FEDERAL COURT OF AUSTRALIA

Its Eco Pty Ltd v BPS Financial Limited (Settlement Approval) [2025] FCA 545

ORDERS

THE COURT ORDERS THAT:

1.    The application brought by the Intervener for an order pursuant to s 54A of the Federal Court of Australia Act 1976 (Cth) is refused.

2.    The parties provide a revised version of the proposed Settlement Distribution Scheme to the chambers of Downes J, and a draft order which reflects these reasons, within 7 days.

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

REASONS FOR JUDGMENT

DOWNES J:

SYNOPSIS

1    By amended interlocutory application dated 26 March 2025, the applicants seek orders including the approval of the settlement and discontinuance of this proceeding pursuant to ss 33V and 33ZF of the Federal Court of Australia Act 1976 (Cth) (Act).

2    Before addressing the application, the following matters deserve emphasis in what has been an unusual case:

(1)    in parallel with this proceeding, which was commenced in late 2021, another proceeding was brought by the Australian Securities and Investments Commission which was heard in October 2023 and determined last year: Australian Securities and Investments Commission v BPS Financial Pty Ltd [2024] FCA 457 (J or ASIC judgment). I will adopt the defined terms in the ASIC judgment;

(2)    in mid-October 2024, a settlement deed was entered by the applicants, the first to seventh respondents, and International Litigation Partners No. 13 Pte Ltd (the Funder) (the first settlement deed);

(3)    the material filed in support of the application included an opinion of counsel who appeared at the hearing. That opinion includes the statement that “the settlement terms are within the range of fair and reasonable settlements”;

(4)    at the hearing, including by written submissions, counsel submitted that there had been no settlement, and that approval was not sought of a settlement, only a discontinuance. This was submitted notwithstanding that the first settlement deed described itself as a “Deed of Settlement”, the application (which was amended on the day before the hearing) sought approval of the settlement, and counsel’s opinion referred to a settlement;

(5)    a central theme in the submissions at the hearing was that, as the first settlement deed did not release any rights of the group members, there was only a discontinuance, not a settlement. However, the first settlement deed contained a clause which purported to settle all claims by the applicants and the group members against the respondents on the basis that they were fully, finally, absolutely and forever settled according to the terms of the deed. Although it did not call itself a release in express terms, that was the plain effect of this clause;

(6)    as a consequence of this and other problematic clauses which were discussed at the hearing, the parties retreated and a further settlement deed was entered on 10 April 2025, including with the Funder as a party (second settlement deed);

(7)    a further draft order was provided to my chambers on 10 April 2025 along with the second settlement deed and a document entitled “Amended Proposed Settlement Distribution Scheme” (SDS). While some changes have been made to the SDS in the background section to refer to the second settlement deed, other important clauses have not been amended such as the definition of Settlement, which clauses continue to refer to the first settlement deed. This needs to be rectified before final orders are made which approves the SDS;

(8)    the Funder did not appear at the hearing but, on 23 April 2025, was granted leave to intervene and make submissions, which it did on 12 May 2025. By those submissions, the Funder seeks an order that a question concerning the insurance coverage of one of the respondents (namely Billzy) be referred to a referee. For the reasons given below, I will not make the referral order sought;

(9)    the draft orders provided by the applicants include orders under s 33V(2) of the Act which have been described as a common fund order (CFO). However, the High Court is reserved on whether s 33V(2) of the Act provides power to make a CFO: Kain v R&B Investments Pty Ltd atf the R&B Pension Fund & Ors S146/2024;

(10)    in any event, the orders which are sought in connection with the proposed CFO are on the basis that Qoin is money within the meaning of s 33V(2), which I do not accept. However, I am satisfied that it is appropriate to make orders which are substantially in the terms sought pursuant to s 23 of the Act.

BACKGROUND

The proceeding

3    The proceeding was commenced on 23 November 2021 as a representative proceeding under Part IVA of the Act. It has been pursued by Eco Green Straws Trading Pty Ltd (formerly known as Its Eco Pty Ltd) and Ms Bethany Joy McManus as the lead applicants on their own behalf and on behalf of the group members.

