FEDERAL COURT OF AUSTRALIA

Alford v AMP Superannuation Limited (No 3) [2026] FCA 923

ORDERS

THE COURT ORDERS THAT:

1.    Within seven days, the applicants (having consulted with the other parties and the funders) provide to the chambers of Justice Moshinsky a proposed minute of orders to give effect to the Court’s reasons dated today.

2.    Subject to further order, until 5.00 pm on 22 July 2026, the Court’s reasons for judgment dated today be suppressed other than being made available (on a confidential basis) to the applicants.

3.    By 4.00 pm on 21 July 2026, the applicants inform the chambers of Justice Moshinsky whether they seek a suppression order over any parts of the Court’s reasons for judgment (and, if so, which parts and on what terms).

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

REASONS FOR JUDGMENT

MOSHINSKY J:

Introduction

1    The applicants in this representative proceeding apply for approval of a settlement of the proceeding. The applicants also apply for orders regarding the distribution of the proceeds of the settlement, and for ancillary orders. The amount of the proposed settlement is $120 million, of which it is proposed that approximately $60 million be deducted for legal fees and disbursements and funding commission. As discussed later in these reasons, in my opinion the settlement can fairly be described as a very disappointing outcome for group members.

2    The proceeding is a consolidation of two proceedings which were commenced in this Court in 2019 relating to fees charged to, and returns obtained for, members of certain superannuation funds. The trustees of the funds were AMP Superannuation Limited (ASL) and N.M. Superannuation Pty Limited (NMS) (together, the Trustees).

3    The original proceedings were:

(a)    Alford v AMP Superannuation Limited (commenced on 30 May 2019); the applicants in this proceeding were Mr Dale Alford and Mr Sebastian Smith; the law firm was Maurice Blackburn; the funder was Harbour Litigation Fund IV, LP (Harbour); and

(b)    Cooper v AMP Superannuation Limited (commenced on about 27 June 2019); the applicants in this proceeding were Ms Anne Cooper and Ms Jodie Mitchell; the law firm was Slater and Gordon Limited (Slater and Gordon); and the funder was Therium Litigation Finance Atlas AFP IC (Therium).

4    Harbour and Therium are referred to in these reasons as the Funders.

5    On 20 August 2019, Murphy J made orders that the proceedings be consolidated. Following the consolidation, a Cooperative Litigation Protocol was entered into by the four applicants, Maurice Blackburn, Slater and Gordon, Harbour and Therium. A consolidated statement of claim was filed on 25 September 2019. This pleading was subsequently amended, as detailed below.

6    Between 27 May and 30 June 2025, the trial of the proceeding took place before Button J. This hearing was on liability only (i.e. not on the quantum of any loss). The parties did not make closing submissions during the hearing from 27 May to 30 June 2025. These were due to be made at a later date.

7    On 13 August 2025, the applicants filed closing written submissions.

8    On 21 August 2025, the parties attended a mediation.

9    Following the mediation, an in-principle settlement agreement was reached between the parties and a Heads of Agreement was signed on 13 September 2025.

10    On 16 February 2026, subject to the approval of the Court and without an admission of liability on the part of the respondents, the parties executed a Deed of Settlement documenting the proposed settlement of the proceeding on the basis that the respondents pay the sum of $120 million (the Settlement Sum) to resolve the claims of the applicants and group members (the Deed of Settlement).

11    By interlocutory application dated 20 February 2026, the applicants apply, pursuant to s 33V(1) of the Federal Court of Australia Act 1976 (Cth), for approval of the settlement. The applicants also apply, pursuant to s 33V(2) of the Act, for orders regarding the distribution of the proceeds of the settlement. The applicants also apply for ancillary orders.

12    On 26 February 2026, a case management hearing took place in relation to the interlocutory application. Orders were made for the distribution of a notice to group members about the proposed settlement (the Notice). Orders had previously been made (on 15 December 2025) for the appointment of Ms Elizabeth Harris (the Costs Referee) as a costs referee to prepare a report on the reasonableness of the applicants’ legal costs.

13    On 11 March 2026, the Costs Referee filed a report on the reasonableness of the applicants’ legal costs (the Costs Report).

14    On 7 April 2026, the hearing of the applicants’ interlocutory application took place. The affidavit material relied on by the parties and the Funders was contained in an electronic Court Book. In addition, a copy of the proposed Settlement Distribution Scheme was tendered. The main affidavit relied on by the applicants was an affidavit of Ms Emma Pelka-Caven, the principal solicitor at Slater and Gordon with the care and conduct of the proceeding on behalf of the applicants, dated 24 March 2026 (the Ninth Pelka-Caven Affidavit). The affidavit included, as a confidential annexure, a confidential opinion of counsel for the applicants dated 23 March 2026 (the Counsel Opinion).

15    Prior to the hearing on 7 April 2026, a number of group members objected to the proposed settlement. In total, 128 group members filed a Notice of Objection (the Objections). Of these, 23 Objections were filed within time and either contained reasons for the Objection or involved circumstances where the group member provided reasons for the Objection when subsequently contacted by Slater and Gordon. The Objections were summarised in the Ninth Pelka-Caven Affidavit at paras 109-120 and copies of the Objections which contained reasons for objecting were annexed to that affidavit. One of the grounds of objection was that the deductions were disproportionately high. None of the objecting group members appeared at the hearing. Senior counsel for the applicants made submissions in response to the Objections at the hearing.

16    During the hearing, the Court raised concerns about:

(a)    whether, as raised in paras 94-102 of the Costs Report, Maurice Blackburn and/or Slater and Gordon failed to comply with their disclosure obligations under the Legal Profession Uniform Law, being Sch 1 to the Legal Profession Uniform Law Application Act 2014 (Vic) (the Legal Profession Uniform Law); and

(b)    the proportionality of the legal fees and disbursements which the applicants sought to deduct from the Settlement Sum (in the latest iteration of the proposed orders provided by the applicants to the Court prior to the hearing, the applicants sought to deduct $43,780,964.60 for legal fees and disbursements (including $650,000 for deed of indemnity costs incurred by Therium)).

17    At the end of the hearing on 7 April 2026, the applicants were given leave to file and serve further affidavit material and submissions relating to the matters that had been raised by the Court. Subsequently, the applicants filed:

(a)    an affidavit of Ms Pelka-Caven dated 22 April 2026 (the Eleventh Pelka-Caven Affidavit) and an affidavit of Ms Pelka-Caven dated 1 May 2026 (the Twelfth Pelka-Caven Affidavit); and

(b)    supplementary submissions dated 22 April 2026.

18    During the hearing on 7 April 2026, senior counsel for the applicants contended that there were a number of errors in the Costs Report. These were detailed in the applicants’ amended outline of submissions dated 30 March 2026 (at paras 46-64). Save in one respect, these alleged errors had not been raised with the Costs Referee. The applicants sought adjustments to the costs that had been allowed by the Costs Referee in the Costs Report to take account of these alleged errors.

19    Subsequent to the hearing, the Court provided a copy of the applicants’ outline of submissions to the Costs Referee and asked her to respond to the alleged errors. The Costs Referee prepared a supplementary report dated 25 May 2026 in which she responded to the alleged errors (the Supplementary Costs Report). In some cases, the Costs Referee accepted that there had been an error; in other cases, the Costs Referee maintained the position in the Costs Report.

20    The applicants were given leave to file a submission responding to the Supplementary Costs Report. The applicants filed further supplementary submissions dated 5 June 2026 responding to that report. Attached to those submissions was a revised form of order sought by the applicants (the Proposed Orders). The Proposed Orders sought approval of the following deductions from the Settlement Sum:

(a)    the “Applicants’ Legal Costs”, comprising:

(i)    $43,673,064.44 for professional legal fees, counsel’s fees and disbursements incurred in connection with the proceeding on the applicants’ behalf and on behalf of all group members (this amount includes $650,000 for deed of indemnity costs incurred by Therium);

(ii)    $3,622,500 for “After the Event” (ATE) insurance costs incurred by Therium;

(b)    “Funders’ Commission”, comprising:

(i)    a payment of $7,250,643.58 to Therium; and

(ii)    a payment of $7,250,643.58 to Harbour;

(c)    the “Applicants’ Reimbursement Payment”, being a payment of $40,000 to each of the four applicants;

(d)    the “sample group member reimbursement payment”, being a payment of $20,000 to each sample group member (there were two sample group members); and

(e)    the “Settlement Administrator’s Fees and Expenses”, being an amount of $198,000 in connection with the administration of the Settlement Distribution Scheme.

21    I note the figure of $43,673,064.44 set out in para (a)(i) above includes uplift payments claimed by Maurice Blackburn and Slater and Gordon on portions of their fees. The amount also includes legal fees and disbursements that were paid by the Funders – to that extent, there would be a reimbursement of the Funders. Further, the amount includes $650,000 claimed by Therium as the costs of a deed of indemnity which was provided by way of security for costs.

22    The proposed deductions set out above total $62,194,851.60.

23    The main issues to be considered in these reasons are:

(a)    Whether the proposed settlement is fair and reasonable (as between the applicants and group members, on the one hand, and the respondents, on the other).

(b)    Whether the proposed settlement is fair and reasonable between group members inter se (that is, between one group member and another).

(c)    Whether the proposed deductions are fair and reasonable. The following issues arise:

(i)    whether the proposed deductions for legal fees and disbursements and for ATE insurance are fair and reasonable; in relation to legal fees and disbursements, two specific issues to be considered are (A) whether the law firms failed to comply with their disclosure obligations under the Legal Profession Uniform Law (and, if so, the consequences of their non-compliance), and (B) whether the claimed legal fees and disbursements are proportionate;

(ii)    whether the proposed deductions for funding commission are fair and reasonable; a further issue is whether, if a portion of the legal fees and disbursements is not approved (with the consequence that the net proceeds are greater than assumed in the Proposed Orders), the amount payable to each Funder should be greater than $7,250,643.58 (to reflect the agreed-upon percentage funding commission);

(iii)    whether the proposed payments to the applicants and sample group members are fair and reasonable; and

(iv)    whether the proposed deduction for the settlement administrator’s fees and expenses is fair and reasonable.

24    For the reasons that follow, I have concluded in summary that:

(a)    As noted above, it is fair to describe the settlement as a very disappointing outcome for group members. Nevertheless, because of recoverability issues, I am satisfied that the proposed settlement is fair and reasonable and in the interests of group members.

(b)    I am satisfied that the proposed distribution of the net proceeds of the Settlement Sum as between different categories of group members is fair and reasonable.

(c)    In relation to the proposed deductions:

(i)    I am not satisfied that the proposed deductions for legal fees and disbursements are fair and reasonable. I approve the following amounts in relation to the “Applicants’ Legal Costs”:

(A)    $39,803,986 for professional legal fees, counsel’s fees and disbursements (including $650,000 for deed of indemnity costs incurred by Therium); and

(B)    $3,622,500 for ATE insurance costs incurred by Therium.

(ii)    I am satisfied that the proposed deductions for funding commission ($7,250,643.58 to each Funder) are fair and reasonable. However, I am not satisfied that a greater dollar amount should be approved even though, as a result of my conclusion summarised in para (c)(i) above, the net proceeds are greater than assumed in the Proposed Orders.

(iii)    I am not satisfied that the proposed deductions for payments to the applicants and the sample group members are fair and reasonable. I consider that the appropriate deductions are $20,000 per applicant and $10,000 per sample group member.

(iv)    I am satisfied that the deduction for the settlement administrator’s fees and expenses is appropriate.

Background

Outline of the proceeding

25    The applicants’ claims at trial related to fees charged to, and returns obtained for, members of particular life-insurance-backed superannuation products offered by the Trustees.

26    The applicants also made claims of accessorial liability against:

(a)    two service-providing life companies, AMP Life Limited (AMP Life) and The National Mutual Life Association of Australasia Limited (NMLA) (together, the Life Companies); and

(b)    AMP’s corporate services entity, AMP Services Limited.

27    All claims concerned the manner in which the Trustees invested superannuation amounts in life insurance policies issued by their respective parent Life Companies, and the way they subsequently monitored and managed those investments.

