Federal Court of Australia

Stanford v Depuy International Pty Ltd (No 9) [2025] FCA 1676

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to sections 37AF(1)(a) and 37AG(1)(a) of the Federal Court of Australia Act 1976 (Cth) (FCA Act), on the ground that it is necessary to prevent prejudice to the proper administration of justice, Annexure JKS-177 and Annexure JKS-178 to the affidavit of Julian Klaus Schimmel dated 3 October 2025 (the Schimmel Affidavit):

(a)    is to be treated as confidential;

(b)    to the extent that it is held by the Court in electronic form, is to be kept in a confidential section of the relevant Court file; and

(c)    is not to be published, made available or disclosed to any person except:

(i)    the Court;

(ii)    Maurice Blackburn Pty Ltd in its capacity as Administrator of the Scheme;

(iii)    Shine Lawyers Ltd in its former capacity as joint Administrator of previous versions of the Scheme;

(iv)    the applicants in the proceeding and their legal representatives;

(v)    Mr Geoff Atkins of Finity Consulting, and any of their staff who assist them for their purpose of their engagement in the proceeding; and

(vi)    Mr Ross Nicholas.

2.    Pursuant to sections 33V(2) and 33ZF of the FCA Act and in accordance with clause 10.6 of the Scheme, final payments to each of the Eligible Group Members identified in Annexure JKS-177 to the Schimmel Affidavit as being in the “Final Payment Cohort” are approved in such amounts as give effect to the recommendation made by Mr Geoff Atkins of Finity Consulting as described at paragraph 4.3 of the Supplementary Administrator’s Report dated 18 December 2025.

3.    Pursuant to sections 33V(2) and 33ZF of the FCA Act and in accordance with clause 11.4 of the Scheme and notwithstanding any other provision of the Scheme, the Eligible Group Members identified in Annexure JKS-178 in the Schimmel Affidavit as being in the “Uncontactable Cohort” are not, unless otherwise ordered, entitled to receive any further payment or distribution from the Settlement Account.

4.    Pursuant to section 33V(2) of the FCA Act and, or alternatively, clause 14.1 of the Scheme, the following amounts of Administration Costs are approved and are to be paid to the Administrator from the Settlement Account:

(a)    costs incurred pursuant to clause 13.1 of the Scheme: $1,115,474;

(b)    costs incurred pursuant to clause 13.2 of the Scheme: $120,450;

(c)    disbursements: $232,695.

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

REASONS FOR JUDGMENT

(revised from transcript)

WIGNEY J:

1    In this application, the administrator of a Court approved settlement scheme seeks further orders which will enable it to proceed to finalise the scheme in the near future. The orders sought include an order concerning the final payments to be made to eligible group members, an order that various group members who the administrator has been unable to contact are not entitled to any further payment, and an order approving the payment to the administrator of further costs incurred in administering the scheme. The administrator’s application was unopposed, though for obvious reasons it is necessary for the Court to carefully consider the availability and appropriateness of the orders in all the circumstances.

2    The substantive proceeding which underlies this application concerned allegedly defective medical devices, known as ASR implants, which were used in hip replacement or resurfacing surgery. Those ASR implants had been designed, manufactured or supplied by the respondents, DePuy International Limited and Johnson & Johnson Medical Pty Limited. The applicants commenced the representative proceeding both in their own right and on behalf of other persons in Australia who, like them, had the subject ASR implants surgically implanted. They claimed that DePuy and Johnson & Johnson had contravened the Trade Practices Act 1974 (Cth) because the ASR implants were not reasonably fit for the purpose for which they were required, were not of merchantable quality, and were not safe, such as persons generally were entitled to expect. They sought compensation for loss and damage caused by the manufacture and supply of the ASR implants.

3    While the matter proceeded to trial, the parties reached a commercial settlement prior to the delivery of judgment. In broad terms, the settlement involved the respondents paying a settlement sum of $250 million plus interest. The settlement funds were to be paid and distributed pursuant to a settlement scheme managed by the two law firms that represented the applicants. The settlement was approved by the Court on 29 June 2016, with detailed reasons published on 1 December 2016: see Stanford v DePuy International Ltd (No 6) [2016] FCA 1452 (Stanford No 6).