4    The applicants allege that the respondents operated a system of trading called a “Qoin System”, which involved selling a form of cryptocurrency called “Qoin Tokens” to “Qoin participants”. It is alleged that the first respondent, BPS Financial Limited, made a series of misleading or deceptive representations about Qoin Tokens which induced group members to purchase them. It is alleged that the Qoin System failed, resulting in the Qoin Tokens losing all of their value and causing the group members to suffer loss and damage.

5    The group members are persons, firms or corporations who or which, since 1 October 2019:

(1)    bought one or more Qoin Tokens; and/or

(2)    accepted Qoin Tokens in exchange for the provision of goods or services; and

(3)    suffered loss or damage by reason of the conduct alleged against the respondents; and

(4)    did not opt out of the proceedings by sending an opt-out notice to the solicitors for the applicants or this Court.

6    The applicants seek damages on the basis that the respondents contravened:

(1)    section 12CB of the ASIC Act and s 21 of the ACL by engaging in unconscionable conduct in trade or commerce;

(2)    section 12BB(1)(e) of the ASIC Act and s 29(1)(g) of the ACL by making false or misleading representations with respect to performance characteristics, uses or benefits; and

(3)    section 12DA(1) of the ASIC Act, s 18 of the ACL and s 1041H of the Corporations Act 2001 (Cth) by engaging in misleading or deceptive conduct in trade or commerce.

7    The proceeding has been funded by the Funder, which has made a cash outlay for legal costs in an amount of $2,718,940 (inclusive of GST).

Application to settle and discontinue the representative proceeding

8    By the latest form of order, the parties seek orders in these terms:

THE COURT NOTES THAT:

The parties have agreed to settle the proceedings on the terms set out in the Amended Deed of Settlement dated [sic] April 2025 (the Amended Deed of Settlement).

Any claims that Group Members have against the Respondents are not extinguished by the making of these orders or the Amended Deed of Settlement and Group Members are not prohibited from bringing proceedings against the Respondents.

THE COURT ORDERS THAT:

1.    Pursuant to sections 33V and/or 33ZF of the Federal Court of Australia Act 1976 (Cth) (Act), any limitation period that applies to the claims of any of the Group Members (including the Applicants) to which the proceeding relates shall begin to run again from 60 days after the date of these orders.

2.    Pursuant to s 33ZB(a) of the Act, the persons affected by orders 3 to 10 below are:

(a)    The Applicants;

(b)    International Litigation Partners No.13; and

(c)    the Respondents.

3.    Pursuant to sections 33V and 33ZF of the Act, the settlement and discontinuance of the proceeding on the terms set out in the Amended Deed of Settlement is approved by the Court (Settlement).

4.    Pursuant to section 33ZB and section 33ZF of the Act:

(a)    the terms of the Settlement Distribution Scheme are approved;

(b)    the Fifth Respondent is appointed administrator of the Settlement Distribution Scheme.

5.    Pursuant to section 33V and/or section 33ZF of the Act, the Court orders that the funding commission payable by the Applicants to ILP (Funding Commission), be apportioned on a pro rata basis between all Group Members and deducted from the settlement fund payable to all Group Members pursuant to the Settlement Distribution Scheme (Common Fund Order).

6.    The Common Fund Order rate approved is [*]%.

7.    The Proceeding be discontinued with no order as to costs.

8.    All cost orders made to date in the Proceeding be vacated.

9.    All security paid by the Applicants for the Respondents’ costs be returned to the Applicants’ solicitors.

10.    Group Members are to be provided copies of this order within 7 days by the Applicants’ solicitors making a copy of these orders available on their website and by the First Respondent sending a copy of these orders through their CRM platform.

9    The application is advanced on the basis that the applicants face substantial recoverability risks. It is submitted that the respondents lack financial resources to make substantial cash contributions to any judgment sum, and there is no insurance available to them. The applicants submitted that if confronted with a judgment debt, the corporate respondents would likely face insolvency, meaning that any Qoin Tokens held by any group members would be at further risk of devaluation.