28    The claims on foot at trial fell into three categories:

(a)    Cash Claims, which concerned claims against ASL, as trustee, for contraventions of the Superannuation Industry (Supervision) Act 1993 (Cth) and breach of trust at general law for failing to take steps to ensure that the interest rates on two cash options offered in its funds were competitive in circumstances where AMP Life deposited the funds with a related party, AMP Bank. The Cash Claims also concerned claims that, in respect of cash and term deposit options in its funds, ASL as trustee failed to take steps to ensure that the investment fees charged in respect of those options were commensurate with the level of investment service (which was negligible) provided. In both cases, AMP Life was alleged to be an accessory to ASL’s breaches.

(b)    MySuper Claims, which concerned products introduced from 1 January 2014 under a legislative regime which required superannuation funds to offer compliant MySuper products if they wished to retain certain amounts. The regime was designed to ensure there were low-cost products for disengaged superannuants. Both ASL and NMS offered MySuper products. The applicants brought claims relating to a sub-set of those products, namely those which were both (i) Generic and (ii) Lifecyle Products. The applicants alleged that the Trustees breached their obligations both in the launch of those products and in their subsequent monitoring and management of them.

(c)    General Amounts Claims, which concerned claims related to non-MySuper products. From 2014 onwards, such amounts came to be known as “Choice” products in contradistinction to MySuper. The applicants brought claims regarding a sub-set of those products defined as the “Impugned Products”. The Impugned Products encompassed most of the products offered by the Trustees which were contemporary (i.e. still open at some time during the claim period). The General Amounts Claims alleged that the Trustees failed to monitor the fees attributable to administration services, the cost of those services, and the margins being retained by the Life Companies in respect of the Impugned Products. Had the Trustees properly monitored fees, costs and margins, they would have appreciated that standard fees for certain of the Impugned Products were high relative to market, and that fees for the Impugned Products had not been set prioritising, or with regard to, members’ best interests. It was said that a prudent trustee with that knowledge ought to have negotiated with the Life Companies to lower the administrative fees to be charged to members for the Impugned Products, or that if such negotiations had failed, a prudent trustee would have outsourced administrative services in respect of the Impugned Products to a third-party provider.

29    Further detail about the claims made by the applicants at various stages of the proceeding is provided in the Ninth Pelka-Caven Affidavit at paras 39-54.

30    The procedural history of the proceeding is described in the Ninth Pelka-Caven Affidavit at paras 55-80. As stated in para 60 of that affidavit, over the course of the Proceeding, the applicants briefed eight experts who prepared a total of 19 expert reports.

31    On 17 November 2023, the applicants made an interlocutory application for the discontinuance of their claims against the fourth respondent and in relation to claims in respect of amounts invested in AMP’s “Mature” products and the “Platform” or “Wrap” products. Leave was granted by Anderson J on 4 April 2024: Alford v AMP Superannuation Limited [2024] FCA 332.

32    On 16 February 2024, the respondents made a class closure application, which was rejected by Murphy J in April 2024: Alford v AMP Superannuation Limited (No 2) [2024] FCA 423.

33    On 26 March 2025, Button J made orders timetabling the distribution of Opt Out Notices to group members. The deadline for group members to opt out of the proceeding was 23 May 2025. A total of 1,894 group members opted out of the proceeding (although, for the reasons set out in Ms Pelka-Caven’s eighth affidavit (dated 20 February 2026), she believes four of those opt outs were in error).

34    As set out in para 77 of the Ninth Pelka-Caven Affidavit, in the weeks leading up to the trial, the applicants undertook substantial preparation, including:

(a)    compiling a court book comprising more than 4,000 documents;

(b)    preparing the four applicants and the two sample group members for cross-examination;

(c)    preparing five expert witnesses for a joint expert conclave and/or cross-examination, as required by the orders of Button J dated 10 December 2024;

(d)    preparing for the cross-examination of the respondents’ five lay witnesses and four expert witnesses; and

(e)    working with counsel to prepare the applicants’ opening submissions, which comprised 299 pages.

35    Between 27 May and 30 June 2025, the matter proceeded to trial, including six days of opening submissions, four days of cross-examination of the respondents’ lay witnesses, and eight days of expert conclaves and cross-examination.

36    The day before the applicants and sample group members were required to give evidence, the respondents informed the applicants that no cross-examination was required.

37    Following the trial, the applicants filed and served written closing submissions on 13 August 2025 of 507 pages.

Deed of Settlement

38    Under the Deed of Settlement, the Settlement Sum is to be paid in two instalments, the first being $75 million, with the balance payable only after settlement approval. The Settlement Sum will accrue interest at the most advantageous rate the parties are able to obtain: see cl 2(a)-(c) of the Deed of Settlement (Confidential Annexure EOPC-20:2-45).

39    The Settlement Sum is not to be funded through the exercise of a right of indemnity against trust assets or deducted from funds required to meet the operational risk financial requirement established by Superannuation Prudential Standard SPS 114 (Deed of Settlement, cl 2(h)).

40    Upon payment of the Settlement Sum, releases and plea in bar provisions become operative (Deed of Settlement, cl 2(g)). Under the release clause, the applicants, on their own behalf and on behalf of group members, release and discharge the respondents and related parties jointly and severally from, and covenant not to sue in respect of:

(a)    claims made in the proceeding;

(b)    any claim “which is in respect of, or arises out of, the circumstances raised” in the proceeding; and

(c)    any claim which the applicants or a group member “has or may have, and which were raised or could have been raised” in the proceeding (Deed of Settlement, cl 4(b)).

41    However, it is made clear that the releases do not affect a group member’s entitlement to bring individual claims which do not give rise to a substantial common issue of fact or law with the claims made in the proceeding (Deed of Settlement, cl 4(c)).

42    The respondents are responsible for the costs of distribution up to an amount of $250,000 plus GST, calculated at $300 per hour, after which they may approach the Court to deduct further costs from the Group Member Settlement Amount (Deed of Settlement, cl 8(l)). The respondents are to provide a monthly statement of the holding account to the applicants’ solicitors until the Group Member Settlement Amount is distributed in full (cl 8(j)). The Settlement Administrator is to provide a final report to the Court at the conclusion of the distribution process (cl 8(p)). The Settlement Administrator and Settlement Distributor are to use best endeavours to ensure all payments are distributed within 12 months from the date of approval orders (cl 8(q)).

Settlement Distribution Scheme

43    The Ninth Pelka-Caven Affidavit summarises the proposed settlement distribution scheme at para 121 and annexes a copy of the scheme. At the hearing, senior counsel for the applicants tendered an amended version of the Settlement Distribution Scheme (Exhibit A2) (the Settlement Distribution Scheme), which contains some marked-up amendments to the scheme.

44    At para 121 of the Ninth Pelka-Caven Affidavit, Ms Pelka-Caven states that, subject to Court approval, the scheme is intended to operate as follows:

(a)    Slater and Gordon is appointed Settlement Administrator (cl 2.1);

(b)    NMS is appointed Settlement Distributor (cl 2.2);

(c)    the respondents open and maintain a bank account to hold the Settlement Sum (cl 3.2) where interest is accrued at a rate of 4.3% per annum for the benefit of group members;

(d)    the respondents make payments from that account as directed by the Settlement Administrator (cl 5.1(a) and 5.2(a));

(e)    the Settlement Administrator appoints an expert accountant or actuary to assist it with calculating the exact amounts to be paid to each individual eligible group member (cl 3.1);

(f)    the Settlement Distributor pays group members directly into a member’s existing account with NMS or alternatively pays the Australian Taxation Office using the Trustee Voluntary Payment Process (cl 5.2(b));

(g)    the Settlement Administrator and the Settlement Distributor are not required to provide group members with an opportunity to review their individual settlement payment (cl 8.1); and

(h)    any surplus funds are to be paid to group members or the Settlement Administrator is to approach the Court (cl 7).

45    The above summary appears to be accurate notwithstanding the amendments to the scheme referred to above.

46    As explained in paras 123-129 of the Ninth Pelka-Caven Affidavit, not all group members will receive compensation under the scheme. Ms Pelka-Caven states in that affidavit:

124.    As part of the settlement negotiations, the respondents agreed to provide a list of group members to be paid who were invested in particular products (relevant to general fees) or options (relevant to the MySuper, Cash and Term Deposit options). However, the respondents were unable or unwilling to provide such lists at regular intervals throughout the relevant period, being approximately 12 years. Instead, the respondents agreed to provide data for three specified points in time in respect of the MySuper, Cash and Term Deposit options, and a single date in respect of general fees.

125.    In those circumstances, I, together with Mr Taylor of Maurice Blackburn and Nick Williams of Slater and Gordon, sought to identify, based on our extensive knowledge of the Proceeding, points in time that were likely to capture the greatest number of group members and, in the case of general fees, those products most likely to have succeeded at trial if the applicants had been successful.

126.    Such an approach is necessarily imperfect. For example, a group member who held an option early in the relevant period for the Cash Claim, but who ceased to hold that option one day prior to the date nominated by the applicants as part of the Agreed Data to be produced by the respondents (for example, 30 May 2011) will not be compensated.

127.    That said, I and my colleagues at Slater and Gordon and Maurice Blackburn have endeavoured to develop the fairest mechanism available on behalf of all group members, based on our knowledge of the Proceeding.

128.    It is also, in my opinion, relevant that of the approximately 2 million estimated group members, we estimate that around 1.7 million will be able to be compensated. The final figure of group members who will be able to receive an Individual Settlement Payment will be capable of determination once Slater and Gordon has had an opportunity to consider the Court-ordered Agreed Data.

129.    The Settlement Administrator is also able to add a group member who is eligible for compensation to the Agreed Data list produced by the respondents if a group member contacts us. I anticipate based on my work conducting other settlement distributions that a small number of persons who have registered with Slater and Gordon, or Maurice Blackburn, and followed the Proceeding over time, may contact us to confirm if they are eligible to receive payment. In those cases, we will seek to follow the steps set out in clause 6.1(b) of the Settlement Distribution Scheme to add those eligible group members to the list of persons who will be compensated.

47    An outline of the proposed method of distribution as between group members is provided in paras 130-131 of the Ninth Pelka-Caven Affidavit:

130.    It is proposed that the total amount available for distribution to group members will, in accordance with the opinions of counsel set out in their confidential opinion, be allocated among Cash and Term Deposit members, MySuper members, and General Amounts members in the proportions identified in that opinion. I agree with the approach adopted to the relativities between those categories of group members, which, in my opinion, appropriately reflects the relative strengths of the respective pillars of the Proceeding. A summary of the allocation and discounts applied to each category is set out in Annexure A of counsel’s confidential opinion.

131.    The entitlements of group members will be determined in accordance with the following process:

(a)    eligible group members who are general fees members will each receive a flat entitlement calculated by reference to the proportion of the settlement amount allocated to those members. On current estimates, this entitlement is approximately $13 per member; and

(b)    eligible group members invested in the relevant Cash and Term Deposit options and MySuper options will receive an entitlement calculated by reference to:

(i)    the proportion of the settlement amount allocated to those members;

(ii)    the estimated claim value for Cash, Term Deposit and MySuper group members; and

(iii)    the investment option balances attributable to each individual group member.

48    In other words, it is proposed that:

(a)    group members who have Cash and MySuper Claims will receive amounts which reflect a risk-adjusted assessment of the relative merits of the claims; and

(b)    group members who have General Amounts Claims will receive a flat fee (currently estimated to be $13 per member).

49    The proposed distribution as between group members is discussed in more detail later in these reasons.

50    The Settlement Distribution Scheme does not provide for a process by which individual group members may seek a review of their assessed entitlement. The reasons for this are explained in paras 133-135 of the Ninth Pelka-Caven Affidavit:

133.    In light of the methodology proposed for calculating entitlements, which relies on account data to be provided by the respondents, I do not consider that there would be any practical utility in establishing a process for individual reviews of group members’ entitlements. The calculations will be performed by reference to objective account data held by the respondents and applied in accordance with a formulaic methodology. I have no reason to believe that the data to be provided by the respondents is inaccurate.

134.    Further, some components of the proposed distribution involve flat payments of relatively modest amounts. In those circumstances, the cost of establishing and administering a review mechanism would, in my opinion, be disproportionate to the amounts likely to be in issue and unlikely to result in any material change to group members’ entitlements.

135.    In addition, the establishment of a review process would increase the administrative costs associated with implementing the Settlement Distribution Scheme and thereby reduce the funds available for distribution to group members. Having regard to the very large number of group members and the formulaic nature of the calculations to be undertaken using respondents’ account data, I consider that the absence of an individual review mechanism is appropriate and consistent with the efficient and cost-effective distribution of the settlement sum.

51    In paras 197-198 of the Ninth Pelka-Caven Affidavit, Ms Pelka-Caven states that on 6 March 2026 she caused a draft of the settlement distribution scheme to be published on Slater and Gordon’s website. She then sets out certain material differences between the draft and the version of the scheme annexed to her affidavit. Ms Pelka-Caven explains that there had been “revisions to the estimated average returns to group members following the receipt of additional data from the respondents on 17 March 2026 and based on the [Counsel Opinion]”. She states at para 198:

Specifically, the average estimated payments have changed:

(i)    for Cash and Term Deposit Group Members, from a range of $79 to $100 to a range of $61 to $132;

(ii)    for MySuper Group Members, from a range of $26 to $41 to a range of $16 to $29; and

(iii)    for General Amounts Group Members, from $18 to $13.

Information given to group members

52    On 15 December 2025, the Court made orders, among other things, requiring the applicants to engage IVE Group (the Mailing House) to undertake the distribution of a notice of proposed settlement to group members. On 26 February 2026, the Court made orders approving the Notice and providing for distribution of the Notice.

53    The Notice informed group members, among other things, of the following material matters:

(a)    the proceeding had settled for $120 million;

(b)    substantial deductions were proposed from the Settlement Sum for legal fees and disbursements, funding commission, and reimbursement to the applicants and sample group members; if the deductions were approved in amounts proposed, they would together total approximately 50% of the Settlement Sum, with the rest to be distributed to group members;

(c)    a draft settlement distribution scheme would be published on the website of Slater and Gordon by 6 March 2026, which would include, among other matters, the range of likely outcomes for average group members; and

(d)    group members had a right to object to the proposed settlement and could do so by providing a Notice of Objection to either Slater and Gordon or the Court by 13 March 2026.

54    Details of the process of delivering the Notice to group members are set out in the Ninth Pelka-Caven Affidavit at paras 91-106. The Notices were distributed by the Mailing House between 2 March and 12 March 2026. This allowed very little time for some group members (those who received the Notice towards the end of that period) to object by the deadline (13 March 2026), which seems unsatisfactory, even if technically permitted by the orders made on 26 February 2026 (see T23, T51).

55    The Mailing House sent 1,707,023 million emails to known group members attaching a copy of the Notice; of these, 1,308,835 emails were successfully delivered to known group members and 631,397 were opened by known group members; the Mailing House made multiple attempts to deliver the Notice to email addresses that bounced or otherwise rejected the email.

56    As set out in the Ninth Pelka-Caven Affidavit at paras 107-108, between 2 March and 13 March 2026, Slater and Gordon’s Client Engagement Team received approximately 2,787 enquiries relating to the Notice; any person who contacted Slater and Gordon before the objection deadline of 13 March 2026 with a question about how to object to the settlement was provided with instructions on how to do so.

Objections

57    A total of 128 group members filed Objections with either Slater and Gordon or the Court Registry: see the Ninth Pelka-Caven Affidavit, paras 109-117.

58    One of the Objections was received after the deadline of 13 March 2026. Given the period of time over which the Notice was distributed (see above), I propose to have regard to the Objection lodged after the deadline.

59    Of the Objections lodged within time, only 23 included grounds for objecting (or involved circumstances where reasons were subsequently provided to Slater and Gordon). Copies of these Objections and the one late Objection are annexed to the Ninth Pelka-Caven Affidavit (Confidential Annexure EOPC-22:195-272). Confidential Annexure 1 to the Ninth Pelka-Caven Affidavit contains a summary of the 24 Objections where the group member provided grounds or reasons for objecting.

60    The grounds of objection set out in those 24 Objections can be categorised as follows:

(a)    Objections to the Settlement Sum: Eleven group members objected to the Settlement Sum on the basis that it does not adequately compensate group members or is otherwise insufficient.

(b)    Objections to the Deductions: Eleven group members objected to the proposed deductions on the basis that the legal fees, funders’ commission, reimbursements and/or ATE insurance costs were excessive, or that the total amount of the deductions was disproportionately high.

(c)    Objections to the Notice of Proposed Settlement: Five group members objected to the level of information in the Notice, on the basis that it was insufficient for them to determine whether the settlement was fair and reasonable.

(d)    Objections to terms of the Settlement Distribution Scheme: Five group members objected to the terms of the draft settlement distribution scheme, including group members who had been excluded from the scheme, or had concerns about the proposed apportionments as between group members.

(e)    Objections to the method of payment: One group member objected to the method of payment (i.e. payment into his superannuation account) and requested to be paid by cheque: see Confidential Annexure EOPC-22:224.

61    In the following paragraphs, I set out, by way of example, some of the Objections.

62    One group member provided the following grounds for objecting to the settlement (Confidential Annexure EOPC-22:210):

My objection is that the proposed deductions for legal fees, funding-related amounts, insurance costs, administration costs, and reimbursement payments appear excessive and disproportionate to the total settlement sum of $120 million.

In particular, I am concerned that these deductions may substantially reduce the amount available for distribution to group members and may result in some group members receiving little or no payment at all. In my view, this raises a serious question as to whether the proposed settlement is fair and reasonable and in the interests of group members.

I am also concerned that group members may have their rights extinguished under the settlement even if they receive no meaningful payment. I respectfully ask the Court to closely scrutinise the proposed deductions and to consider whether they are fair and reasonable in all the circumstances.

63    One group member provided grounds that included (Confidential Annexure EOPC-22:232-233):

Excessive proposed deductions - The proposed deductions (legal fees, funder reimbursements, ATE insurance costs and a funding commission) would consume a very large portion of the $120,000,000 Settlement Sum and materially reduce funds available to Group Members; these deductions should be reduced or closely scrutinised by the Court.

…

Relief sought: Require full, itemised disclosure and independent verification of all legal costs, funder reimbursements, ATE insurance costs and any uplift before approval; reduce any funding commission or uplift unless justified by itemised evidence; require publication of the draft SDS with worked examples and justification for any minimum threshold; require the Settlement Distributor to accept member-supplied documentary evidence to correct or supplement Respondent records.

64    One group member’s Objection included (Confidential Annexure EOPC-22:237):

Disproportionate Legal Fees: The proposed deductions for legal fees, disbursements, and funder commissions total approximately $60 million, which is 50% of the entire Settlement Sum. It is inherently unfair for the legal representatives and funders to be “handsomely remunerated” while the actual victims receive a negligible amount.

Inadequate Individual Compensation: While the Respondents are paying $120 million, the distribution to the approximately 2.5 million affected Australians results in an estimated average of only $24 per person. This amount is “laughable” and does not come close to reflecting the actual financial losses incurred by group members due to the alleged fee breaches over a 12-year period.

Lack of Transparency: The Notice sent to group members is “misleading” by omission, as it fails to disclose the total number of people in the class. Without this context, group members cannot easily understand that their individual payout will likely be less than the cost of a modest lunch, making the “success” of the litigation feel like a waste of the Court’s time.

Administrative Waste: The Applicants’ Solicitors have already flagged that they may propose a “threshold sum,” meaning many group members will receive nothing at all if their share is deemed too small to bother sending. This suggests the only guaranteed beneficiaries of this six-year legal battle are the lawyers and funders, not the people they claim to represent.

Extinguishment of Rights: It is “shameful” that group members who receive $0 (due to the threshold) or a negligible $24 will have their legal rights against the Respondents permanently extinguished.

65    The most detailed Objection is a five-page typed document (Confidential Annexure EOPC-22:258-262). The Objection contains the following summary:

2.    SUMMARY OF OBJECTION

2.1    I do not object to the settlement amount itself. My objection is limited solely to the level of legal costs and litigation funding commissions proposed to be deducted.

2.2    My concerns over the fees and commissions are summarised as follows:

(a)    their disproportionate share of the settlement fund: proposed deductions materially reduce compensation available to group members;

(b)    their disproportion to the work reasonably required: the core issues can be established largely through documentary and financial evidence;

(c)    the unusually large amount of legal labour implied: billable hours correspond to some 130,000 hours, equivalent to dozens of full-time lawyer-years;

(d)    a lack of practical control and agency of group members over costs, resulting in an absence of competitive market tension over fees and an inability to supervise or influence costs; and

(e)    the need for judicial scrutiny: limited adversarial review makes the Court’s supervision particularly important.

Applicable principles

66    Section 33V of the Federal Court of Australia Act provides:

33V    Settlement and discontinuance—representative proceeding

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

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

67    The principles applicable to an application for approval of a settlement, and for orders with respect to the distribution of the proceeds of a settlement, have been set out in many recent cases. In Janssen v OnePath Custodians Pty Ltd (No 2) [2026] FCA 291 (Janssen), Button J set out the following principles at [56]-[60]:

56    The principles in relation to s 33V are settled and have been summarised in several cases, including Camilleri v Trust Co (Nominees) Ltd [2015] FCA 1468 (Camilleri) at [5] (Moshinsky J); Webb v GetSwift Ltd (No 7) [2023] FCA 90; (2023) 165 ACSR 650 (GetSwift) at [15]–[17] (Murphy J); Kemp v Westpac Banking Corp (No 4) [2023] FCA 830 (Kemp) at [16]–[21] (O’Bryan J); and Ewok Pty Ltd as trustee for the E & E Magee Superannuation Fund v Wellard Limited [2024] FCA 296 (Ewok) at [52]–[53] (Button J).

57    In summary, the Court’s central task under s 33V(1) is to determine whether the proposed settlement is fair and reasonable and in the interests of group members as a whole, including as between group members inter se: GetSwift at [15] (Murphy J); Camilleri at [5(a)] (Moshinsky J). Under s 33V(2), the Court must determine what orders are just with respect to the distribution of settlement proceeds. That assessment is necessarily fact-specific and directed to ensuring an equitable distribution of the funds among those who have benefited from the proceeding: Kemp at [20] (O’Bryan J). There is not usually a single or clear way in which a settlement should be framed; reasonableness is a range and it is not for the Court to second-guess the commercial and forensic judgements of those who are best placed to assess whether a proceeding should be settled and on what terms, provided that the outcome is within the range of reasonable decisions: Horsky v Mesoblast Limited [2024] FCA 1509 (Horsky) at [13]–[14] (Beach J). Similarly, the Court assesses the proposed settlement mindful that, while the arrangement should be framed to achieve a broadly fair and cost-effective division of proceeds, this may involve judgement calls being made: Horsky at [16] (Beach J).

58    In undertaking its task, the Court assumes a protective role in relation to group members’ interests: Horsky at [15] (Beach J).

59    In Camilleri, Moshinsky J identified the following additional considerations:

(a)    the importance of group members receiving timely notice of the critical elements of the settlement so that they have an opportunity to take steps to protect their own position, and the relevance of the absence of objections as a consideration in support of the settlement (at [5(f)]); and

(b)    where a group member objects, whether the objector is prepared to assume the role and risks of being lead plaintiff (at [5(g)]).

60    In Kemp, at [17], O’Bryan J also noted that the Court will ordinarily consider “the terms of any advice received from counsel and from any independent expert in relation to issues which arise in the proceeding”. The Court’s Class Actions Practice Note at [15.1(a)(i)] provides that the counsel opinion provided by counsel for the applicants is ordinarily the subject of a confidentiality order.

68    In Williams v FAI Home Security Pty Ltd (No 4) [2000] FCA 1925; 180 ALR 459 at [19], Goldberg J referred to nine factors that are useful in evaluating the reasonableness of a proposed settlement. Those factors (which are reflected in the Court’s Class Actions Practice Note at [15.5]) include: the range of reasonableness of the settlement in light of the best recovery; and the range of reasonableness of the settlement in light of all the attendant risks of litigation. These factors encompass, implicitly if not explicitly, the risk that, were the matter to go to judgment, it may not be possible to recover all or part of an award of damages.

69    Section 33V(2) was recently considered by a Full Court of this Court in Levitt v Luke in his capacity as the co-executor of the estate of Luke (Deceased) [2025] FCAFC 79 (Levitt). The Full Court (Moshinsky, Button and Shariff JJ) stated:

122    … [Section] 33V(2) relevantly provides that, if the Court approves a settlement of a representative proceeding, it may make “such orders as are just with respect to the distribution of any money paid under a settlement …”. Where an application for approval of a settlement involves deductions from a settlement sum on account of legal fees, the Court will usually require justification of the fairness and reasonableness of the fees claimed, including in relation to the necessity of incurring them at all, and in relation to their proportionality having regard to the potential outcomes that were anticipated for the litigation (if it were successful): Modtech Engineering Pty Ltd v GPT Management Holdings Ltd [2013] FCA 626 at [26]–[36] (Gordon J); Camilleri at [53]–[54]. As Mortimer CJ recently observed in McDonald v Commonwealth of Australia [2025] FCA 380 at [360]–[361]:

Just as with the funder’s fee, the Court has a responsibility to scrutinise the proposed legal costs arrangements carefully. In considering the applications made to the Court for deductions, as the Deed contemplates, the Court is still performing a protective function in relation to group members: see Bolitho at [1572]–[1573]; Petersen at [88] (Murphy J); Webb v GetSwift Ltd (No 7) [2023] FCA 90; 414 ALR 500 at [15]–[16] (Murphy J); Ingram at [15] (Derrington J); Tour v Australia and New Zealand Banking Group Ltd [2024] FCA 1513 at [8] (Beach J).

The Court’s general power to award costs must be exercised in a way “that promotes the overarching purpose” of the quick, inexpensive and efficient resolution of disputes according to law set out in s 37M of the Federal Court Act: Bellamy’s Australia Ltd v Basil [2019] FCAFC 147 at [24]. The same is true when the Court is considering an approval of a deduction of costs from a settlement sum, or approval of a separate payment of costs, under s 33V. See Gill v Ethicon Sàrl (No 11) [2023] FCA 229 at [7]…

123    In making such assessments, it is necessary to bear in mind the observations made by Beach J in Blairgowrie Trading Ltd v Allco Finance Group Ltd (Receivers & Managers Appointed) (in liq) (No 3) [2017] FCA 330 (at [181]):

But what is claimed for legal costs should not be disproportionate to the nature of the context, the litigation involved and the expected benefit. The Court should not approve an amount that is disproportionate. But such an assessment cannot be made on the simplistic basis that the costs claimed are high in absolute dollar terms or high as a percentage of the total recovery. In the latter case, spending $0.50 to recover an expected $1.00 may be proportionate if it is necessary to spend the $0.50. In the former case, the absolute dollar amount as a free-standing figure is an irrelevant metric. The question is to compare it with the benefit sought to be gained from the litigation. Moreover, one should be careful not to use hindsight bias. The question is the benefit reasonably expected to be achieved, not the benefit actually achieved. Proportionality looks to the expected realistic return at the time the work being charged for was performed, not the known return at a time remote from when the work was performed; at the later time, circumstances may have changed to alter the calculus, but that would not deny that the work performed and its cost was proportionate at the time it was performed. Perhaps the costs claimed can be compared with the known return, but such a comparison ought not to be confused with a true proportionality analysis. Nevertheless, any disparity with the known return may invite the question whether the costs were disproportionate, but would not sufficiently answer that question.

See also Levitt at [135]-[136].

70    I will discuss the relevant provisions of the Legal Profession Uniform Law and the related principles later in these reasons.

Whether the proposed settlement is fair and reasonable

71    In this section of these reasons I consider whether the proposed settlement (in particular, the amount of the Settlement Sum) is fair and reasonable and in the interests of group members. In the next section of these reasons, I will consider the issue of whether the proposed settlement (in particular, the proposed distribution of the proceeds of the settlement) is fair and reasonable as between group members.

72    In considering whether the proposed settlement is fair and reasonable and in the interests of group members, I have considered the opinions expressed by counsel for the applicants in the Counsel Opinion. The opinion was prepared by four barristers (including the two barristers who appeared at the hearing of the present application). The opinion is necessarily confidential, as it expresses counsel’s opinions as to the strengths and weaknesses of the applicants’ claims in the proceeding. In the event that settlement is not approved and the proceeding continues to be tried, access to these opinions could provide an advantage to the respondents.

73    The Counsel Opinion is a detailed document which contains a thorough and careful evaluation of the strengths and weaknesses of the applicants’ claims in the proceeding, as well as other risks faced by the applicants (in particular, recoverability risks). The opinion is 117 pages in length (including two annexures) and 113 pages in length (excluding annexures). The opinion comprises 430 paragraphs. The opinion is logically structured and clearly expressed. The opinions expressed in the document are supported by cogent reasons. The fact that the trial of the proceeding (on liability) has already occurred means that the opinions are informed by having seen the case opened and the evidence unfold. I accept the opinions expressed in the Counsel Opinion.

74    Section A2 of the Counsel Opinion contains an overview of the applicants’ claims. The three categories of claims advanced at trial related to Cash Options (with a similar case in respect of Term Deposit Options), MySuper Amounts and General Amounts. Although the expression is slightly different, these three categories correspond to the three pillars of the applicants’ case at trial outlined at [28] above.

75    Section B of the Counsel Opinion sets out factual background, including a description of the Impugned Products and their features. This section also contains a discussion of the powers and duties of the Trustees.

76    Section C of the Counsel Opinion contains a description of the proposed settlement including the proposed distribution of the settlement proceeds. These matters are outlined at [38]-[51] above.

77    Section D sets out the relevant principles regarding approval of a settlement. The balance of the Counsel Opinion discusses matters relevant to whether or not the settlement should be approved, arranged under the following headings:

(a)    Section E – Complexity and duration of the litigation;

(b)    Section F – Stage of the proceeding;

(c)    Section G – Risks of establishing liability, causation, loss and damage;

(d)    Section H – Recovery risks;

(e)    Section I – Other matters; and

(f)    Section J – Fairness and reasonableness of the settlement.

78    Of the above sections, Section G is by far the most detailed, including specific consideration of the strengths and weaknesses of each of the principal claims made by the applicants in the proceeding.

79    In evaluating whether the Settlement Sum is fair and reasonable and in the interests of group members, it is relevant to consider (among other things) the prospects of success of the applicants’ claims and the dollar value of the applicants’ claims. On the basis of the Counsel Opinion, I consider that at least some of the applicants’ claims have good or very good prospects of success. On the other hand, other claims are not as strong. As already indicated, I accept the views expressed in the Counsel Opinion as to the strengths and weaknesses of the various claims.

80    The Counsel Opinion assists in forming a view as to the realistic, best-case scenario (were the applicants to succeed at trial). In para 10 of the Counsel Opinion, counsel provide the dollar value of the claims which they consider have “some prospects of success”. At the hearing of the present application, senior counsel described these amounts as “a reasonable, realistic best case in the event that the proceeding succeeds” (T9). It is apparent that the Settlement Sum is only a small fraction of the realistic, best-case scenario (were the applicants to succeed at trial).

81    Viewed purely through the lens of prospects, I would not be satisfied that the Settlement Sum is a fair and reasonable amount and in the interests of group members. However, there are other factors that are relevant in considering whether the Settlement Sum is fair and reasonable and in the interests of group members. One of these factors is the risk that the applicants would not be able to recover all or some of a successful judgment from the respondents. This factor is discussed in detail in the Counsel Opinion: see paras 13-16 and Section H (paras 366-411). [REDACTED].

82    [REDACTED].

83    [REDACTED].

84    [REDACTED].

85    [REDACTED].

86    [REDACTED].

87    [REDACTED].

88    [REDACTED].

89    Having regard to the matters discussed above, and the additional matters discussed by counsel in the Counsel Opinion, I am satisfied that the recoverability risks faced by the applicants are serious, and that this factor weighs strongly in favour of the proposed settlement being fair and reasonable and in the interests of group members.

90    Another factor that militates in favour of the proposed settlement being fair and reasonable and in the interests of group members is the certainty that a settlement brings for group members. If the applicants are successful at the liability stage of the proceeding, there would need to be a further hearing on loss. Given the scale and nature of the proceeding, it is likely that a successful judgment for the applicants would be subject to appeal. Further, given the recoverability issues discussed above, further processes would likely be needed to recover any damages.

91    Ultimately, having regard to all of the relevant factors, counsel express the opinion that the Settlement Sum is fair and reasonable and in the interests of group members (see paras 17-18 of the Counsel Opinion).

92    I have expressed the view, above, that viewed purely through the lens of prospects, I would not be satisfied that the Settlement Sum is a fair and reasonable amount and in the interests of group members. However, when consideration is given to all relevant factors, in particular the recoverability risks and the advantages of certainty, on balance, I am satisfied that the Settlement Sum and the other terms of the settlement are fair and reasonable and in the interests of group members. For these reasons, I do not accept the proposition expressed in many of the Objections that the Settlement Sum is not fair and reasonable.

93    That said, in my opinion, the settlement can fairly be described as a very disappointing outcome for group members. The Settlement Sum represents only a small fraction of the applicants’ realistic, best-case scenario, and the predominant reason for the settlement being considered fair and reasonable is the risks of recovery.

Whether the proposed settlement is fair and reasonable between group members inter se

94    I now consider whether the proposed settlement is fair and reasonable as between group members. This issue is primarily focussed on the proposed method of distribution of the net settlement proceeds (i.e. the settlement proceeds after approved deductions) as between group members.

95    As noted above, not all group members will receive compensation under the Settlement Distribution Scheme. The reasons for this are set out in the Ninth Pelka-Caven Affidavit at paras 124-129, which have been set out at [46] above. In the circumstances of this case, as there explained, I consider that the approach taken is practical and reasonable.

96    The proposed method of distribution as between group members has been outlined at [47] above. In summary, it is proposed that:

(a)    group members who have Cash and MySuper Claims will receive amounts which reflect a risk-adjusted assessment of the relative merits of the claims; and

(b)    group members who have General Amounts Claims will receive a flat fee (currently estimated to be $13 per member).

97    The proposed distribution methodology is described in more detail in the Counsel Opinion. As set out in para 154, it is proposed that:

(a)    the Group Member Settlement Amount is to be divided into three amounts based on the relative strengths of the Cash Claims, MySuper Claims and General Amounts Claims as assessed in the Counsel Opinion (Settlement Distribution Scheme, cl 6.2(a)(i));

(b)    for Cash Claims and MySuper Claims, the amounts paid to group members will be determined by reference to the apportionment formula contained in Sch 1 to the Settlement Distribution Scheme, which provides (in summary) that a group member’s entitlement is determined as a function of Claim Percentage x Deemed Balance x Discount Percentage where:

(i)    Claim Percentage is an amount determined by the Settlement Administrator; it is to reflect the value of the group member’s claims based on the difference between their actual position (e.g. the fees actually charged) and the position which the applicants contended should have occurred (e.g. the fees that should have been charged);

(ii)    Deemed Balance is the specific group member’s balance derived from the data which the respondents have provided; and

(iii)    Discount Percentage will be determined for each category based on the total claim for each category and the Group Member Settlement Amount assigned to each category; the purpose of this stage is to apportion the payout to the settlement received; and

(c)    for the General Amounts Claims, a flat sum will be distributed to each General Amounts group member for whom sufficient data exists to effect payment; that payment will be equal amongst the General Amounts group members.

98    For the purposes of step (a) above, counsel attribute percentages to represent their view as to the prospects of success of the various claims (including, where appropriate, sub-categories of claims): see paras 424-429 of and Annexure A to the Counsel Opinion. As explained during the hearing of the present application, the percentages in the last column of Annexure A that relate to the Cash Claims (i.e. the first four rows) are added together to produce a single percentage applicable to the Cash Claims; the percentage appearing in the last column of Annexure A for the MySuper Claims is used as the percentage for those claims; and the percentages in the last column of Annexure A that relate to the General Amounts Claims (i.e. the last three rows) are added together to produce a single percentage applicable to the General Amounts Claims. Those combined percentages are set out in para 430 of the Counsel Opinion. It is on this basis that it is proposed that the net settlement proceeds would be divided between the three pillars of the applicants’ case.

99    In my opinion, the proposed method of distribution as between group members appears to be logical and fair. The division of the net settlement proceeds as between the three pillars of the applicants’ case (to produce, in effect, three pools of funds) is based on a considered view as to the relative prospects of success of the various claims. The proposed methods of distribution of the three pools of funds are appropriate. Within the Cash Claims pillar, all group members are treated in a substantively equal way. Within the MySuper Claims pillar, all group members are treated in a substantively equal way. In relation to the General Amount Claims, given the very small quantum of compensation available for the relevant group members, it would not be practicable to calculate the quantum of compensation on an individual basis and a flat amount of compensation is appropriate. I note that the proposed distribution methodology has been prepared without the benefit of actuarial input. It is possible that some modifications may be required based on actuarial advice to ensure that the scheme operates as intended (see cl 6.2 of the Settlement Distribution Scheme).

100    Insofar as the settlement does not include any opportunity for review, I consider this to be appropriate as the costs of a review process would consume a disproportionate amount of the settlement proceeds.

101    Insofar as some of the Objections contended that the Notice did not provide sufficient information, it is true that the detailed percentages set out in the Counsel Opinion have not been made available to group members. However, as these percentages contain an implicit assessment of the strengths and weaknesses of various claims, I consider it was appropriate for these percentages to be omitted from the information made available to group members. The draft of the settlement distribution scheme (which was made available to group members) did, however, indicate the proposed approach to distribution of the net settlement proceeds as between group members.

102    I note that one group member objected to the method of payment (i.e. payment into his superannuation account). However, as explained at the hearing of the present application (T26), by reason of the group member’s age, the payment is required to be made to his superannuation account.

103    For these reasons, I am satisfied that the proposed settlement is fair and reasonable as between group members.

Proposed deductions

104    I will now consider whether each of the proposed deductions set out in the Proposed Orders (see [20] above) is fair and reasonable. Implicit in the Proposed Orders is that a “common fund order” should be made, in the sense that the deductions should be borne by all group members (and not only those who signed agreements with the law firms and/or the Funders). There is no real issue as to the appropriateness of adopting that approach; the issue is the extent of the proposed deductions.

Legal fees and disbursements

105    As set out above, in the Proposed Orders, the applicants seek an order that, for the purposes of the Settlement Distribution Scheme, the “Applicants’ Legal Costs” (comprising $43,673,064.44 for legal fees and disbursements and $3,622,500 for ATE insurance costs incurred by Therium) be approved. I will first consider the proposed deduction for legal fees and disbursements, and then consider the proposed deduction for ATE insurance costs.

106    One of the issues that arises in relation to the proposed deduction for legal fees and disbursements is whether Maurice Blackburn and/or Slater and Gordon failed to comply with their disclosure obligations under the Legal Profession Uniform Law.

107    Section 174 of the Legal Profession Uniform Law provides in part:

174    Disclosure obligations of law practice regarding clients

(1)    Main disclosure requirement

A law practice—

(a)    must, when or as soon as practicable after instructions are initially given in a matter, provide the client with information disclosing the basis on which legal costs will be calculated in the matter and an estimate of the total legal costs; and

(b)    must, when or as soon as practicable after there is any significant change to anything previously disclosed under this subsection, provide the client with information disclosing the change, including information about any significant change to the legal costs that will be payable by the client—

together with the information referred to in subsection (2).

(2)    Additional information to be provided

Information provided under—

…

(b)    subsection (1)(b) must include a sufficient and reasonable amount of information about the impact of the change on the legal costs that will be payable to allow the client to make informed decisions about the future conduct of the matter.

(Emphasis added.)

108    Section 178 provides in part:

178    Non-compliance with disclosure obligations

(1)    If a law practice contravenes the disclosure obligations of this Part—

(a)    the costs agreement concerned (if any) is void; and

(b)    the client or an associated third party payer is not required to pay the legal costs until they have been assessed or any costs dispute has been determined by the designated local regulatory authority; and

(c)    the law practice must not commence or maintain proceedings for the recovery of any or all of the legal costs until they have been assessed or any costs dispute has been determined by the designated local regulatory authority or under jurisdictional legislation; and

(d)    the contravention is capable of constituting unsatisfactory professional conduct or professional misconduct on the part of any principal of the law practice or any legal practitioner associate or foreign lawyer associate involved in the contravention.

(Emphasis added.)

109    These provisions were considered by Beach J in Wills v Woolworths Group Ltd [2022] FCA 1545 (Wills). His Honour held (at [28]) that a failure to comply with the disclosure obligation in s 174(1)(b) will result in the costs agreement concerned being void in terms of its operation in futuro rather than ab initio. I adopt that construction of the provisions.

110    Where a costs agreement is void pursuant to s 178(1)(a), the law practice can still recover its fair and reasonable legal costs, and these can include the payment of an uplift fee on costs the payment of which was conditional on a successful outcome: see Wills at [68].

Factual findings

111    I will now make some factual findings that are relevant both to whether Maurice Blackburn and Slater and Gordon failed to comply with their disclosure obligations under the Legal Profession Uniform Law and to the proportionality of the claimed legal fees and disbursements.

112    The findings are based in part on the affidavit of Mr Oliver Way dated 27 March 2026 (Way Affidavit) (filed by Harbour) and the affidavit of Mr Thomas McDonald dated 31 March 2026 (McDonald Affidavit) (filed by Therium). The findings are also based on the Eleventh Pelka-Caven Affidavit, which was filed after the hearing of the present application and in response to concerns that had been raised by the Court as to whether the law firms failed to comply with the Legal Profession Uniform Law and as to the proportionality of the proposed deduction for legal fees and disbursements. (The Eleventh Pelka-Caven Affidavit was the subject of corrections in the Twelfth Pelka-Caven Affidavit.)

113    I note that the principal lawyers at Maurice Blackburn responsible for the conduct of the proceeding on behalf of the applicants were Ms Rebecca Gilsenan and Mr Samuel Taylor. They did not provide any affidavits for the purposes of the present application. However, the affidavits of Ms Pelka-Caven contain some material on an “information and belief” basis, based on information provided by Mr Taylor.

114    In May 2019, Mr Alford and Mr Smith each executed a Retainer and Costs Agreement with Maurice Blackburn and a funding agreement with Harbour in relation to the proceeding: Ninth Pelka-Caven Affidavit, para 19.

115    On 25 June 2019, each of Ms Cooper and Ms Mitchell entered into a legal costs agreement with Slater and Gordon and a litigation funding agreement with Therium: Ninth Pelka-Caven Affidavit, para 29.

116    On 20 August 2019, Murphy J made orders that the two initial proceedings be consolidated. Those orders also approved joint funding terms, which were annexed at Annexure A to the orders. This was, in effect, a common fund order.

117    On 18 December 2019, following the judgment of the High Court of Australia in BMW Australia Ltd v Brewster [2019] HCA 45; 269 CLR 574, Murphy J made orders setting aside the common fund order.

118    Notwithstanding the setting aside of the common fund order, Therium and Harbour continued to fund the proceeding essentially on the same terms as the “Funding Terms” set out in Annexure A to the 20 August 2019 orders: Way Affidavit, para 60.

119    In the period 2020 to 2023, Harbour approved several amendments to the budget for legal fees and disbursements proposed by Maurice Blackburn: Way Affidavit, para 66.

120    In mid-2022, Maurice Blackburn proposed a budget increase to Harbour. This was discussed further in late 2022 and early 2023: Way Affidavit, para 67.

121    On about 4 April 2023, Harbour approved the increased budget proposed by Maurice Blackburn. The updated budget increased the allocation for solicitors, counsel and disbursements from £4.2 million ($7,372,428) to £5.5 million ($9,654,370): Way Affidavit, para 67; Confidential Exhibit OW-2:135-138, 175-182. It appears that these figures represent the budget for amounts to be paid by Harbour, rather than amounts to be paid by both Funders.

122    On 27 April 2023, Slater and Gordon provided a written budget for the proceeding to Ms Cooper and Ms Mitchell. The budget was $23,409,058 (for the whole proceeding – i.e. not just the fees charged by Slater and Gordon) (the April 2023 Budget), comprising $17,545,507 in professional fees and $5,863,550 in disbursements. In addition, the budget provided for an estimated uplift fee of $505,685.78, being 25% of the $2,022,743.12 in estimated fees that would be carried by Slater and Gordon on a ‘no win, no fee’ basis. This was the last written budget provided by Slater and Gordon to Ms Cooper and Ms Mitchell: Eleventh Pelka-Caven Affidavit, para 8.

123    On 16 May 2023, Maurice Blackburn provided the April 2023 Budget (i.e. the budget for approximately $23.4 million) to Mr Alford and Mr Smith: Eleventh Pelka-Caven Affidavit, para 13(c); Confidential Annexure EOPC-23:1-3.

124    On 26 May 2023, Therium agreed to vary the terms of engagement between Slater and Gordon and Therium for the primary purpose of increasing the funding limit: McDonald Affidavit, para 36; Confidential Exhibit TM-2:36-41. Pursuant to the revised terms (see the McDonald Affidavit, para 37):

(a)    Therium agreed to pay to Slater and Gordon 60% of the professional fees incurred and 100% of the disbursements (cl 6(c));

(b)    Therium agreed to fund up to the increased Revised Funding Limit in addition to any amounts paid in respect of security for costs; it was agreed that Therium was not obliged to pay or reimburse, whether pursuant to the litigation funding agreements or otherwise, to Slater and Gordon or any other party, any amount which exceeded the Revised Funding Limit (cl 9(c)); and

(c)    Slater and Gordon agreed to continue with the proceeding until final resolution even if the Revised Funding Limit was reached (cl 9(c)).

125    On 16 June 2023, Therium entered into amended litigation funding agreements with each of Ms Cooper and Ms Mitchell: McDonald Affidavit, para 38; Ninth Pelka-Caven Affidavit, Annexure EOPC-21:66-107.

126    In early September 2023, Maurice Blackburn flagged with Harbour that there would be a need for a further budget increase to cover developments in the proceeding not previously anticipated, including in respect of discovery, pleadings, evidence, interlocutory processes, and a longer trial than previously anticipated: Way Affidavit, para 74.

127    On 1 November 2023, Maurice Blackburn emailed Mr Alford and Mr Smith informing them that the existing $23.4 million budget was nearly exhausted and that Maurice Blackburn was in the process of preparing a new budget: Eleventh Pelka-Caven Affidavit, para 13(c).

128    On 22 November 2023, Maurice Blackburn sent an email to Harbour which, among other things, attached a total proposed budget (for 100% of the legal fees and disbursements (including GST) for the proceeding) of $34.4 million (the November 2023 Proposed Budget), which was an increase of $11 million from the existing budget of $23.4 million: Way Affidavit, para 75; Confidential Exhibit OW-2:225-229; Eleventh Pelka-Caven Affidavit, para 13(c). The increase in the budget was stated to cover various line item increases resulting from increased complexity in the proceedings, with the most significant budget increase being for costs associated with expert evidence. Ultimately, Harbour decided not to approve the whole of the increase sought by Maurice Blackburn: Way Affidavit, para 76.

129    On 18 December 2023, Maurice Blackburn emailed Mr Alford and Mr Smith informing them that a new budget was still in the process of being prepared: Eleventh Pelka-Caven Affidavit, para 13(c).

130    On 23 February 2024, Slater and Gordon provided a written budget to Therium. This was provided as part of a request for additional funding from Therium. This was the last written budget provided by Slater and Gordon to Therium: Eleventh Pelka-Caven Affidavit, para 11. However, Therium continued to receive notice of the applicants’ actual professional fees and disbursements: Eleventh Pelka-Caven Affidavit, para 12.

131    Ms Pelka-Caven gives evidence in her eleventh affidavit (at para 11) that Slater and Gordon’s 23 February 2024 budget was not provided by Slater and Gordon to Ms Cooper and Ms Mitchell because the funding request was unresolved. The funding request remained unresolved between February 2024 and the resolution of the proceeding: Eleventh Pelka-Caven Affidavit, para 11.

132    On 2 April 2024, Maurice Blackburn emailed Mr Alford and Mr Smith explaining that Harbour had only agreed to pay disbursements (as opposed to professional fees) while budget negotiations were ongoing: Eleventh Pelka-Caven Affidavit, para 13(c).

133    On 29 April 2024, Harbour agreed to a partial increase in the budget that had been proposed by Maurice Blackburn: Way Affidavit, para 78.

134    On 7 June 2024, Maurice Blackburn emailed Mr Alford and Mr Smith advising them that Harbour would indefinitely continue the arrangement of paying only disbursements: Eleventh Pelka-Caven Affidavit, para 13(c).

135    On 7 June 2025, Maurice Blackburn emailed Mr Alford and Mr Smith, informing them that Harbour had not formally approved a budget increase and attaching a copy of the November 2023 Proposed Budget. That proposed budget had not been updated since November 2023 and remained the most up-to-date budget: Eleventh Pelka-Caven Affidavit, para 13(d). Ms Pelka-Caven gives evidence in her eleventh affidavit that Mr Taylor (of Maurice Blackburn) accepts that a budget update ought to have been provided prior to June 2025 and that, when provided, should have been up to date, but he notes that the main reason for the delay was the protracted negotiations between Maurice Blackburn and Harbour regarding the approval of the November 2023 Proposed Budget (which approval was never ultimately given) and Maurice Blackburn’s desire to provide the applicants with a concluded rather than a proposed position on the budget and funding: Eleventh Pelka-Caven Affidavit, para 13(h).

136    In August 2025, during the post-trial mediation, Ms Pelka-Caven verbally informed Ms Cooper and Ms Mitchell that the amount of actual professional fees and disbursements which had been incurred on their behalf was $42 million: Eleventh Pelka-Caven Affidavit, para 9.

137    In summary:

(a)    On 27 April 2023, Slater and Gordon provided the April 2023 Budget (for approximately $23.4 million) to Ms Cooper and Ms Mitchell. That was the last written budget provided by Slater and Gordon to Ms Cooper and Ms Mitchell.

(b)    On 16 May 2023, Maurice Blackburn provided the April 2023 Budget (for approximately $23.4 million) to Mr Alford and Mr Smith.

(c)    In early September 2023, Maurice Blackburn flagged with Harbour that there would be a need for a further budget increase.

(d)    In November 2023, Maurice Blackburn provided the November 2023 Proposed Budget (for approximately $34.4 million) to Harbour.

(e)    On 7 June 2025, Maurice Blackburn provided a further written budget to Mr Alford and Mr Smith, but this was the November 2023 Proposed Budget.

Whether the law firms failed to comply with the Legal Profession Uniform Law

138    Section 174(1)(b) provides that a law practice must, “when or as soon as practicable after there is any significant change to anything previously disclosed under [s 174(1)],” provide the client with information disclosing the change. Thus, if there was a significant change to a previously disclosed estimate of the legal fees and disbursements for the proceeding, each law firm was under an obligation to disclose the change.

139    Based on the findings set out above, I consider that a significant change for the purposes of s 174(1)(b) occurred in early September 2023 (if not earlier). As set out above, in early September 2023, Maurice Blackburn flagged with Harbour that there would be a need for a further budget increase to cover developments in the proceeding not previously anticipated, including in respect of discovery, pleadings, evidence, interlocutory processes, and a longer trial than previously anticipated. I infer that, by that time, there had been a significant change in Maurice Blackburn’s estimate of the legal fees and disbursements for the proceeding. In circumstances where the two law firms were working together on the proceeding, I infer that Slater and Gordon held the same view as Maurice Blackburn. In other words, by early September 2023, there had been a significant change in Slater and Gordon’s estimate of the legal fees and disbursements for the proceeding.

140    Neither Maurice Blackburn nor Slater and Gordon disclosed that change to the applicants in early September 2023 or shortly afterwards. There is no reason to think that it was not reasonably practicable for Maurice Blackburn and Slater and Gordon to provide a revised estimate of the legal fees and disbursements to the applicants in early September 2023 or, at least, by mid-September 2023. Neither Maurice Blackburn nor Slater and Gordon have provided any evidence to suggest that it was not reasonably practicable for them to do so, the issue of their compliance with their disclosure obligations under the Legal Profession Uniform Law having been squarely raised.

141    In light of the above, I consider that, in mid-September 2023 (say, 15 September 2023), both Maurice Blackburn and Slater and Gordon failed to comply with (or contravened) their obligations in s 174(1)(b) of the Legal Profession Uniform Law. I note that there does not appear to be any real issue that Maurice Blackburn and Slater and Gordon failed to comply with their disclosure obligations in s 174(1)(b). In their supplementary submissions dated 22 April 2026, the applicants appear to accept that both law firms failed to comply with s 174(1)(b) (see paras 8-10) (although the submissions do not refer to a particular date upon which the failure to comply occurred). Although Maurice Blackburn provided updates and information to Mr Alford and Mr Smith at various times, it does not appear to be suggested that these were sufficient to comply with s 174(1)(b).

142    It is, of course, quite unsatisfactory that the two law firms failed to comply with their disclosure obligations under the Legal Profession Uniform Law. The obligations are important and exist for obvious reasons. Moreover, the change to the previous estimate of the legal fees and disbursements was likely to have been very large (given the scale of the proceeding and the matters flagged by Maurice Blackburn with Harbour in early September 2023).

143    Section 178(1)(a) provides that if a law practice contravenes the disclosure obligations in the relevant Part (which includes s 174), the costs agreement concerned (if any) is void. I therefore conclude that, by reason of Maurice Blackburn’s contravention of s 174(1)(b), from 15 September 2023, its costs agreements with Mr Alford and Mr Smith were void. I also conclude that, by reason of Slater and Gordon’s contravention of s 174(1)(b), from 15 September 2023, its costs agreements with Ms Cooper and Ms Mitchell were void.

144    As noted above, where a costs agreement is void pursuant to s 178(1)(a), the law practice can still recover its fair and reasonable legal costs and these can include the payment of an uplift fee. In the next section of these reasons, I will consider whether the legal fees and uplift fees claimed are fair and reasonable. It is therefore not necessary to consider that issue here.

Whether the legal fees and disbursements are proportionate

145    I now consider whether the claimed legal fees and disbursements are fair and reasonable. This includes a consideration of the issue raised by the Court at the hearing of the application, namely whether the claimed legal fees and disbursements are proportionate to the nature and scope of the proceeding. This concern was raised because, on the face of things, the amount claimed seemed extraordinarily high. The concern was also raised because many of the Objections contended that the proposed deduction for legal fees and disbursements was excessive.

146    I note at the outset that the fact that (as I have found) both law firms failed to comply with their disclosure obligations under the Legal Profession Uniform Law tends to suggest that they lost sight of the fact that the applicants were their clients and the applicants had an important role in monitoring (on behalf of group members) the legal fees and disbursements that were proposed to be incurred. That role of the applicants was particularly important where (as here) it was proposed that the applicants would seek a common fund order, with the effect that the legal fees and disbursements would be borne by all group members (not only those who had signed agreements with the law firms). Further, it is noteworthy that, as detailed above, from November 2023 onwards, the Funders refused to approve increases in the budget for legal fees and disbursements that were proposed by the law firms. Thus, for a considerable period of time, the law firms were conducting the proceeding in circumstances where the budget for their fees and the disbursements had not been approved by the applicants or the Funders.

147    In the Supplementary Costs Report, at para 6, the Costs Referee sets out a summary of her opinions as to the reasonable legal costs and disbursements. The Costs Referee sets out two alternative figures, depending on whether there is a reduction in respect of duplicative work carried out by the law firms before the consolidation of the two proceedings. It is convenient to deal with the issue of whether there should be such a reduction at the outset. In my opinion, at the time the pre-consolidation work was carried out by each law firm, there was a proper basis for it to be carried out. Accordingly, I do not consider it necessary to make a reduction in respect of pre-consolidation work. I therefore put that issue to one side and proceed on the basis of the Costs Referee’s figures without a reduction in respect of pre-consolidation work.

148    For ease of expression, I will omit cents (and round to the nearest dollar) in the figures set out in this section of these reasons.

149    I will now address each of the alleged errors raised by the applicants in their outline of submissions dated 30 March 2026, including a consideration of the Costs Referee’s response to those contentions in the Supplementary Costs Report, and the applicants’ further supplementary submissions dated 5 June 2026 in response to the Supplementary Costs Report.

150    The first alleged error was that the Costs Referee is said to have misstated Slater and Gordon’s claim for an uplift fee on fees it carried on a ‘no win, no fee’ basis (applicants’ 30 March 2026 submissions, paras 46-51). The Costs Referee states in the Costs Report that Slater and Gordon’s claim for an uplift fee was $1,030,301. The applicants contend that, in fact, the claimed uplift fee is $1,858,634. The applicants submit that the error appears to have occurred because the Costs Referee misconstrued the terms of the relevant legal costs agreement. The applicants submit that Slater and Gordon was entitled to charge a 25% uplift fee on 100% of the professional fees it carried on a ‘no win, no fee’ basis (including the fees it carried once the Revised Funding Limit was reached). In the Supplementary Costs Report, at paras 7-11, the Costs Referee explains that, prior to finalisation of the Costs Report, she sought clarification from Slater and Gordon of the basis for the claimed uplift fees and received emails in response (Annexure A to the Supplementary Costs Report) which confirmed the figure of $1,030,301. It was on the basis of Slater and Gordon’s email response that she adopted that figure. In my view, the applicants’ position on this issue should be accepted. While the email annexed to the Supplementary Costs Report supports the figure adopted by the Costs Referee, the email appears to have been merely a calculation based on a premise which the Costs Referee had provided (namely that the uplift was payable on only 40% of the fees). Accordingly, I accept that the dollar amount of Slater and Gordon’s claimed uplift fee is $1,858,634 (which is $828,333 more than provided for by the Costs Referee).

151    The second alleged error is that there is an arithmetic error in the proposed “Shimshon Adjustment”. This relates to Table 10 in the Costs Report, where $338,000 was deducted instead of $33,800 (being the figure in the second last row of the table). In the Supplementary Costs Report, the Costs Referee accepts that this was an error and adjusts for it (which has the effect of increasing the allowance for counsel’s fees).

152    The third alleged error is that there are unexplained deductions for trial costs. This relates to Table 6 in the Costs Report. It is said that there is an unexplained deduction of $142,201 plus GST for “Preparation for Trial”. In the Supplementary Costs Report, the Costs Referee accepts that this was an error and adjusts for it.

153    The fourth alleged error relates to a deduction for costs which the Costs Referee considered involved “Unreasonable time” by reason of (for example) duplication of work between the two law firms and duplication or unreasonable work by reason of the number of fee earners involved in document preparation. In Section N.6 (paras 212-217) of the Costs Report, the Costs Referee made an overall deduction of 5% to accommodate this issue. In their submissions dated 30 March 2026, the applicants submit that, in Section L of the Costs Report, the Costs Referee had already reviewed the work done during each phase of the proceeding for duplication and had made adjustments for duplication. Accordingly, the applicants submit, there was a double reduction problem. Further, the applicants point to a discrepancy between the overall reduction of 5% (referred to in para 217 of the Costs Report) and the figures for “Unreasonable time” in Table 8 of the Costs Report (a percentage reduction of 0.10% in the third column and a dollar amount reduction of 1% in the fourth column). In the Supplementary Costs Report, the Costs Referee says that the deductions in Sections N.2 to N.9 of the Costs Report are intended to be in addition to the adjustments dealt with earlier in the Costs Report. Accordingly, she says that there is no problem of double reductions. The Costs Referee deals with the reduction for “Unreasonable time” at paras 32-43 of the Supplementary Costs Report. She explains that the 1% reduction in Table 8 is a reduction to the balance of fees after previous adjustments. She states that she remains of the view that that reduction is appropriate. The applicants do not appear to challenge that reduction in their further supplementary submissions dated 5 June 2026. I will therefore proceed on the basis that the Costs Referee’s intended reduction for “Unreasonable time” is a reduction of 1% on the balance of fees after previous adjustments, rather than the 5% figure in Section N.6 (at para 217) of the Costs Report.

154    The fifth alleged error relates to two other adjustments in Table 8 of the Costs Report, namely the adjustments for “Single Unit Time Entries” and “Internal conferrals”. The topic of “Single Unit Entries” is dealt with in Section N.4 of the Costs Report, which concludes (at para 200) with an overall reduction of 5%. The topic of “Internal conferrals” is dealt with in Section N.5, which concludes (at para 211) with an overall reduction of 3% for this issue. However, the figures in Table 8 of the Costs Report relating to each of these matters are a percentage reduction of 0.1% (in the third column) and a dollar amount reduction of 1% (in the fourth column). I will deal separately with the two aspects of this alleged error.

(a)    In the Supplementary Costs Report, the Costs Referee deals with the “Single Unit Time Entries” issue at paras 20-22. She accepts that there is an apparent inconsistency between the 5% reduction in para 200 and the reduction in Table 8 for this matter. She states that, at Table 8, she applied a 1% discount to the previously discounted costs to take into account the fact that a proportion of the entries would have been accommodated in the earlier, phase adjustments. On reflection, she considers that 1% is too high a reduction, and she proposes instead to make no reduction for this issue.

(b)    In the Supplementary Costs Report, the Costs Referee deals with “Internal conferrals” at paras 23-31. She accepts that there is an apparent inconsistency between the figures in the Costs Report. She states in para 31 of the Supplementary Costs Report that in Table 8 she applied a 1% discount to the previously discounted costs to take into account the fact that a proportion of the internal work was accommodated in earlier adjustments. I take from this that the Costs Referee’s intended adjustment for “Internal conferrals” is a reduction of 1% of the balance of previous adjustments, rather than the 3% figure in Section N.5 (para 211) of the Costs Report. The applicants do not appear to challenge the 1% reduction in their further supplementary submissions. I will therefore proceed on the basis that the Costs Referee’s intended reduction for “Internal conferrals” is a reduction of 1% on the balance of the previous adjustments.

155    Having made the adjustments discussed above, the Costs Referee sets out (in Table 1 of the Supplementary Costs Report) revised figures for “allowed costs”. The summary in Table 1 includes (with the addition of a total figure for the “Actual Costs” column):

156    In their further supplementary submissions dated 5 June 2026, the applicants submit at para 7 that the Court should increase the above amount of $42,194,731 by $828,333 (to reflect the correct amount of the uplift fee claimed by Slater and Gordon). This produces the amount of $43,023,064. Although less than previously sought, the applicants indicate that they are content with the lower figure. To that amount, the applicants add $650,000 for the costs of a deed of indemnity paid by Therium. This produces $43,673,064, being the amount sought in the Proposed Orders.

157    I accept that the actual costs for “Projected costs to conclusion of the settlement approval” ($585,799) and for “Costs of the reference” ($68,187), as recorded in Table 1 of the Supplementary Costs Report, are fair and reasonable.

158    I will now consider whether the other amount claimed for legal fees and disbursements (including uplift) (i.e. $42,369,078, being the figure of $41,540,745 allowed by the Costs Referee (see Table 1 of the Supplementary Costs Report) plus $828,333 to reflect the correct amount of the uplift fee claimed by Slater and Gordon) is fair and reasonable.

159    Insofar as the applicants’ claim for legal fees and disbursements includes uplift fees, the amounts claimed are approximately $899,438 claimed by Maurice Blackburn (see Table 5 in the Supplementary Costs Report) and $1,858,634 claimed by Slater and Gordon (being the figure discussed at [150] above). There is no direct evidence that these figures are fair and reasonable. While the Costs Referee expresses a view that the rates (for legal work) set out in the costs agreements are within the range of reasonable rates for complex class actions (para 101 of the Costs Report), she says it is “a matter for the Court” as to whether an uplift fee is to be allowed (para 102 of the Costs Report). She does not express a view that the uplift fees are fair and reasonable.

160    The claimed legal fees and disbursements are significantly higher than the estimates or budgets provided by the law firms to the applicants or the Funders during the course of the proceeding. The key budgets and estimates covered in the evidence are as follows:

(a)    On 27 April 2023, Slater and Gordon provided the April 2023 Budget for the proceeding to Ms Cooper and Ms Mitchell. This was $23,409,058 (for the whole proceeding – i.e. not just the fees charged by Slater and Gordon), comprising $17,545,507 in professional fees and $5,863,550 in disbursements. In addition, the budget provided for an estimated uplift fee of $505,686, being 25% of the $2,022,743 in estimated fees that would be carried by Slater and Gordon on a ‘no win, no fee’ basis.

(b)    On 16 May 2023, Maurice Blackburn provided the April 2023 Budget (i.e. the budget for approximately $23.4 million) to Mr Alford and Mr Smith.

(c)    On 22 November 2023, Maurice Blackburn sent an email to Harbour with the November 2023 Proposed Budget. This proposed a total budget of $34.4 million for 100% of the legal fees and disbursements, which was an increase of $11 million from the existing budget.

161    On the basis of the November 2023 Proposed Budget, I infer that, as at November 2023, a reasonable estimate of the legal fees and disbursements for the proceeding (not including uplift fees) was $34.4 million. I draw this inference notwithstanding that the budget was not approved by Harbour.

162    The issue of whether the claimed legal fees and disbursements are proportionate was specifically raised at the hearing of the application. The applicants were given the opportunity to file further evidence and submissions about this issue. The applicants subsequently filed the Eleventh and Twelfth Pelka-Caven Affidavits. This issue is addressed in paras 21-24 of the Eleventh Pelka-Caven Affidavit. In those paragraphs, Ms Pelka-Caven states that the amount claimed by the applicants (for legal fees and disbursements) is about 36% of the Settlement Sum. Ms Pelka-Caven states that, in her experience, 36% is within the range of proportionate legal costs for a consolidated class action of this size and complexity that ran for seven years and settled following a trial of preliminary issues on liability. Ms Pelka-Caven refers to the percentages in a number of other cases (with the figures corrected in her twelfth affidavit). The approach taken in Ms Pelka-Caven’s affidavits suffers from the weakness identified by Beach J in Blairgowrie Trading Ltd v Allco Finance Group Ltd (Receivers & Managers Appointed) (in liq) (No 3) [2017] FCA 330; 343 ALR 476 (Blairgowrie Trading) at [181] (set out in the quotation from Levitt at [69] above), in that it looks at the matter with the benefit of hindsight rather than looking to the expected realistic return at the time the work was carried out. Despite the Court specifically raising proportionality as an issue, Ms Pelka-Caven does not provide any evidence explaining why, at the time the legal work was carried out, it was considered necessary and appropriate and proportionate to carry out that work. Further, despite the discussion at the hearing of the difference between the estimates or budgets and the proposed deduction of $43.1 million for legal fees and disbursements (see T44, T64-65, T88-89), Ms Pelka-Caven does not provide any evidence explaining why the estimates or budgets were exceeded by many millions of dollars.

163    Having regard to the matters discussed above, I am not satisfied that the other amount claimed for legal fees and disbursements (including uplift) (i.e. $42,369,078) is fair and reasonable. First, insofar as the claimed amount includes uplift fees, as stated above, there is no direct evidence that the uplift fees are fair and reasonable. Secondly, in comparison with the estimates or budgets provided by the law firms to the applicants or Funders, it is difficult to see how the legal fees and disbursements can be considered fair and reasonable. Thirdly, the issue of the proportionality of the fees and disbursements having been specifically raised, the further evidence provided by the applicants does not provide cogent evidence to explain why the work was considered necessary and appropriate and proportionate at the time that the work was carried out. In light of these matters, I am only prepared to accept that an amount of $38.5 million for other legal fees and disbursements is fair and reasonable (rather than the claimed amount of $42,369,078). I have arrived at the $38.5 million figure by starting with the November 2023 Proposed Budget of $34.4 million and then increasing this upwards to $38.5 million to allow for changes in the legal work that was required to be carried out. In forming the view that $38.5 million is a fair and reasonable amount, I have taken into account the complexity and long duration of the proceeding and the fact that the matter went to trial. I have approached the question of what amount is fair and reasonable and proportionate from the perspective of the time when the legal work was carried out rather than in hindsight based on the settlement, in accordance with Blairgowrie Trading at [181]. In the absence of direct evidence that the claimed uplift fees are fair and reasonable, I have not allowed any amount for uplift fees in the $38.5 million figure.

164    To the extent that the Costs Referee expressed a view that a higher amount was fair and reasonable, I respectfully disagree with her. In my opinion, she did not have sufficient regard to the proportionality of the fees, assessed at the time the legal work was carried out, and to the other matters discussed above.

165    I will now consider the amount of $650,000 paid by Therium for the deed of indemnity. If approved, this amount would be paid to Therium by way of reimbursement of this expense (which forms part of its “project costs”, as referred to in its submissions (para 48) and in other documents). No equivalent amount is sought by Harbour. In the McDonald Affidavit at para 44(b), it is stated that Therium paid $650,000 to acquire deeds of indemnity to meet security for costs orders made against the applicants. Further details are provided in paras 45-46 of that affidavit. In the circumstances of this case, I am satisfied that the proposed deduction for deed of indemnity costs is reasonable and proportionate. As submitted by Therium at para 68 of its submissions, an order that Therium be reimbursed for its security for costs expenses will mean that “group members who will share in the fruits of the settlement will pay a share of the … costs of obtaining the settlement”.

Conclusion on legal fees and disbursements

166    In summary:

(a)    I approve the deductions for “Projected costs to conclusion of the settlement approval” ($585,799) and for “Costs of the reference” ($68,187).

(b)    I approve an amount of $38.5 million for other legal fees and disbursements.

(c)    I approve the proposed deduction of $650,000 for the costs of the deed of indemnity.

This produces a total of $39,803,986.

ATE insurance costs

167    The Proposed Orders seek approval of a deduction of $3,622,500 for ATE insurance costs incurred by Therium. No corresponding deduction is sought by Harbour.

168    Details of the ATE insurance taken out by Therium are set out in the McDonald Affidavit at paras 47-72. Mr McDonald states at para 68 of that affidavit that the acquisition of the ATE policy (referred to in para 59 of the affidavit) served two purposes as there set out.

169    Mr McDonald refers at para 69 of the McDonald Affidavit to the way in which the premium for the ATE policy is treated by Therium.

170    At para 72 of his affidavit, Mr McDonald states that, based on his experience negotiating litigation funding agreements and his knowledge of Therium’s business, it is his belief that without ATE insurance Therium would have required a higher funding commission under the funding agreements to reflect Therium’s considerably higher risks – namely:

(a)    Therium would have been exposed to considerable adverse costs risk at a level it was not assuming at the time it made the investment; and

(b)    it is likely that significant further capital would have been required to be committed by Therium to satisfy security for costs sought by the respondents.

171    In Janssen, Button J considered the cases relating to ATE insurance-related costs at [147]-[163]. That passage included:

152    In Perera v Getswift Ltd [2018] FCA 732; (2018) 263 FCR 1, Lee J set out, at [195], the principle that, in assessing the reasonableness of a funder’s remuneration, it is the total amount to be paid to the funder, including any ATE insurance costs, that is relevant, rather than any individual component assessed in isolation (the aggregate principle). The aggregate principle was then adopted by Black J in Williamson v Sydney Olympic Park Authority [2022] NSWSC 1618 (Williamson) at [83]. Referring to Williamson, in Ghee v BT Funds Management Ltd [2023] FCA 1553 (Ghee), Murphy J, at [150], stated:

In my view there is no real difficulty with approaching the issue on the basis proposed in Williamson. The question can be boiled down to whether the combined amount of the proposed funding commission and ATE costs is reasonable and proportionate. Indeed, that was the effect of the approach I took in Petersen and in Spotless.

…

163    Having regard to this case law, the following points may be noted:

(1)    Where an entity funds the conduct of a case in a way that includes taking on the risk of adverse costs orders and is rewarded for taking on that risk, allowing a deduction for the costs of ATE insurance in addition to the reward for risk is increasingly seen as “double-dipping” and the deduction is often not approved. However, if having regard to the aggregate to be paid to the funder of a class action — both commission and any additional deductions — shows that the aggregate return for risk is still reasonable, deductions over and above the commission may be approved, or a combined total may be approved. On these points, see: Spotless at [96]–[97] (Murphy J); Asirifi-Otchere v Swann Insurance (Aust) Pty Ltd (No 3) [2020] FCA 1885; (2020) 385 ALR 625 (Asirifi) at [32]–[33] (Lee J); Bradshaw v BSA Ltd (No 2) [2022] FCA 1440 (Bradshaw) at [161]–[162] (Bromberg J); Ghee at [147]–[155] (Murphy J); Krieger at [121]–[124], [155]–[156] (Murphy J); Williamson at [83]–[87] (Black J).

(2)    Taking on the risk of adverse costs orders is seen as part of the core function of third-party litigation funding arrangements: Asirifi at [32] (Lee J); Ghee at [147(d)] (Murphy J).

…

(4)    What is communicated to group members is important, including in relation to what they are told about who is taking on what risk, and what the rewards for taking on the risks are: Camilleri at [5(f)] (Moshinsky J); Williamson at [9]–[11], [49], [63], [84] (Black J).

172    In Challenor v QSuper Board [2026] FCA 617 (Challenor), Button J stated at [61]:

Where an ATE insurance policy has been obtained and the funder seeks recovery of ATE insurance-related costs from the settlement sum, the authorities make clear that the Court should examine the aggregate funding burden to be borne by group members, rather than only considering particular components in isolation (the aggregate principle). As I observed in Janssen at [152]ff, drawing on Perera v GetSwift Ltd [2018] FCA 732; (2018) 263 FCR 1 at [195] (Lee J), among a number of other cases, the appropriate enquiry is whether the combined amount to be paid by group members — including any funding commission and any ATE insurance-related deductions — is reasonable and proportionate in all the circumstances. That aggregate approach provides the appropriate framework within which concerns about “double-dipping” may arise, where a funder seeks both to justify its remuneration by reference to matters that include adverse costs exposure and to pass on, as a separate deduction, the costs of defraying that very risk through ATE insurance (see the discussion of “double-dipping” in Janssen at [154]ff).

(Emphasis added.)

173    The aggregate of the proposed dollar amount deduction for funding commission to Therium ($7,250,643.58) and the ATE insurance-related costs ($3,622,500) is $10,873,143.58. This represents approximately 18% of $60 million (being half of the Settlement Sum, reflecting Therium’s contribution). Further, the evidence in the McDonald Affidavit establishes that Therium likely retained a residual liability for an adverse costs order: see para 71 of the McDonald Affidavit. Having regard to these matters, I consider the aggregate amount of $10,873,143.58 to be reasonable and proportionate in the circumstances. I therefore approve the proposed deduction of $3,622,500 for ATE insurance-related costs.

Funding commission

174    The Proposed Orders seek approval of deductions for funding commission in the amount of $7,250,643.58 for each Funder (a total of $14,501,287.16). The total amount represents 20% of the net proceeds (i.e. the Settlement Sum after deduction of all other deductions set out in the Proposed Orders). The litigation funding agreements with each Funder provide for a funding commission of 20% of net proceeds if there is a settlement below a certain amount. The proposed settlement is below that threshold, so the applicable percentage under the litigation funding agreements is 20%. The parties have proceeded on the basis that the total funding commission is to be split equally between the two Funders.

175    In the event that the Court reduces the other deductions set out in the Proposed Orders (with the result that the amount of the net proceeds is greater than assumed in the Proposed Orders), the Funders seek a funding commission that represents 20% of the net proceeds. In other words, in that event, they seek a greater dollar amount.

176    Harbour has provided evidence of its decision-making process in agreeing to fund the litigation, the litigation risks and its exposure, and the return multiple represented by the proposed funding commission compared with the return multiple in its modelling: see the Way Affidavit, paras 28-42, 92-97, 103-106. Mr Way expresses the view in para 105(f) that the total proposed return to Harbour represents a return multiple which is significantly less than the return multiple that Harbour had modelled for a late settlement of the proceeding at the time of the 2019 investment proposal.

177    Similarly, Therium has provided evidence of its decision-making process in deciding to fund the litigation, its provision of security for costs, its indemnity for adverse costs orders, and Therium’s return on its investment using three metrics (multiple on invested capital, internal rate of return and return on invested capital) under various settlement approval scenarios: see the McDonald Affidavit, paras 25, 45-82. Mr McDonald expresses the view at para 82 that the estimated ranges of return under the various settlement approval scenarios set out in his affidavit are materially below both Therium’s return expectations and (in his experience) the return thresholds ordinarily required by professional litigation funders for investments of this duration, risk profile and illiquidity.

178    In Challenor, Button J set out the following principles relating to deductions for funding commission:

56    Where, as part of a proposed settlement distribution, orders are sought providing for a litigation funder to receive a funding commission (including on a settlement common fund order (CFO) basis), the relevant enquiry is whether the orders sought are “just” within the meaning of s 33V(2) of the Act: Kain v R&B Investments Pty Ltd [2025] HCA 28; (2025) 99 ALJR 1138 (Kain) at [10], [19] (Gageler CJ); see also at [70]–[74] (Gordon, Steward, Gleeson and Beech-Jones JJ).

57    The Court’s supervision of litigation funding charges recognises that funding commissions are often the largest single deduction from group members’ recoveries and are negotiated in circumstances of information asymmetry: Money Max at [72] (Murphy, Gleeson and Beach JJ). That supervision is directed to ensuring an appropriate and proportionate reward for the risk assumed, not to driving funding rates to the lowest possible level: Ghee v BT Funds Management Ltd [2023] FCA 1553 at [128] (Murphy J), citing Kuterba v Sirtex Medical Limited (No 3) [2019] FCA 1374 at [12] (Beach J) and Endeavour River Pty Ltd v MG Responsible Entity Limited [2019] FCA 1719 at [29] (Murphy J).

58    In determining whether it is “just” to make such an order (and if so, at what rate), the Court undertakes a commonsense evaluative assessment informed by the factors identified by the Full Court in Money Max at [80] (Murphy, Gleeson and Beach JJ). Those considerations include:

(a)    the terms of any funding agreement;

(b)    the litigation risks involved in providing funding in the proceeding;

(c)    the risk and quantum of any adverse costs exposure assumed by the funder;

(d)    the legal costs expended, and any security for costs provided, by the funder;

(e)    the amount of any settlement or judgment (to facilitate an assessment of whether the aggregate commission is proportionate to the risks assumed);

(f)    the extent to which group members were informed of the value and form of the commission sought, and the mechanism by which it would be payable;

(g)    any substantial objections raised by group members to the proposed funding charges;

(h)    the extent to which astute or sophisticated group members agreed to the funding terms;

(i)    a comparison with the funding commission rates in other representative proceedings and what is generally available in the market; and

(j)    the likely recovery to group members “in hand” under any pre‑existing funding arrangements.

59    As the Full Court made clear in Money Max, the considerations relevant to the approval of a funding commission are not fixed or exhaustive, but depend upon the circumstances of the particular case and are matters for the Court hearing the approval application: Money Max at [80] (Murphy, Gleeson and Beach JJ). Central among them, however, will ordinarily be the financial risk undertaken by the funder, assessed prospectively: Money Max at [82(d)]; Galactic Seven Eleven Litigation Holdings LLC v Davaria [2024] FCAFC 54; (2024) 302 FCR 493 (Galactic) at [157] (Colvin J). That prospective assessment necessarily requires vigilance against hindsight bias, as Edelman J (in dissent) emphasised in BMW Australia Ltd v Brewster [2019] HCA 45; (2019) 269 CLR 574 (Brewster) when observing that “risk at the time of agreement should be assessed by reference to the circumstances prevailing at the time of agreement — not at the conclusion of the proceedings”: at [221]. The Court’s assessment of that risk may be informed by contemporaneous material, including confidential opinions of counsel, or by objective aspects of the risk assumed, as identified by the funder, but not, ordinarily, by the funder’s own subjective assessment of that risk: Galactic at [158] (Colvin J).

60    Relatedly, the discretion conferred by s 33V(2) is not to be construed narrowly. As was observed by Beach J in Elliott-Carde v McDonald’s Australia Ltd [2023] FCAFC 162; (2023) 301 FCR 1 (Elliott-Carde) at [103], the requirement that an order be “just” must be understood in light of the statutory purpose of Pt IVA of the Act, including facilitating access to justice by making the prosecution of relatively low-value claims economically viable.

179    In my opinion, the proposed dollar amount deductions for funding commission are fair and reasonable in the circumstances of this case. I am satisfied that the total amount ($14,501,287.16) is within the range of reasonable funding commissions and represents an appropriate and proportionate reward for the risk assumed. This remains the case even if the other deductions sought by Therium ($650,000 for deed of indemnity costs and $3,622,500 for ATE insurance-related costs) are taken into account. The inclusion of those amounts produces a total of $18,773,787.16, which is approximately 16% of gross settlement proceeds. I therefore approve the proposed dollar amount deductions for funding commission.

180    However, I am not satisfied that it is fair and reasonable for a greater amount to be paid to the Funders. Although I have reduced the proposed deduction for legal fees and disbursements, I consider it appropriate for group members to receive the full benefit of that reduction. While I accept that the return to the Funders from the litigation is relatively low, I consider that the proposed dollar amount deductions for funding commission represent a sufficient return for the Funders in all of the circumstances. Accordingly, I reject the Funders’ contention that the funding commission should reflect 20% of net proceeds (in the event that the net proceeds are greater than assumed in the Proposed Orders).

Proposed payments to the applicants and sample group members

181    The applicants seek payments of $40,000 for each of the four applicants and $20,000 for each of the two sample group members.

182    The evidence in support of these proposed deductions is set out in the Ninth Pelka-Caven Affidavit at paras 151-167. Ms Pelka-Caven states at para 154 that a substantial portion of the time devoted by the applicants and the sample group members to this litigation was expended for the benefit of all group members; the time and attention devoted by the applicants significantly exceeded what would ordinarily have been required had the proceeding been conducted solely for their own benefit; in addition, the applicants were exposed to inconvenience and stress inherent in acting as representative applicants in a lengthy and complex representative proceeding, including initially being required for cross-examination for which they prepared, until that request was no longer pursued during the trial.

183    At para 155 of that affidavit, Ms Pelka-Caven provides details of the employment status of the applicants and sample group members. It appears that three of them are retired.

184    At para 156, Ms Pelka-Caven outlines the range of tasks undertaken by the applicants for the benefit of group members.

185    At para 157, Ms Pelka-Caven states that the applicants and the sample group members acted conscientiously and diligently in performing their roles and in discharging their responsibilities to group members; they also devoted considerable time to remaining informed about developments in the proceeding beyond the time required merely to provide instructions.

186    In paras 159 and 160, Ms Pelka-Caven refers to (a) the fact that the proceeding has been on foot since 2019, a period approaching seven years; and (b) the fact that the proceeding progressed to trial, which required substantial preparation on the part of the applicants and sample group members.

187    While Ms Pelka-Caven describes the proposed deductions as “reimbursement” payments, it is unclear whether the applicants and sample group members incurred expenses themselves. The affidavit does not provide any details of expenses incurred by the applicants and sample group members or of lost income. The overall impression is that the proposed deductions are largely intended to recognise and reflect the time and effort that the applicants and sample group members devoted to the proceeding for the benefit of group members.

188    Ms Pelka-Caven states in para 162 of her ninth affidavit that she has not attempted to itemise the time spent by each applicant and sample group member in performing their role. It follows that the proposed amounts of $40,000 and $20,000 do not represent a calculation based on the time spent by each applicant or sample group member multiplied by a particular hourly rate. Rather, they represent an amount which Ms Pelka-Caven considers to be reasonable (see paras 163 and 166 of that affidavit).

189    In the circumstances of this case, I am not satisfied that the amounts of the proposed payments to the applicants and sample group members are appropriate. While I accept that some payments to the applicants and sample group members are appropriate (to recognise and reflect their contribution to the proceeding for the benefit of group members), in the context of a very disappointing settlement and the very small amounts that are to be paid to group members, I consider that payments in the amounts of $40,000 to each applicant and $20,000 to each sample group member are excessive. I consider that appropriate amounts in all the circumstances are $20,000 for each applicant and $10,000 for each sample group member.

Settlement administrator’s fees and expenses

190    It is proposed that there be a deduction of $198,000 for the settlement administrator’s fees and expenses. The evidence in support of this deduction is at paras 168-173 of the Ninth Pelka-Caven Affidavit. I consider this deduction to be fair and reasonable.

Conclusion

191    For these reasons, I have reached the conclusions set out at [24] above. At this stage, I will make an order that the applicants (having consulted with the other parties and the Funders) provide to my chambers a proposed minute of orders to give effect to these reasons.

Associate:

Dated:    16 July 2026

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