4    The settlement scheme that was approved by the Court was detailed and complex. It was required to remain in operation for several years. The terms of the settlement scheme were considered in some detail Stanford No 6 at [48]-[65]; see also Stanford v DePuy International Pty Ltd (No 8) [2024] FCA 35 (Stanford No 8) at [9]-[30]. In short summary, group members were required to register their compensation claims with the scheme administrators and the administrators were required to assess each registered group member’s eligibility for compensation. Group members who were found to be eligible could elect to receive a lump sum compensation amount pursuant to a “fast track” resolution, or have their compensation claim individually assessed by assessors appointed by the administrators. Payment of the fast track and assessed compensation amounts occurred over time based on actuarial advice received by the administrators. The scheme envisaged that there may be “top up” payments once all the claims had been finally assessed. The settlement scheme has been amended on several occasions, though none of the amendments bear on the present application.

5    Administration of the scheme over time obviously involved considerable work on the part of the administrators. The scheme provided for the payment of the costs and expenses incurred by the administrators and provision was also made in the settlement scheme for the administrators to approach the Court for directions in relation to the administration of the scheme. The administrators have had the matter relisted on several occasions for the purposes of seeking various directions and orders and reporting to the Court in respect of the administration of the scheme. The orders sought by the administrators in the past have included orders approving and permitting the payment of administration costs. On the last occasion that the matter was before the Court, detailed consideration was given to the terms of the scheme concerning the payment of the administrators’ costs, the history of the administrators’ applications in respect of the approval and payment of their costs, the Court’s jurisdiction to make orders in respect of the payment of the administrators’ costs and the principles that apply when considering such applications: see Stanford No 8 at [24]-[28] and [54]-[69]; see also Stanford v DePuy International Ltd (No 7) [2017] FCA 748. It should also be noted that on the last occasion that the matter was before the Court one of the two joint administrators was removed. The remaining administrator is Maurice Blackburn Pty Ltd.

6    As adverted to earlier, in this application the administrator seeks four orders: first, an order approving the making of final payments to certain group members; second, an order that a cohort of group members that the administrator has not been able to contact are not entitled to receive any further payments; third, an order approving the payment to the administrator of specified administration costs; and fourth, confidentiality or non-publication orders in respect of the names of group members in exhibits to the affidavit relied on by the administrator in support of the application.

Approval of the administrator’s administration costs

7    It is appropriate to first consider whether to approve the payment to the administrator of further administration costs. That is because the quantum of the further administration costs factors into the calculation of the final payments to be made to group members.

8    As discussed in Stanford No 8, the terms of the settlement scheme provide for the payment of two types of administration costs: general administration costs pursuant to clause 13.1 of the settlement scheme, being variable costs which are effectively calculated on the basis of the time taken by the lawyer or paralegal performing the task at hand; and costs associated with the preparation of eligibility or claims books which, pursuant to clause 13.2 of the scheme, are calculated on the basis of a fixed scale for the specified tasks. As has already been noted, the administrators have previously sought and obtained the Court’s approval in respect of the payment of general administration costs. In both Stanford No 7 and Stanford No 8, I expressed a degree of concern or disquiet in respect of the general administration costs that have been accrued or incurred by the administrators in respect of their administration of the scheme. Nevertheless, on each occasion that the administrator has sought the Court’s approval in respect of the payment of administration costs, I have ultimately approved the payments because the reasonableness of the costs have been supported by cogent opinion evidence from a costs expert.

9    In Stanford No 8, I provided a detailed summary of all the general administration costs that have been approved to date. It suffices for present purposes to indicate that the Court has previously approved the following payments to the administrators in respect of general administration costs and disbursements: in 2017, a total of $3,451,166.66 for the period from approximately June 2016 to March 2017, comprising professional or legal fees of $2,834,004.53 and disbursements of $617,162.63 (see Stanford No 7 and Stanford No 8 at [43]-[52]); in 2018, a total of $5,040,630 for the period from approximately February 2017 to April 2018, comprising legal fees of $4,602,549 and disbursements of $438,081 (see Stanford No 8 at [53]-[58]; in 2019, a total of $4,106,471.88 for the period from approximately April 2018 to March 2019, comprising legal fees of $2,826,674.06 and disbursements of $1,279,797.82; in 2020, a total of $1,992,317 for the period from approximately March 2019 to May 2020, comprising legal fees of $1,467,323 and disbursements of $524,994 (see Stanford No 8 at [65]-[68]); and in 2024, a total of $1,558,369.64 for the period May 2020 to October 2021, comprising professional or legal fees of $1,292,237.20, and disbursements of $266,132.44 (see Stanford No 8 at [70]-[72] and [77]-[110]).

