I Market Overview

Australia is home to a sophisticated third-party litigation funding market. In 2015, the Australian litigation funding market was estimated to be worth around A$3 billion as compared with a total Australian litigation market of around A$21.1 billion. Industry estimates suggest a compounded annual growth rate of between 3 per cent and 11 per cent.2, 3

Traditionally third-party litigation funding in Australia was used to support insolvency litigation but has been increasingly utilised in a broad range of civil and commercial litigation and arbitration matters, including: tort, shareholder and investor, product liability, employment, consumer and environmental claims. A 2018 litigation finance survey of Australian lawyers and in-house counsel found that more than 70 per cent of survey respondents cited legal finance as a growing, essential new business tool for law firms, and were users of single-case funding.4

The increasing use of litigation funding for a broad range of class actions5 is another well-established trend of the Australian funding market. By 2017, almost half of all class actions filed in the Federal Court of Australia were supported by third-party litigation funders.6 Although this trend is to be contrasted with a more subdued use of third-party funding in class action filings in the state courts, where, for example, only 10 out of the 85 class actions filed in the Supreme Court of Victoria were funded.7 In 2018/2019, funded class actions commenced across all state and federal jurisdictions were reported to represent 72 per cent of all class actions issued.8

Initially, the Australian litigation funding market was dominated by ASX-listed IMF Bentham Ltd, with an estimated market share of 69 per cent in 2015.9 IMF Bentham Ltd's first mover advantage has since been significantly eroded in Australia as other domestic and international funders compete for business. The Australian Law Reform Commission (ALRC) now estimates there are approximately 25 litigation funders active in the Australian market.10

II Legal and Regulatory Framework

i The legal basis of third-party funding and limits on funding others

Prior to 2006, encouraging litigation and funding another's claim for profit were prohibited in Australia by the common law doctrines of maintenance and champerty.11 These doctrines prevented the courts from being used for speculative business ventures. Maintenance and champerty were the foundation for numerous challenges to the legitimacy of litigation funding before being progressively abolished as crimes and torts.12 Even after the statutory abolition of maintenance and champerty in most states of Australia, courts could still intervene in funded litigation where funding contracts were considered to be contrary to the public policy considerations upon which the previous prohibitions were based at common law.13 More than 20 challenges to funding agreements were mounted14 in the eight years prior to the 2006 landmark decision of the High Court in Campbells Cash and Carry Pty Ltd v. Fostif Pty Limited (Fostif).15

In a pivotal moment in the development of the Australian jurisprudence the High Court in Fostif held that third-party litigation funding of a class action was not an abuse of process or contrary to public policy.16 The Court stated that notions of maintenance and champerty could not be used to challenge proceedings simply because they were funded by a litigation funder.17 Since Fostif, litigation funding has become an entrenched part of the Australian legal system. It now plays a crucial role in providing greater access to the courts and bringing equality of arms to claims against often well-resourced respondents. However, challenges to litigation funding agreements still arise from time to time, predominantly in states where the torts of maintenance and champerty have not yet been abolished by statute.18

A further matter under review by regulators is whether lawyers should be restricted from funding claims in the way that third-party funders do. At present, Australian legal practitioners are prohibited from entering into any arrangement for payment of damages-based contingency fees, where fees are calculated by reference to a percentage of the amount recovered.19 Practitioners are entitled to enter into conditional billing arrangements whereby their ordinary fees are payable upon a successful outcome. These arrangements are known as no-win-no-fee agreements and sometimes permit an uplift of 25 per cent of the lawyer's ordinary fees where a successful outcome is achieved.20 For obvious reasons, such no-win-no-fee agreements are often not commercially viable, particularly for larger or more complex claims such as class actions. Interestingly, in its 2017 report on Litigation Funding and Group Proceedings, the Victorian Law Reform Commission (VLRC) suggested that the damages-based contingency fee prohibition does not prevent lawyers from receiving a contingency fee via a common fund court order. It was considered that this might be achieved by approving a litigation service fee in the context of class actions conducted in the Supreme Court of Victoria.21 That proposition was sought to be tested in a class action brought against BHP, following the Fundão Dam collapse in 2015, considered to be Brazil's worst environmental disaster. However, because of other case management rulings made in respect of the competing class actions, Moshinsky J did not ultimately determine whether a common fund order comprising a litigation services fee was permissible.22

The extent to which a lawyer may be associated with the litigation funder has been extensively tested in Australia by a Melbourne-based solicitor, who was the sole director and shareholder of Melbourne City Investments Pty Ltd (MCI). In 2014, securities class actions were commenced by MCI, as the representative plaintiff, against ASX listed Treasury Wine Estates (TWE) and Leighton Holdings (LEI). At incorporation, MCI acquired shares in TWE and LEI and other small parcels of shares costing less than A$700 in various other ASX-listed companies. This same MCI director had also appointed himself as the legal representative for MCI, which was receiving litigation funding to conduct the claims.

In December 2014, the Victorian Court of Appeal allowed an appeal against a decision by the trial judge to refuse TWE's application for a stay of the proceedings on abuse-of-process grounds. It was held on appeal that the class action was an abuse of process because it had been commenced with the predominant purpose of earning legal fees for the solicitor, rather than the fees being an incident or by-product of the vindication of legal rights, and the proceeding was therefore permanently stayed. In their majority judgment, Maxwell P and Nettle JA emphasised the importance of maintaining public confidence in the fairness of court processes; confidence that 'would undoubtedly be shaken' if the enrichment of a solicitor were held to be a legitimate purpose for bringing proceedings.23

Earlier in 2013, the same solicitor had trialled a different funding model for a class action brought against Banksia Securities.24 He again sought to act as the lead plaintiff's solicitor, while also being a director and secretary of the litigation funder and holding an indirect shareholding in the funder. The litigation funding agreement entitled the litigation funder to 30 per cent of the amount received by way of an award or settlement of the proceeding, and to exercise control over the conduct of the proceeding. In November 2014, the Supreme Court of Victoria restrained the solicitor and senior counsel from acting for the lead plaintiff in the Banksia Securities class action owing to conflicts of interest. Justice Ferguson considered that the main risk arising from the solicitor's pecuniary interest in the outcome of the class action was that he might not fulfil, or might not be perceived to fulfil, his duties to the court or be independent and objective.25 Her Honour found 'it would be inimical to the appearance of justice for lawyers to skirt around the prohibition on contingency fees by this means; particularly where the legal practitioner's interest in the funder is sizeable'.26

ii Present regulation of litigation funding

As providers of financial services and credit facilities, litigation funders are subject to the consumer provisions of the Australian Securities and Investments Commission Act 2001 (Cth) (the ASIC Act). The ASIC Act contains protections against unfair contract terms, unconscionable conduct, and misleading and deceptive conduct.27 These provisions provide avenues for redress against unfair or false and misleading terms or omissions in funding agreements.

There are no licensing requirements imposed on litigation funders by the Corporations Act 2001 (Cth) (the Corporations Act) requiring funders to hold an Australian Financial Services Licence (AFSL), or by the National Credit Code requiring them to hold an Australian credit licence. Consequently, litigation funders have no regulated capital adequacy requirements, nor are they required to comply with various related corporate and risk management regulatory requirements, which would ordinarily apply if they were licensed. This is not to suggest that the applicable regulation of litigation funding has been without challenge.