10    The applicants rely on the following materials in support of the application for the Court’s approval:

(1)    affidavits of Mr Elliott Smith affirmed on 18 December 2024, 13 March 2025, and 25 March 2025;

(2)    the affidavit of Mr Antonie Wiese, the seventh respondent, dated 13 March 2025; and

(3)    the applicants’ written submissions in support of the application.

11    No submissions were filed on behalf of the respondents. However, the respondents appeared at the hearing and supported the orders sought. The respondents also consent to the latest form of order.

The first proposed settlement deed

12    On 17 October 2024, the first settlement deed was entered by the applicants, the first to seventh respondents, and the Funder.

Objections to the proposed settlement

13    On 19 December 2024, orders were made for a Notice of Proposed Settlement in an approved form to be provided to group members. Paragraph 6 of the Notice of Proposed Settlement set out the main terms of the proposed settlement, and paragraph 8 notified that the Funder was seeking not greater than 40% of the settlement fund in compensation for legal fees expended in the proceedings. The Notice of Proposed Settlement stated that the applicants were settling for Qoin because the respondents do not have any cash, assets or applicable insurance. Group members were advised that if they wished to oppose the settlement, they should complete a Notice of Objection and return it to the applicants’ solicitors by 3 February 2025.

14    On or shortly after 19 December 2024, the Notice of Proposed Settlement was uploaded to the website of the applicants’ solicitors. The applicants’ solicitors also sent the Notice of Proposed Settlement to all of the approximately 1,600 group members.

15    On about 20 December 2024, the respondents sent the Notice of Proposed Settlement to group members though their Customer Relationship Management System and made that Notice available through the Qoin Wallet App.

16    The applicants’ solicitors received 13 Notices of Objection by the deadline of 3 February 2025, as well as correspondence and calls. A summary of concerns raised by group members is that:

(1)    the group members want monetary compensation rather than more Qoin Tokens, which in their view is a useless and valueless asset;

(2)    the respondents can just create more Qoin Tokens for zero cost;

(3)    some group members believe the settlement will devalue their existing Qoin Tokens as they believe that the respondents will create new Qoin Tokens to pay for the settlement;

(4)    the respondents do in fact have money and they have just hidden it;

(5)    the proposed settlement is not enough of a punishment or deterrent for the respondents.

17    Although any group member who returned a Notice of Objection was required to file and serve on the applicants’ solicitors any written submissions by 3 February 2025, only one group member, being Mr Glen Miller, did so. Mr Miller objects to the proposed settlement for the reasons that:

(1)    the proposal offers no commercial benefit to Mr Miller (or the group members) as it only offers further Qoin Tokens, instead of monetary compensation;

(2)    Mr Miller has lost faith in the Qoin System and does not want any further involvement with the system or the respondents; and

(3)    the gifting of valueless Qoin Tokens in respect of the losses suffered is insubstantial and incapable of compensating Mr Miller (or the group members) for the real losses associated with the misleading or other conduct of the respondents and is, therefore, unreasonable.

Further objections to the proposed settlement

18    On or about 13 March 2025, the Funder confirmed that it had elected to seek a CFO of 40% inclusive of legal costs.

19    On 13 March 2025, the applicants’ solicitors sent correspondence to the respondents which requested that the respondents send a further notice to the group members regarding the CFO rate being sought by the Funder (CFO Notice).

20    On 14 March 2025, the CFO Notice was posted on the website of the applicants’ solicitors.

21    On or about 17 March 2025, the CFO Notice was provided to group members through the respondents’ Customer Relationship Management System.

22    On 20 March 2025, the applicants’ solicitors arranged for the CFO Notice to be emailed to the group members.

23    The applicants’ solicitors received correspondence from a number of group members seeking clarification of the CFO Notice. Mr Smith attests that while some of these group members expressed similar or identical objections to those previously received in response to the Notice of Proposed Settlement, no additional reasons for objecting were provided.

24    Between 17 March 2025 and 25 March 2025, the applicants’ solicitors received two objections to the CFO rate from group members. Those group members objected on the basis that the 40% CFO percentage was too high.

The second settlement deed

25    In response to concerns raised by me during the hearing and by my chambers after the hearing in relation to certain terms of the first settlement deed, the parties entered into the second settlement deed on 10 April 2025. Subject to omitting the problematic clauses, that deed is in substantially the same terms as the first settlement deed.

The intervention of the Funder

26    Following the hearing, the Funder obtained leave to intervene in the proceedings, and to file submissions and affidavit material.

27    The Funder relies on the following materials:

(1)    the affidavit of Mr Andrew Sutherland, sworn 12 May 2025; and

(2)    the Funders’ written submissions filed 12 May 2025.

CHARACTERISATION OF THE APPLICATION

28    Section 33V of the Act provides as follows:

33V Settlement and discontinuance—representative proceeding

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

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

29    As noted above, the applicants’ oral and written submissions at the hearing addressed the discontinuance of the proceedings, in circumstances where orders were sought in December 2024 for a Notice of Proposed Settlement to be provided to group members, and the applicants’ amended interlocutory application (and draft orders) seek the Court’s approval of a settlement. Furthermore, the second settlement deed is entitled “Amended Deed of Settlement”.

30    In my view, the application is for approval of what is, in truth, a settlement. That is apparent from the terms of the second settlement deed, which refers to the fact that the parties to the deed have “agreed to settle the claims of the Applicants in the Proceeding” and also contains an agreement to settle the cross-claim.

31    In consideration for the proceeding being discontinued and other promises by the applicants and the Funder (as referred to below), the respondents have undertaken to transfer certain Qoin Tokens to be held on trust for distribution to the group members including any CFO and/or Costs Equalisation Order: clauses 4.2(b) and 4.2(c).

32    By clause 5.4, the Funder has given a warranty “not to be involved in or support any further or replacement class action against the Respondents”. The Funder entered both settlement deeds which contained a warranty by the respondents that there is no remaining or responsive insurance that could provide a recovery for any claim in the proceeding: clause 5.1(a).

33    For these reasons and notwithstanding that the second settlement deed does not contain a release, and the group members are not constrained from bringing proceedings against the respondents, my view is that the parties and the Funder have achieved a settlement within the meaning of s 33V(1) of the Act, both in substance and in form.

FAIRNESS AND REASONABLENESS OF THE SETTLEMENT

34    For the reasons that follow, I consider that the settlement should be approved pursuant to s 33V(1) of the Act, as it is fair and reasonable and in the interests of the group members.

The confidential Counsel’s opinion

35    I have had the benefit of a confidential opinion of counsel dated 28 October 2024. The opinion sets out the relevant factors, including the recoverability risks, the risks of assessing liability, and the risks of assessing loss or damage. In counsel’s view, the settlement is within the range of fair and reasonable settlements, having regard to the interests of the group members.

Inability to meet judgment debt

36    It is apparent from the material that, even if the applicants were to succeed in establishing liability, there is no realistic prospect of the group members recovering any monetary sum from the respondents. This includes because the unchallenged affidavit material demonstrates that none of the respondents hold insurance which would cover the sum of a judgment debt.

37    Mr Wiese, the seventh respondent and the director of the first, second, fourth and fifth respondents, deposes that the first, fourth and fifth respondents were collectively insured by a group insurance policy with a limit of $1 million, and that the policy limit has been exhausted. Mr Wiese also deposes that the insurer for the second respondent (Billzy) declined to respond to the claim.

38    The third respondent is not insured and is not named as an insured party to any policy relevant to the proceedings.

39    The sixth and seventh director respondents do not have relevant insurance.

40    It follows that, if confronted with a judgment debt, the first to fifth respondents would likely face insolvency and need to be put into external administration. In that scenario, the underlying Qoin System would likely cease to operate, thus rendering worthless any Qoin Tokens that are held by group members at present.

Proposed referral sought by the Funder

41    By its submissions, the Funder seeks an order pursuant to s 54A of the Act as follows:

….the court should refer the question of the ‘Billzy coverage’ to a referee…to inquire and report on whether the insurer’s position in declining to respond to the claim is one that is reasonably open to challenge.

