The Third Party Litigation Funding Law Review 7th edition: Australia

02 JANUARY 2024 BY JASON GEISKER & DIRK LUFF

Introduction

Australia is home to one of the world's most sophisticated third party litigation funding markets. Initially, litigation funding was used by insolvency practitioners to pursue insolvency-related legal claims, but since the turn of the millennium litigation funding has been utilised in a far broader range of civil and commercial disputes and arbitrations. Even so, third party litigation funding services remain relatively underutilised in Australia.² In 2021, the total legal market spend on litigation in Australia was estimated at A$4.8 billion, with the addressable market for third party litigation funding estimated at half that amount, or A$2.4 billion.³ In contrast, the Australian litigation funding market had an estimated revenue of only A$221 million in 2020–21.⁴ The litigation funding market is estimated to have grown by 9.3 per cent per annum between 2018 and 2023. That trend is predicted to continue, albeit at a significantly slower rate of 2.9 per cent per annum, over the next five years.⁵

In 2019, the Australian Law Reform Commission (ALRC) estimated there were approximately 33 litigation funders active in the Australian market,⁶ a number that has remained stable.⁷ The use of litigation funding for a broad range of class actions⁸ is a well-known aspect of the Australian market. Around five years ago, class actions represented just under half of the litigation funding market, although contrary to popular belief, funded class actions have since declined to represent less than 36 per cent of the market in 2023.⁹ The balance of the market continues to comprise of small to large businesses and individuals.¹⁰ Similarly, in the 12 months ending 3 March 2018, approximately 72.5 per cent of the class actions filed in Australia were supported by third party litigation funders.¹¹ However, over the past five years there has been a steady decline in funded class actions as a proportion of the overall class actions commenced in Australia, such that they now represent less than half of all class actions filed.¹² Indeed, in 2022, total class action filings themselves (funded and unfunded) were at the lowest level since 2017–2018, reflecting the broader slowdown of this market segment.¹³ In 2023, that slowdown appears to have somewhat abated, although the data requires careful analysis given the prevalence of 'competing' class actions in the 2023 period to 30 June.

Despite dealing with covid-19 comparatively well from a public health perspective, Australia did not completely avoid the economic shockwaves from the pandemic experienced around the globe. Factors influencing the demand for litigation funding in Australia include the strength of the local economy, the rate of corporate insolvencies, the demand for legal services, regulatory settings and the level of government intervention.¹⁴ Yet, despite the biggest economic downturn since the great depression, surprisingly for the Australian business community covid-19 did not result in the tsunami of corporate insolvencies originally expected. Largely due to unprecedented levels of government assistance and intervention, external administrations in 2020 and 2021 were kept at record lows,¹⁵ resulting in a reduced demand for litigation funding in the insolvency market segment. In the 2022–2023 financial year this trend has reversed, with corporate insolvency appointments returning to pre-covid-19, long-term average levels.¹⁶ This was in-part driven by the Australian Taxation Office adopting a more aggressive approach towards recovery of overdue tax debts,¹⁷ but has also been driven by increased insolvencies in the construction, food and accommodation, and retail sectors.¹⁸ This recent increase in corporate insolvencies and deteriorating economic conditions, along with an increase in demand for legal services¹⁹ and predicted improved regulatory settings, is expected to drive growth in the litigation funding industry over the coming years.

Year in review

i Corporations Amendment (Litigation Funding) Regulations 2022

In a further major shift in the regulation and reform of litigation funding in Australia, on 16 December 2022, changes to the regulation of litigation funding schemes under the Corporations Act 2001 (Cth) (the Corporations Act) were introduced by the commencement of the Corporations Amendment (Litigation Funding) Regulations 2022 (the Funding Regulations). The broad effect of the Funding Regulations is to return the regulatory position back to that which existed immediately prior to the Corporations Amendment (Litigation Funding) Regulations 2020 (Cth) (the 2020 Regulations). The Funding Regulations once again provide litigation funding schemes with an explicit exemption from the managed investment scheme (MIS), Australian financial services licence (AFSL), product disclosure and anti-hawking provisions of the Corporations Act.²⁰ In part, this is to ensure that the Corporations Regulations 2001 (Cth) (the Corporations Regulations) reflect the status of the law following the Full Court of the Federal Court's decision in LCM Funding Pty Ltd v. Stanwell Corporation Limited (Stanwell).²¹

The explanatory statement, issued by the authority of the Assistant Treasurer and Minister for Financial Services, states that the MIS and ASFL regimes were not designed or intended to regulate the litigation funding industry.'²² The Funding Regulations bring arrangements for litigation funding schemes in line with arrangements for other types of funding schemes (i.e., insolvency funding schemes) and litigation funding arrangements.

ii ASIC amends relief for litigation funding schemes

On 19 December 2022, following the commencement of the Funding Regulations, the Australian Securities and Investments Commission (ASIC) announced amendments to existing legislative instruments that provided relief that was not covered by the Funding Regulations. Two critical instruments due to expire on 31 January 2023 were extended for three years until 31 January 2026:

1. ASIC Credit (Litigation Funding-Exclusion) Instrument 2020/37, which exempts litigation funding arrangements and proof of debt arrangements from the application of the National Credit Code; and
2. ASIC Credit (Litigation Funding-Exclusion) Instrument 2020/38, which exempts litigation funding arrangements funded by conditional costs arrangements (no-win no-fee retainers) from MIS obligations, AFSL requirements, product disclosure and anti-hawking requirements.

In its announcement, ASIC stated that the purpose of the extension of the relief was 'to provide certainty for litigation funders, lawyers and members of litigation funding and proof of debt funding arrangements while the Government considers further its policy position for these types of arrangements'.²³

iii Common fund orders

A significant evolutionary step in the Australian legal system has been the judicial consideration of common fund orders (CFOs) in class actions. CFOs can provide for the legal costs of the proceedings and the commission charge of a litigation funder to be shared 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. However, the ability of the court to make a CFO at an early stage of a class action proceeding was successfully challenged in the High Court (by a 5:2 majority) in the Lenthall and Brewster class actions on 4 December 2019.²⁴

The first CFO in a class action was made by the Full Court of the Federal Court on 26 October 2016 in the QBE class action.²⁵ 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. In approving the order, Murphy, Gleeson and Beach JJ stated 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.²⁶ 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'.²⁷

Following the QBE class action, a number of CFOs were made in a range of class actions, including Blairgowrie Trading Ltd v. Allco Finance Group Ltd (Receivers & Managers Appointed) (In Liq) (No. 3),²⁸ Camping Warehouse v. Downer EDI (Approval of Settlement),²⁹ Lenthall v. Westpac Life Insurance Services Limited³⁰ (the Lenthall class action) and Catherine Duck v. Airservices Australia.³¹

In 2019, the judicial power enabling CFOs at an early stage of the proceeding was ultimately challenged in a landmark series of cases involving the Lenthall class action and Brewster v. BMW Australia Ltd (the Brewster class action),³² where a separate question for determination as to the power to make CFOs 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 CFOs to be made. Allsop CJ, Middleton and Robertson JJ were unanimous in dismissing the Lenthall appeal, finding that Section 33ZF of the Federal Court of Australia Act 1976 (Cth) (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.³³ Likewise, Meagher JA, Ward JA and Leeming JA agreed that CFOs were authorised pursuant to Section 183 of the Civil Procedure Act 2005 (NSW) (CPA).³⁴ It was held that the making of CFOs was a proper exercise of judicial power and in no way contravened Chapter III of the Commonwealth Constitution.³⁵

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 33ZF of the FCA Act and Section 183 of the CPA validly enabled the making of CFOs. On 4 December 2019, a majority of the High Court of Australia (Kiefel CJ, Bell, Keane, Nettle and Gordon JJ) held that neither Section 33ZF of the FCA Act nor Section 183 of the CPA empowers a court to make a CFO.³⁶ In a joint judgment, Kiefel CJ, Bell and Keane JJ held that although the power conferred on the court by those sections is broad, considerations of text, context and purpose all point to the conclusion that it does not extend to the making of a CFO.³⁷ However, the High Court's judgment left two questions unresolved:

1. whether the court has power to make a CFO at the conclusion of a representative proceeding, pursuant to Section 33ZF of the FCA Act and Section 183 of the CPA (following a judgment) or Section 33V(2) of the FCA Act and Section 173(2) of the CPA (following a settlement); and
2. whether the making of a CFO would be unconstitutional.

Following the High Court's decision in the Brewster and Lenthall class actions, on 20 December 2019, the Federal Court issued a new class actions practice note (GPN-CA) to indicate that the Court will still consider appropriate applications for orders sharing the costs of class actions at the conclusion of proceedings of this kind.³⁸

Different approaches have been taken by judges in interpreting the scope of the High Court's decision in Brewster and Lenthall.

Justice Beach, Justice Murphy and Justice Lee of the Federal Court have expressed the view that the court has the power to make CFOs (sometimes referred to as 'expense sharing orders') at the time of settlement under Section 33V(2) of the FCA Act,³⁹ with those Justices making such orders in recent cases.⁴⁰ Other Federal Court judges have taken a different view,⁴¹ with some considering that the majority of the High Court gave strong reasons favouring a funding equalisation order over a CFO.⁴² The question of whether the court has the power to make CFOs at the time of settlement under Section 33V(2) was recently referred for consideration by the Full Court of the Federal Court of Australia in the McDonald's employment class action.⁴³ The Full Court, comprised of Justice Lee, Justice Beach and Justice Colvin, unanimously affirmed this proposition. Justice Beach noted the wide judicial discretion conferred by Section 33V(2), finding that 'none of the terms used in Section 33V(2) would, as a matter of natural meaning, be read as precluding a settlement CFO.'⁴⁴ His Honour also considered the context and purpose of 33V(2), in that it is a provision addressing the settlement of proceedings⁴⁵ and, while there is no specific guidance on 33V(2) from extrinsic materials, the purpose of Part IVA is not in doubt.⁴⁶ Justices Lee and Colvin made similar assessments of Section 33V(2), in that it confers a broad discretion⁴⁷ and that its purpose is obvious.⁴⁸ Submissions made by the court-appointed contradictor included that making a settlement CFO would not constitute an exercise of judicial power, principally because it would involve the creation of rights and obligations for which the FCA Act does not provide, and that it also involves the weighing of policy considerations in quantifying the amount of commission to be paid. The Court rejected this position, finding that the making of a settlement CFO was simply the exercise of a discretionary power (in accordance with the requirements of Section 33V(2)), and noting that courts very commonly 'set rates of return of interest, calculate economic loss, and fix the remuneration of executors, trustees, liquidators and salvors, which tasks can involve commercial assessments and considerations of risk'.⁴⁹ Finally, it is important to note that the Court also considered the meaning of the decision in Brewster, and clearly distinguished it as being limited to the question of whether CFOs could be made early in a proceeding under the 'gap-filling' power in Section 33ZF(1).⁵⁰

Separately, the question of whether CFOs can be made at settlement under Section 173 of the CPA was referred to the Court of Appeal of the Supreme Court of NSW in Brewster,⁵¹ although the Court of Appeal promptly declined to decide the issue because no settlement had been reached and therefore the Court was effectively being asked to deal with the issue in a factual vacuum.⁵² This issue was subsequently considered in the case of Haselhurst v. Toyota Motor Corporation Australia Ltd, where Justice Rees confirmed that the court had the power to make a CFO at settlement under Section 173(2) of the CPA.⁵³

Given these decisions and practice notes, the Federal Court of Australia and Supreme Court of NSW seem to have endorsed the view that both courts have the power to make CFOs at the time of settlement, and that the High Court's earlier decision in Brewster is limited to commencement CFOs. However, this issue may ultimately be referred to the High Court of Australia for determination.⁵⁴

In Pearson⁵⁵ (the stolen wages class action), Murphy J of the Federal Court also considered whether a CFO made pre-Brewster had continuing effect. His Honour found that although it is apparent, as a result of the decision in Brewster, that the extant CFO made earlier in the proceeding was beyond power, as an order of a superior court, the CFO remained valid until and unless set aside,⁵⁶ and as no party had sought to have the CFO set aside, it continues in effect.⁵⁷

Notwithstanding these subsequent developments, the High Court's decisions in the Brewster and Lenthall class actions have constrained the courts' ability to adopt CFOs and to deal with commission rates. The decisions have also been viewed as being likely to substantially reduce the interest of litigation funders in the Australian class action market.⁵⁸ With some judges now calling for legislative intervention on the issue,⁵⁹ there appears to be a strong basis for regulatory change.

iv Contingency fees in the Supreme Court of Victoria (class actions)

Another evolutionary step in the Australian system occurred on 18 June 2020 with the introduction of damages-based contingency fees in class actions applicable in the Supreme Court of Victoria. These changes were introduced via a new Section 33ZDA of the Supreme Court Act 1986 (Vic) allowing for group costs orders in class actions. Group costs orders can now be made where it is 'appropriate or necessary to ensure that justice is done'. This is a first in Australia and, consistent with recommendations from academics,⁶⁰ the Productivity Commission, Victorian Law Reform Commission (VLRC) and ALRC, permits the court to make orders allowing a plaintiff law firm to charge its fees as a percentage of the amount recovered rather than on a time or scale fee basis. Fundamental to the making of a group costs order is that the plaintiff law firm must assume liability for adverse costs risks as a condition of the order and be prepared to satisfy any security for costs orders.⁶¹ Consequently, comparisons with no-win no-fee contingency fee arrangements (which do not require the plaintiff's lawyers to provide security or cover adverse costs exposure) are not apt. At an early stage in the proceeding, the court will determine the percentage to be allocated to the plaintiff law firm that can be charged as a contingency. It may revisit this percentage at a later stage.⁶² Guidance as to procedural matters is set out in the Supreme Court's practice note,⁶³ (the Practice Note), which came into operation on 1 July 2020 with the commencement of Section 33ZDA.

