribution Scheme, the Proposed Settlement is fair and reasonable on an inter se basis. In particular:

The Settlement Distribution Scheme must be administered having regard to the best interests of the Group Members as a whole with a view to striking a balance between participation and the efficient distribution of the Resolution Sum.

(Footnotes omitted)

103    I agree with this analysis. I note that within the confidential material there is a report from KordaMentha, prepared for the purpose of the mediation and addressed in the Confidential Opinion, which provides calculations based on various scenarios of the quantum range of aggregate possible outcomes for the Group Members and which is critically analysed in the opinion. The analysis supports the Resolution Sum as within the range of reasonable outcomes.

104    As to the last point, the objectors should understand that I cannot accept at face value the various submissions that they have lost considerably more, in monetary terms, than what is likely to be received pursuant to the Distribution Scheme. As I put to more than one objector during oral submissions, an individual claim that a specific sum of money has been lost assumes no risk in proving the claim upon a contested trial. The risks are factual, legal and often tactical. The settlement has been reached as the result of a negotiated compromise. The individuals best informed to undertake those negotiations are the lawyers for Equity Financial and AMPFP, subject of course to their instructions. A settlement at mediation will always reflect a degree of compromise. Judgments are made based on legal and commercial risk. There is no one correct or incorrect figure. As Beach J stated in Blairgowrie Trading Ltd v Allco Finance Group Ltd (Receivers and Managers Appointed) (in liq) (No 3) (2017) 343 ALR 476; 118 ACSR 614 at [82] – [83]: