Federal Court of Australia

Thomas v Commonwealth Financial Planning Limited (No 2) [2026] FCA 1261

ORDERS

OTHER MATTERS

A.    Unless otherwise indicated, capitalised terms in these orders have the same meaning as in the Third Further Amended Statement of Claim filed on 10 October 2023 (3FASOC) or in the orders made by Beach J on 16 December 2024 (as amended by order 1 of the orders made on 20 January 2025, and orders 1(a) and 6 of the orders made on 23 May 2025) (the December 2024 Orders).

B.    “Business Day” means a day on which banks are open for business in Sydney, New South Wales other than a Saturday, Sunday or public or bank holiday in Sydney, New South Wales.

C.    “Registered Persons” means:

(a)    persons who had registered with Shine Lawyers in connection with this proceeding as at 16 December 2024 (regardless of whether they had signed a costs agreement or completed a Registration Form); and

(b)    persons who completed a Registration Form by the Class Deadline.

D.    “Registration Form” means the registration form set out in Schedule 1 to the Existing Clients Communication, which could be completed:

(a)    online at the Registration Portal (comminsureclassaction.enterclaim.com); or

(b)    as a hard copy form and returned to the Applicants’ solicitors by email or post to the addresses listed in the Existing Clients Communication.

E.    “Late Registration” means:

(a)    a late registration form completed online on Shine’s website; or

(b)    a hard copy Registration Form,

received by the Applicants’ solicitors after the Class Deadline but before the Registration Deadline.

THE COURT ORDERS THAT:

1.    Pursuant to section 33V of the Federal Court of Australia Act 1976 (Cth) (the Act), the Court approves the settlement of the proceeding on the terms agreed with the Respondents, as set out in the Deed of Release and Settlement, which took effect on 6 March 2026 (the Settlement Deed), as exhibited to the affidavit of Craig Richard Allsopp sworn 10 July 2026 at Tab 1 (pages 1 to 29) of Confidential Exhibit CRA-7, including any amendment in the form of the Amendment Deed at Annexure JAC-1 to the affidavit of James Angus Campbell dated 29 July 2026 (Amendment Deed).

2.    Pursuant to sections 33V and 33ZF of the Act, any:

(a)    Group Member (who is not a Deemed Registrant) who:

(i)    has not completed a Registration Form by 29 August 2025 (the Class Deadline);

(ii)    is not a person identified in Confidential Annexure A submitted to the chambers of Beach J on 27 August 2026 (Confidential Annexure A); or

(iii)    has not opted out in accordance with order 16 of the December 2024 Orders; or

(b)    New Clients who:

(i)    have not completed and submitted a Late Registration or have not completed a registration form online at the Registration Portal by the Registration Deadline (4pm AEST on 11 June 2026); or

(ii)    are not persons identified in Confidential Annexure A; or

(iii)    have not opted out in accordance with order 16 of the Court’s orders dated 16 December 2024; or

(c)    Registered Person (who is not a New Client) who has not answered questions 4 and 5 in “Part B: Questions to help determine if you are a Group Member (Mandatory Fields)” of the Registration Form by the Registration Deadline (4pm AEST on 11 June 2026) or opted out in accordance with order 16 of the Court’s orders dated 16 December 2024,

will remain a Group Member for all purposes of this proceeding but shall not, without leave of the Court, be permitted to seek any benefit pursuant to the settlement of the proceeding in accordance with the settlement distribution scheme referred to in order 6 below.

3.    Pursuant to sections 33V and/or 33ZF of the Act, leave is granted to the persons identified in Confidential Annexure A to participate in the settlement of the proceeding.

4.    Pursuant to sections 33V and 33ZF of the Act the Applicants be authorised:

(a)    nunc pro tunc, to enter into and give effect to the Settlement Deed (and the transactions contemplated by it) for and on behalf of each of the Group Members who have not opted out of the proceeding; and

(b)    to enter into and give effect to the Amendment Deed for and on behalf of the Group Members who have not opted out of the proceeding.

5.    Pursuant to section 33ZB of the Act, the settlement in the Settlement Deed, the Amendment Deed and orders 4 and 14 be binding upon the Applicants, all Group Members who have not opted out of the proceeding, and the Respondents.

6.    The Settlement Distribution Scheme (the SDS) in the form of Annexure C submitted to the chambers of Beach J on 27 August 2026 be approved and given effect.

7.    Pursuant to sections 33Z and/or 33ZF of the Act, the Applicants are deemed to be “Eligible Group Members” in accordance with the SDS.

8.    Pursuant to sections 33V and/or 33ZF of the Act, and in accordance with the SDS, KordaMentha Pty Ltd as trustee for the KM Unit Trust (ABN 36 220 576 038) (KordaMentha) be appointed as administrator of the SDS (the Settlement Administrator).

9.    The Settlement Administrator has liberty to apply to the Court for directions in respect of the administration of the SDS.

10.    Pursuant to section 33V(2) of the Act, the following deductions from the Settlement Distribution Fund are approved:

(a)    an amount equal to $8,297,060 as commission payable to Woodsford Litigation Funding 3 LLP (company number OC432988, registered in England and Wales) (the Funder);

(b)    the amount of $1,086,082.50 on account of after-the-event insurance costs and the fees for the deeds of indemnity provided to the Respondents by way of security for costs;

(c)    legal costs and disbursements (including uplift) in the amount of $7,258,696.28, which includes the sum of $744.00 in relation to the liability incurred in connection with stamp duty paid on the Settlement Deed;

(d)    the sum of $20,000.00 to each of the Applicants by way of reimbursement; and

(e)    the reasonable expenses of and incidental to the administration process carried out in accordance with the SDS, in the estimated amount of $677,417.00, including:

(i)    legal costs and disbursements incurred by the Applicants, in the estimated amount of $61,967.00; and

(ii)    KordaMentha’s costs in the estimated amount of $615,450.00.

11.    On the date the Approval Orders (as defined in the Settlement Deed) become final and binding in accordance with the Settlement Deed:

(a)    the orders for security for costs dated 26 September 2022 and 6 October 2023 be vacated;

(b)    the sum of $20,000 paid into Court under order 6 of the Court’s orders dated 26 September 2022 be returned to the Funder; and

(c)    any deeds of indemnity become void and be deemed to have no effect.

12.    On the date the Approval Orders (as defined in the Settlement Deed) become final and binding in accordance with the Settlement Deed, all previous costs orders entered in this proceeding be vacated.

13.    Within 20 Business Days after the final distribution is made to Group Members under the SDS, the Settlement Administrator is to provide a report to the Court on the administration of the SDS.

14.    With effect from 20 Business Days after the final distribution is made to Group Members under the SDS, and subject to further order, the proceeding against the Respondents is dismissed with no order as to costs as between the Applicants and the Respondents, without prejudice to:

(a)    the right of any party to the Settlement Deed and Amendment Deed to make an application to enforce the Settlement Deed and/or Amendment Deed in a new proceeding;

(b)    the right of the Settlement Administrator to refer any issues relating to the SDS to the Court for direction or determination in accordance with the terms of the SDS.

15.    Pursuant to sections 33V and 33ZF of the Act, the Court declares that the persons identified in Confidential Annexure B submitted to the chambers of Beach J on 27 August 2026 have opted out of this proceeding and are not Group Members.

Group Member Data

16.    Pursuant to rule 20.15 of the Federal Court Rules 2011 (Cth) (Rules) and/or section 37P or 33ZF of the Act, the Respondents are to produce to the Settlement Administrator, on a confidential basis, spreadsheets containing the following data for each CommInsure Life Product held by a person identified in Confidential Annexure A (insofar as it is reasonably available) who completes a Registration Form in accordance with the SDS, within 30 business days of being provided a list of those persons by the Settlement Administrator:

(a)    policy number;

(b)    insured name;

(c)    owner name;

(d)    joint owner name (if applicable);

(e)    date of policy commencement;

(f)    date of policy and termination (if applicable);

(g)    state;

(h)    date of birth;

(i)    sex;

(j)    smoker status;

(k)    occupation category;

(l)    type of cover;

(m)    sum insured;

(n)    benefit period;

(o)    waiting period;

(p)    level or stepped premiums;

(q)    premium payment frequency (monthly, quarterly, annually);

(r)    premiums paid during the Relevant Period;

(s)    adviser group (CFP or FWL);

(t)    adviser name;

(u)    a field indicating whether or not a claim has been made on the policy, the date of the claim, and a ‘claims number’ field that can be used to identify the nature of the claim; and

(v)    a field flagging the presence of any of the following indicators in respect of the policy:

(i)    there has been a claim on the policy for death;

(ii)    there has been a claim on the policy, other than for death, which has been closed with a reason indicating the death of the claimant; or

(iii)    the insured or primary owner name contains the words “estate of” or “deceased”.

17.    The list delivered to the Respondents pursuant to order 16 above must include the information provided by each person identified in Confidential Annexure A via the Registration Form.

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

REASONS FOR JUDGMENT

BEACH J:

1    My approval is sought under s 33V(1) of the Federal Court of Australia Act 1976 (Cth) concerning the settlement of this proceeding. Orders are also sought under s 33V(2) to facilitate a settlement distribution scheme including the making of a common fund order. The settlement terms include a payment of $22.5 million in settlement of the applicants’ and group members’ claims.

2    Under the proposed settlement, the applicants and registered group members will receive $5.12 million of the gross settlement sum after deductions are made for inter alia legal costs and a litigation funding commission, the latter of which is to be formalised in a CFO as I have just indicated.

3    I heard this matter on 3 August 2026. But as a result of discussions with counsel, substantial modifications needed to be made to the proposed orders including the proposed settlement distribution scheme. Further versions of the proposed orders and the proposed scheme were submitted to my chambers yesterday. These are now in a satisfactory form.

4    Now there are two features of this case that require some discussion.

5    First, the aggregate amount to be distributed to registered group members is very modest when considered as a percentage of the gross settlement sum. But the significant diminution in the prospects of success of the applicants’ and group members’ claims since the inception of this proceeding provides a partial but justifiable explanation for this percentage. Moreover, just looking at this percentage in the aggregate is unduly simplistic. The $5.12 million is only to be distributed to registered group members, with a barring order applying to non–registered group members who have not opted out. And once one considers the likely maximum monetary claim of each participating group member, the available part of the settlement sum to be distributed to each group member will in fact provide a high or substantial percentage of the realistic maximum value of each individual claim.

6    Second, it is necessary to say something on the question of the applicants’ authority on behalf of group members to give a release or covenant not to sue in favour of non–parties as part of the settlement. In my view, the prudent and practical solution to address this question of authority is to use a combination of orders under ss 33V, 33ZB and 33ZF, such that s 33ZB reinforces the orders under s 33V and also reinforces any order under s 33ZF. This is not an iron–clad solution, but it is the realistic best option available. I will discuss the intellectual evangelism on this topic later, but first some general matters.

7    The generally applicable principles are not in doubt. As to whether the proposed settlement is fair and reasonable and in the interests of group members, I adopt what I said in J Wisbey & Associates Pty Ltd v UBS AG (No 3) [2025] FCA 1018 at [7] to [15].

8    First, my discretion is broad and its exercise is only limited by the necessity that it be exercised judicially having regard to the particular circumstances of the case.

9    Second, the central question is whether the proposed settlement is a fair and reasonable compromise of the claims made on behalf of the group members who will be bound by the settlement.

10    Third, one approaches the question by asking whether the proposed settlement is fair and reasonable as between the parties having regard to the claims of the group members (inter partes fairness), and then whether the proposed settlement is fair and reasonable as between the group members (inter se fairness).

11    Fourth, there is not usually one single or clear way in which a reasonable settlement should be framed. Reasonableness is a range, and the question is whether the proposed settlement falls within that range.

12    Fifth, the parties and their legal representatives are often in a better position to appreciate the risks associated with the proceedings. Moreover, different parties will have different appetites for risk. It is not my present task to second guess the commercial strategies or decisions made by an applicant’s legal representatives, but rather to satisfy myself that any decision is within the reasonable range of decisions that are open.

13    Sixth, in determining whether to approve a proposed settlement, the Court assumes a protective role in relation to group members’ interests. In this respect the interests of the parties may not wholly coincide with the interests of group members. Relatedly, the parties may have an affection for the deal and consequently may not critique the settlement from the perspective of group members who may be disadvantaged by the proposed settlement.

14    Seventh, in relation to inter se fairness, a particular concern is to confirm that the interests of the representative applicant or signed–up clients of a given firm of solicitors are not being preferred over the interests of other group members. And any settlement distribution scheme should be framed to achieve a broadly fair and cost–effective division of the proceeds, including treating like group members alike. This may involve judgment calls being made where a range of alternative approaches might have been open to be adopted.

15    Eighth, inter se fairness also involves other procedural considerations as to the fairness of a proposed distribution process, such as whether appropriate individuals have been nominated to administer such a process, whether the procedures for lodging and assessing claims are appropriate and to be conducted in a timely manner, and whether the proposed distribution scheme incorporates appropriate checks and balances such as procedures for ensuring consistency between assessments.

16    Ninth and more generally, the above considerations are not exhaustive and some are not mandatory. And even more generally, the decision as to whether to approve is evaluative and in part impressionistic.

17    Let me turn to the first dimension of fairness.

Is the settlement fair and reasonable inter partes?

18    In summary, the applicants make the following allegations against the respondents concerning conduct during the period 21 August 2014 to 21 August 2020 (the relevant period).

19    The Colonial Mutual Life Assurance Society Pty Limited (CommInsure) charged the applicants and group members premiums for CBA life product policies which they paid themselves or through their superannuation funds as members. The CBA life products are life risk insurance products issued by CommInsure that provided cover for one or more forms of life cover including terminal illness cover, total and permanent disability cover, trauma cover, or income protection and/or business overheads cover, and included Total Care Plan, Total Care Plan Super, SMSF Plan, Income Care, Income Care Plus, Income Care Platinum, and Essential Cover policies.

20    It is alleged that the premiums charged by CommInsure for the CBA life product policies were higher than the premiums payable on substantially equivalent or better insurance products that could have been obtained by the applicants and group members from third–party insurers. I will refer to the difference here as the excess premiums.

21    It is alleged that Commonwealth Financial Planning Limited (CFP), Financial Wisdom Limited (FWL) and their financial adviser authorised representatives did not disclose such matters when providing personal advice to the applicants and group members about the CBA life products.

22    It is said that CFP, FWL and their authorised representatives were incentivised through commissions and other benefits to recommend the CBA life products even if the CBA life products were not in the best interests of clients, rather than substantially equivalent or better insurance products available for a cheaper premium.

23    By reason of these matters, it is said that the authorised representatives breached their duties and obligations to the applicants and group members by failing to give priority to their clients’ interests and failing to act in their clients’ best interests, failing to avoid the real or substantial possibility of conflict between their duty to their clients and the interests of CFP, FWL, CommInsure and their own interests, and improperly using their position to gain an advantage for themselves, CFP, FWL and/or CommInsure.

24    It is said that CFP and FWL breached their duties to the applicants and group members by failing to take reasonable steps to ensure that their authorised representatives complied with their statutory obligations. And it is said that each time it received the excess premiums, CommInsure knew or ought to have known of the matters set out above, and knowingly took receipt of the excess premiums.

25    The applicants allege that the respondents were liable for their authorised representatives’ conduct under and concerning ss 764A, 764B, 917A, 917B, 917E, 917F, 961B, 961J and 961L of the Corporations Act 2001 (Cth) and breached their fiduciary obligations insofar as they recommended CommInsure insurance policies in preference to other substantially equivalent or better insurance policies with lower premiums to financial advice clients; a claim is also made under the first limb of Barnes v Addy.

26    Mr Edward Thomas, the first applicant, and Ms Diana Tyrrell, the second applicant, were clients of authorised representatives who, during the relevant period, received personal advice from them which included recommendations to retain their CBA life product policies through their superannuation funds as members. These applicants and group members, who during the relevant period only retained or renewed pre–existing policies that had first been taken out before the start of the relevant period, have been referred to by the parties, and I am content to refer to them as, the existing clients. Contrastingly, Ms Notre Dame Saez Gomez Galarza, the third applicant, was a client of an authorised representative who, during the relevant period, received personal advice which included a recommendation to obtain CBA life product policies in her own name and through her superannuation fund as a member. This applicant and group members, who during the relevant period first obtained rather than retained or renewed pre–existing policies, have been referred to by the parties, and I am content to refer to them as, the new clients.

27    Generally, group members in the proceeding are persons who during the relevant period were advised by an authorised representative to obtain, renew or otherwise retain, by themselves or through their superannuation funds as members, a policy for a CBA life product, on the basis of that advice obtained, renewed or otherwise retained, by themselves or through their superannuation funds as members, CBA life product policies, and by reason thereof and in paying what are claimed to be any excess premiums on such CBA life product policies, by themselves or through their superannuation funds as members, suffered loss or damage or claim an account of profits. As I say, the group members can be and have been divided into existing clients and new clients

28    CFP and FWL until about May 2020 were related licensees of the Commonwealth Bank of Australia. CommInsure was a wholly owned subsidiary of CBA until at least 1 November 2019, when it was acquired by AIA Australia Limited.

29    In my view it was reasonable to assess the settlement range on the assumption that the best recovery available to all registered group members in respect of the excess premiums claim was in the range put to me by the applicants and the funder. Further, it was reasonable to apply a discount for other substantial risks including that the prospects on liability were slightly less than even. Assuming a distribution sum of $5.12 million, the best estimate is the following concerning distributions to registered group members.

30    First, the estimated distribution under the unit–based approach that is to be applied concerning registered group members who are new clients is $1,413,028. So, this represents 60.67% of the estimated excess premiums attributable to registered new clients.

31    Second, the estimated distribution under the unit–based approach concerning registered group members who are existing clients is $3,706,972 which equates to 28.2% of the estimated excess premiums attributable to registered existing clients on the assumption that advice was received from 1 January 2015, 36.8% of the estimated excess premiums attributable to registered existing clients on the assumption that advice was received from 1 January 2017, and 98.1% of the estimated excess premiums attributable to registered existing clients on the assumption that advice was received from 1 January 2019.

32    Generally speaking, I accept that the amounts likely to be received in hand by registered group members after all proposed deductions as part of this settlement are within the range of likely outcomes for those group members at any trial if they were to be successful. Accordingly the outcome for group members who are eligible to participate in the settlement is positive relative to the alternative of their claims proceeding to judgment.

33    Now I should note that there were numerous objections to the settlement raised by group members to the effect that the quantum of the settlement sum was inadequate and that the proposed deductions were disproportionate including concerns about the litigation funding commission. But none of these objections were substantial enough to warrant my not making the necessary orders.

34    Let me now turn to the question of authority.

35    As part of the approval application, and given that releases and covenants not to sue purportedly on behalf of group members are to be given in favour of non–parties, an order is sought under s 33ZF authorising the applicants nunc pro tunc to enter into and give effect to the settlement deed on behalf of group members, together with an order under s 33ZB making it clear that the settlement is binding on all group members who have not opted out, whether registered or deemed registered or otherwise.

36    Now the releases and covenants not to sue here travel well beyond what would normally be considered to be within the express or implied authority of the representative applicants under Part IVA to give on behalf of group members. They extend to the giving of releases and covenants not to sue in favour of non–parties. But nothing in the text or context of the provisions of Part IVA directly confers such an expansive if not ambitious authority, with due respect to those who would suggest otherwise. How then is the existence of such extensive authority to be adjudicated upon? And what is the best realistic solution to enshrine an adjudication supporting such authority?

37    In relation to releases, I said in Newstart 123 Pty Ltd v Billabong International Ltd (2016) 343 ALR 662 at [55] to [62]:

The releases to be provided by group members as against Billabong itself accord with the notifications given. I will deal with the releases against related parties later.

First, in my view I have clear statutory power to make proposed orders dealing with the authority question covering the breadth of the releases against Billabong, putting to one side the related party releases for the moment. Sections 33ZF and 33Z(1)(g) are sufficiently broad. Moreover, in terms of s 33ZB, any order made under s 33Z(1)(g) can bind accordingly. Such powers are not limited to the pleaded claims.

Second, there is little doubting the statutory authority of an applicant in a representative capacity under Part IVA taking action which binds group members. If it be accepted that an applicant has statutory authority on behalf of group members to negotiate and enter into a settlement agreement subject to Court approval, then such an applicant has implied statutory authority to negotiate and agree to ancillary and reasonably tailored and proportionate terms and conditions, such as broader releases, to achieve the primary aim.

Third, there may be doubt as to how far any such releases could extend beyond the pleaded case but still be within such authority. But there are several practical answers that can be given. If the releases deal with non-pleaded claims which if brought within separate later proceedings could be the subject of an issue estoppel or Anshun estoppel if the first proceeding had been litigated to judgment, then there would be such authority. It would be counterintuitive to suggest otherwise. Not to permit of the authority to give such a broader release would condone of a situation (the bringing of a later proceeding) which by definition would be an exercise in futility. But more fundamentally, if an applicant had authority to apply to amend the proceeding to bring such a new claim on behalf of group members, why would not the applicant have the authority to release the new claim without going through unnecessary formalities in the context of a s 33V process?

Fourth, in those cases where a group member has opted in to or registered in respect of a settlement (or at the least has chosen not to opt out) with notice of its terms including broader releases, such conduct in a particular case may separately constitute implied authority.

Fifth, in any event if there is a doubt or authority needs to be extended beyond any express or implied statutory authority, the statutory powers referred to above can be exercised. Having viewed the settlement agreement and the releases in the present case, I am satisfied that I should make the order sought on this aspect insofar as the releases concerning Billabong.

As to the releases against related entities of Billabong, it must be said that the orders of Murphy J of 22 September 2015 and 5 August 2016 and the notification protocols thereunder did not expressly advert to the same, contrary to the suggestion made in some of Newstart’s material before me. Preferably this ought to have been done. But notwithstanding this omission, although with some hesitation, I am prepared to accept the following:

(a)    First, releases of this type are a common feature of settlements of commercial litigation.

(b)    Second, the settlement with Billabong would have been unlikely to have been obtained absent such broader releases.

(c)    Third, there is no suggestion in the material that claims against related entities had any significant value that was being given away.

(d)    Fourth, I do not consider it realistic that a RGM or UGM (particularly those who had a very modest holding of Billabong securities) would have taken any different course in response to Murphy J’s orders of 22 September 2015 and 5 August 2016 even if the notification protocols had referred expressly to the potential for releases against related entities.

(e)    Fifth, my observations set out above on the authority question apply in this context as well.

In my view it is appropriate to make the orders sought, the effect of which will be to bind RGMs and UGMs to the releases in the settlement agreement, including the releases against related entities of Billabong. For completeness, I should note on this aspect that I do not consider it necessary to formally modify paragraph 10(b) of the orders of Murphy J of 22 September 2015 given the operation of the settlement agreement concerning the releases once approval is given. Further, what I have said in the preceding paragraph partly deals with one aspect of the objection of Greenspot Pty Ltd.

38    I also made the following orders 1 to 3 inter alia which appear at the end of the report (p 678) and utilise ss 33V, 33ZB and 33ZF:

1.    Pursuant to ss 33V and 33ZF of the Federal Court of Australia Act 1976 (Cth) (Act), settlement of the proceeding upon the terms set out in the Settlement Agreement executed by the Applicant, the Respondent, Slater and Gordon Limited and Comprehensive Legal Funding LLC dated 11 July 2016 (Settlement Agreement) and the Settlement Distribution Scheme (and any annexures) filed by the Applicant (Settlement Documents) be approved.

2.    Pursuant to s 33ZF of the Act or otherwise, the Court authorises the Applicant nunc pro tunc for and on behalf of the Group Members (being those persons who meet the definition of “Group Member” in the Further Amended Statement of Claim and who did not file an opt out notice) to enter into and give effect to the Settlement Documents and the transactions contemplated for and on behalf of Group Members.

3.    Pursuant to s 33ZB and s 33ZF of the Act, the persons affected and bound by the settlement of the proceedings be the Applicant, the Respondent and Group Members.

39    The point to be noted about these orders is that they invoke both ss 33ZB and 33ZF, a course that I propose to take in making the orders in the present case.

40    Now before proceeding further it is worth setting out various aspects of the Deed of Release and Settlement dated 6 March 2026 as modified by an amending deed (the settlement deed), which contain the relevant releases and covenants not to sue in favour of non–parties, given by the applicants purportedly on behalf of group members.

41    Clauses 6.1 and 6.2 provide:

6.1    Releases

(a)    Upon the First Respondent and Second Respondent causing the payment contemplated by clause 3.2(b) to be made, the following releases become operative:

(b)    the Applicants (on their own behalf and on behalf of all Group Members and their Related Parties) release and discharge the Respondents and their Related Parties jointly and severally from the Applicants’ and Group Members’ Claims.

6.2    Covenants

(a)    Upon the First Respondent and Second Respondent causing the payment contemplated by clause 3.2(b) to be made, and subject to clause 6.2(b):

(i)    the Applicants (on their own behalf and on behalf of each Group Member and their Related Parties) covenant not to sue the Respondents or their Related Parties in respect of any of the Applicants' and Group Members' Claims;

…

except to the extent necessary:

…

(vi)    to give effect to this Deed and the Settlement Distribution Scheme and/or the Consequential Orders.

(b)    For the avoidance of doubt, the covenants given in (a) do not extend to Claims against the Respondents in relation to an existing claim, entitlement (or potential entitlement) under a CBA Life Product.

42    Clause 1.1 defines “Applicants’ and Group Members’ Claims” in the following terms:

Applicants’ and Group Members’ Claims means the Claims made by the Applicants on their own behalf and/or on behalf of Group Members against the Respondents in the Proceeding as articulated in the 3FASOC or any prior amended pleading and any and all Claims arising from, in connection with, in respect of or related to them (or any of them) or seeking orders for the recovery of substantially the same loss or damage or substantially the same equitable relief as that sought in the Proceeding but excluding:

(a)    Claims against the Respondents and their Related Parties in relation to an existing claim, entitlement (or potential entitlement) under a CBA Life Product policy;

(b)    Claims against the financial adviser authorised representatives of the First Respondent and Second Respondent who provided financial product advice to Group Members except insofar as they relate to advice given during the Relevant Period to acquire, renew or continue to hold (by themselves or through their superannuation funds as members) a CBA Life Product.

43    Clause 1.1 defines “Claim” as:

Claim includes a claim, notice, demand, action, proceeding, litigation, or liability however arising.

44    Clause 1.1 also defines “Related Parties” as:

Related Parties means:

(a)    the related bodies corporate of a Party as defined in the Corporations Act 2001 (Cth); and

(b)    the directors, officers, partners, servants, contractors and agents of a Party,

as at the date of this Deed or at any time during the period from 20 August 2014 to the date of this Deed.

45    Clearly by the definition of “Related Parties”, the releases and covenants not to sue extend to a broad category of non–parties, whether corporations or individuals. Further, they can include “Related Parties” that were not even such during the relevant period, being 21 August 2014 to 21 August 2020. The definition of “Related Parties” includes “as at the date of this Deed” or “at any time during the period from 20 August 2014 to the date of this Deed”. So the definition can include a corporation or an individual that only became a related party after 21 August 2020 through to 6 March 2026, a period of almost 6 years. Further, the reference to “contractors and agents” is high, wide but less than handsome.

46    Now in such a context, is it seriously suggested that consideration need only be given to s 33ZB as an unquestioning cure–all to the question of authority concerning releases and covenants not to sue in favour of non–parties? Some would suggest that this be so, but let me suggest otherwise.

47    Section 33ZB provides:

Effect of judgment

A judgment given in a representative proceeding:

(a)    must describe or otherwise identify the group members who will be affected by it; and

(b)    binds all such persons other than any person who has opted out of the proceeding under section 33J.

48    The usual operation of s 33ZB has been described in Timbercorp Finance Pty. Ltd. (in liquidation) v Collins (2016) 259 CLR 212 by the plurality in the following terms (at [52]):

Part 4A creates its own kind of statutory estoppel. Section 33ZB requires that a judgment in a group proceeding identify the group members affected by it and, subject to a provision not presently relevant, provides that that judgment “binds all persons who are such group members at the time the judgment is given”. In order to understand that to which the group members are bound, it is necessary to read s 33ZB in the context of Pt 4A as a whole and ss 33C(1) and 33H in particular. By that process it will be seen that group members are bound by the determination of the claims giving rise to the common questions.

49    So, the paradigm application of s 33ZB concerns an adjudication on, inter alia, the claims of group members giving rise to the common issues.

50    Now what is the judgment in the proceeding before me given that we are not dealing with the paradigm case? One possibility is the judgment in terms of the order dismissing the proceeding after the terms and conditions of the settlement deed have been satisfied and completed. But such a judgment obviously only deals with and dismisses the claims against the named respondents. The boundaries and content of such a judgment, although it would bind group members of course, would not extend to non–parties on the respondents’ side of the ledger. So, in form it is limited to the causes of action pleaded and the parties to the proceeding including the group members.

51    Section 33ZB does not directly speak to claims against non–parties on the respondents’ side of the ledger or causes of action against the named parties that have not been alleged or litigated. And the reference in s 33ZB(b) to “binds all such persons” is referring to the judgment in the prefatory words to s 33ZB. Of course, s 33ZB could be read to embrace a penumbra of claims around the alleged claims concerning the same facts but different and not pleaded causes of action. But where the releases on a reasonable construction are travelling beyond this, then you are getting into problematic territory beyond such a penumbra. Anyway, I am not so concerned with that aspect but rather the question of the position of non–parties on the respondents’ side of the ledger.

52    Now another possible subject matter for the “judgment” under s 33ZB is the approval order under s 33V(1). Now such an approval order under s 33V(1) is a necessary condition for a binding settlement. But in the absence of an additional order under s 33ZB, it is only the operation of the settlement deed itself which could bind, not the s 33V(1) approval order as such which is only a necessary condition. Once s 33V(1) approval is given, the settlement can operate subject to the satisfaction of all other conditions precedent. But questions remain as to how and what binds group members in terms of authority.

53    How then is a group member bound by a release given in a settlement deed in favour of a non–party to the proceeding? If there has been no order under s 33ZB and/or s 33ZF, then a group member could only be bound by operation of the settlement deed, if at all, and once the condition precedent is satisfied. So, the question of authority does arise. And how do you deal with this? Clearly, the exercise of statutory power suggests itself as a sensible solution. But what power?

54    Now as in Newstart, there has been a practice developed of attaching to a s 33V(1) order an order under s 33ZB on the basis that the settlement, and of course all the elements of the settlement deed, then become binding upon group members by force of s 33ZB rather than the settlement deed itself. And there is no technical difficulty with that solution. In this respect “judgment” includes an “order” (see the s 4 definition). And the order directly made under s 33ZB would be to the effect that “the settlement deed be binding upon the applicants, the respondents and group members”.

55    This device of necessarily adding a s 33ZB order to a s 33V(1) order was not originally discussed in Grouped Proceedings in the Federal Court (ALRC report No. 46, 1988) at [216] to [218] and the footnoted reference to clause 28(2) (analogous to s 33V(1)) of the draft Bill annexed to this report, and notwithstanding the existence of clause 29 in the draft Bill (analogous to s 33ZB) referred to at [223]. Indeed the very language of s 33V(1) did not suggest that a s 33ZB order was always a necessary adjunct. Moreover, the place of s 33ZB, being after ss 33Z and 33ZA, and in the division headed “Division 4 — Judgment etc”, suggests that it was not designed as an adjunct to s 33V which is in Division 2. Be that as it may, I have no difficulty in s 33ZB being used as an adjunct to s 33V. But is this all that is required?

56    You would only make such a s 33ZB order to inter alia address releases and covenants not to sue in favour of non–parties if you were satisfied that the representative applicant had or should be given the broader authority to give the extended releases and covenants in favour of non–parties on a respondent’s side of the ledger. But if that be so, why not say so directly under a s 33ZF order as well? And why not then re-inforce that s 33ZF order by making a s 33ZB order concerning that order? If a “judgment” includes an “order” and you consider that a s 33V order can be the subject of a s 33ZB order, then a similar logic can be applied so that a s 33ZF order can also be made the subject of a s 33ZB order.

57    In my view, there is no difficulty in having orders under both ss 33ZB and 33ZF as it reflects the reality of the situation.

58    Now Lee J has written on this topic in Dyczynski v Gibson (2020) 280 FCR 583 at [388] to [400], J & J Richards Super Pty. Ltd v Linchpin Capital Group Ltd (No 2) [2023] FCA 509 at [25] to [30] and Compumod Investments Pty. Ltd v Universal Equivalent Technology Ltd (Settlement Approval) [2024] FCA 571 at [7], [8] and [20] to [22]. His Honour likened his position to John the Baptist crying into the wilderness. But one should not take this self–referential simile too far when one recalls that the preaching of this evangelist was terminated in problematic circumstances. But I have applied a more sensitive approach than Salome.

59    The use of s 33ZB is permissible, as I have indicated. But I am not convinced that no anterior question of authority needs to be looked at where the applicants on behalf of group members are giving purported releases and covenants not to sue in favour of non–parties or releases in favour of parties but concerning claims that are quite unrelated to the causes of action and clearly outside the penumbra that I have referred to. One is only using the power in s 33ZB if one is prima facie satisfied of such an authority. Section 33ZB is not there to be waved around like a fairy wand whose magical touch causes the question of authority to give releases or covenants not to sue in favour of non–parties to disappear. In such a scenario, an order under s 33ZF is desirable.

60    Indeed, Lee J in Dyczynski said (at [398]):

Having said this, two points of qualification should be made as to where s 33ZF orders could be appropriate. First, there may, of course, be cases, perhaps in class actions involving a relatively small number of group members who are represented, where the Court can be satisfied that individualised instructions have been given by group members to give releases which travel beyond the claims the subject of the proceeding. Questions of authority of the representative do not then arise. Secondly, there may also be cases where it may be within the scope of the authority of a representative applicant to give releases authorised by the Court to a privy of the respondent, but this complication need not be explored: see for example the discussion in Newstart 123 Pty Ltd (at [57]); see also Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd (No 4) [2019] FCA 804 (per Foster J at [59]-[62]).

(emphasis in original)

61    The second possibility foreshadowed by Lee J, albeit in a lukewarm fashion, is of course the scenario that I am currently discussing.

62    Now lest there be a doubt that I have not fully considered what was said in Dyczynski, I should make the following points. First, the case did not directly discuss or concern the scenario where the applicants purported to give releases or covenants not to sue in favour of non–parties on behalf of group members in a settlement context. Second, to the extent that the discussion of Murphy and Colvin JJ at [244] to [253] has any relevance to my context, it concerns the appropriateness of making a s 33ZB order. But it does not deny the desirability of also making a s 33ZF order in the circumstances that I am addressing. Disembodied commentary expressed in generality hardly defines away the problem.

63    There should not just be an application of s 33ZB over any settlement by an applicant purportedly on behalf of group members involving the giving of releases or covenants not to sue in favour of non–parties, or indeed in favour of parties concerning claims that are well outside the penumbra of the pleaded case. Proper attention to this precise problem of authority can be reflected in and is surely manifested by any consideration that culminates in a s 33ZF order. Indeed, by the very making of a s 33ZF order, any s 33ZB order then has a more secure foundation concerning such releases or covenants. Indeed and as I have said, the s 33ZB order could be directly applied to the s 33ZF order as well as the s 33V order. Section 33ZB is the end point rather than the starting point concerning the type of questions of authority that I am dealing with.

64    In summary, I do not doubt that s 33ZB embodies a foundational concept for the operation of Part IVA concerning binding group members. But to express the matter at that level of generality is not contentious. But the issue is not that, but the particular “judgment” to be identified. And here, although one is not using the usual type of “judgment” referred to in s 33Z, but rather taking judgment to include “order” so as to pick up a settlement dealt with by a s 33V order, one still has to choose to make a form of s 33ZB order. The question then becomes: what form should you choose insofar as the settlement provides for releases and covenants not to sue in favour of non–parties? But then in addressing that question, are you not addressing yourself to the authority question? And if you are, why not be transparent about it? And why not reflect that transparency in a s 33ZF order? And particularly where that could only fortify the foundation for your s 33ZB order applying to the s 33V order or indeed justify a s 33ZB order which directly targets your adjudication on authority (the s 33ZF order) concerning releases or covenants not to sue in favour of non–parties.

65    Finally, there is one other matter concerning the question of the enforcement of any release or covenant not to sue in favour of a non–party that is worth referring to. If there is an order under s 33ZB this may more easily facilitate the enforcement of such a release or covenant by a respondent on behalf of and in favour of the non–party whether or not you treat the latter as being a privy of the former. Further, if the non–party is subsequently sued by a group member in breach of the covenant or release, not only would that non–party have a defence arising on the basis that it was a beneficiary of such a release or covenant held on its behalf or on trust by the respondent, but it would also have a stronger Anshun type point. I prefer the latter rather than saying that the non–party could take the benefit of any issue estoppel arising under s 33ZB (if at all) as a privy of the respondent.

66    I will make both the s 33ZF and s 33ZB orders sought to put the matter of authority concerning the releases in favour of non–parties beyond doubt. Further, I note that as a matter of form, the settlement deed stipulates the making of both orders to be necessary conditions precedent. So, the making of these orders facilitates the bargain that has been struck, although of course they are not justified solely for that reason.

Is the settlement fair and reasonable inter se?

67    Let me deal with two topics here, although they are not exhaustive of all factors relevant to this dimension of fairness, some of which I have discussed elsewhere.

68    First, the settlement distribution scheme excludes the following group members from participating in the distributions: (a) existing clients who have not registered before the class deadline of 29 August 2025; (b) existing clients who failed to complete mandatory registration fields or to rectify registration defects before the registration deadline; (c) new clients who did not register before the registration deadline of 11 June 2026; (d) registered existing clients who answered the eligibility questions in a manner indicating that they are not group members; and (e) registered group members who paid less than $1000 in total premiums during the relevant period and have an estimated entitlement of less than $20.

69    I have no difficulty with any of these exclusions although I will allow late registrants to participate in the distributions. In relation to group members who answered the eligibility questions in a manner indicating that they are not group members, it is appropriate for payments under the scheme to be reserved only to those persons who are in fact group members. They are the only persons who have claims and who are giving releases. The eligibility questions were clear and obviously connected to the group member definition. Further, in relation to the exclusion threshold of $999 in total premiums / $20 in settlement payment, this approach is fair and reasonable as the amount payable would be de minimis. It is appropriate to limit distribution payments to certain classes of group members where the costs associated with distribution to those members would make it inefficient and wasteful to allow such distribution. In this case, the administrative cost of distribution would exceed and accordingly be disproportionate to the benefit received from making payments below $20.

70    Second, as to the actual mode of distribution, a unit based model has been used, the detail of which I do not need to descend deeply into save to say that each participating group member is allocated a number of units referable to the premiums paid and whether they are existing clients or new clients; given that the new clients have stronger claims, double the number of units will be allocated to them per premium band; annexure A to the settlement distribution scheme sets out details concerning the total number of units and unit value.

71    The settlement distribution scheme proceeds on a unit based calculation model with the following payments proposed on the basis of a $5.12 million distribution sum, before factoring in the admission of late registrants to participate as I will discuss in a moment:

72    The methodology permits each group member to be paid an amount that approximates their losses. The evidence is that it is not practically feasible to calculate or estimate actual losses without substantially eroding the funds available for distribution. I agree with the applicants that premiums paid is the best available proxy for actual losses. So, the unit based model is preferable because by differentiating based on premiums paid it more closely reflects the actual losses of group members than say a pro rata split model. There is no material difference in the administration costs associated with implementing the unit based model compared to the pro rata split model. I accept that in these circumstances, the unit based model is the preferable and most equitable model. Of course this proposed distribution methodology is imperfect, but it is fair.

73    There is one final matter on this topic. Notwithstanding the exclusions that I have identified, I will allow late registrants to participate in the settlement which will reduce the unit value by up to 1.8%, such that all group members will receive at least 1.8% less of a payment. Save for this, it is just for the registration and barring orders to be made.

Litigation funding commission — CFO

74    Woodsford Litigation Funding 3 LLP funded the proceeding pursuant to a litigation funding agreement (LFA) with each applicant and terms of engagement with the applicants’ solicitors. Let me first address the question of the funding commission.

75    An order is sought that $8,297,060 be paid to the funder by way of a commission. This can be transposed into a CFO, with the commission equating to an approximate rate of 36.9%.

76    The funder seeks such a CFO rather than enforcing or seeking to enforce what was described as the funder’s success fee provided for under the LFA. This represents a more than 50% discount to the funder’s success fee that the funder bargained for at the outset of the proceeding. In effect, the contractual funder’s success fee would have been $16,839,417, being 3.5 times the cash outlay of $4,811,262, whereas the commission now sought is $8,297,060.

77    The LFA defined the “Funder’s Success Fee” in the following terms (Clause 1.22):

‘Funder’s Success Fee’ means the amount equal to:

1.22.1    if the Cash Outlay, on the date that Gross Proceeds are received by or on behalf of the Representative, is less than AU$3,190,000, the greater of:

1.22.1.1    twenty-two point five per cent (22.5%) of the Gross Proceeds; or

1.22.1.2    two point five times (2.5x) the Cash Outlay; or

1.22.2    if the Cash Outlay, on the date that Gross Proceeds are received by or on behalf of the Representative, is equal to or more than AU$3,190,000, the greater of:

1.22.2.1    twenty-seven point five per cent (27.5%) of the Gross Proceeds; or

1.22.2.2    three point five times (3.5x) the Cash Outlay.

78    “Cash Outlay” was defined (clause 1.10) as:

‘Cash Outlay’ means the total amount of Action Costs advanced by the Funder, or payable pursuant to Funding Notices, plus all other fees and costs relating to the Claims reasonably incurred by the Funder.

79    “Gross Proceeds” was defined (clause 1.25) as:

‘Gross Proceeds’ means:

1.25.1    all money, including costs, damages, compensation, any redress scheme established at any time by the Defendant(s) or any third party, settlement sum, and interest, paid or credited to, in favour of, for the benefit of, or to the order of, the Representative, the Claimant or the Claimant Group; and

1.25.2    the value of any property, interest, asset, release, waiver or other consideration received by, or held in favour of, for the benefit of, or to the order of, the Representative, the Claimant or the Claimant Group,

in each case relating to the subject matter of the Claims and whether received from the Defendant or any third party.

80    It is not in doubt that the Court has power pursuant to s 33V(2) to order that any commission sought by a litigation funder be payable by all group members standing to benefit from the settlement on a CFO basis at the time that settlement is approved. A settlement that allows some group members to free ride would not be fair and reasonable to group members as a whole. In those circumstances, it is just to defray the commission charged to funded group members across the group as a whole using a mechanism such as a CFO.

81    Now the Court must make an evaluative assessment in exercising the discretion under s 33V(2) to make a settlement CFO and the appropriate rate in the circumstances of the case. As an aid to that evaluative assessment, there are a range of relevant factors to consider as discussed by Murphy, Gleeson and Beach JJ in Money Max Int Pty Ltd v QBE Insurance Group Limited (2016) 245 FCR 191 at [80] in order to determine whether the grant of a CFO will be just. It hardly needs to be pointed out that those factors recognise the commercial realities and risks assumed by the litigation funder but must be viewed through the lens of what is reasonable in order to fulfil the purpose of providing access to justice. In particular, the award of a CFO and the rate should provide an appropriate reward for the risk undertaken by a litigation funder. The assessment of litigation and financial risk must avoid hindsight bias and recognise that the funder took on the risks at the time that it elected to invest in the proceeding and then on an ongoing basis during the life of the proceeding. But this is not to say that risk assessment is a static and once and for all analysis only to be considered at the time the funding arrangements are first entered into. Further, whilst a review of market rates for equivalent settlement CFOs can act as a useful indicator as to whether a particular commission is just, it does not displace the evaluative assessment that one is required to perform based on the idiosyncratic features of any given case. It is appropriate to be cautious when comparing the headline funding rates in other cases due to the inherent differences between the proceedings.

82    In my view the amount sought is just in all the circumstances and supports the making of the requested CFO.

83    The substantial risks that the funder assumed in funding the proceeding support my view that the commission is just. This proceeding has turned out to be high risk given the very significant reduction in the estimated losses suffered by group members, the diminishing assessment of the prospects of success on liability and the difficulties in determining liability and causation on a common basis.

84    Further, in agreeing to fund and to continue to fund the proceeding, the funder placed a substantial amount of capital at risk and assumed other financial risks on behalf of the applicants. At the outset of the proceeding, the funder made a commitment in the LFA to fund up to $6,380,000 in legal costs, disbursements, security and upfront ATE insurance premiums, $4,880,000 of which was a commitment for legal costs and disbursements. The funder primarily assessed its required return from an investment on the basis of the cash that was put at risk in funding a proceeding. As the quantum of committed cash increased, the risk to the funder increased. The funder has incurred approximately $4,811,263 in upfront costs which were not recoverable in the event of an unsuccessful outcome in the proceeding. Moreover, absent the settlement or the funder withdrawing its support, it is likely that the funder would have been required to make further substantial cash outlays to support the proceeding.

85    Further, whilst the funder obtained ATE insurance to mitigate the risk of adverse costs, it remained exposed to any adverse costs ordered above the limits of the policy, being $3.6 million. The applicants had provided $2.7 million in security up to the completion of the respondents’ expert and lay evidence. There was a risk, assessed prospectively and without the benefit of hindsight, that the funder would have had to meet any adverse costs in excess of the ATE insurance cover limit.

86    Further, both the funder’s contemporaneous considerations of risk and the objective assessment of risks in the proceeding are relevant to my evaluation of whether the CFO and the rate sought are just.

87    At the outset of the proceeding, the funder assessed that the proceeding was commercially viable. It was originally estimated that the proceeding would be worth approximately $140 million. That figure was based on an assumption that the average premium payable on CommInsure policies was 23.4% higher than the cheapest equivalent policies available. Whilst the methodology underpinning this estimate was uncertain, the funder performed a further analysis at the outset of the proceeding in which it was estimated that the proceeding had a value of between $110 million to $123 million. But this estimate also had problematic aspects.

88    As the proceeding developed, the prospects of success and likely recovery deteriorated significantly. By the time of mediation in November 2025, the proceeding had become commercially border–line.

89    Following the receipt of the group member transactional data, an analysis was conducted which indicated that the claim value was between $15.8 million and $49.4 million, being substantially lower than the $140 million originally estimated. The $49.4 million estimate was premised on very favourable assumptions and did not reflect any discounts for liability risk. In other words, it was the best case scenario.

90    Further and significantly, on 27 May 2025 Halley J dismissed various claims in a representative proceeding in R and N Hunter Pty Ltd v Count Financial Limited [2025] FCA 544. That proceeding made allegations some of which were similar to the proceeding before me. His Honour’s decision to dismiss various claims increased the risk profile of the proceeding substantially. Further, as part of this, there was a material risk that any breach of statutory duty or fiduciary duty would not be determined on a common basis.

91    I should say that this last point is not unknown. In a representative proceeding in an analogous context to what I am dealing with being Stack v AMP Financial Planning Pty. Ltd. (No 2) (2021) 401 ALR 113, I said (at [164] to [169]):

Now there are fiduciary duties allegedly owed by the AMP licensees and separately owed by the AMP authorised representatives, for whom the AMP licensees are responsible.

It may be accepted that the existence of a fiduciary relationship between an AMP licensee or AMP authorised representative and an applicant and/or group member must be informed by the nature of the relationship with the applicant or group member. Moreover, in any one year there were numerous AMP authorised representatives across the AMP licensees as I have already indicated.

Further, to a large extent the determination of the existence of a fiduciary duty, the scope of that duty, as well as whether there was a breach of that duty necessitates an investigation into the circumstances of each of the group members.

Further, even if a fiduciary duty is found to exist, the determination of that duty’s scope will also depend on an examination of all of the facts and circumstances on a case by case basis. This would require an examination of the relationship between each of the group members and their particular AMP authorised representatives.

These claims, of course, raise many individual questions. But selecting a sufficient number of sample group member claims for adjudication may be an efficient way to proceed in the first instance.

As for the knowing receipt claim against AMP Life, the allegations are a derivative of the breach of fiduciary duties claims. Being such derivative claims, they also require a consideration of the circumstances of each group member with respect to the fiduciary duty allegations.

92    Now in light of the deteriorating prospects and issues with commonality, it was appropriate to apply a 75% to 85% discount to group members’ claims to account for the substantial risks of non–recovery. Accordingly, it is appropriate that the proceeding settle for an amount that would see group members recover between $1.2 million to $3.5 million. But group members will in fact receive an aggregate amount of $5.12 million.

93    In my view, the return to the funder represented by the CFO that is being sought is proportionate to the significant liability and recovery risks. The funder priced the risks at the outset of the proceeding by agreeing to fund the proceeding in return for the funder’s success fee. But in circumstances where the risks in the proceeding increased significantly beyond those anticipated at the outset, the funder’s return has not increased proportionately in recognition of that escalation. Rather, the funder has substantially and voluntarily reduced the return on those funds sought in spite of the substantial increases in risk. The $8,297,060 now sought represents a more than 50% reduction in the return that it would have sought under the terms of the LFA, absent the deterioration in prospects and quantum. The commission sought in the application represents a return significantly below the level of risk that the funder assumed in this case. That substantially lower return is the product of the deteriorating quantum and prospects of this case, the low settlement ultimately reached and the need to salvage something from the proceedings.

94    In all the circumstances, in my view the CFO sought is reasonable and just.

95    Further, in the notice of proposed settlement sent pursuant to my orders of 16 March 2026, group members were provided with notice of the intention to seek a deduction from the settlement of “no more than $9,995,210”. Consistent with that notice, the funder seeks the lower sum of $8,297,060. Moreover, there has been no objection by group members to a CFO. There were 101 objections filed by group members that disclosed substantive reasons for objection, of which 16 objected to the deductions generally and 1 objected specifically to the commission rate. These objections, which in any event represent a very small proportion of the class that is estimated to be over 15,500 registered group members, do not affect my view as to the reasonableness and proportionality of the commission.

96    Further, orders are sought that the applicants’ legal costs and disbursements, $4,531,579 of which have been paid by the funder throughout the course of the proceeding, be reimbursed from the settlement sum. In my view it is just that the funder be reimbursed the amount that it has already paid supporting the applicants’ legal costs and disbursements. The funder assumed significant risk by paying the applicant’s upfront legal costs. Further, the funder has an entitlement under the LFA with the applicants to be reimbursed such costs from the gross proceeds.

97    Let me deal with a related but separate topic, under which I will also discuss what some have described as the aggregation principle.

Recovery of ATE premiums and security costs

98    An order is also sought for the payment of $1,086,082 in respect of amounts associated with obtaining ATE insurance to cover the applicants’ adverse costs liabilities, including premiums and deeds of indemnity associated with the provision of security for costs. Specifically, the amounts sought are for the reimbursement of $141,120 for upfront premiums paid by the funder under the ATE policy, for the reimbursement of $138,562 for the costs of the deeds of indemnity paid by the funder and for the recovery of $806,400 in respect of the deferred and contingent premiums payable under the ATE insurance policy upon the successful resolution of the proceeding.

99    Now some judges of this Court have characterised a claim for an ATE insurance premium as double dipping or as the cost of defraying a component of the very risk that the funder contracted to accept. But other judges of this Court including myself have allowed deduction of ATE insurance costs as fair and reasonable within the context of the other deductions to be made in the funder’s favour. Ultimately, the question of whether reimbursement and recovery of ATE insurance premiums is just pursuant to s 33V(2) can be reduced to whether in the aggregate the proposed funding commission and ATE insurance costs are reasonable and proportionate in the circumstances. I will return to discuss this aggregate perspective aspect later.

100    In my view it is just that in addition to the funding commission, the funder be reimbursed for the payment of upfront ATE insurance premiums and costs associated with obtaining deeds of indemnity which were obtained to meet the applicants’ security obligations in the proceeding. The upfront component of the ATE insurance premiums paid by the funder and the cost of the deeds of indemnity were at risk in the event of a loss in the proceeding, which became increasingly likely based on the diminishing prospects of the proceeding.

101    The ATE insurance policy made clear that the upfront premiums were non–refundable. In that respect, in addition to the exposure to any residual adverse costs above the ATE insurance policy limit, the upfront amounts represented a proxy for the funder’s adverse cost exposure. In other words, even though the funder was indemnified up to $3.6 million for any adverse costs order by virtue of the ATE insurance policy, it had already put $279,682 ($141,120 plus $138,562) of its funds at risk which would be irrecoverable in the event of a loss in the proceeding. In my view it is just for the out of pocket amounts to be reimbursed to the funder to account for the fact that these funds were at risk.

102    Relatedly, there was a benefit in the funder incurring the deeds of indemnity costs upfront. A deed of indemnity from an A–rated insurer is a comparatively cheaper form of security for group members. Alternative forms of security would have likely precipitated an increase in the ultimate cost of funding to group members. The forms of security proposed by the respondents would have come at a significantly greater cost to group members because the funder would have had to price its return under the funder’s success fee factoring in a significant increase in the cash outlay required to support the proceeding.

103    Further, the applicants could not have given security by way of deeds of indemnity without the funder obtaining the ATE insurance policy including by the funder paying the upfront premiums payable under the policy. Failure to do so would have given the insurer the right to terminate the policy. Accordingly, whilst the funder also obtained a benefit from the ATE insurance policy insofar as it defrayed its adverse cost risk, group members also received substantial benefit by reason that it was able to offer better terms in consideration for the funding provided to support the proceeding.

104    Further, under the LFA, the funder agreed with the applicants that it was entitled to recover both the costs paid in obtaining ATE insurance, including upfront insurance premiums, and costs paid associated with security and the unpaid insurance premiums such as conditional or deferred premiums which are due to the ATE insurer from gross proceeds. Further, the applicants contracted with the funder for the reimbursement of ATE insurance costs in addition to the commission. The combined figures were essentially the price at which the funder was prepared to undertake the funding of the proceeding in view of the risks at the commencement of the proceeding and as it progressed.

105    Now is the aggregate amount to be deducted under the settlement distribution scheme, being the costs and other amounts paid by the funder including the ATE premium and security related costs as well as the commission, just and proportionate in the circumstances of this case? Is the aggregate return for risk still reasonable? In my view the combined amount sought by the funder to be paid out of the gross proceeds of the settlement is reasonable and proportionate in the circumstances of this case. In my view, aggregate deductions of 41.7%, being the commission of $8,297,060 plus the said $1,086,082, are just and proportionate. Let me turn to the broader context.

106    Now I accept that the proportion that a funder stands to gain from the settlement relative to the group members will be relevant in determining whether the deductions sought in the funder’s favour are just. But an artificial and arbitrary allocation to group members based on broad and unprincipled assessments of what is fair that fails to consider the circumstances of the case, particularly the proper assessment of risk attaching to their claims and the allocation of resources by the funder, will not be just. In Kuterba v Sirtex Medical Limited (No 3) [2019] FCA 1374, I stated (at [19]):

No power contained in or philosophy underpinning Part IVA provides a proper basis for giving group members something for what turned out to be nothing or to give them something beyond what the true value of their claims are worth, reflecting the product of the face value times the probability of success times the probability of recovery. Moreover, to so artificially allocate is economically distortive and unnecessarily disincentivises the reasonable investment of time and expense in investigating, funding and prosecuting class actions.

107    There are three scenarios where it may be appropriate for group members to receive a modest aggregate return from the gross settlement sum.

108    First, where the group members’ claims have turned out to be hopeless or unlikely to succeed. In a scenario where the prospects of demonstrating the respondent’s liability are demonstrably low and the legal costs and funding commission would soak up say 90% of a modest settlement sum, it ought not be seriously suggested that group members are automatically entitled to 50% of a valueless claim in which the group members have taken no risk or paid no upfront costs.

109    Second, in the scenario where group members’ claims on liability and quantum are strong, but recoverability has become fraught because of say the financial position of the respondent, it may be appropriate for group members’ returns to fall below 50% particularly where the group members have risked no actual capital.

110    Third, in the scenario where the individual amounts to be paid to registered group members constitutes a substantial proportion of their alleged loss and damage, it may be appropriate for such group members to receive less than in the aggregate 50% of the gross settlement sum.

111    In my view, and notwithstanding that the majority of the settlement fund is to be used to meet deductions in favour of the applicants’ solicitors, the funder and the applicants’ reimbursement payments, that is not a barrier to the approval of the deductions sought by the funder. Assuming that all the deductions are approved, group members will receive an aggregate sum of $5.12 million, being 22.76% of the settlement fund. In this respect the following can be noted.

112    First, the proceeding represents a hybrid of the scenarios set out above. Whilst it is not said that group members’ claims were hopeless or certain to fail, they were likely to fail. Accordingly, the reasonableness of the aggregate amount to be returned to group members ought to be assessed against the true value of group members’ claims factoring in the likelihood of failure. Further, the prospects that group members would have recovered any loss even if the matter had been successful at trial were increasingly remote due to the significantly lower total quantum than anticipated and the challenges and expense associated with proving individual claims in particular in proving causation. There is nothing in Part IVA or s 33V(2) which would require that the group members receive anything more than is just in the circumstances of the proceeding. The aggregate amount available for distribution being 22.7% of the settlement fund represents a just return considering the high risk of failure and non–recovery.

113    Second, the per registered group member returns as a proportion of assessed individual loss are reasonably high. Registered group members who are new clients are to receive approximately 60.67% of the estimated excess premiums. And registered group members who are existing clients are to receive approximately 28.2% to 98.1% of the estimated excess premiums depending on when they received the relevant advice. So, the question of aggregate returns hardly carries the day and is not a central useful metric if the individual returns to registered group members represent a substantial proportion of the registered group members’ assessed loss.

114    In the context of the proceeding, and the accompanying risks associated with it, the individual returns to registered group members are reasonable and proportionate, and therefore just.

Legal costs and disbursements

115    The applicants seek a deduction for their legal costs and disbursements to the extent they have been assessed as reasonable by the costs assessor. The costs assessor has concluded that the total legal costs and disbursements on a solicitor and own client basis incurred and estimated to be incurred by the applicants with their solicitors for work done up to and including the settlement approval hearing are fair and reasonable given the scope and complexity of the matter and the stage at which the proceeding settled. I will allow the amount sought by way of a deduction under s 33V(2) as reasonable and proportionate in the circumstances of this case.

Applicants’ remuneration for representative role

116    The applicants each claim an amount of $20,000 as remuneration for the time spent representing the interests of the group. In my view the proposed payment of $20,000 each is fair and reasonable, and is within the usual range for cases of this type. I will permit these deductions.

Settlement administrator and administration costs

117    There are two matters to briefly address.

118    First, KordaMentha was engaged in this proceeding to assist with the registration process pursuant to my orders on 16 December 2024 that were amended on 20 January 2025 and 23 May 2025, and my orders on 16 March 2026 that were amended on 27 March 2026. KordaMentha is therefore familiar with the proceeding and the group member cohort such that there are likely to be significant efficiencies and cost savings in appointing them as settlement administrator. I will make this appointment.

119    Second, the applicants’ solicitors have estimated the total costs of administering the settlement to be $677,417, which estimate is based on an administration duration of 18 months, and having regard to the role of the settlement administrator as the point of all communications with group members during the administration of the settlement distribution scheme. Save for an amount of $11,000, which the costs assessor was not asked to express an opinion on, her report expresses an opinion that these costs are fair and reasonable. I will make provision for this.

Conclusion

120    For the foregoing reasons I will make the orders sought.

Associate:

Dated:    28 August 2026