Since the introduction of Section 33ZDA, the Supreme Court has considered several applications for group costs orders made in varying circumstances, including where law firms were self-funded, funded by a litigation funder and where multiple firms were acting jointly under differing funding arrangements:

1. in September 2021, in the matter of Fox v. Westpac Banking Corporation (Fox);⁶⁴
2. in February 2022, in the matter of Allen v. G8 Education Ltd (G8 Education);⁶⁵
3. in April 2022, in the matter of Bogan v. The Estate of Peter John Smedley (Deceased) (Bogan);⁶⁶
4. in August 2022, in the matters of Nelson v. Beach Energy and Sanders v. Beach Energy (Beach Energy);⁶⁷
5. in August 2022, in the matters of Lay v. Nuix Ltd, Batchelor v. Nuix Ltd and Bahtiyar v. Nuix Ltd (Nuix);⁶⁸
6. in November 2022, in the matter of Gerhke v. Noumi Ltd (Gerhke);⁶⁹
7. in December 2022, in the matter of Mumford v. EML Payments;⁷⁰
8. in December 2022, in the matter of Liberman v. Crown Resorts Ltd;⁷¹
9. in March 2023, in the matter of Fox v. Westpac Banking Corporation (No. 2);⁷² and
10. in September 2023, in the matter of DA Lynch v. Star Entertainment Group; Drake v. Star Entertainment Group; Huang v. Star Entertainment Group; and Jowene v. Star Entertainment Group (Star).⁷³

Whether the making of a group costs order is appropriate or necessary to ensure that justice is done (the criterion for the exercise of the discretion) will depend upon a broad evaluative assessment of the relevant facts and evidence before the Court. The price, or the costs that group members are likely to pay, is relevant but not the only consideration.⁷⁴ A review of the decisions to date provides several key takeaways, as given below.

First, the Court has approached the question of whether to make an order in a similar manner as when asked to approve a settlement and deductions for legal and funding costs under Section 33V of the FC Act. The decisions (and the Practice Note) acknowledge that disclosing matters relevant to an application for a group costs order involves a similar degree of transparency as a Section 33V application. Absent a confidentiality regime, this is prejudicial to the interests of the plaintiff, therefore the Practice Note (Section 14.2) allows for the plaintiff to approach the Court regarding confidentiality arrangements. The court has often delivered its decisions in a public version of the judgment with a separate and further confidential schedule provided only to the plaintiff. Similarly, the Court developed a practice, in the early applications (though also utilised recently in Star), of appointing a contradictor, which allowed the Court to consider arguments independently made in the interest of group members.

Secondly, while Section 33ZDA specifically refers to the setting of a percentage, the Court has emphasised that there is no set range. This reflects the fact that each circumstance presented to the Court is unique. A survey of the decisions where an order has been made shows that the range, so far, has varied from a low of 14 per cent in Star, to a high of 40 per cent in Bogan. None of the decisions in which an order has been made have proceeded to trial or settlement approval. The factors considered relevant by the Court in determining whether a percentage is fair and reasonable have included:

1. the risks that the proceeding will not progress without an order. In Bogan, Justice Dixon approved a percentage of 40 per cent, on the basis that there was evidence before the Court from the funder that they would cease to fund the proceeding if a group costs order was not made (either via the existing funding agreement or via a proposed cost-sharing agreement). His Honour considered it highly relevant to assess the risk that if the application were refused the funder would terminate the funding agreement;
2. the costs to group members under alternative funding arrangements. The counterfactual where alternative funding arrangements would be available to group members has been a key feature of submissions and evidence in support of funding applications. In Fox, Nuix, G8 Education, Beach Energy and Gerhke, predictive modelling under alternative funding arrangements and different recovery scenarios were utilised in favour of the proposed orders. Since Fox, the Court has consistently cautioned about the inherent uncertainty in predictive modelling. Indeed, as was emphasised in Gerhke,⁷⁵ while it remains a relevant consideration, a comparison of potential financial outcomes of alternative funding models should not 'subsume the place of the evaluative inquiry required by section 33ZDA', which must consider the effects of the order holistically; and
3. the investment evaluation principles relevant to law firms. In Bogan, Justice Dixon compiled a list of the risks he considered would inform a lawyer's investment evaluation.⁷⁶ These included the prospect of the claims failing at trial, the responsibility for the payment of legal costs disbursements (of either side) falling to the law practice, the capital requirement of security for costs, the expectations as to the net return on the investment sum as well as the timing of the receipt of any resolution sum. These types of matters, to be addressed in confidential materials filed by the applicants, are all relevant to the Court's consideration of what is fair and reasonable in the circumstances.

Thirdly, and further to the above observation regarding the relevance of investment principles, the Court expects a high degree of candour in the provision of supporting evidence for it to be satisfied that an order is fair and reasonable. In Nuix, the evidence provided in support of the application failed to satisfy Justice Nichols that the plaintiffs' lawyers had sufficient financial resources to fund the proceedings. Critical evidence such as financial statements from the funder and precise details of the relevant insurance policy were not forthcoming.

Finally, and further to the above observation regarding the relevance of predictive alternative outcome modelling, the return to group members is not the sole determining factor in group costs order applications. This was emphasised in Fox, and has been reinforced in subsequent decisions, as follows (at [8(a)]):

Whether the making of a group costs order (at all or at a particular percentage rate) is appropriate or necessary to ensure that justice is done in the proceeding (the statutory criterion for the exercise of the discretion), will depend upon a broad, evaluative assessment of the relevant facts and the evidence before the court. In making that assessment the interests of group members must be given primacy. In that assessment price, or the costs that group members are likely to pay, is a relevant consideration, but not the only consideration.

v Abolition of torts of maintenance and champerty and new class action regime in Western Australia

