FEDERAL COURT OF AUSTRALIA

Spozac Pty Ltd as trustee for the LDB Family Trust t/as Not Just Cakes v Tyro Payments Ltd (No 3) [2025] FCA 488

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to s 33V(2) and s 33ZF of the Federal Court of Australia Act 1976 (Cth), order that if, after the distribution to the applicant and eligible group members of amounts presently held by the Scheme Administrator pursuant to Cl. 5.3(d) of the Settlement Scheme, there remains any residual amount which is impractical to distribute, then that amount be paid by way of charitable donation to the Moriarty Foundation.

2.    The interlocutory application filed on behalf of the Settlement Administrator dated 4 February 2025 otherwise be dismissed.

3.    Pursuant to s 33ZF of the Federal Court Act, order that Andrew Chen not be permitted to resign from his role as administrator of the scheme without leave of the Court.

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

REASONS FOR JUDGMENT

OWENS J

1    On 19 May 2023, pursuant to s 33V(1) of the Federal Court of Australia Act 1976 (Cth), Rares J approved the parties’ settlement of these proceedings: Spozac Pty Ltd as trustee for the LDB Family Trust t/as Not Just Cakes v Tyro Payments Ltd [2023] FCA 590. His Honour did not, however, approve the proposed settlement distribution scheme. That scheme was then revised in various respects, and a further hearing took place on 30 May 2023. At the conclusion of that hearing, Rares J indicated that he was prepared to approve, subject to certain further amendments, the new scheme: Spozac Pty Ltd as trustee for the LDB Family Trust t/as Not Just Cakes v Tyro Payments Ltd (No 2) [2023] FCA 643.

2    On 19 June 2023, Rares J made orders pursuant to s 33V(2) of the Federal Court Act approving a settlement distribution scheme in relation to the settlement. His Honour also made an order, pursuant to s 33ZF of the Federal Court Act, appointing Andrew Chen of Findex as the administrator of the scheme. His Honour granted liberty to Mr Chen to “list the proceeding for the purpose of seeking orders consequential to, or in connection with, the settlement deed and/or the scheme”.

3    The total amount paid by the respondent in settlement of the claims made in the proceedings was $5 million. After legal costs, funding commission, and various other approved payments were made, including nominal payments to a certain class of group member, there was expected to be over $2 million available for distribution to so-called eligible group members.

4    The settlement sum was paid into a trust account established by Findex on 21 August 2023. After carrying out a registration process, Mr Chen commenced making payments to group members. Between December 2023 and January 2024, Mr Chen distributed a total of just under $2.1 million. That was not, however, the whole amount available to be distributed. The reasons there was money left over included the facts that it did not prove possible to contact all group members, some who were contacted did not wish to receive a payment, and others provided incorrect banking details.

5    The evidence does not disclose what Mr Chen did between the point in January 2024 when he completed the distributions referred to above, and February 2025. On 4 February 2025, however, he filed an interlocutory application that sought, amongst others, orders that the amounts able to be paid to both Findex and to the solicitors for the applicant out of the settlement moneys be increased. At the time the application was filed, he had over $225,000 sitting in his trust account.

6    Clause 5.3(d) of the settlement distribution scheme required surplus funds remaining after any initial distribution to be shared equally between the applicant and eligible group members. There was no explanation in the evidence for why that step had not already been taken (save for the inference that he did not wish to do so until he knew whether Findex and Bannister Law would be entitled to any part of the remaining sum).

7    Insofar as the application related to the scheme administrator (Findex):

(a)    The settlement distribution scheme approved by Rares J permitted an amount of up to $38,500 to be paid to Findex on account of its costs and disbursements incurred in performing its role as the scheme administrator: cll. 1.1, 5.1(a)(v), 5.2(b). Those costs were defined as the “Findex Administration Costs” in the deed.

(b)    The application sought an increase of up to $25,000 to the “Findex Administration Costs”.

(c)    In other words, an increase of 65% was sought.