If it is open to challenge, then there may be the possibility (not resolved on the current evidence) that the settlement is one that is not fair and reasonable and in the interests of group members.

…if there is insurance, and the declinature is reasonably open to challenge then it may be in the Applicant and Group Members interests to seek to join the insurer(s) to the proceeding, or commence a separate proceeding against Billzy…

…the parties have no way of knowing whether the asserted declinature by the Billzy insurer is reasonable or open to challenge…

42    In considering whether to make an order for reference under s 54A, two relevant factors are the “just determination of all proceedings before the Court” and the efficient use of judicial resources: Kadam v MiiResorts Group 1 Pty Ltd (No 4) (2017) 252 FCR 298; [2017] FCA 1139 at [57] (Lee J).

43    This proceeding has been on foot since 2021. The first settlement deed was entered approximately seven months ago, in October 2024. The Funder entered that deed, and it may be inferred that it made whatever inquiries it considered to be appropriate before it accepted the warranties from Billzy that were given in clause 5, including in relation to its insurance. The Funder did not seek to appear at the hearing of the application, and did not take any steps to either cross-examine any deponent or take any other steps to investigate whether the insurer acted reasonably in declining the insurance claim made by Billzy. The Funder then entered the second settlement deed in April 2025 and again accepted the warranties of Billzy. Following a draft order being provided by the parties, the Funder only then decided to seek leave to intervene and make submissions which seeks a referral.

44    To permit this proceeding to be further prolonged by mere “possibilities” which the Funder wants to now explore will result in added delay, increased costs to the applicants and respondents, the wastage of costs by those parties associated with the application which is on foot, the wastage of court time associated with this application including the hearing in March, and an inefficient use of judicial resources in dealing with what is, in truth, no more than a speculative prospect that the insurer might not have had a proper basis to decline the insurance claim by Billzy.

45    For these reasons, the application for a referral is declined.

Lack of funding

46    The Funder is no longer willing to continue to fund the proceedings in the absence of a realistic prospect of the respondents making a material cash contribution to a settlement. Similarly, the solicitors for the applicants are unwilling to continue the proceedings without funding. The applicants do not wish to continue the proceedings, and it seems likely that they do not or will not have sufficient resources to continue acting as the representative party in the proceedings without funding from the Funder. Although the proceedings have been ongoing since 2021, there has not been significant progress towards trial. Furthermore, the claims which are advanced are not without complexity and the cost of bringing them to a resolution would likely not be inconsiderable.

Rights of group members not prejudiced

47    As observed, formal and informal objections to the key terms of the first settlement deed were received by the applicants’ solicitors from a small percentage of the group members in response to the Notice of Proposed Settlement. These objections were largely on the basis that group members did not consider the proposed transfer of Qoin Tokens to be adequate compensation.

48    However, importantly, the settlement will not determine the claims of the group members, and there has been no judicial consideration of the merits of any claims which they could bring that would operate as issue estoppel or res judicata. The group members will be at liberty to pursue their claims in their own right if they wish to do so and, in that context, it is relevant that the running of limitation periods relevant to those claims has been suspended by s 33ZE of the Act.

49    In these circumstances, the approval of the settlement will not have an adverse impact on the interests of group members. Rather, the second settlement deed is in the interests of group members. As it is unlikely that the respondents will be able to meet any judgment debt at the conclusion of this proceeding, the group members will receive Qoin Tokens pursuant to the SDS (once it is amended) in addition to retaining their rights to pursue any claims that arise out of the facts of the proceeding and which they might wish to bring. Although the value of Qoin Tokens is likely to be limited, there is at least some chance that the Qoin Tokens have some value. To be blunt, it is better than nothing.

50    Furthermore, although not required for the approval of a settlement under s 33V, it is appropriate that group members be informed that their rights are not released by the settlement. The parties accepted this, and a notice to this effect was included in the latest draft order, and it should be included in any further draft order which is provided.