A further development towards aligning the states with the federal jurisdiction occurred in September 2022, when the Western Australian parliament followed the Victorian, NSW and Queensland jurisdictions by establishing a legislative framework for class actions for the Supreme Court of Western Australia.⁷⁷ In an effort to seek uniformity, the Western Australian government chose to model its own class action regime on the federal system as detailed in Part IVA of the FCA Act, although with some minor variations. Additionally, as part of the same reforms in September 2022, the Western Australian parliament also abolished the torts of maintenance and champerty in that state as part of the government's civil procedure reforms.⁷⁸ This legislation was careful not to interfere with the common law restrictions on contracts that might be found to be contrary to public policy or otherwise treated by the courts as illegal.⁷⁹ These statutory abolitions followed the path taken in other Australian states such as NSW, Victoria, South Australia and the Australian Capital Territory and adopted earlier recommendations of the Western Australia Law Reform Commission.⁸⁰

Legal and regulatory framework

i The legal basis and limits of third party funding

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.⁸¹ 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 in most Australian states.⁸² More than 20 challenges to funding agreements were mounted⁸³ in the eight years leading up to the 2006 landmark decision of the High Court in Campbells Cash and Carry Pty Ltd v. Fostif Pty Limited (Fostif).⁸⁴

In a pivotal moment in the development of Australian jurisprudence, the High Court held in Fostif that third party litigation funding of a class action was not an abuse of process or contrary to public policy.⁸⁵ 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.⁸⁶ Following Fostif, litigation funding has become an entrenched part of the Australian legal system, playing a crucial role in providing greater access to the courts and bringing equality of arms to claims often against well-resourced respondents.

Even so, courts may still intervene in funded litigation where funding arrangements are contrary to the public policy considerations upon which the previous prohibitions were based at common law.⁸⁷ Fostif reserved the question as to what those public policy considerations might be in the Australian states that have not abolished the torts of maintenance and champerty by statute. Hence, challenges to litigation funding agreements still arise from time to time.⁸⁸ A more recent example arose in the Queensland Court of Appeal decision in Gladstone Ports Corp Ltd v. Murphy Operator Pty Ltd⁸⁹ (Gladstone). That case involved a challenge to the adequacy of security for costs provided by way of a deed of indemnity from the funder. The defendant joined the funder to the proceeding and sought a declaration that its funding arrangements supporting the class action were unenforceable by reason of public policy. Gladstone argued the funder had been given an impermissible level of control, particularly in relation to settlement and other decision making, in the litigation.

The Court of Appeal rejected these arguments. To the extent that 'maintenance offends against the law', the Court considered this can be adequately dealt with through the doctrine of abuse of process and should be subsumed into that body of law, rather than dealt with as a separate tort of maintenance.⁹⁰ The Court said a litigation funder was not in any substantially different position from 'an insurer defending a claim or suing to recover under a right of subrogation'.⁹¹ An application for special leave to appeal was subsequently dismissed, with the High Court concluding Gladstone's arguments had insufficient prospects of success.⁹²

Likewise, the extent of a lawyer's ability to fund claims, in the same way that third party funders might, has been reviewed by the Court too. Apart from Victoria, legal practitioners in all other Australian states and territories are presently 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).⁹³ Unsurprisingly, practitioners in all states are still entitled to enter into conditional billing arrangements whereby their ordinary fees are payable upon a successful outcome.⁹⁴ These arrangements, known as no-win no-fee agreements, sometimes permit an uplift of up to 25 per cent of the lawyer's ordinary fees where a successful outcome is achieved.⁹⁵ For obvious reasons, such arrangements are often not commercially viable for practitioners, particularly for larger or more complex claims such as class actions. Victoria has been the only state to address this issue. Victorian practitioners have been permitted to enter into damages-based contingency fee arrangements for class actions since 1 July 2020.⁹⁶

The extent to which a lawyer may be associated with a litigation funder was extensively tested by a Melbourne-based solicitor, Mark Elliott (now deceased), who was formerly a sole director and shareholder of Melbourne City Investments Pty Ltd (MCI). In 2014, two securities class actions were commenced by MCI, as the representative plaintiff, against ASX listed Treasury Wine Estates (TWE) and Leighton Holdings (LEI). MCI had acquired shares in TWE and LEI. Mr Elliott 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 stayed the proceedings as an abuse of process. The stay was granted because the proceedings had been commenced with the predominant purpose of earning legal fees for Mr Elliot, rather than the fees being an incident or by-product of the vindication of legal rights. 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.⁹⁷

Separately, Mr Elliott trialled a different funding model for a class action brought against Banksia Securities.⁹⁸ 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 funder to a 30 per cent commission and to exercise control over the conduct of the proceeding. The Supreme Court of Victoria restrained Mr Elliott from acting in the Banksia Securities class action owing to conflicts of interest. Justice Ferguson considered that the main risk arising from Mr Elliott'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.⁹⁹ 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'.¹⁰⁰

In February 2018, a A$64 million settlement of the Banksia Securities class action was approved but then made subject to judicial review following an appeal from a disgruntled group member. The review involved the appointment of a contradictor to assist the Court to consider the amounts to be paid for legal costs and funding commission. In the dramatic developments that followed, allegations were presented to the Court suggesting the plaintiff's solicitor and counsel had engaged in serious misconduct in connection with their billing practices. In response, both the plaintiff's senior and junior counsel elected not to dispute the allegations and offered to have their names removed from the roll. The review hearing before Supreme Court Justice Dixon, which examined the funder's and lawyers' conduct, including whether they should be ordered to forego all costs and commission and pay additional damages to the 16,000 class members, concluded on 18 March 2021, with judgment delivered on 11 October 2021.¹⁰¹ In his judgment, Justice Dixon found that the litigation funder and five lawyers involved engaged in egregious conduct in connection with a fraudulent scheme, intending to claim more than A$19 million in purported legal costs and funding commission from the settlement sum. Justice Dixon noted that their conduct had shattered confidence in, and expectations of, lawyers as an honourable profession, and corrupted the proper administration of justice. The Court concluded that the lawyers' and funder's actions were appalling breaches of their respective duties to the court, particularly the paramount duty and overarching obligations imposed on them by the Civil Procedure Act 2010 (Vic). As well as removing some of the lawyers involved from the roll of admitted practitioners, Justice Dixon also referred the matter on to the Director of Public Prosecutions for further investigation and appropriate action.¹⁰²

ii Post-Fostif developments in litigation funding regulation

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), which contains protections against unfair contract terms, unconscionable conduct, and misleading and deceptive conduct.¹⁰³ These provisions provide avenues for redress against unfair or false and misleading terms or omissions in funding agreements. Funders are also subject to the general regulatory requirements under the Corporations Act and the general law, including equity.¹⁰⁴

In 2009, litigation funding regulation prompted national debate following the landmark decision in Brookfield Multiplex Funds Management Pty Ltd v. International Litigation Funding Partners Pte Ltd (Multiplex), which determined that litigation funding agreements and the lawyer's retainer in a funded class action constituted managed investment schemes within the meaning of Section 9 of the Corporations Act.¹⁰⁵ Managed investment schemes are required to be registered¹⁰⁶ and managed by a public company holding an AFSL.¹⁰⁷ Failure to comply is an offence.¹⁰⁸

A second landmark case involving a dispute between a funder and client raised similar questions at the time regarding the nature and regulation of funding arrangements. In Chameleon Mining NL (Receivers and Managers Appointed) (Chameleon) the funded client sought to rescind a funding agreement under Section 925A of the Corporations Act and thereby avoid payment of the funder's commission.¹⁰⁹ The 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 constituted 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 decisions the federal government intervened, announcing that it would protect funded class actions from too heavy a regulatory burden.¹¹⁰ In 2010, 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 the financial product regulatory requirements of the Corporations Act. More recently, those protections have been significantly scaled back and subsequently reinstated, as discussed below.