8    Insofar as the application related to the applicant’s solicitors (Bannister Law):

(a)    The settlement distribution scheme approved by Rares J permitted an amount of up to $14,735.30 to be paid to Bannister Law for with work performed in connection with the approval or administration of the settlement scheme: cll. 1.1, 5.1(a)(v), 5.2(b). Those costs were defined as the “BLCA Administration Costs”.

(b)    The application sought an increase of up to $11,000 to the “BLCA Administration Costs”.

(c)    In other words, an increase of 75% was sought.

9    The basis upon which those orders were sought shifted between the time the application was filed, and the time it was determined.

EVIDENCE AND SUBMISSIONS FILED IN ADVANCE OF THE FIRST HEARING

10    Before the application was listed for hearing, one affidavit was filed in support, namely, that of Mr Chen sworn on 4 February 2025. Written submissions were also filed on his behalf. In his affidavit, Mr Chen gave evidence that:

(a)    The amounts nominated in the settlement distribution scheme as “Findex Administration Costs” and “BLCA Administration Costs” were “calculated as best estimates of the total cost that it was contemplated would be incurred in completing the distribution of all payments to group members”. No evidence was adduced, however, of the method by which the estimate was calculated, the assumptions underpinning it, and any contingencies for which allowance was made.

(b)    At the time the scheme was approved, Findex “did not anticipate or intend to incur costs in excess of” the amount specified in the scheme, and Bannister Law “similarly anticipated [the BLCA Administration Costs] to be sufficient to cover the costs incurred by” Bannister Law in connection with the administration of the scheme.

(c)    The costs actually incurred were, however, “greater than originally anticipated”. That was said to be for three reasons:

(i)    First, the registration process was “substantially more time-consuming than anticipated due to the number of registrants and the volume of communication and correspondence that was required to be undertaken with registrants to facilitate their registration”. The process was said to have been made more complicated by:

(A)    group members attempting to register more than once, and registering in categories for which they were not eligible. Findex was thus required to “identify those group members who had registered multiple times, de-duplicate the pool of registered group members and ensure that group members were appropriately classified and received the correct distribution”;

(B)    some group members providing incorrect or incomplete information “which required additional contact and follow-up by email”. Moreover, time was “required to respond to and satisfy group members’ concerns that the invitation to register and request for bank account details was a hoax or scam”.

(ii)    Secondly, in order to process payments, it was necessary to “follow-up with group members by email and telephone who had failed to provide payment information to Findex to facilitate payments. The number of non-responding group members was larger than expected”.

(iii)    Thirdly, in attempting to send notices to group members requesting bank details, Findex “received 17 email bounce-backs”. As a result, Findex spent time “attempting to contact group members by telephone, which for many group members required multiple attempts due [to] the group member not answering or responding to messages”.

The evidence in this respect did not, however, identify the time in fact spent performing this unanticipated work (in total, let alone by reference to individual tasks or activities). There was no attempt to identify the extent to which work of the kind described had been anticipated (which surely it must have been), and thus the amount of “extra” unanticipated work involved.

(d)    Findex has already incurred costs of $17,634 in excess of the $38,500 specified in the definition of “Findex Administration Costs” that it would seek to recover, and has also written off a further $3,900 that it would not seek to recover. The evidence in this respect did not go beyond identification of the figures just cited. That is, there was no evidence, for example, of the hours spent on particular tasks, the rates charged for that work, or any other information that would have enabled scrutiny of the reasonableness of the charges identified. Furthermore, where the assumptions and method of calculation of the original estimate were not disclosed, it was not possible to obtain any real understanding of the extent to which any amount incurred related to work that was or was not (or should have been) anticipated.

(e)    The further work that was required to be done was:

(i)    determining the amount of remaining funds available for distribution;

(ii)    distributing the remaining funds;

(iii)    dealing with failed payments, including by following up with group members to ascertain whether their payment details have changed; and

(iv)    completing the distribution of funds to those group members for whom the initial distribution failed.

It did not appear to be suggested that this further work was unanticipated. Indeed, Mr Chen described it as work “to complete the distributions required under the Settlement Scheme”, which I took to involve a recognition that a final distribution of this kind was always likely to be required (which it plainly was).

(f)    The further work required would cost up to $14,000. That estimate was broken down into smaller amounts for particular activities, although the analysis was still, on the whole, pitched at a level of generality that made any real scrutiny of the reasonableness of the expected expenses difficult at best.

11    The evidence relating to the proposed increase in the BLCA Administration Costs was simply to the effect that legal expenses had been and would be incurred in relation to this application up to an amount just over $11,500. Save as to a division between the fees of counsel and Bannister Law, and the extent to which costs had already been incurred, as opposed to being expected future costs, no breakdown or explanation of the way in which that total amount was calculated was provided.

12    The bottom line, therefore, was that Findex was seeking to recover some combination of $17,634 for its past costs, and up to $14,000 for its future costs, but with the total capped at $25,000. Bannister Law was seeking to recover its costs up to $11,000.

13    The written submissions summarised the effect of Mr Chen’s evidence and, after identifying the relevant statutory powers, framed the critical submission in the following terms:

In Stanford [v DePuy International Pty Ltd (No 8) [2024] FCA 35], Wigney J exercised the power in s 33V(2) to grant orders for additional administrator’s costs in circumstances where the original estimate of those costs was too low: at [37]-[38], [71]-[72]. In approving those additional costs, Wigney J observed that the administrator’s work was properly undertaken (at [99]), the fees claimed were fair and reasonable (at [100]), and there was no reason to disallow or discount the costs sought (at [110]).

As in Stanford, here the “best estimate” upon which the Findex Administration Costs were originally based did not anticipate the complexity that ultimately arose in administering the scheme and thus underestimated the costs that would be incurred. Conversely, Mr Chen’s present estimate of costs to make a further distribution in accordance with cl 5.3 of the [scheme] is informed by a real appreciation of that complexity. Accordingly, his estimates of the further work needed and costs to be incurred ought to be accepted as proper, fair and reasonable. There is also no reason to disallow or discount those costs in circumstances where: (i) the amount of the increase is modest; (ii) there is ambiguity in the [scheme] as to whether the original cap on the Findex Administration Costs was intended to apply to any further distributions under cl 5.3; (iii) in any event, the original cap is not determinative in circumstances where cl 2.1 of the [scheme] provides that the terms of the [scheme] are effective “subject to any further order of the court” and cl 2.3 provides that the scheme is to be administered “in accordance with this [scheme], the Scheme Objective and any orders made by the Court in relation to the administration of this [scheme]” (emphasis added); and (iv) Mr Chen’s evidence is that in the event that the costs incurred by Findex are less than $25,000 (GST incl.), only those costs actually incurred will be distributed to Findex.

14    It may thus be seen that the basis upon which the application was initially framed was that there had been a good faith under-estimation of the costs likely to be incurred, attributable to unanticipated complexity in the task, which amount had been reflected in the scheme. It was submitted that the work done to date had been reasonable, that the further work required to be done, and the cost of doing it, was also reasonable. The scheme itself was then said to contemplate the possibility of an increase to the fees permitted to be charged, and the Court’s approval of an increase in the amount specified in the scheme was being sought.

15    The way in which the decision of Wigney J in Stanford was characterised in submissions appeared to suggest that it was a case dealing with a situation closely analogous to the present application. That is to say, Stanford was submitted to have been a case where an application was made for “additional administrator’s costs in circumstances where the original estimate of those costs was too low”. It was then said that Wigney J had “approv[ed] those additional costs”. In fact, the circumstances of Stanford were quite different to those here:

(a)    The settlement scheme in Stanford did not specify or otherwise limit the amount of costs able to be charged by the scheme administrators. Rather, by cl. 13.1(c) of that scheme, administration costs were to be paid “in such amounts as are approved by the Court from time to time during the implementation” of the scheme (see at [27]). It follows that there was no relevant concept of “additional costs” (in the sense of costs over and above an amount specified in the scheme) at play in Stanford. All costs in Stanford were required to be approved.