In 2009, the regulation of litigation funding became the subject of national debate as a result of the landmark case of Brookfield Multiplex Funds Management Pty Ltd v. International Litigation Funding Partners Pte Ltd (Multiplex), which determined that litigation funding agreements (including the funding agreement and retainer) in a funded class action constituted managed investment schemes within the meaning of Section 9 of the Corporations Act.28 Managed investment schemes were required to be registered and managed by an entity holding an AFSL. Failure to comply was an offence under the Corporations Act.

A second landmark case involved a dispute between a funder and client, which raised similar questions regarding the nature and regulation of funding arrangements. In Chameleon Mining NL (Receivers and Managers Appointed) (Chameleon) the litigant sought to rescind a funding agreement under Section 935A of the Corporations Act and thereby avoid payment of the funder's commission.29 The funded client argued that the funding agreement was a financial product and that the funder did not hold an AFSL. The High Court concluded that the funding agreement was a 'credit facility' rather than a financial product and, while it did not need an AFSL, the funder did require an Australian credit licence.

In the aftermath of these two landmark cases the federal government intervened, announcing that it would protect funded class actions from too heavy a regulatory burden.30 In 2010, the Australian Securities and Investment Commission (ASIC) issued class orders granting transitional relief to the lawyers and litigation funders involved in funded class actions, exempting them from the managed investment regulatory obligations. ASIC subsequently granted transitional relief from financial product regulatory requirements of the Corporations Act.

The Multiplex and Chameleon cases also led to the introduction of a new conflict management regime. In 2012, regulations were enacted exempting litigation funders from the managed investment scheme provisions of the Corporations Act subject to compliance with new conflict management requirements.31 Litigation funders providing both single-party funding32 (litigation funding arrangements) and multiparty funding33 (litigation funding schemes) are now required to conduct reviews and maintain written procedures identifying and managing conflicts of interest.34

In April 2013, ASIC released a regulatory guide detailing how litigation funders may satisfy the obligations to manage conflicts of interest (the ASIC Guide).35 The ASIC Guide describes the actual, potential and present or future conflicts of interest that may arise in a litigation scheme because of a divergence of interests between the funder, lawyers and claimants. The ASIC Guide requires funders to have robust arrangements in place to identify and assess divergent interests and conflicts, and to respond as needed.36 The regulations require funders to design their own conflicts management policy suited to the nature, scale and complexity of the litigation schemes funded in recognition that funding operations differ greatly.37

iii Government reviews into the regulation of litigation funding

Despite the introduction of the 2012 'conflict management' procedures and the ASIC Guide in 2013, the regulation of litigation funding remained a heavily debated reform issue in the years that followed. In 2014, the Productivity Commission delivered a comprehensive report regarding access to justice, which favoured two major reforms that, if implemented, would greatly impact litigation funding.38 The two proposed reforms were (1) the introduction of a licensing regime for litigation funders,39 and (2) the removal of the ban on lawyers charging damages based contingency fees, thereby introducing another funding option for clients.40 Both reforms (and an array of other proposals) have more recently received further consideration at state and federal level by the VLRC and the ALRC respectively.41

VLRC

On 16 December 2016, the Victorian Attorney General, the Hon. Martin Pakula MP, commissioned the VLRC to report on litigation funding and the conduct of class actions, and to consider how regulators might better protect litigants from unfair risks or disproportionate costs burdens.42 The VLRC report, 'Access to Justice: Litigation Funding and Group Proceedings', tabled in the Victorian parliament on 19 June 2018 (VLRC Report), recommends that, subject to careful regulation, legal practitioners be permitted to charge contingency fees so as to provide another funding option for clients who are unable to bring proceedings without financial assistance in appropriate cases. The VLRC Report also supports industry-wide, national regulation of litigation funders and recommends that Victoria advocate for stronger national regulation through the Council of Australian Governments.43

ALRC

The following year, on 11 December 2017, the then Federal Attorney General, the Hon. Mr George Brandis QC, announced that the ALRC would be asked to conduct a similar review at the federal level into litigation funding and the conduct of class actions. The ALRC Inquiry, led by the Hon. Justice Sarah Derrington QC, consulted broadly with judicial and expert panels, regulators, stakeholders and interested parties in the United Kingdom and Canada. A discussion paper released on 1 June 2018 (the ALRC Paper)44 attracted more than 70 formal submissions from a broad range of industry stakeholders, including: funders, law firms, insurers, industry super funds, non-government organisations, business lobby groups, and regulatory bodies and professional associations.

The ALRC report 'Integrity, Fairness and Efficiency – An Inquiry into Class Action Proceedings and Third-Party Litigation Funders' was delivered to the Attorney General on 21 December 2018 and tabled in the federal Parliament on 24 January 2019 (the ALRC Report). The ALRC Report makes 24 recommendations, predominantly relating to the reform of class action law and procedure.

Consistent with the earlier recommendations of the VLRC and the Productivity Commission, the ALRC Report recommends that 'percentage-based fee arrangements' or contingency fee arrangements for solicitors be permitted in Australian class action proceedings with some limitations.45 This would allow solicitors to receive a proportion of the sum recovered at settlement, subject to court approval, to ensure arrangements are reasonable and proportionate. The four key arguments advanced in favour of contingency fee arrangements are that they will: (1) increase access to justice for prospective group members of medium-sized class actions (between A$30 million and A$60 million); (2) promote competition; (3) increase returns for group members; and (4) provide clarity and certainty for group members.46 The recommended limitations to be placed on contingency fee arrangements include that the contingency fee be the one and only form of funding; the solicitors are precluded from also recovering any professional fees on a time-cost basis; and the solicitors bear the onus of paying for the disbursements and must account for these within the contingency fee.47

In relation to the regulation of litigation funders, the ALRC Report does not recommend the introduction of a licensing regime (as initially proposed in the ALRC Paper), but instead recommends improved court oversight of litigation funders on a case-by-case basis.48 The ALRC considers this will 'achieve at least the same level of consumer protection without the regulatory burden of a licensing regime'.49 The ALRC suggested a suite of amendments to the Federal Court of Australia Act 1976 (Cth) (the FCA Act) aimed at strengthening the Federal Court's supervision of litigation funders, including to provide that litigation funding agreements for class action proceedings are enforceable only with the approval of the Court; expressly empowering the Court to award costs against litigation funders (and insurers) who fail to comply with the overarching purposes of the FCA Act (to facilitate the just resolution of disputed claims according to law and as quickly, inexpensively, and efficiently as possible); and a statutory presumption that litigation funders who fund class action proceedings will provide security for costs in a form that is enforceable in Australia.50

The ALRC Report also recommends that the ASIC Guide be strengthened to require that litigation funders who fund class action proceedings report annually to ASIC on their compliance with the requirement to implement adequate practices and procedures to manage conflicts of interest.51 In recognition of the wide range of funding models that have emerged since the 2012 'conflict management' procedures were introduced, the ALRC also recommends that the scope of Regulation 5C.11.01 of the Corporations Regulations 2001 (Cth) be amended to include 'law firm financing' and 'portfolio financing' within the definition of a 'litigation funding scheme', so that litigation funders who provide such funding are also required to implement conflict management procedures.52

The VLRC and ALRC Reports are only one step in the process towards actual law reform. The next steps involve further industry consultation and feedback in light of the reports followed by consideration and implementation of some or all of the recommendations by the Victorian and federal governments.

III Structuring the Agreement

i Typical structure

Funded litigation can involve a tripartite relationship between the litigation funder, the lawyer and the funded client, whereby the funder agrees to provide for all the client's legal costs and disbursements in return for receiving a percentage of any damages recovered. This percentage typically ranges between 20 per cent and 45 per cent of the settlement proceeds depending on the risks and time involved and the type of funding required.53 The ALRC Report noted that the median commission rate for third-party litigation funding of Federal Court class actions between March 2017 and March 2018 was 30 per cent.54 However, in the context of insolvency litigation funding, commission rates can be considerably higher.55

In class actions, the funder typically also assists with project management, administration and pre-claim investigation and sometimes also charges a project management fee. Litigation funders often agree to provide an indemnity to cover the risk of adverse costs orders in the event that the proceeding is unsuccessful. This may involve providing security for costs as agreed or ordered by the court.

As litigation funders do not act as the legal representatives for the funded litigant, clients generally enter into two agreements: (1) a standard retainer agreement with a lawyer recording the scope and terms under which the legal services are to be provided; and (2) a litigation funding agreement with the funder recording the terms on which litigation funding is to be provided. Commonly, the funder and lawyers have no direct contractual relationship, although clients often authorise their lawyers to report directly to the funder. Funders may agree to pay a proportion, or all, of the lawyer's fees during the course of the claim. Where legal fees are partially deferred they are generally recovered from any resolution sum if a successful outcome is achieved. Sometimes the lawyer also agrees to assume some financial risk in respect of the legal fees in the event that the claim is not successful.

Funding agreements often allocate project management responsibilities and day-to-day administrative control over the litigation to the funder, allowing the funder the right to provide instructions and administrative support to the lawyers, subject to the client's overriding instructions. In theory, the ultimate level of control given to the funder might be seen to give rise to potential conflicts between the interests of the client, in achieving the best possible outcome, and the interests of the funder, in resolving the claim for an acceptable return on its investment. In Fostif the Court of Appeal recognised that a high level of control by the funder is expected and permissible but cautioned that it would be contrary to public policy for the lawyers to fully abdicate to the funder the obligation to act for the representative party.56 Therefore, while it is permissible for a funder to maintain day-to-day control of a claim, the legal representatives are expected to consult with the client on key issues. In this regard funding agreements often preserve the right of the client to override the funder's instructions. They also commonly include dispute resolution mechanisms to manage potential conflicts between the funder and client. Unresolved disputes between funders and clients can require the lawyers to brief a senior counsel to provide a final and binding opinion on areas of dispute, such as, for example, the reasonableness of a proposed settlement offer.

The funded client usually authorises the lawyer to receive any resolution sum on their behalf to be applied in accordance with an agreed priority for reimbursements and payments as set out in the funding agreement. Generally payments are prioritised by first reimbursing the lawyer for any deferred fees and the funder for legal costs and disbursements outlaid, before paying any funding commission and then distributing the balance (or pro rata share in the case of a class action) to the funded clients.

ii Judicial intervention

Australian courts have recently shown some willingness to scrutinise the commercial terms of litigation funding agreements and, in some instances involving representative proceedings, intervene if they consider funding commissions to be excessive. In Earglow Pty Ltd v. Newcrest Mining Ltd Justice Murphy considered that the court had power to reduce a litigation funder's commission rate when approving a class action settlement.57 His Honour held that the court was not limited to the binary choice of either approving or rejecting the settlement – instead, the court had power to approve the settlement, while at the same time varying, of its own motion, the amount payable to the funder (thus, in effect, overriding the contractual arrangements between the funder and group members).58 Justice Murphy considered that this power derived from a combination of Sections 23, 33V, 33Z and 33ZF of the FCA Act, and that it was, in many respects, analogous to the court's power to fix the amount of costs payable to the lawyers.

In deciding whether to exercise that power in the context of a class action settlement approval, Australian courts have shown a willingness to review and consider not only funding commissions, but also: legal costs, the amount that funded litigants will receive 'in hand', the risks assumed by the funder, the amount of adverse costs exposure, and the sophistication and experience of funded litigants. Applying these principles to the Newcrest settlement approval application, Murphy J concluded that the aggregate funding commission of A$6.78 million, at rates of between 26 per cent and 30 per cent, was fair and reasonable. In reaching this conclusion, his Honour considered the published empirical research into the funding commission rates paid in Australian class actions, as well as a number of recent decisions in which settlements were approved, before concluding that those rates were at the lower end of the range. He also emphasised the need for transparency about matters relating to funding in judgments to allow proper benchmarking.

In the subsequent decision of Mitic v. OZ Minerals Ltd (No. 2), Justice Middleton agreed that the court had power to vary the amount payable to a litigation funder out of a settlement in a class action,59 but preferred to base that view on Section 33V(2) of the FCA Act, rather than on the other provisions referred to by Justice Murphy.60

This issue appears not to be settled though. In Liverpool City Council v. McGraw-Hill Financial Inc61 (now known as S&P Global Inc), Lee J approved a comparatively large funding commission of A$92 million out of a total settlement of A$215 million (about 43 per cent) through a funding equalisation order, but, in doing so, considered that Section 33V(2) of the FCA Act did not give the court the power to interfere with the amount of a funding commission to make a settlement reasonable, or to alter a 'valid contract' between parties (including a funding agreement).62 Lee J noted that there were no objections or applications to set aside the agreement and that a large portion of the class were sophisticated institutional investors. His Honour, did not ultimately decide on whether the court has an inherent power to alter a funding agreement,63 although his Honour did express significant doubt about the existence of such a power, which would allow the court to interfere and vary funding agreements in the context of a settlement by altering the contractual promises of group members to pay a commission.64 Therefore, the question (and extent) of judicial power to vary terms of litigation funding agreements remains somewhat controversial and unresolved in Australia.65

More recently the courts have considered this question in a number of cases and have either declined to vary the commission rate66 or, in some cases, varied the commission rate.67 Looking ahead, the ALRC Report recommends that the Federal Court be given an express statutory power to reject, vary or amend the terms (such as the commission rate) of such litigation funding agreements and suggests a further requirement that litigation funding agreements (for class action proceedings in the Federal Court of Australia) are enforceable only with the approval of the Federal Court.68

IV Disclosure

The Federal Court's Class Action Practice Note requires the disclosure of legal costs and any litigation funding charges to current and potential clients in class actions, in clear terms, as soon as is possible.69 Broader disclosure to the court and other parties is also required in any class action.70 Funded applicants are entitled to redact these materials to conceal information that might confer a tactical advantage on another party.71 Commercial terms such as the litigation budget, the commission and costs structure are generally redacted whereas the court is given a complete version.72 On occasion the Federal Court has been prepared to order production of unredacted litigation funding agreements where relevant, for example, where funding rates were relevant to the respondent's application to set aside the proceeding as an abuse of process,73 or where an application to de-class the proceeding on the ground that a closed class was said to be an abuse of process.74

Conversely, parties have also successfully resisted production of funding agreements and documents associated with the funding relationship, such as investigative reports and correspondence between the funder and a funded party, on the ground of legal professional privilege under Section 119 of the Evidence Act 1995 (NSW) (the Evidence Act). In Hastie Group Ltd (in liq) v. Moore the respondent successfully obtained orders at first instance for production of an expert report that had been provided to the prospective litigation funder.75 However, the NSW Court of Appeal overturned that decision and upheld a claim of legal professional privilege. It did so on the ground that the report was prepared for the dominant purpose of the provision of professional legal services in relation to proceedings or anticipated proceedings under Section 119 of the Evidence Act, having regard to the engagement letter attached. Importantly, the Court of Appeal also held that the disclosure of the report to a litigation funder was not sufficient to waive privilege in circumstances where it was clear that the report was being provided on a confidential basis.76

V ADVERSE Costs

Superior Australian courts generally have power to order costs against a non-party, including a third-party funder. In Knight v. FP Special Assets Ltd the High Court held that the relevant provisions of the Supreme Court Act 1867 (Qld) empowered the Court to award costs against a non-party where the party to the litigation is an insolvent person or 'man of straw' and the non-party has played an active part in the conduct of the litigation and has (or some person on whose behalf that non-party has been appointed has) an interest in the subject of the litigation.77

Examples exist where a litigation funder did not provide any contractual indemnity against adverse costs and where the court subsequently refused to order that third-party funder to pay adverse costs. In Jeffery & Katauskas Pty Ltd v. SST Consulting Pty Ltd (SST) the High Court held that it was not an abuse of process where a plaintiff was unable to meet an adverse costs order simply because the funder had not assumed any liability for adverse costs.78 In that case the defendant had not sought adequate security for costs during the proceeding. The High Court clarified that a litigation funder does not always have to put the funded party in a position to meet any adverse costs order.79

At the time, the High Court's SST decision generated apprehension from some quarters, suggesting that funders might refuse to provide indemnities for adverse costs to the detriment of successful respondents. However, perhaps as a result of commercial realities and market competition, these fears have not materialised.80 In practice, litigation funders now routinely agree to indemnify funded clients against adverse costs exposure and provide security for costs that may be ordered. Representative applicants in funded class action claims will often not be prepared to assume personal liability for the costs of the class without such costs indemnities.81

In Domino's Pizza Enterprises Limited v. Precision Tracking Pty Ltd (No. 2) the funded party opposed a security for costs order being made on the grounds that there was no risk that a costs order would not be satisfied because of the combined effect of the litigation funding indemnity, an adverse costs insurance policy and proposed undertakings by Precision Tracking Pty Ltd to notify the parties of any relevant change of funding circumstances.82 However, the court ordered security for costs to be lodged, concluding that: (1) Precision Tracking did not have the capacity to meet an adverse costs order; (2) the funding agreement restricted the indemnity to a counterclaim in the proceedings; and (3) the adverse costs insurance was taken out for the primary claim. Additionally, the funder had an absolute discretion to terminate its funding arrangements with Precision Tracking at any time, including the adverse costs indemnity and the adverse costs insurance.

The adequacy of adverse costs insurance as a form of security was again tested in Petersen Superannuation Fund Pty Ltd v. Bank of Queensland Ltd (Petersen).83 In that case Justice Yates accepted that, depending on the circumstances, 'an appropriately worded ATE policy might be capable of providing sufficient security for an opponent's costs'; but on the facts of Petersen concluded that the specific policy offered was not sufficient, noting the beneficiary of the policy was the applicant, not the respondents.84 His Honour also found that there was no mechanism by which the respondents could compel the applicant to sue on the policy if it were breached. Although this could potentially be overcome by direct proceedings against the insurer under the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW), there were other potential difficulties, including numerous policy exclusions that might be relied on, and a lack of evidence in relation to procurement of the policy that might have an impact on non-disclosure and avoidance rights.

VI The Year in Review

i Competing funded class actions

Evidence suggests that competing or overlapping funded class actions against the same respondent arising out of substantially the same subject matter are becoming more prevalent. Professor Vince Morabito's empirical report 'Competing class actions and comparative perspectives on the volume of class action litigation in Australia' concludes that, as at 30 June 2018, there had been 28 instances or sets of competing class actions in Australia.85

The Federal Court of Australia is adopting a hands-on approach to case management and demonstrating a willingness to exercise its case management powers to prevent duplicative funded class actions. In McKay Super Solutions Pty Ltd (Trustee) v. Bellamy's Australia Ltd (Bellamy's) the Court scrutinised the funding packages offered by competing litigation funders in detail at the commencement of the case.86 Two securities class actions commenced on an open basis had been filed against Bellamy's Australia Ltd, in McKay Super Solutions Pty Ltd (Trustee) v. Bellamy's Australia Ltd (the McKay class action) and Basil v. Bellamy's Australia Limited (the Basil class action).87 The respondent applied to the court to stay one of the class actions on the grounds that it would be oppressive and an abuse of process to defend two similar funded class actions. The pleadings and claim period in each class action were similar, each class action was of a similar size and claim value, and each had experienced class action solicitors on the record. The major point of difference was the litigation funding. The McKay class action was funded by IMF Bentham. The Basil class action was funded by ICP Capital. Beach J held that neither class action should be stayed and that the IMF Bentham-funded class action should remain as an 'open class' and the ICP Capital-funded class action should remain on foot but become a closed class.88 Ultimately, the comparative financial position of IMF Bentham, the form of security provided and the standard terms of its funding agreement were key determinants in the court resolving which funded class action should proceed as an open class in Bellamy's.

In Perera v. GetSwift Ltd89 (GetSwift class action) there were three competing class actions resulting in a carriage motion to determine which class action would proceed and which (if any) would be stayed. The court adopted a multi-factorial analysis to compare the competing class proceedings.90 Justice Lee considered that the court had the power to stay two of the proceedings and permit one to proceed on the basis that to allow two duplicative open class proceedings to proceed would perpetuate unnecessary multiplicity, would bring the administration of justice into disrepute and would amount to an abuse of the court's process. Broadly, the main area of difference between the various GetSwift class actions identified by the court was in the approach to funding and costs. The class action selected to proceed (the Webb class action)91 was said to have an innovative, highly competitive funding model and novel proposed methods to reduce costs by involvement of court-appointed costs referees and joint experts.92 The funding model was calculated as the lesser of 20 per cent of the net settlement sum and a multiple of legal costs, increasing at various stages of the proceedings.93 Lee J considered the alignment of the reward of the funder with a multiple of legal costs was a significant attraction of the funding model because it recognises the reality that the risk of a funder (including for adverse costs) increases incrementally as legal costs increase and has the advantage of avoiding 'windfalls' that might be disproportionate to the risk and costs incurred.