The Multiplex and Chameleon cases also led to the introduction of a 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 certain conflict management requirements.¹¹¹ During this time litigation funders providing both single-party funding¹¹² (litigation funding arrangements) and multiparty funding¹¹³ (litigation funding schemes) were required to conduct reviews and maintain written procedures identifying and managing conflicts of interest.¹¹⁴ In April 2013, ASIC released a regulatory guide detailing how litigation funders may satisfy these obligations.¹¹⁵

However, in a dramatic policy change on 22 May 2020, the then Federal Treasurer, the Honourable Josh Frydenberg, announced significantly expanded regulatory requirements were to be imposed on litigation funding via the 2020 Regulations. The stated effect of the 2020 Regulations was twofold: to require third party litigation funders to hold an AFSL, and to require funders to comply with the managed investment scheme regime under Chapter 5C of the Corporations Act. The 2020 Regulations were published on 23 July 2020 under a cloud of controversy,¹¹⁶ and took effect on 22 August 2020.¹¹⁷ The 2020 Regulations rejected the detailed recommendations of the ALRC report 'Integrity, Fairness and Efficiency – An Inquiry into Class Action Proceedings and Third-Party Litigation Funders' (ALRC report) delivered to the Federal Attorney-General on 21 December 2018.¹¹⁸ A number of applications were made in connection with funded class actions to determine if they contravened the 2020 Regulations or were protected by the transitional provisions.¹¹⁹ At the time, some funded class actions also experienced delays due to compliance with the managed investment scheme regime.¹²⁰

Subsequently, in Stanwell Corporation Ltd v. LCM Funding Limited,¹²¹ one of the respondents to the class action, Stanwell, alleged that the funding arrangements for the class action were unlawful, in that they constituted a managed investment scheme that failed to comply with the 2020 Regulations. In response, the litigation funder (LCM) filed a cross-claim seeking a declaration that the funding arrangements did not constitute a managed investment scheme, and contended that the earlier Full Court decision of Multiplex was wrong. Justice Beach dismissed Stanwell's claims, holding that the litigation funding arrangements were grandfathered by reason of the transitional provisions in the 2020 Regulations.¹²² As such, his Honour found that it was not necessary to deal with the litigation funder's cross-claim and dismissed the cross-claim.¹²³ Justice Beach did, however, state that there is a strong case for arguing that it is appropriate for a Full Court to reconsider the majority decision in Multiplex.¹²⁴ His Honour then went on to identify (in some detail) the problematic aspects of the reasoning in Multiplex, including the 'unresolved conceptual incoherence in applying Chapter 5C [of the Corporations Act] to litigation funding schemes'.¹²⁵ On 13 December 2021, the litigation funder appealed from the dismissal of its cross-claim.

In 2022 in the landmark decision of Stanwell,¹²⁶ the Full Court of the Federal Court of Australia unanimously held that the decision in Multiplex was plainly wrong, and that a litigation funding scheme did not constitute a managed investment scheme.¹²⁷ The Court agreed with Justice Beach's analysis of the deficiencies in the reasoning in Muliplex. ¹²⁸ Justice Lee found that the 'characterisation of litigation funding arrangements as managed investment schemes is a case of placing a square peg into a round hole'.¹²⁹ His Honour also dismissed the idea that litigation funding schemes are unregulated, citing the Court's close protective and supervisory role '. . . to ensure that any class action is conducted in a way which best facilitates the just resolution of the disputes according to law and as quickly, inexpensively and efficiently as possible. Relatedly, the Court is also obliged to protect group members and manage the class action recognising that conflicts of interest, or conflicts of duty and interest, between and among representatives, group members, funders and solicitors can arise.'¹³⁰

Following the Stanwell decision, the federal government has clarified the regulatory position to align with Stanwell by introducing amendments to the Corporations Regulations. This has been implemented via the Funding Regulations, which commenced on 10 December 2022. The Funding Regulations (among other things) exempt litigation funding schemes from the managed investment scheme provisions of the Corporations Act, effectively bringing the arrangements for litigation funding schemes in line with the regime prior to 22 August 2020 and the law following Stanwell.

iii Reviews into the regulation of litigation funding

The regulation of litigation funding in Australia has evolved through a long history of reviews and reports.

Productivity Commission report

In September 2014, the Productivity Commission delivered a comprehensive report regarding access to justice, which favoured two major reforms which, if implemented, would greatly impact litigation funding.¹³¹ The two proposed reforms were the introduction of a licensing regime for litigation funders,¹³² and the removal of the ban on lawyers charging damages-based contingency fees, thereby introducing another funding option for clients.¹³³ Both reforms (and an array of other proposals) received further independent consideration at state and federal level by the VLRC and the ALRC.¹³⁴

VLRC

On 16 December 2016, the Victorian Attorney-General 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.¹³⁵ The VLRC report, 'Access to Justice: Litigation Funding and Group Proceedings', tabled in the Victorian parliament on 19 June 2018 (VLRC report), recommended 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 supported industry-wide, national regulation of litigation funders and recommended that Victoria advocate for stronger national regulation through the Council of Australian Governments.¹³⁶

ALRC

On 11 December 2017, the federal government announced that the ALRC would conduct a similar federal review into litigation funding and the conduct of class actions. The ALRC Inquiry, led by the Honourable 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 (ALRC paper)¹³⁷ 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 was delivered to the Attorney-General on 21 December 2018 and 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.¹³⁸ 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: increase access to justice for prospective group members of medium-sized class actions (between A$30 million and A$60 million); promote competition; increase returns for group members; and provide clarity and certainty for group members.¹³⁹ 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.¹⁴⁰

Notably, in relation to the regulation of litigation funders, the ALRC report recommends against the introduction of a licensing regime (contrary to the initial proposal in the ALRC paper). It suggests improved court oversight of litigation funders on a case-by-case basis.¹⁴¹ The ALRC considers this will 'achieve at least the same level of consumer protection without the regulatory burden of a licensing regime'.¹⁴² The ALRC report suggests a suite of amendments to 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.¹⁴³