(b)    It is true that in Stanford an estimate of the costs likely to be incurred in the administration of the scheme had been prepared at the time approval of the settlement was sought (and given). It was not an estimate, however, that found any expression in any term of the settlement scheme. The estimate had been made by an actuary who had prepared a financial model of future cashflows into and out of the settlement fund, for the purpose of determining whether the settlement sum was likely to be enough to pay all group members’ claims. That report was tendered on the settlement approval application. The actuary identified that the assumption he had made was “broad-brush and … not based on any business plans or budgets provided by” the scheme administrator. The estimate in Stanford had thus been prepared for, and served, a very different purpose to the estimate of costs that was reflected in the terms of the settlement scheme in this case (see at [37]-[39]).

(c)    The relevance of the divergence of the actual costs from the original estimate in Stanford to the application for approval of payment of administration costs was as a discretionary factor going to whether otherwise appropriate costs should be disallowed or discounted; not as the fact giving rise to the need for approval in the first place. That is to say, in the context of an application for approval of payment of administrative costs under the relevant provision of the scheme, Wigney J identified the “two central questions” as whether the work the subject of the claim was properly undertaken and, if it was, whether the fees charged in respect of that work were fair and reasonable (see at [95]). It was only upon answering those two questions in the affirmative that Wigney J asked whether there was “some other sound reason” for disallowing or discounting the recoverable fees. It was in that context that his Honour took into account the fact that costs had exceeded the estimate (see at [101]-[110]).

(d)    The scheme, and thus the work involved in administering it, in Stanford was vastly more complex than that in the present proceedings.

(e)    Finally, it might be observed that the evidence before Wigney J in relation to the reasonableness of the work performed, and the rates charged for it, was of a very different character and quality to that relied on in this case. If nothing else, the scheme administrators in Stanford adduced expert evidence from a costs assessor who had examined tax invoices and time sheets, and had performed a detailed consideration of the work performed (see at [77]-[83]).

16    In any event, whatever its merits, the application articulated in Mr Chen’s affidavit and in written submissions filed on his behalf was clear enough: the amounts included in the settlement deed as a “best estimate” of administration costs had, by reason of the unexpected complexity of the work, been exceeded, and an additional allowance was being requested.

17    In preparing for the hearing of the application, I read the judgments of Rares J in both Spozac and Spozac (No 2). A paragraph in Spozac caught my eye. In paragraph [14], Rares J said:

The parties proposed that Andrew Chen of Findex be appointed scheme administrator. He had agreed to act for a fee of $25,000 on the basis of the then proposed scheme.

18    The apparent reference to Mr Chen having agreed to act for a fixed fee (albeit in the context of a version of the scheme that had been superseded) caused me to make further inquiries. I thus searched the Court file for the evidence adduced in support of the approval of the settlement scheme before Rares J. That search revealed an affidavit sworn by Charles Bannister on 8 May 2023. That affidavit included the following evidence:

47. I believe that Andrew Chen of Findex is appropriate to be appointed as Settlement Administrator because:

…

(d)    Findex has provided a competitive indication of the cost of administering the [scheme] and has confirmed that that costs estimate will operate as a cap on the costs of its work in administering the settlement, which will ensure that the costs which might be incurred in distributing the settlement sum to group members will be minimised;

…

65. Findex has provided an estimate of $25,000 to administer the [scheme]. … Findex has confirmed that its estimate will operate as a cap on its costs to administer the [scheme].

…

67. At a high level, I estimate BLCA’s costs associated with the distribution to be around $28,235.30 (inclusive of GST). I note that an amount of $53,235.00 has been notionally allocated from the settlement sum for distribution costs, and that if BLCA’s costs exceed that amount, BLCA will not seek to recover that excess.

19    The agreement expressed in that affidavit on the part of Findex and Bannister Law to cap their fees (and not seek to recover any excess amount) was in respect of a different version of the scheme to that which was ultimately approved, and in different individual, but not aggregate, amounts. (That is to say, the affidavit stated that Findex would cap its fees at $25,000 (compared to $38,500 in the approved scheme) and Bannister Law would cap its fees at $28,235.30 (compared to $14,735.30 in the approved scheme). In each case, however, the total amount was $53,235.30.)

20    I also located the transcript of proceedings before Rares J on 30 May 2023 (which was the final hearing at which the approval of the settlement scheme was discussed). That transcript included the following exchanges (between Rares J and counsel appearing on that occasion, who was not counsel appearing on this application) (emphasis added):

HIS HONOUR: But on the first definitions page the BLCA administration costs are $14,735.30. Now, just so I can conceptualise what that is, is that, when I approve this, what’s expected to be spent – or incurred in giving assistance to Mr Chen when he’s the administrator going forward? And that’s effectively the capped costs.

COUNSEL: Indeed. That’s correct, your Honour, and the same principle, I should note, your Honour, applies with respect to the Findex administration cost which is over the page.

HIS HONOUR: Well, now, that has gone up from, I think, $25,000.

COUNSEL: It has, your Honour.

(Trans. 122/39 – 123/3)

…

COUNSEL: Before we do, your Honour, I might just address one point on something we’ve been discussing.

HIS HONOUR: Yes.

COUNSEL: With respect to the increase in Mr Chen’s administration costs, that is partly because of the very stages of the distribution, but the real cost doesn’t come from that. There was always going to be several stages of a distribution to cover residual amounts left over after an original distribution in any case. The real cost has come from the introduction of this additional registration process which involves Mr Chen directly receiving registrations – well, first setting up the secure portal through which group members could register their interest in receiving a nominal amount under this [scheme]. And the [indistinct] anticipates that that would be administered wholly by Findex, and so registrations would come in and be received by Mr Chen, and he would be responsible for working through those and working them into the model and the subsequent distribution that will take place. So the main uplift in his costs comes from that process.

HIS HONOUR: Okay. I follow. I follow.

COUNSEL: And I should indicate that administration costs have always been capped at an amount of about $53,000 or $55,000, and the increase in Mr Chen’s administration costs has led to a decrease in the costs that are now claimable by Bannister Law for any assistance that they render to Findex as part of that distribution process. So in terms of the global impact on the money available to the group, there’s no change in the money to be distributed by reason of those increased administration costs.

(Trans. 126/40 – 127/19)

…

COUNSEL: Your Honour asked me whether or not those rates would be charged for the purpose of Bannister Law assisting Findex if the administration were with or without uplift. There will be no uplift charge, so they’re just the standard rates.

HIS HONOUR: No uplift, okay.

COUNSEL: And of course, that’s subject to the cost cap in the definition of BLCA administration costs.

(Trans. 130/11-19).

21    It thus appeared to me, on the basis of the (admittedly small) portions of the Court file that I had inspected, that approval of the scheme had been sought from Rares J on the express basis that a significant reason in favour of the appointment of Findex as scheme administrator was the fact that it had agreed to cap its fees at $38,500 (and that those fees would include the work of performing a final distribution of residual funds after the initial distribution). Similarly, Bannister Law had expressly represented to Rares J that it would not seek to recover fees over $14,735.30. These were not estimates: they were caps accompanied by an explicit promise not to seek to recover costs actually incurred over and above the caps. The fact that group members would pay no more than just over $53,000 in scheme administration costs was plainly presented as a significant beneficial feature of the scheme for which approval was sought.

22    None of that, however, had been disclosed in either the evidence filed in support of the application, or the written submissions.

THE INITIAL HEARING

23    When the application was called for hearing, I raised the impression that I had obtained from my review of the Court file, and said that if that impression was accurate, I was concerned that it had not been raised. I also said that I would require persuasion as to why I should exercise my discretion now in a manner inconsistent with the express basis upon which approval of the scheme had been sought and obtained. Counsel responded as follows:

COUNSEL: Yes. Your Honour, I can address that in short now.

HIS HONOUR: Okay.

COUNSEL: And, really, the reason is, ultimately, it’s in the interests of group members for that to occur. The issue is that there is a risk that the settlement administrator will resign from completing the administration, and in that case - - -

HIS HONOUR: Is that in the – that’s not in the evidence.

COUNSEL: There is no evidence on that issue.

HIS HONOUR: And, I mean - - -

COUNSEL: So I put it only as highly as a risk that that will occur.

24    After some further discussion, counsel sought, and I granted, an adjournment.

25    The scheme administrator subsequently filed a further affidavit, and contacted my chambers to arrange for the application to be relisted.

THE SECOND HEARING

26    At the resumed hearing, I asked if the application to increase the amounts payable to Findex and Bannister Law was pressed. I was informed that it was.

27    A second affidavit of Mr Chen, sworn on 1 May 2025, was read on the application. In that affidavit, Mr Chen:

(a)    Referred to paragraphs [65] and [67] of Mr Bannister’s 8 May 2023 affidavit, and confirmed that they “accurately reflect the basis on which Findex accepted its role as administrator of the Settlement Scheme” (that is, that the amounts specified as “Findex Administration Costs” and “BLCA Administration Costs” were to operate as caps, and any costs incurred over those amounts would not be sought to be recovered).

(b)    Gave evidence about the process by which, and the reasons why, the Findex cap was increased from $25,000 to $38,500, but confirmed that the corresponding reduction in the Bannister Law cap, by which the total cap for scheme administration costs was capped at $53,235.30, was due to “a concern to ensure that the total administration costs of the scheme did not increase overall, having regard to the original purpose of the caps”.

(c)    Explained that distributions made to eligible group members had been significantly higher than originally anticipated.

(d)    Said:

I do not believe that if the Findex Administration Costs and the BLCA Administration Costs are amended in accordance with the orders sought in the Application that the original purpose of the caps agreed by Findex and BLCA will be defeated. This is because group members have already received or will receive distributions that are equal to (in the case of those who have received nominal distributions) or higher than (in the case of Eligible Group Members) that anticipated when the Settlement Scheme was approved.

(e)    Also said:

If Findex cannot recover at least a proportion of its costs reasonably incurred, my role as settlement administrator will become commercially untenable. In those circumstances, I will regrettably have no choice but to withdraw from that role.

28    In oral submissions, counsel distilled the reasons favouring the grant of the relief sought to three grounds:

(a)    First, that the purpose of the capped costs was “to ensure that that the distribution to group members was not going to be eroded”. In circumstances where group members had already received distributions equal to or greater than the amount predicted at the time the settlement scheme was approved, it was said that “any further increase to the costs are not going to decrease the distribution to eligible group members”.

(b)    Secondly, it was said that “the increase in the costs that’s being sought [is] fairly modest in the scheme of the administration”. In particular, it was submitted that “if we take that there are 310 eligible group members and we divide the increase that’s sought by both Findex and BLCA by that amount, it’s just over $100 for each group member whereas it will make a significant difference to Findex and BLCA in recouping their costs.”

(c)    Thirdly, it was submitted that “it is in the interests of group members ultimately because Findex is likely to be able to perform this further distribution more efficiently than any alternative settlement administrator”. This submission, in other words, built on the threat contained in Mr Chen’s affidavit that, if his performance of the role of settlement administrator became “commercially untenable” he would purport to resign.

29    At the conclusion of the hearing I made orders dismissing the application in all but one respect, and made an order pursuant to s 33ZF of the Federal Court Act by which Mr Chen not be permitted to resign as scheme administrator without leave of the Court. What follows are my reasons for making those orders.

CONSIDERATION

30    Consideration of this application must commence with a clear and precise articulation of what exactly the Court is being asked to do.