10    The total of the approved general and administration costs and disbursements up to October 2021 is $16,148,955.18. The Court has also approved the payment of fixed costs in respect of the preparation of eligibility and claims books pursuant to clause 13.2 of the settlement scheme totalling $6,028,770. The total of the administration costs approved and paid to the administrator(s) to date is accordingly $22,177,725.20. That is undoubtedly a very large amount, however as previously noted, and as discussed in detail in both Stanford No 7 and Stanford No 8, the reasonableness of the costs incurred by the administrators has at each stage been supported by cogent expert evidence.

11    The administrator’s current application in respect costs and disbursements is for the Court to approve and authorise the payment of the following amounts referrable to the period November 2021 to May 2025: $1,115,474 in respect of general administration costs pursuant to clause 13.1 of the settlement scheme; $120,450 in respect of claims books pursuant to clause 13.2 of the settlement scheme; and $232,695 in respect of disbursements. The administrator relies on a report prepared by Mr Ross Nicholas, a legal costs expert and solicitor, to support the approval of those costs. The administrators relied on reports prepared by Mr Nicholas in support of all of the earlier applications in respect of costs and disbursements. Aside from some initial issues I had with the adequacy of Mr Nicholas’ first report which were discussed in Stanford No 7 and ultimately addressed by Mr Nicholas, I have previously accepted Mr Nicholas’ evidence concerning the reasonableness of the administrators’ cost.

12    In his most recent report, Mr Nicholas has expressed the opinion that the costs and disbursements the approval for which is sought by the administrator as charged in accordance with the settlement scheme, are reasonable and should be approved. I have carefully read and considered Mr Nicholas’ report. I am unable to discern any fault or deficiency in the methodology and reasoning employed by Mr Nicholas and I accept his opinions.

13    It follows that it is appropriate to make the order sought by the administrator in respect of the approval and payment of the costs and disbursements incurred by it in respect of the period November 2021 to May 2025. The total amount approved and payable is $1,468,620.

Approval of final payments

14    Before considering the administrator’s application in respect of final payments to group members, it is necessary to provide some brief context in the form of a short summary of the current state of the administration of the settlement scheme.

15    A total of 1,635 group members have been found to be eligible to receive compensation under the settlement scheme.

16    As noted earlier, eligible group members were able to elect to receive a lump sum fast track payment or to have their compensation claims individually assessed by an assessor. Group members who elected to receive a fast track payment were entitled to receive a payment of $55,000, or in the case of group members who had revisions in both hips, a payment of $110,000. As events transpired, the vast majority of eligible group members (1,339) elected to receive fast track payments. That was far more than had been anticipated or projected at the time of the settlement approval. Only 296 group members elected to have their individual claims assessed.

17    All of the group members who elected to receive a fast track payment have received a payment of $55,000 or $110,000. Similarly, all group members who elected to have their claims individually assessed have received payments reflecting their assessed compensation.

18    While the fast track group members have received their fast track payments in full, and the individually assessed group members have received their assessed compensation payments in full, under the terms of the settlement scheme they are entitled to receive further payments in certain circumstances. Relevantly, the settlement scheme provides that group members are entitled to “top up” payments in circumstances where there remains a surplus in the settlement fund after all fast track and assessed claim amounts are paid in full: see clause 10.7(a). As events transpired, that is what has occurred. The fact that the settlement fund had a positive balance or surplus after all fast track and assessed compensation payments were made was essentially a product of the fact that many more group members elected to receive fast track payments than was earlier projected to be the case. It was expected that more group members would elect to have their claims individually assessed and that those assessments would exceed the lump sum fast track payments.

19    The vast majority of group members have already received a 17.5% “top up” payment under the terms of the settlement scheme. That top up payment for fast track group members was $9,625 (in the case of those with a single revision) or $19,250 (in the case of those with a double revision). The top up payment received by individually assessed group members was calculated on the basis of 17.5% of their assessed compensation. The only group members who did not receive the first top up payment were those group members who the administrators were unable to contact. More will be said about that cohort of group members later.

20    The first top up payments were calculated and paid on the basis of advice that the administrator received from its actuarial advisers, Mr Geoff Atkins and Mr Adam Payne. Mr Atkins and Mr Payne have provided actuarial advice to the administrators throughout the administration of the scheme. They also provided expert evidence at the settlement approval stage.

21    Clause 10.6 of the settlement scheme relevantly provides, in effect, that the administrators may make final compensation payments to group members and, in that regard may take advice from actuarial experts regarding, among other things, the final payment percentage that is reasonable and appropriate in the circumstances. Provision is also made in that clause for the administrators to obtain the Court’s approval in respect of the proposed final payments.