The ALRC report also recommends that the ASIC Guide 248 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.¹⁴⁴ In recognition of the wide range of funding models emerging since the 2012 conflict management procedures were introduced, the ALRC also recommends that the scope of Regulation 5C.11.01 of the Corporations Regulations 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.¹⁴⁵

PJC review

In May 2020, the former federal government announced yet another review of 'litigation funding and the regulation of the class action industry' – this time via a referral to the Parliamentary Joint Committee on Corporations and Financial Services (PJC).¹⁴⁶ A four-week period was allowed for short submissions followed by a series of short hearings in July and August 2020. The stated terms of reference of the inquiry were to consider whether the current level of regulation applying to Australia's growing class action industry is impacting fair and equitable outcomes for plaintiffs.¹⁴⁷ In mid-2020, the hastily convened PJC review¹⁴⁸ considered the regulation of 'litigation funding and the class action industry' prior to the federal government responding to the 24 detailed recommendations contained in the ALRC report.¹⁴⁹

On 21 December 2020, precisely two years after the ALRC report was completed, the PJC delivered its own, far briefer report (PJC report). In it, the PJC recognised that litigation funders close the considerable gap in financial resources between the two sides of a class action, reducing the defendant's ability to defeat the case through superior economic power and recognised that, in many instances, a class action in Australia may not proceed without a litigation funder. However, in many respects, the PJC report took a major departure from many of the earlier recommendations of the ALRC report.

The PJC report recommended a series of additional legislative, regulatory and practice requirements be introduced with the stated objective of constraining litigation funders and class actions. These recommendations include:

1. that a new concept of 'procedural proportionality' be legislated for class actions to require that the potential costs and drawbacks of proceedings be balanced against the benefits to class members, as well as the impact on court resources, regulatory outcomes and public interest;
2. a presumption that litigation funders provide security for costs and fully indemnify representative plaintiffs;
3. enhanced Federal Court legislative powers to oversee and reject, vary or amend any term of a litigation funding contract in the interests of justice, including commissions and fees, and to require Federal Court approval orders as a condition of the funding agreement being enforceable;
4. permitting the appointment of court-appointed referees with market capital or finance expertise to act as litigation funding fee assessors;
5. legislating to guarantee a minimum return of at least 70 per cent of the gross proceeds to class action members;¹⁵⁰
6. enhanced use of contradictors to appear at class action settlement approval hearings;
7. a review of the ability of lawyers to obtain an uplift fee of 25 per cent of their costs on no-win no-fee retainers;
8. subjecting lawyers to financial services regulation (including AFSL and managed investment scheme compliance obligations) where they conduct class actions on a contingency basis;
9. requiring litigation funders and lawyers to make disclosures to the Federal Court as to any potential conflicts of interest (on an ongoing basis) and to provide their conflict management policy to the court when applying for approval of funding agreements;
10. imposing on litigation funders the same standards and duties that are owed by lawyers to their clients;
11. limiting the forum for claims brought under the Corporations Act to the Federal Court; and
12. working with state and territory governments to achieve consistent class action regimes across jurisdictions.

In contrast to the ALRC report, the PJC report adopts a far more aggressive stance on what the PJC report authors consider to be the appropriate level of regulatory intervention. The authors cite evidence of a 'systemic and inappropriate' skewing of successful class action proceeds in favour of litigation funders at the expense of class members' share of the proceeds.¹⁵¹ The PJC's conclusion appears to be based on a selected extract from the earlier ALRC report, which noted the median return to class members in funded claims was 51 per cent, compared to 85 per cent in unfunded claims.¹⁵² The PJC's somewhat simplistic comparison appears to have informed its rationale for some of its more hard-line reform recommendations, without recognising the fundamental differences between funded claims and claims pursued without third party funding (TPF) support. For instance, claims pursued without TPF offer no litigation expense assistance, no adverse costs protection and no security for costs support to class representatives. These benefits come with a cost, generally in the form of a funding commission. Hence, it is unsurprising that funded claims tend to result in lower median percentage net returns to class members than unfunded claims (once commissions are factored in). However, can the median percentage returns be looked at in isolation or used as a proper comparator without regard to the other benefits litigation funding might provide? The PJC report authors do acknowledge that in many instances a class action in Australia may not proceed at all without a litigation funder.¹⁵³ The federal government is yet to comprehensively respond to aspects of the PJC report and previous recommendations of the ALRC report.

Structuring the agreement

i Typical structure

Funded litigation can involve a contractual relationship between the litigation funder, the lawyer and the funded client, whereby the funder agrees to provide for some or all of the client's legal costs and disbursements in return for receiving a percentage of any damages recovered. The remuneration can take any form, although more common forms include a multiple of the funding, a percentage of the proceeds, a fixed amount, or a combination of these.¹⁵⁴ Percentages typically range between 20 and 45 per cent of the settlement proceeds depending on the risks and time involved and the type of funding required.¹⁵⁵ 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.¹⁵⁶ However, in the context of insolvency litigation funding, commission rates can be considerably higher.¹⁵⁷ In contrast, the median rate for 'common fund' orders in class actions during the period October 2016 to December 2019 was 21.9 per cent.¹⁵⁸

In class actions, the funder may also assist with project management, administration and pre-claim investigation and may charge a project management fee. Litigation funders routinely agree to provide security for costs and an indemnity to cover the risk of adverse costs orders if the proceeding is unsuccessful.

As litigation funders do not act as the legal representatives for the funded litigant, clients generally enter into two agreements: a standard retainer agreement with their lawyer recording the scope and terms under which the legal services are to be provided; and a litigation funding agreement with their 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 and agree to funder-approved standard lawyer terms. Funders may agree to pay a proportion, or all, of a lawyer's fees during the claim. Where legal fees are partially deferred, they are generally recovered from any resolution sum if a successful outcome is achieved. The client usually authorises the lawyer to receive any resolution sum on the client's behalf to be applied in accordance with an agreed priority. ¹⁵⁹

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.¹⁶⁰ 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. Hence, funding agreements often preserve the client's right to override the funder's instructions and commonly include dispute resolution mechanisms.