31    The approved settlement distribution scheme was not structured so as to approve a certain level of fees, set on the basis of the best estimate of the persons involved, while contemplating the possibility that the scheme administrator and Bannister Law could seek approval for reasonably incurred costs in excess of the estimate. That is to say, the caps were not simply a threshold above which further costs would be required to be approved. If it had been structured in that way, then the way in which the application was initially framed would have been appropriate (i.e., an attempt to demonstrate the good-faith nature of the original estimate, the existence of unforeseeable additional work, and the fact of reasonably incurred costs as a result). Such a case would have been broadly analogous to Stanford, where the fact that an estimate had been exceeded would have been a relevant consideration to take into account in the exercise of a discretion to approve the payment of claimed costs.

32    Here the settlement scheme was approved on the basis of an explicit promise that costs incurred in administering the scheme over the specified caps would not be claimed. What was being sought by this application, therefore, was a fundamental alteration to the basis upon which the scheme was approved. Express representations made to the Court for the purpose of obtaining approval were being repudiated. The true character of the application, and its inconsistency with previous submissions made to, and accepted by, the Court should have been clearly and distinctly raised. That is especially so in circumstances where the application was, in substance, being conducted ex parte. The respondent, having no interest in the outcome of the application, did not participate. The applicant’s (and group members’) interests were capable of being affected by the outcome of the application, but their solicitor was instructing counsel for the scheme administrator. Those circumstances made it vitally important that full and fair disclosure was made of all matters bearing on the entitlement to the relief sought.

33    Once the true nature of the application is understood, I do not consider that any of the arguments advanced in support of it are capable of justifying the relief sought.

34    I reject the submission that the original purpose of the caps would not be defeated if they were increased. The purpose of the caps was not to achieve a particular estimated return to eligible group members. The purpose of the caps was, plainly, to maximise returns to group members. As Lee J observed in Gill v Ethicon Sarl (No 10) [2023] FCA 228 at [9], in an observation equally apposite to scheme administrators as solicitors, “every cent paid to the solicitors is a cent not paid to group members”. The fact that group members have received more than was initially expected is undoubtedly a happy circumstance, but it does not provide the slightest justification for increasing the amount payable to those administering the scheme (I hasten to add that there is no suggestion that the work of the scheme administrator was responsible for some unexpected augmentation of the funds available for distribution).

35    I also reject the submission that the comparison between the cost to individual group members (said to be a little over $100 each) compared to the benefit to Findex and Bannister Law ($25,000 and $11,000 respectively) favours the granting of the relief sought. Any justification for the relief sought must be capable of articulation in a principled way, and not simply on the basis that the impact on group members would be slight. Moreover, I do not accept the characterisation of the increases sought as “fairly modest”. As I have already mentioned, the Findex and Bannister Law caps were sought to be raised by 65% and 75% respectively. To increase the total scheme administration costs by close to 70% represents a significant and substantial change to the scheme that was approved.

36    In any event, I do not accept that there was a sufficient evidentiary basis to justify the reasonableness of the increases sought:

(a)    The fundamental premise, that the original estimates were reasonable in light of the known features of the scheme has not been established. No evidence whatsoever was adduced to explain how the relevant dollar figures were arrived at. If nothing else, I do not know what work was included in them, or what contingencies were allowed for. There is thus no basis upon which I am able to form a view about whether the “additional” work that has been done was or was not included in the original estimate (and if not, why not).

(b)    The evidence as to why the costs incurred were “greater than originally anticipated” is also deficient. The matters identified in Mr Chen’s first affidavit are not obviously matters that should not have been anticipated. It did not seem to be suggested that the nature of the tasks was unexpected (e.g., communicating with group members in relation to the registration process, de-duplicating lists, checking people were appropriately classified, dealing with failed payments, and so forth). The argument seemed to be that there was more work of an expected kind than had been anticipated. But why that was so, or the extent to which it was so, was not explored. Overall, the evidence went nowhere close to justifying a 65% or greater increase in the costs incurred.

(c)    It appeared to be acknowledged that the work remaining to be done would always have been required (and thus ought to have been anticipated, and included in the original estimate). Indeed, the fact of a “distribution to cover residual amounts left over after an original distribution” was specifically mentioned by counsel before Rares J as work that was included in the capped estimate of administration costs. In those circumstances, it is unclear why any extra amount for that work would have been allowed. It follows that, to the extent that the submission advanced in writing, that there was ambiguity in the scheme as to whether the costs of performing a final distribution were intended to be included within the cost caps, was pressed, I reject it.