22    Mr Atkins and Mr Payne have prepared an actuarial report which calculates final payments that should be made to the eligible group members. Those final payments are effectively calculated to ensure that, when they and any outstanding scheme administration costs and expenses (including tax liabilities and outstanding liens) are paid, the settlement fund will be fully expended save for a contingency amount. More will be said about the contingency amount later. The calculations are also made on the assumption that no further payments will be made to the cohort of uncontactable group members. The reasonableness or appropriateness of that assumption will be considered next.

23    In their report, Mr Atkins and Mr Payne advised that the final payments that should be made to group members should be calculated on the basis that group members receive a further payment representing 4.68 cents in the dollar, or 4.68%, of the fast track or assessed compensation payments received by each group member. In other words, for each dollar of the fast track or assessed compensation amount paid to a group member, the group member should receive an additional 4.68 cents.

24    In a supplementary report provided to the Court on the eve of the hearing of this application, however, the administrator indicated that the actuaries had revised their calculation to take into account more recent developments that have resulted in there being more funds available for distribution than was originally estimated to be the case. Specifically, the administrator advised the actuaries that the updated accounts of the scheme indicated that the amount available for the final distribution to group members was $7,359,242 compared with $7,140,254 as was the case when the actuaries prepared their initial report. The calculation of the amount available for the final distribution took into account the retention of $100,000 for contingencies. The rationale for the contingency amount is discussed later.

25    Based on the updated information, the actuaries now calculate that it would be appropriate to make a further top up payment of 4.82 cents in the dollar, or 4.82%. In other words, group members will receive an additional 4.82 cents for every dollar of the fast track or individual assessed compensation amount paid or payable to them. Single revision fast track group members will receive an additional $2,651, double revision fast track group members will receive an additional $5,302 and individual assessment group members will receive variable amounts depending on the amount of their assessed compensation. The average final top up payment to individually assessed group members is $12,532 (based on an average assessed amount of $260,000). If those final payments are made, the end result for group members is that (putting aside the cohort of uncontactable group members) they will have received payments of 122.32% of the original fast track or individually assessed compensation amounts. That is obviously a positive outcome for the group members.

26    As noted earlier, the administrator’s calculation of the amount available for final distribution, and the actuaries’ calculation of the amount of the final distributions, factors in the retention of a contingency amount. The actuaries were asked to consider what would be a reasonable amount to set aside as a contingency to respond to any slip, omission or error. The scenarios they considered in assessing an appropriate contingency amount included members of the cohort of uncontactable group members coming forward to claim a final payment and the incurring of further or higher expenses in the final administration of the scheme, including higher legal or actuarial fees. It should be noted in this context, however, that the administrator has agreed that it will not seek any further administration costs in the future beyond the fee estimate of $327,986.50 which had been factored into the calculation of the final group member payments. Mr Nicholas expressed the opinion that that fee estimate was reasonable.

27    In their report, the actuaries expressed the opinion that the contingency amount could be adequately funded from the scheme’s investment income. They estimated that the investment income would be in the order of $50,000 if the final top up payments were made at the end of August 2025. The administrators considered that that contingency amount would be “adequate for its intended purpose”. As the final payments will obviously not be made until some time after August 2025, it would appear from the actuaries’ analysis that the scheme’s income, and therefore the size of the expected contingency amount, is likely to be higher than $50,000.

28    It is apparent from the administrator’s supplementary report and the actuaries’ updated calculation of the final payments to group members that the final payments have been calculated in such a way as to produce a contingency amount of $100,000. The actuaries have not expressed any opinion about the adequacy or reasonableness of that amount. The actuaries did, however, conduct a “sensitivity” analysis based on the assumption that an additional $100,000 was made available to the scheme. The actuaries in effect calculated that if that amount was factored into the calculation of the final top up payments, as opposed to forming part of the final balance or contingency amount, single revision fast track group members would receive an additional $33 (and therefore double revision fast track group members would receive an additional $66) and individually assessed group members would on average receive an additional $156. The point of this analysis was in effect to demonstrate that factoring in an additional $100,000 would not make a huge difference to the final payments to be made to group members. In my view, that tends to suggest that factoring in a contingency amount of $100,000 is reasonable in all the circumstances.

29    It should also be noted in this context that the administrator has indicated that any monetary balance remaining in the scheme when the administration is finalised and the scheme is effectively wound up will be donated to a suitable charity. In other words, if no contingencies eventuate and the estimated surplus or balance in the fund after the making of the final payments to group members and the payment of all expenses is $100,000, that amount will be donated to charity.