51    It is also appropriate to make an order pursuant to ss 33V and 33ZF that the limitation periods for group members’ claims commence to run again from 60 days after the date on which the settlement is approved. The parties accepted this and, again, such an order is proposed in the latest draft order, and it should be included in any further draft order which is provided.

SETTLEMENT DISTRIBUTION SCHEME

52    As observed above, the SDS requires further amendment. While the background clauses have been updated to the refer to the second settlement deed, other clauses of the SDS including important definitions such as “Settlement”, “Settlement Deed”, and “Parties” continue to refer to the first settlement deed. This is not intended to be an exhaustive list of the defects in the SDS, which needs to be reviewed and corrected by the parties and provided to my chambers.

THE PROPOSED CFO

Power to make orders sought

53    By their submissions, the applicants and the Funder rely upon s 33V(2) in support of the proposed CFO. That section provides that, when approving a settlement of a representative proceeding, the Court “may make such orders as are just with respect to the distribution of any money paid under a settlement or paid into the Court” (emphasis added).

54    The Act does not define “money” and there does not appear to be any case yet determined on whether cryptocurrency constitutes “money” within the meaning of s 33V(2).

55    In my view, Qoin Tokens, being a form of cryptocurrency, do not constitute “money” for the purposes of s 33V(2). That is for the following reasons.

56    The Oxford English Dictionary (online) defines “money” as “any generally accepted medium of exchange which enables a society to trade goods without the need for barter; any objects or tokens regarded as a store of value and used as a medium of exchange”. Similarly, the Macquarie Dictionary (online) defines “money” as “gold, silver, or other metal in pieces of convenient form stamped by public authority and issued as a medium of exchange and measure of value”.

57    While Qoin Tokens could be regarded as a medium of exchange, in the manner described in the ASIC judgment, they are not generally accepted or issued by a public authority. If they were, I could walk into a corner store with Qoin Tokens in my pocket and purchase a bottle of milk, or I could transfer Qoin Tokens to another person’s bank account to pay for goods or services described in a tax invoice, or I could exchange Qoin Tokens for euros before I depart on my European holiday. However, I can do none of those things. Rather, I can only make and receive Qoin Tokens as part of the Qoin Facility which means there is a limit on the persons who would treat them as an acceptable medium of exchange, such that they are not generally accepted. Further, transactions using Qoin Tokens involve communications with the Qoin Blockchain Nodes as described in J [49]–[56] and [60]–[63], rather than exchange or transfer of cash or money in a bank account.

58    For these reasons, the Federal Court is not empowered to make the proposed CFO under s 33V(2) of the Act. In making this finding, I consider that it is not correct to describe the proposed orders as a “CFO”, and there should not be any reference to a “Common Fund Order” in the orders. It is a misleading descriptor as there is no “fund” of “money”; rather, the proposed orders concern an allocation of a particular percentage of Qoin Tokens to the Funder.

59    Although the application and draft order also referred to s 33ZF of the Act as an alternative basis for seeking the proposed CFO, no submissions were advanced in relation to that section. In light of the statements by the plurality in BMW Australia Limited v Brewster (2019) 269 CLR 574; [2019] HCA 45 at [49]–[51] (Kiefel CJ, Bell and Keane JJ) (for example), there is some uncertainty as to whether orders of the kind sought in this case could be made under that section. In any event, I consider that the Court has power under s 23 of the Act to make orders to the effect proposed in paragraphs 5 and 6 of the draft order. In stating this, I have particular regard to the observations of Beach J in Elliott-Carde v McDonald’s Australia Ltd (2023) 301 FCR 1; [2023] FCAFC 162 at [129]–[132], which cites Money Max Int Pty Ltd v QBE Insurance Ltd (2016) 245 FCR 191; [2016] FCAFC 148 at [168] (Murphy, Gleeson and Beach JJ). Although Beach J was addressing a CFO, his Honour’s observations (and the conclusion reached by the Full Court in Money Max) make plain that s 23 is of broad application and can be a source of power to make orders in representative proceedings either in addition to, or instead of, s 33ZF(1) in circumstances where, as in this case, s 33V(2) does not apply, and it is appropriate to do so.