(d)    The evidence in support of the extra amounts claimed was also grossly inadequate. I was simply told that the “additional work” had or would result in increased costs of many thousands of dollars. I was told nothing about how the estimates had been determined. Certainly, there was no sufficiently granular estimate placed before me that would have allowed me to satisfy myself of the reasonableness of the amounts claimed.

37    Finally, the suggestion that the scheme administrator would resign if not granted the substantial increase was extraordinary. Scheme administrators are appointed by the Court to play an important role. In performing that role they are officers of the Court. No particular person has any presumptive right to be so appointed: see Gill (No 10) at [10]. The Court will carefully scrutinise any proposed appointment having regard to, amongst other considerations, the costs to be incurred in performing the role: see Gill (No 10) at [10]-[16]. A powerful justification would need to be advanced by a scheme administrator who had succeeded in persuading the Court to appoint him or her on the basis of a guaranteed capped fee, that the cap should later be increased on the basis that performance of the role had ceased to be commercially profitable.

38    Here, in effect, the scheme administrator sought to present the issue for the Court as a binary choice: either the requested increases with a modest impact on group members were granted, or, if they were not, then group members would suffer a greater financial detriment by reason of the need to retain a new scheme administrator who lacked the incumbent’s familiarity with the scheme. There is, however, an obvious third possibility: that the scheme administrator complete the role to which he was appointed for the amount he agreed to charge.

39    The scheme administrator and Bannister Law each specifically adverted to the possibility, at the time the settlement scheme was propounded for approval, that they may incur costs in excess of the amount at which they had agreed to cap their fees. Their willingness to cap their fees may be taken to have been a material factor in the willingness of Rares J to approve the settlement scheme in the terms proposed, and to appoint the scheme administrator to his role. I am not persuaded on the evidence that there is any aspect of the work that has been required to be performed that should not have been anticipated at the time approval was sought. To the extent that the work has been more time-consuming than was in fact anticipated, the evidence does not permit a finding that that is so to an extent that would justify so fundamental a change to the basis upon which approval was sought and obtained. Overall, I am not persuaded that it is appropriate to amend the scheme to increase the amounts specified in the definitions of “Findex Administration Costs” and “BLCA Administration Costs”.

40    In light of Mr Chen’s threatened resignation, I also considered it appropriate to order, pursuant to s 33ZF of the Federal Court, that he not be permitted to do so without obtaining the leave of the Court. For the reasons I have given, on the evidence adduced on this application, I would not regard the mere commercial unprofitability of the role as a proper basis upon which Mr Chen may resign. It was in those circumstances, and given the potential harm that may flow to group members if he purported to do so, including, if nothing else, the delay in what appears to be an already significantly delayed final distribution, and the need to incur costs in relation to the making of a replacement appointment, that I made the order.

A FINAL MATTER

41    There was one discrete item of relief sought by the scheme administrator in his interlocutory application that I was prepared to grant.

42    Clause 5.3(f) of the settlement scheme provides that if, after the final distribution of funds to eligible group members, there remains “any residual amount which is impracticable to be distributed”, the scheme administrator is to approach the Court for directions. Pursuant to that clause, the scheme administrator sought the following order:

following the distribution of the further payments [pursuant to clause 5.3(d) of the settlement scheme], any remaining Residual Settlement Sum in the Scheme Distribution Account be paid by way of charitable donation to the Moriarty Foundation.

43    The evidence disclosed that the Moriarty Foundation is “an indigenous charity that enables Aboriginal families and communities to unlock children’s potential through locally-led programs of Indi Kindi (being an early education initiative conducted in a number of remote Aboriginal communities) and John Moriarty Football”. I am satisfied that that is a worthy cause to which any residual sum that cannot practicably be distributed to group members should be paid, in order to bring the settlement scheme to completion.

Associate:

Dated:    15 May 2025