More recently, some litigation funders have purchased claims as an alternative to traditional litigation funding.¹⁶¹ This has largely occurred in the context of insolvency litigation as a result of amendments to the Corporations Act allowing external administrators (including liquidators) to assign rights to sue.¹⁶² The agreement to purchase or assign the claim may be structured in a number of ways, including providing for the funder to pay an upfront payment, a back-end payment contingent on success (such as a percentage of any damages recovered), or a combination of both.

ii Judicial intervention

Over the past decade, Australian courts have shown a willingness to scrutinise the commercial terms of litigation funding agreements and, in some instances (somewhat controversially), intervene if they consider funding commissions to be excessive. In Earglow Pty Ltd v. Newcrest Mining Ltd (Newcrest), Justice Murphy considered that the court had power to reduce a litigation funder's commission rate in the context of a class action when approving the settlement.¹⁶³ 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).¹⁶⁴ Justice Murphy considered that this power derived from a combination of Sections 23, 33V, 33Z and 33ZF of the FCA Act, and was 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 also shown a willingness to review and consider 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, Justice Murphy concluded that the aggregate funding commission of A$6.78 million, at rates of between 26 and 30 per cent, was fair and reasonable. His Honour considered the published empirical research into the funding commission rates paid in Australian class actions, and previous settlement approval decisions, before concluding that those rates were at the lower end of the range. His Honour also emphasised the need for transparency about matters relating to funding in settlement approval judgments to allow proper benchmarking.

In contrast, in 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,¹⁶⁵ 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.¹⁶⁶

This issue appears not to be settled. In Liverpool City Council v. McGraw-Hill Financial Inc (now known as S&P Global Inc),¹⁶⁷ Justice Lee 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).¹⁶⁸ In doing so, Justice Lee 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. Although his Honour did not ultimately decide on whether the court has an inherent power to alter a funding agreement,¹⁶⁹ he 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.¹⁷⁰

Consequently, the question (and extent) of judicial power to vary terms of litigation funding agreements remains somewhat controversial and unresolved in Australia.¹⁷¹ The courts have since considered this question in a number of cases and have either declined to vary the commission rate,¹⁷² or, in some cases, varied the commission rate.¹⁷³ On 30 September 2021, the former federal government responded to the specific recommendations of the ALRC report and PJC report 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 that litigation funding agreements (for class action proceedings) be enforceable only with the approval of the Federal Court, via the new Treasury Laws Amendment (Measures for Consultation) Bill 2021: Litigation Funders (Funders Bill), which, among other things, aimed to provide the court with express statutory power to do so.¹⁷⁴ The Funders Bill was introduced into Parliament on 27 October 2021 but did not pass the Senate.

A recent decision gives an example of the overriding consideration of whether a proposed order is reasonable and just in all of the circumstances. In Gill v. Ethicon Sarl (No. 12),¹⁷⁵ the Federal Court rejected an application under Section 33V(2) by solicitors (being a wholly owned subsidiary of an ASX listed entity) acting for a group of plaintiffs affected by serious and chronic complications caused by pelvic mesh implantations. The solicitors sought approval for a deduction of well over A$32 million out of a $300 million settlement amount, representing the accrued interest payable on two disbursement loan facilities taken out by the solicitors, which carried interest charges initially calculated at rates between 22.4 per cent and 31.8 per cent per annum. Evidence was led as to the circumstances that led to the solicitors having to resort to sourcing disbursement funding at such exorbitant rates. In a judgment that raised a range of concerns, including as to the potential for a conflict of interest for the solicitors, the calculations as to the net proceeds for the plaintiffs, whether the proposed arrangements were properly notified to the plaintiffs and the reasonableness of the settlement itself (even before the proposed deduction of the interest), Justice Lee dismissed the application in its entirety and discouraged the solicitors from making a further application.¹⁷⁶

Scrutiny of the commercial terms of litigation funding agreements has also arisen in the insolvency context. In Re Jabiru Satellite Limited (in liq) and NewSat Limited (in liq),¹⁷⁷ the Supreme Court of New South Wales (NSW) dismissed an application for the appointment of a special purpose liquidator seeking to pursue claims available to the companies against secured lenders. The Court determined that the appointment was not beneficial to creditors of the companies, placing considerable weight on the onerous proposed funding terms. In particular, Justice Black was concerned with the size of the potential funding fee (of at least 70 per cent of the net resolution sum), which the Court found would be 'wholly disproportionate' to the costs the funder would likely incur.¹⁷⁸

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.¹⁷⁹ Broader disclosure to the court and other parties is also required in any class action.¹⁸⁰ Funded applicants are entitled to redact these materials to conceal information that might confer a tactical advantage on another party.¹⁸¹ Commercial terms such as the litigation budget, the commission and the costs structure are generally redacted, whereas the court is given a complete version.¹⁸² 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,¹⁸³ or where an application to de-class the proceeding on the ground that a closed class was said to be an abuse of process.¹⁸⁴

Conversely, outside the class action realm, there are few mandatory requirements for disclosure of funding agreements, with the notable exception of proceedings advanced in the insolvency context.¹⁸⁵ Under Section 477(2B) of the Corporations Act, a liquidator must obtain the approval of the court, the committee of inspection or a resolution of creditors before entering into any agreement that has a term (or obligations which may be discharged) beyond three months. The approval process requires an assessment by the court that entry into the agreement is a proper exercise of power and not ill-advised or improper, rather than involving the exercise of commercial judgment.¹⁸⁶ Applications for approval to enter into funding agreements are often made together with further requests for that material to remain confidential and for the application to be heard in camera. This is because liquidators in Section 477(2B) applications may need to disclose commercially sensitive details such as the terms and conditions of funding, including, for instance:

1. any limit of funding, the terms of repayment to the funder and the funder's success fee and the terms of the provision of security for costs;
2. privileged legal advice;
3. confidential details of insurance policies; and
4. confidential investigations and the liquidator's proposed strategy for future investigations.

As explained by Justice Barrett in McGrath & Anor re HIH Insurance Ltd,¹⁸⁷ it is often the case that liquidators are in the unenviable position of needing approval from the court to fund claims against third parties where disclosing the details of that funding and the terms on which it is to be provided is an incidental part of obtaining approval. This sets their case apart in such a way that justice will best be served by an examination of the matters the liquidators are bound to raise with the court, in an atmosphere where they can lay them before the court fully and frankly and without any apprehension that the interests they are bound to serve will thereby be prejudiced. In considering whether to grant suppression orders, the court will consider what is necessary to prevent prejudice to the proper administration of ^justice188 and the authorities show that where the liquidators can demonstrate that the proposed proceeding would be undermined by the publication of the materials, then the entirety¹⁸⁹ or the sensitive parts of the material¹⁹⁰ will be suppressed.