60    For the following reasons, I am satisfied that it is appropriate to make orders which are substantially in the terms sought in paragraphs 5 and 6 of the draft order.

Reasonableness of legal fees incurred

61    The reasonableness of legal fees incurred by the Funder is a relevant consideration to a decision whether to allocate a percentage of the Qoin Tokens to the Funder in the manner proposed in the SDS.

62    Although discovery has not been undertaken, and the parties’ evidence has not been filed, there were a number of steps taken between November 2021 and September 2024. These steps included preparation of amendments to pleadings, appearances at directions and interlocutory hearings, attendance at mediation, and negotiations which have culminated in the settlement.

63    In evidence were the litigation funding agreements between the Funder and the applicants, the budget of the proceedings and a schedule of invoices of legal costs. Mr Smith, an experienced class action solicitor, swears in his first affidavit that there were no unnecessary or unreasonable costs incurred. Mr Smith also attests that the Funder took an active role in supervising the fees and disbursements incurred in the proceeding and enforcing budgets for the work.

64    In these circumstances, and having regard to the evidence, I am satisfied that the legal costs incurred by the Funder were reasonable. No party, or group member, submits otherwise.

Reasonableness of 40% rate

65    The solicitor for the Funder, Mr Andew Sutherland, has calculated a range of potential recoveries by the Funder pursuant to a 40% rate which depend upon a notional value being ascribed to each Qoin Token. Mr Sutherland’s calculations describe a range of potential rates by ascribing a value to the Qoin Tokens, subtracting the legal costs incurred, and expressing the rate as a total percentage of the settlement amount, described by him as the “Effective CFO Rate”.

66    These calculations are set out below:

67    In order for the Funder to recoup an amount equivalent to its legal costs outlay of $2.7 million, the ascribed value of a Qoin Token must be greater than $1.50. As at 20 January 2020, Qoin Tokens had an equivalent AUD value of $0.15. Although there is no evidence as to the present value of Qoin Tokens, it is the applicants’ case in this proceeding that the Qoin Tokens are effectively worthless. That sentiment was repeated in some of the objections received from group members. There is also the looming prospect of a penalty being imposed on the companies which were found liable in the ASIC judgment, which could have a negative impact on the value of Qoin Tokens in the future. For these reasons, it appears that the prospect of the Funder recouping its legal costs is a low one.

68    The risk taken by the Funder in funding this proceeding, but not recouping its legal costs, is also a relevant consideration. The risk involved in this case was not inconsiderable: none of the respondents had (or have) detailed financial information which is publicly available. Further, it appears that these proceedings are the first representative proceedings in this Court involving allegations of the kind made by the applicants about investments in cryptocurrency, increasing the difficulty to assess the prospects of success ex ante.

CONCLUSION AND DISPOSITION

69    For these reasons, I am prepared to make orders which are substantially in the terms contained in the draft order. That is because, in summary, the result achieved by the proposed orders enures to the benefit of the parties and the Funder because it enables the proceeding to be brought to an end in circumstances where no party wishes it to continue, the Funder no longer wishes to fund it, no group member is prevented from pursuing their own proceeding should they wish to do so, no group member has been prejudiced by this proceeding being brought, the group members will receive further Qoin Tokens which is better than nothing, and the Funder has some prospect of recovering its not insignificant outlays in legal costs in this proceeding in circumstances where it bore a serious risk of non-recovery of any of those costs.

70    The parties will be ordered to provide to my chambers an updated version of the SDS which reflects the entry by the parties of the second settlement deed, and a draft order which reflects these reasons within 7 days. The parties are also requested to consider and, if necessary, address in any draft order the issue of whether the correct name of the first respondent is BPS Financial Limited (as appears in the originating documents and some, but not all, of the affidavits filed in this proceeding) or BPS Financial Pty Ltd (as appears in the settlement deeds and in the ASIC judgment).

Associate:

Dated:    26 May 2025

SCHEDULE OF PARTIES