30    Having carefully read the report of Mr Atkins and Mr Payne and the administrator’s report and supplementary report, I am satisfied that the basis upon which the final payments to group members has been calculated is reasonable in all the circumstances. I consider that the assumptions that the actuaries were asked to make in performing their calculations were reasonable and that their methodology was appropriate. I have no reason to doubt the accuracy of the calculations. I accept that it is reasonable for there to be a contingency amount and that the proposed contingency amount of $100,000 is reasonable and appropriate. I also consider that the administrator’s proposal to donate any remaining balance to charity when the scheme is wound up to be reasonable in all the circumstances, though whether there is a positive balance at the end of the day remains to be seen.

31    It follows that I propose to make the order sought by the administrator in relation to the final payments to be made to eligible group members.

No further payments to the cohort of uncontactable group members

32    The administrator seeks an order the effect of which would be that it would be appropriate for the scheme to be finalised on the basis that the identified cohort of uncontactable group members will not be entitled to receive any further payment. In other words, those in the cohort who did not receive previous top up payments will not be able to come forward at some later point and claim those payments and none within the uncontactable cohort will be entitled to receive the final top up payment. That is because the administrator has not been able to contact group members in the cohort in respect of the payment of the top up payments, despite its reasonable efforts to do so.

33    The evidence concerning the steps taken by the administrator to contact eligible group members in respect of the payment of previous top up amounts, and in anticipation of the payment of a final top up payment, is contained in the administrator’s report on the performance of the settlement administration. A schedule annexed to the affidavit relied on by the administrator also summarises the steps taken by the administrator to contact each of the members of the uncontactable group members cohort. In summary, the administrator sent at least two emails to group members concerning the final top up payment. In the case of group members who had not provided an email address, or who had expressed a preference not to receive emails, “hard copy” correspondence was sent by registered post to the last known address of the group member and, where there was no response, a text message was sent to the relevant group member if they had provided a mobile phone number. Where the aforementioned steps prompted no response, the administrator undertook further steps which were considered to be “proportionate to the end that was sought be achieved”. The steps included the search of probate registers and the Ryerson Index to Death Notices and Obituaries in Australian Newspapers.

34    It is also important to emphasise in this context that the settlement scheme provides that group members must cooperate with the administrator and must, among other things, promptly inform the administrator of any change in their contact details. More importantly, the scheme provides that if a group member fails to comply with his or her obligations, including the obligation to update contact details, the administrator may determine that the group member is not eligible to receive compensation. I am accordingly satisfied that the order sought by the administrator in respect of the uncontactable cohort falls within the terms of the settlement scheme.

35    There are currently 61 eligible group members in the cohort of uncontactable group members. Twenty-four of those group members were also unable to be contacted when the earlier top up payments were made.

36    I am satisfied that the administrator has taken reasonable steps to contact the group members in the cohort of uncontactable group members. I am also satisfied that it is, in all the circumstances, reasonable for the administrator to proceed to make the final payments to group members and in due course finalise and wind up the scheme administration on the basis that the 61 group members in the cohort of uncontactable group members will not be eligible to receive any further payments. I propose, however, to qualify the order sought by the administrator in respect of the uncontactable cohort by inserting the words “unless otherwise ordered”. The effect of that qualification will be that if, in the period between now and the finalisation of the scheme, any member of the cohort somehow becomes aware of the making of the final payments and comes forward to claim that payment, the administrators may approach the Court for further directions about the appropriate response. It may be appropriate in the circumstances to permit that payment to be made out of the contingency amount, assuming that there is one. After the winding up of the scheme, however, members of the uncontactable cohort will effectively have no avenue for claiming the top up payment. In all the circumstance, however, that is unavoidable and not unreasonable.

Confidentiality and non-publication order

37    The confidentiality and non-publication order sought by the administrator covers two annexures to the affidavit filed by the administrator in support of this application. Those annexures contain the names of all the eligible group members, including the cohort of uncontactable group members, as well as details of the election made by each group members in respect of the form of compensation (fast track or assessed) and the payments made to the group members to date. That information has not previously been made public. I am satisfied that disclosure of the information would be contrary to the interests of justice and that disclosure would cause prejudice to the administration of justice given the nature of the underlying proceedings and the settlement scheme and the vulnerability of the group members. I am unable to see how the principles of open justice would require the disclosure of the information.

38    It follows that I propose to make a non-publication order pursuant to ss 37AF(1)(a) and 37AG(1)(a) of the Federal Court of Australia Act 1976 (Cth) in respect of the two annexures to the administrator’s affidavit, though the form of the order will differ slightly from that initially proposed by the administrator.

Associate:

Dated:    19 December 2025