Perhaps the most prominent example of competing or overlapping funded class actions in Australia involves one of Australia's oldest funds managers, AMP Ltd. In 2018, the market value of AMP Ltd plummeted by about 11 per cent as a result of previously undisclosed revelations that emerged during the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. Five separately funded shareholder class actions were brought against AMP Ltd offering various types of funding packages. All the proceedings, except the Komlotex proceeding, involved a litigation funder – the Komlotex proceeding involved a no-win-no-fee model. Four of the proceedings were commenced in the Federal Court and one in the NSW Supreme Court. This led to conflicting applications in each court for the transfer of the proceedings to the other. All proceedings were ultimately transferred to the NSW Supreme Court, where a carriage motion was then conducted. Prior to the carriage motion hearing, the Fernbrook proceeding agreed to consolidate with the Komlotex proceeding, which left the NSW Supreme Court to determine which of the remaining four competing class proceedings should be permitted to proceed.

Ward CJ in Eq adopted a multifactorial approach and determined that the consolidated Komlotex/Fernbrook proceeding should be permitted to proceed, and permanently stayed the remaining proceedings. The factor upon which Her Honour placed most weight was the no-win-no-fee model proposed by the Komlotex/Fernbrook proceeding, which involved no funding commission.94 The decision was appealed and the appeal dismissed. The NSW Court of Appeal held that there was no error of principle in the approach adopted by the primary judge and that the strong policy of the law is to avoid a multiplicity of proceedings.95 So it seems clear that the various attributes of competing litigation funding proposals and their projected returns to group members are likely to be factored in to any decision the Supreme Court makes when determining how to deal with competing or overlapping class actions.

Following the AMP class actions, the Federal Court has entered into protocols with the NSW Supreme Court and the Supreme Court of Victoria for dealing with competing class actions commenced in the respective Courts.96 These protocols provide that each Court will nominate a judge to implement the protocol and to confer and determine the appropriate management of the competing actions, which may include a joint case management hearing. The ALRC Report also recommends amendments to the FCA Act to give the Courts express statutory power to resolve competing class actions.97

ii Common fund orders

A significant evolutionary step in the Australian system has been the judicial approval of 'common fund' orders sought for the benefit of litigation funders in class actions. Common fund orders can provide for the legal costs of the proceedings and the commission charge of a litigation funder to be met by all members of a class who succeed in, or achieve a settlement in, a class action, irrespective of whether they have signed any legal retainer or funding agreement. Common fund orders have been made in a growing number of class actions, including: Money Max Int Pty Ltd (Trustee) v. QBE Insurance Group Ltd (the QBE class action);98 Blairgowrie Trading Ltd v. Allco Finance Group Ltd (Receivers & Managers Appointed) (In Liq) (No. 3) (the Allco class action);99 Camping Warehouse v. Downer EDI (Approval of Settlement) (the Downer EDI class action);100 Lenthall v. Westpac Life Insurance Services Limited101 (the Lenthall class action); Catherine Duck v. Airservices Australia102 (the Airservices class action); and a range of other class actions discussed below.

A common fund order dealing with a litigation funding commission was first made by Murphy J in the QBE class action. The order was made at an early stage of the proceedings to assist group members in making an informed decision as to their participation in the class action prior to opting out. On 15 November 2016, the Full Court approved that common fund order saying that upon any successful settlement or judgment in the proceedings the applicant and class members must pay a reasonable court-approved funding commission from any monies received, prior to distribution of those monies.103 The Full Court declined to set the funding commission rate, preferring to determine that issue at a later stage, 'when more probative and more complete information will be available to the Court, probably at the stage of settlement approval or the distribution of damages'. The applicant in the QBE class action had sought a rate of 30 per cent, which was less than the 32.5–35 per cent rate provided for in the pre-existing funding agreements.104 Largely in response to QBE's principal argument that a common fund order would mean that class members would receive significantly less in hand than if a funding equalisation order were made, the Full Court also imposed a floor condition that class members could not be worse off under the common fund orders than they would be if the orders were not made.105 A further condition was also imposed that class members would be informed of the proposed (common fund) orders and the fact that they would have deducted from any settlement or judgment a reasonable funding commission at a court-approved rate before being required to choose whether or not to opt out. The Full Court considered that if class members were concerned about an obligation to pay a reasonable court-approved funding commission, they could opt out of the proceedings and bring their own case (either individually or collectively) with or without other funding arrangements.106

Subsequently, on 4 May 2018, Justice Murphy approved a A$132.5 million settlement of the QBE class action.107 In doing so His Honour approved the funder's common fund commission at A$30.75 million or 23.208 per cent of the gross settlement sum. Although the commission was large, the Federal Court noted various reasons for concluding it was 'fair and reasonable', including: (1) that the funder took on substantial obligations and significant risks in agreeing to fund a large, complex and expensive proceeding, doing so at a time when the risks could not be accurately assessed and the outcome was far from certain; (2) a large number of sophisticated class members had agreed to funding rates significantly in excess of the 23.2 per cent funding rate proposed; (3) the proposed 23.2 per cent funding rate was substantially better for class members who signed litigation funding agreements than the 32.5 per cent or 35 per cent funding rates in place in those agreements; (4) the proposed 23.2 per cent funding rate was also substantially better for class members than the 30 per cent funding rate for which approval was sought in the application for the common fund orders made in 2016; (5) the proposed 23.2 per cent funding rate was arrived at as part of the settlement negotiations, and the funder further reduced the commission it had sought; (6) the aggregate funding commission satisfied the rider in the common fund orders made in 2016 that class members not be worse off than if the orders had not been made; and (7) a 23.2 per cent funding rate on the gross settlement (and 27.75 per cent of the net settlement) was within the broad parameters of the funding rates available in the market, and lower than many available funding rates.108 These considerations reflected factors identified earlier by the Full Court for determining a reasonable funding commission rate.109

A number of common fund orders have been made since the QBE class action. In 2017, Justice Beach made a specific common fund order at the time of settlement approval of the Allco class action (prior to the QBE settlement approval), allowing the funder 30 per cent of the net settlement amount (i.e., after deduction of legal costs), which equated to about 22 per cent of the gross settlement amount of A$40 million. His Honour emphasised that the 30 per cent rate was reasonable and proportionate to the investment and risk undertaken by the funder in the context of the settlement and should not be seen as a precedent and that he would have set a lower rate had the settlement amount been substantially higher. He also stated that 'a 30 per cent rate would be difficult to justify on a net settlement sum above A$50 million', albeit with the caveat that 'valuable services such as that which a funder provides have a commercial cost and if it can be justified, so be it'.110

Similar orders were also made in the Downer EDI class action, setting the commission rate at 10 per cent. Although this rate was comparatively low, the circumstances of that case were quite unique, including that 'the funder only provided adverse costs cover and security for costs', with the lawyers acting on a no-win-no-fee basis and the total settlement amount being relatively modest (A$8.25 million).

Justice Lee made common fund orders for the payment of funding commission of the lesser of 20 per cent of the net settlement sum and a multiple of legal costs at the commencement of the proceedings in the GetSwift class action. His Honour considered it to be preferable to make the order at an early point, and noted that the order could be varied by the court at a later time if necessary.111 This decision was subsequently cited in Impiombato v. BHP Billiton Ltd112 in support of the making of an early common fund order, while retaining scope to vary or vacate the order. In the Lenthall class action, Justice Lee made orders similar to those in the GetSwift class action. The funding rate to be paid by the class in the Lenthall class action is the lesser of 25 per cent of the gross recovery and three times the total spend on legal costs and disbursements and adverse costs.113

Australian courts have indicated that whether it is appropriate to provide for common fund orders with specific funding commission rates early in the proceedings will depend on the circumstances of the case. In the Airservices class action, Justice Bromwich held that it might distort decision-making and was not appropriate to make common fund orders early in that proceeding that fixed any commission rates, because there was a reasonable possibility that a separate question might end the proceeding or provide a platform for early settlement.114 Approximately 11 common fund orders in class actions have been made in the 12-month period since the Lenthall common fund order. Notably these include Hall v. Slater & Gordon, where a final common fund order authorised a funder commission of A$8 million, representing 21.92 per cent of the gross settlement sum or 28.07 per cent of the net proceeds after costs, from a total settlement of A$36.5 million;115 Southernwood v. Brambles Limited,116 (in the context of consolidated competing class actions), where an unspecified percentage of aggregate resolution sums is yet to be determined by the court, but with the amount payable to be equally apportioned to each of the funders; Hopkins v. Macmahon Holdings Limited,117 where the court approved a funding commission of A$1.295 million, representing just over 19 per cent of the gross settlement sum and around 35 per cent of the net settlement sum. Perhaps of most notoriety was the settlement approval decision in Petersen Superannuation Fund Pty Ltd v. Bank of Queensland Limited,118 where Murphy J refused to approve a common fund commission rate of 25 per cent of the gross settlement (as sought by Vannin Capital Operations Limited). Instead the approved common fund order specified a total payment of A$5.98 million (all but A$1 million of which was in reimbursement of amounts Vannin had paid out), this being 13.7 per cent of the net settlement or 8.3 per cent of the gross settlement. Although a funding rate of 25 per cent of the gross settlement was considered to be within prevailing market rates at the time the case was commenced, in significantly reducing the funding commission, the Court noted that, 'Vannin did not assume the risks of adverse costs, passed on substantial costs to class members and was not obliged to pay most of the legal fees associated with the litigation'.119

During this period, the judicial power enabling common fund orders was directly challenged in a landmark series of cases involving the Lenthall class action and Brewster v. BMW Australia Ltd (Brewster),120 (another class action), where a separate question for determination as to the power to make common fund orders was referred directly to the NSW Court of Appeal. In a historic first joint sitting of the Full Federal Court of Australia (via Lenthall) and the NSW Court of Appeal (via Brewster), the Courts heard these challenges. On 1 March 2019, both Courts concluded that there is sufficient statutory power enabling common fund orders to be made. Allsop CJ, Middleton and Robertson JJ were unanimous in dismissing the Lenthall appeal, finding that Section 33ZF of the FCA Act (the basis for the general power of the courts to make orders appropriate or necessary to ensure that justice is done in the proceedings) enabled the courts to make such orders.121 Likewise, Meagher JA, Ward JA and Leeming JA agreed that common fund orders were authorised pursuant to Section 183 of the Civil Procedure Act 2005 (NSW) (CPA).122 It was held that the making of common fund orders was a proper exercise of judicial power and in no way contravened Chapter III of the Commonwealth Constitution.123 Further, it was held that there was no law that could be characterised as 'an acquisition of property' and that there was no compulsory acquisition of property because group members retained the right to opt out before any liability to pay the funder crystallised.124

The High Court subsequently granted special leave to hear appeals in both the Lenthall and Brewster matters as to whether the Courts had erred in concluding that Section 183 of the CPA and Section 33ZF of the FCA Act validly enabled the making of common fund orders. Those hearings took place in August 2019, with various Attorney-Generals of the Commonwealth and the states of Queensland, Victoria and Western Australia intervening to be heard on the issue. The anticipated outcome of the High Court's decision will finally determine whether the Federal Court and the NSW Supreme Court have power to make common fund orders.

VII Conclusions and Outlook

Litigation funding in Australia has evolved into a mature and sophisticated market. Common law and regulatory developments have steadily refined and clarified the regime's requirements since the High Court's seminal decision in Fostif. Market competition, spurred by new local and international funding entrants and law firms now offering to conduct traditional no-win-no-fee funding in competing class actions, is continuing to drive innovation and placing pressure on commission rates and funding terms.

Key issues for determination will be the High Court's pending decisions in the Lenthall and Brewster matters as to the extent of judicial power available to make common fund orders in class actions. If the High Court allows these appeals, ending common fund orders in their present form, we can expect litigation funding in class actions to return to a focus on competitive client book-building at the early stage of a class action pending further regulatory intervention. Irrespective of the outcome, the adoption of the common fund doctrine in class actions over the past years since Money Max has arguably improved fairness and equity between class members and enabled funders to more efficiently consider the commercial viability of multiparty claims, while decreasing the need to engage in costly client book-building. Should the status quo be altered by the High Court, there will be a strong basis for regulatory change. Further limited regulatory changes and funder reporting requirements can also be expected following the VLRC and ALRC recommendations.

Clearly, an important next step in the evolution of litigation funding in Australia will be the introduction of damages-based contingency fees for lawyers, as recommended by the Productivity Commission, the VLRC and the ALRC. On this front it seems inevitable that litigation funders will soon be asked to compete directly with Australian lawyers in the funded class action segment of the market, which should further enhance consumer outcomes and provide even greater levels of access to justice.


Footnotes

1 Jason Geisker is a principal and Dirk Luff is a senior associate at Maurice Blackburn Lawyers, the legal advisers to Claims Funding Australia Pty Ltd. The authors wish to thank and acknowledge the assistance received from Jenny Tallis and Jessica Xiao.

2 IMF Bentham Litigation Funding Masterclass October 2015 presentation, p. 8.

3 IBIS World Industry Report OD5446, 2017, p. 3.

4 Burford Capital, 2018 Litigation Finance Survey, p. 22.

5 A class action is a procedure whereby a single representative can bring or conduct a claim on behalf of others in the same, similar or related circumstances (Part IVA Federal Court of Australia Act 1976 (Cth) Section 33C(1)).

6 Victorian Law Reform Commission, 'Access to Justice – Litigation Funding and Group Proceedings' Consultation Paper (July 2017), p. 8, para. 1.47.

7 Victorian Law Reform Commission, 'Access to Justice – Litigation Funding and Group Proceedings' Report (March 2018), p. xiv, paras. 12, 14.

8 King & Wood Mallesons, The Review: Class Actions in Australia 2018/19, p. 5.

9 IMF Bentham Litigation Funding Masterclass October 2015 presentation, p. 9.

10 Australian Law Reform Commission, 'Inquiry Into Class Action Proceedings And Third-party Litigation Funders' Discussion Paper 85 (June 2018), p. 16, para. 1.12.

11 Maintenance is assistance in prosecuting or defending a lawsuit by someone with no bona fide interest in the case. Champerty is an agreement to divide litigation proceeds between the owner and another party unrelated to the lawsuit who helps enforce the claim.

12 Civil Law (Wrongs) Act 2002 (ACT) Section 221; Maintenance, Champerty and Barratry Abolition Act 1993 (NSW) Sections 3-4, 6; Criminal Law Consolidation Act 1935 (SA) Schedule 11 cll 1(3), 3; Wrongs Act 1958 (Vic) Section 32; and Crimes Act 1958 (Vic) Section 322A. The torts have not been abolished in Queensland, Western Australia, Tasmania or the Northern Territory.

13 For example, see Wrongs Act ۱۹۵۸ (Vic) Section ۳۲(۲).

14 (2006) 229 CLR 386; [2006] HCA 41.

15 Standing Committee of Attorney Generals, Litigation Funding Discussion Paper (May 2006), p. 4.

16 Campbells Cash and Carry Pty Ltd v. Fostif Pty Limited (2006) 229 CLR 386; [2006] HCA 41 at [1].

17 ibid. at [84]–[86].

18 For a recent example, see Murphy Operator Pty Ltd v. Gladstone Ports Corporation Ltd (No. 2) [2019] QSC 12 at [33–[38]; see also the 13 September 2019 decision in Murphy Operator Pty Ltd v. Gladstone Ports Corporation Ltd (No. 4) [2019] QSC 228, where, in response to a direct challenge to the litigation funding agreements between the funder and the lead applicants and group members, it was held that those agreements are not, by reason of maintenance, champerty or public policy, unenforceable.

19 See Section 183 of the Legal Profession Uniform Law 2015 (NSW).

20 See, for example, Section 182(2)(b) of the Legal Profession Uniform Law 2015 (NSW).

21 Victorian Law Reform Commission, 'Access to Justice: Litigation Funding and Group Proceedings' Report, p. 63, para. 3.96.

22 Impiombato v. BHP Billiton Limited (No. 2) [2018] FCA 2045 at [153].

23 Treasury Wines Estates Limited v. Melbourne City Investments Pty Ltd (2014) 45 VR 585; [2014] VSCA 351 at [22].

24 Bolitho v. Banksia Securities Ltd (No. 4) [2014] VSC 582 at [53].

25 ibid. [53].

26 ibid. [51].

27 Australian Securities and Investments Commission Act 2001 (Cth), Sections 12BF–12BM, 12CA–12C, 12DA.

28 Brookfield Multiplex Funds Management Pty Ltd v. International Litigation Funding Partners Pty Ltd (2009) 180 FCR 11; [2009] FCAFC 147.

29 International Litigation Partners Pte Ltd v. Chameleon Mining NL (Receivers and Managers Appointed) (2012) 246 CLR 455; [2012] HCA 45.

30 Treasury Press Release, Hon Chris Bowen, Minister for Financial Services, Superannuation and Corporate Law 'Government acts to ensure access to justice for class action members', No. 039, 4 May 2010.

31 Corporations Amendment Regulation 2012 (No. 6) (Cth).

32 Corporations Regulations 2001 (Cth), r 5C.11.01(d).

33 ibid. rr 5C.11.01(b)–5C.11.01(c).

34 ibid. r 7.6.01AB.

35 ASIC Regulatory Guide 248, 'Litigation schemes and proof of debt schemes: Managing conflicts of interest'.

36 ibid. RG248.31.

37 Corporations Regulations 2001 (Cth) r 7.6.01AB(2)(a).

38 Productivity Commission, 'Access to Justice Arrangements', Inquiry Report No. 72 (2014).

39 ibid. vol 2, p. 633, Recommendation 18.2.

40 ibid. vol 2, p. 619, Recommendation 18.1.

41 Victorian Law Reform Commission, 'Access to Justice – Litigation Funding and Group Proceedings' Report (March 2010), pp. 17–19, paras. 2.23-2.31 and (Chapter 3); Australian Law Reform Commission, 'Inquiry into Class Action Proceedings And Third-party Litigation Funders' Discussion Paper 85 (June 2018), pp. 48–52, paras. 3.21–3.33 and pp. 83–91, paras. 5.9–5.41.

42 Victorian Law Reform Commission, 'Access to Justice – Litigation Funding and Group Proceedings' Consultation Paper, p. v.

43 ibid. p. xvi, paras. 28–31.

44 Australian Law Reform Commission, 'Inquiry into Class Action Proceedings And Third-party Litigation Funders' Discussion Paper 85, pp. 4–5, and p. 17, para. 1.17.

45 Litigation Funders' Report 134, p. 28, p. 205.

46 ibid. pp. 199–201; Australian Law Reform Commission, 'Inquiry into Class Action Proceedings and Third-party Litigation Funders' Discussion Paper 85, p. 83, para. 5.10.

47 Australian Law Reform Commission, 'Integrity, Fairness and Efficiency – An Inquiry into Class Action Proceedings and Third-Party Litigation Funders' Report 134, p. 28, p. 205.

48 ibid. p. 163, para. 6.42.

49 ibid. p. 162, para. 6.37.

50 ibid. pp. 153–177.

51 ibid. pp. 177–183.

52 ibid. pp. 183–184.

53 Victorian Law Reform Commission, 'Access to Justice – Litigation Funding and Group Proceedings' Consultation Paper, p. 115, para. 8.25. In securities class actions, commission rates have declined over recent years as competition in that sector has increased. The courts have considered these rates in the context of class actions settlement approvals: Kuterba v. Sirtex Medical Limited (No. 3) [2019] FCA 1374 at [7] to [16].

54 Australian Law Reform Commission, 'Integrity, Fairness and Efficiency – An Inquiry into Class Action Proceedings and Third-Party Litigation Funders' Report 134, p. 70 and Table 3.7.

55 The funding fee in insolvency cases can exceed 50 per cent, and has been as high as 75 per cent: see Victorian Law Reform Commission, 'Access to Justice – Litigation Funding and Group Proceedings' Report (March 2018), p. 28, para. 2.74; Standing Committee of Attorneys-General, Litigation Funding in Australia, Discussion Paper (2006) p. 4.

56 Fostif v. Campbells Cash & Carry Pty Ltd (2005) 63 NSWLR 203; [2005] NSWCA 83 at [94]–[116].

57 Earglow Pty Ltd v. Newcrest Mining Ltd [2016] FCA 1433 at [7] and [157]. At [165] Murphy J stated that 'the Court's role to protect class members' interests includes protecting them in relation to excessive litigation funding charges'.

58 For contrast see City of Swan v. McGraw-Hill Companies Inc [2016] FCA 343; (2016) 112 ACSR 65 at 71 [30], where it was said that in an appropriate case the court may refuse settlement approval because a funding commission is so disproportionate to the risk and expense to which the funder was exposed in the proceedings that it provides a proper basis for the court to refuse approval.

59 Mitic v. OZ Minerals Ltd (No. 2) [2017] FCA 409 at [28]–[29]; see also Blairgowrie Trading Ltd v. Allco Finance Group Ltd (Receivers & Managers Appointed) (In Liq) (No. 3) [2017] FCA 330; (2017) 343 ALR 476 at [101]; Petersen Superannuation Fund Pty Ltd v. Bank of Queensland Limited (No. 3) [2018] FCA 1842 at [202]..

60 In Tamaya Resources [2017] FCA 650 at [105]–[106], Justice Wigney appeared to accept that the power existed, and so too did the Full Court in Melbourne City Investments Pty Ltd v. Treasury Wine Estates Ltd (2017) 252 FCR 1; [2017] FCAFC 98 at [90].

61 [2018] FCA 1289.

62 ibid. at [51].

63 ibid. at [52]–[58].

64 ibid. at [47].

65 See, for instance, observations of Justice MBJ Lee, 'Varying Funding Agreements and Freedom of Contract: Some Observations' 1 June 2017, IMF Bentham Class Actions Research Initiative with UNSW Law: Resolving Class Actions Effectively and Fairly, p. 7. In other instances, the Federal Court has indicated that under Section 33ZF of the Federal Court of Australia Act 1977 it has the power, for example, to effectively modify 'any contractual bargain dealing with the funding commission payable out of any settlement proceeds' in the course of a settlement approval: Blairgowrie Trading Ltd v. Allco Finance Group Ltd (Receivers & Managers Appointed ) (In Liq) (No. 3) (2017) 343 ALR 476, 504. See also Earglow Pty Ltd v. Newcrest Mining Ltd [2016] FCA 1433 at [133]–[134], [157]; Mitic v. OZ Minerals Ltd (No. 2) [2017] FCA 409 (21 April 2017) at [26]–[31].

66 Clarke v. Sandhurst Trustees Ltd (No. 2) [2018] FCA 511 at [26]–[27].

67 Petersen Superannuation Fund Pty Ltd v. Bank of Queensland Limited (No. 3) [2018] FCA 1842 at [5]–[16], although that reduction was in the context of a common fund order being made, [14], [75], [217]–[227].

68 Australian Law Reform Commission, 'Integrity, Fairness and Efficiency – An Inquiry into Class Action Proceedings and Third-Party Litigation Funders' Report 134, pp. 169–177.

69 Federal Court of Australia, Class Action Practice Note (GPN-CA) – General Practice Note 25 October 2016, p. 4, para. 5.3.

70 ibid. paras. 6.1, 6.4.

71 ibid. para. 6.4(b).

72 Federal Court of Australia, Class Action Practice Note (GPN-CA) – General Practice Note 25 October 2016, para. 6.1.

73 Spatialinfo Pty Ltd v. Telstra Corporation Ltd [2005] FCA 455.

74 Dorajay Pty Limited v. Aristocrat Leisure Limited [2005] FCA 588.

75 Hastie Group Ltd (in liq) v. Moore [2016] NSWCA 305.

76 ibid. at [59]–[60].

77 Knight v. FP Special Assets Ltd (1992) 174 CLR 178; [1992] HCA 28 at [192]–[193]; see also Gore v. Justice Corporation (2002) 119 FCR 429; [2002] FCAFC 83.

78 Jeffery & Katauskas Pty Ltd v. SST Consulting Pty Ltd (2009) 239 CLR 75; [2009] HCA 43.

79 See also Grave, Adams and Betts, Class Actions in Australia, para. 17.1000.

80 ibid.

81 ibid.

82 Domino's Pizza Enterprises Limited v. Precision Tracking Pty Ltd (No. 2) [2017] FCA 211.

83 [2017] FCA 699.

84 ibid. at [92].

85 See Vince Morabito, 'Competing class actions and comparative perspectives on the volume of class actions litigation in Australia', An Evidence-Based Approach to Class Actions Reform in Australia (Monash Business School, 6th ed, 11 July 2018), p. 13 – of the 28 competing class action identified, 16 related to shareholder claims, five concerned product liability, four were investor, two were mass tort and one related to consumer protection.

86 McKay Super Solutions Pty Ltd (Trustee) v. Bellamy's Australia Ltd [2017] FCA 947.

87 McKay Super Solutions Pty Ltd v. Bellamy's Australia Limited (VID 163/2017); Basil v. Bellamy's Australia Limited (VID 213/2017).

88 A closed class action is restricted to identified group members who have entered into a funding agreement with the funder. An open class action is a class action on behalf of both the funded group members and unfunded group members who fall within the group member definition.

89 (2018) 263 FCR 1; [2018] FCA 732.

90 ibid. [169].

91 ibid. [330].

92 ibid. [328].

93 ibid. [73].

94 Wigmans v. AMP Ltd [2019] NSWSC 603 at [354].

95 Wigmans v. AMP Ltd [2019] NSWCA 243 at [51] and [91].

96 Protocol for Communication and Cooperation between Supreme Court of New South Wales and Federal Court of Australia in Class Action Proceedings, November 2018; Protocol for Communication and Cooperation between Supreme Court of Victoria and Federal Court of Australia in Class Action Proceedings, June 2019.

97 Australian Law Reform Commission, 'Integrity, Fairness and Efficiency – An Inquiry into Class Action Proceedings and Third-Party Litigation Funders' Report 134, p. 107.

98 (2016) 245 FCR 191; [2016] FCAFC 148.

99 [2017] FCA 330.

100 [2016] VSC 784.

101 [2018] FCA 1422 at [25].

102 [2018] FCA 1541.

103 Money Max Int Pty Ltd (Trustee) v. QBE Insurance Group Ltd (2016) 245 FCR 191; [2016] FCAFC 148.

104 ibid. at [11].

105 ibid. at [12].

106 ibid. at [13].

107 Money Max Int Pty Limited (Trustee) v. QBE Insurance Group Limited [2018] FCA 1030.

108 ibid. at [8].

109 Money Max Int Pty Ltd (Trustee) v. QBE Insurance Group Ltd (2016) 245 FCR 191; [2016] FCAFC 148 at [80].

110 Blairgowrie Trading Ltd v. Allco Finance Group Ltd (Receivers & Managers Appointed) (In Liq) (No. 3) [2017] FCA 330 at [160].

111 Perera v. GetSwift Ltd (2018) 263 FCR 1; [2018] FCA 732 at [244]–[248].

112 [2018] FCA 1272 at [25].

113 Lenthall v. Westpac Life Insurance Services [2018] FCA 1422 at [13], [58]–[62].

114 Catherine Duck v. Airservices Australia [2018] FCA1541 at [16].

115 [2018] FCA 2071.

116 [2019] FCA 1021.

117 [2018] FCA 2061.

118 [2018] FCA 1842.

119 ibid. at [257].

120 [2019] NSWCA 35.

121 Westpac Banking Corporation v. Lenthall [2019] FCAFC 34.

122 Brewster v. BMW Australia Ltd [2019] NSWCA 35 at [56]–[61], [64]–[67].

123 ibid. at [96]–[103].

124 ibid. at [104]–[110].