Parties have 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.¹⁹¹ 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.¹⁹²

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.¹⁹³

This principle was applied in Jin Lian Group Pty Ltd (in liq) v. ACapital Finance Pty Ltd (No. 2),¹⁹⁴ where the Court held a third party funder jointly and severally liable for the defendant's costs from the date security for costs was provided.¹⁹⁵ In this case, security for costs was ordered in the sum of A$149,000. As the plaintiff was an insolvent company and the liquidators were without funds to pay the security, the liquidators entered into a funding agreement pursuant to which the funder provided funding for the security and an adverse costs indemnity up to A$150,000. The plaintiff was ultimately unsuccessful at trial, and the defendant's costs exceeded the amount of security provided. The Court considered the matters relevant in determining whether it is appropriate to make a non-party costs order, including that the funder provided funds for the litigation, had a direct interest in the fruits of the litigation and had agreed to provide an adverse costs indemnity, and determined that each of the matters were present in this case.¹⁹⁶ The Court formed the view that 'but for the intervention of the Funder . . . . the proceeding would not have continued',¹⁹⁷ and stated that 'Litigation funders should be aware that if they involve themselves in pending court proceedings in circumstances where their intervention is the factor that causes those proceedings to continue and go to trial, they risk an adverse costs order.'¹⁹⁸

Most recently, the Federal Court, in Hardingham v. RP Data Pty Limited (Third Party Costs),¹⁹⁹ made a third party costs order against a funder in circumstances where the funding agreement expressly excluded the funding of an adverse costs order. Again, the Court emphasised that 'one obvious risk for any commercial litigation funder is that, if the funded litigation is unsuccessful, the funder might face an application that it pay the successful parties' costs. That risk arises whether or not it has agreed to indemnify the applicant against an adverse costs order.'²⁰⁰

The limits of this principle have been tested on the related question of whether security for costs can, and should, be ordered against third party litigation funders in 'no costs' jurisdictions.²⁰¹ In Augusta Ventures Ltd v. Mt Arthur Coal Pty Ltd (Augusta),²⁰² the Full Court of the Federal Court was asked to consider whether the court has power to make a security for costs order against a third party funder in a no costs jurisdiction²⁰³ and, if so, whether the order should be made on discretionary grounds.²⁰⁴ The Court reiterated that it retains power to stay proceedings (including by reference to considerations concerning the exposure of a litigation funder to costs) as part of its power to control its own processes.²⁰⁵ However, the focus is different when exercising discretion to make security for costs orders against third party funders in no costs jurisdictions. It was said the prejudice the claimants themselves would suffer from not being able to vindicate their rights, should the funder not provide such security, is inappropriate where such claimants are not ordinarily liable for costs.²⁰⁶ Accordingly, the Court upheld the appeal and set aside the order for security for costs originally made against the third party funder.

Similarly, in Duck v. Airservices Australia (No. 3),²⁰⁷ the Court considered an application for an order that the third party litigation funder pay the respondent's costs of the proceeding in a no costs jurisdiction. The Court held that the no costs jurisdiction did not prevent a costs order being made against the third party funder, but declined to exercise the discretion to make the costs order sought because it was not in the interests of justice to do so in the particular circumstances of the conduct of the proceedings.²⁰⁸ The Court concluded that the no costs jurisdiction is but one factor to consider in the exercise of the court's broad costs discretion, and that the conduct of the litigation is always likely to be an important consideration.²⁰⁹ The Court attached considerable weight to the efficient determination of the proceedings, especially by way of a separate question, which saved substantial costs and court time, and stated that it was very much in the interests of justice to encourage this sort of conduct, especially by the potent exercise of the costs discretion.²¹⁰ However, the Court recognised that a costs order might be warranted against a funder in certain circumstances, for example, if the proceeding was instituted vexatiously or without reasonable cause, or if there was an unreasonable act or omission in the conduct of the proceedings that caused the respondent to incur costs.²¹¹

However, 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.²¹² 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.²¹³

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. Perhaps as a result of commercial realities and market competition, these fears have not materialised.²¹⁴ In practice, litigation funders routinely agree to indemnify 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 costs without such indemnities.²¹⁵

Where security for costs has been sought in funded litigation, the adequacy and form of security proposed by some funders has also given rise to disputes. 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.²¹⁶ The Court ordered security for costs to be lodged, concluding that Precision Tracking did not have the capacity to meet an adverse costs order; the funding agreement restricted the indemnity to a counterclaim in the proceedings; and the adverse costs insurance was taken out for the primary claim. Additionally, the funder had 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)²¹⁷ and Equititrust Limited v. Tucker.²¹⁸ In the Petersen 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.²¹⁹ 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.

The costs of providing security, including the costs of obtaining an after the event (ATE) policy, will typically be borne by funded clients either indirectly in the sense that they are absorbed in the funding commission, or directly in that they are recovered through a payment made to the funder of an amount in addition to the funding commission.²²⁰ The ability of a funder to recoup the costs of obtaining an ATE policy in a funded class action was recently considered in Asirifi-Otchere v. Swann Insurance (Aust) Pty Ltd (No. 3).²²¹ In approving a settlement by way of a common fund order, the Court decided that the costs of obtaining an ATE policy should not be passed on separately to group members when the court controls the remuneration, but should be incorporated into the commission paid to the funder. The Court noted that it is a matter for the funder whether to obtain an ATE policy to defray the risk of providing an adverse costs indemnity.²²²

Conclusions and outlook

The litigation funding landscape in Australia continues to grow and evolve into a more sophisticated market. In the past 17 years, the common law has steadily refined and clarified the regime's requirements since the High Court's seminal decision in Fostif. Increased competition coupled with the availability of group costs orders in Victoria have driven innovation, and while the first part of the 2020s saw a dramatic hardening of the regulatory environment, particularly in relation to class action and multiparty litigation funding, that trend is now reversing under the new federal government with the commencement of the Funding Regulations in December 2022.

Clearly, some important steps in the evolution of litigation funding in Australia have been the progressive abolition of the torts of maintenance and champerty across various states of Australia. Comity and uniformity would hopefully see the remaining states and territories follow suit in this respect. The introduction of damages-based contingency fees for lawyers in Victoria has also been significant with several group costs orders now made since the commencement of Section 33ZDA of the Supreme Court Act 1986 (Vic) in July 2020. The likelihood is that further group costs orders will be made, further entrenching the Supreme Court of Victoria as a jurisdiction of choice for many funded class actions. Changes to harmonise the damages-based contingency fee provisions for class actions in other states and territories, and federally, present an opportunity for lawmakers and regulators to adopt a key ALRC report recommendation, enhance consumer choice and provide new pathways for access to justice.

Key issues for determination in the year ahead will be the new federal parliament's response to the ALRC report. The extent of judicial power available to make CFOs at settlement by reference to Section 33V of the FCA Act is also likely to be further tested. Irrespective of the outcome, the adoption of the common fund doctrine in class actions since the QBE decision has no doubt improved fairness and equity between class members and enabled funders to better consider the commercial viability of multiparty claims, while decreasing the need to engage in costly and time-consuming client book-building. Should the High Court further constrain CFOs in class actions, there will be a stronger case for regulatory change, as recommended by the ALRC report. As Justice Beach lamented in McKay Super Solutions Pty Ltd (Trustee) v. Bellamy's Australia Ltd:²²³ 'Trial judges need flexible tools to regulate these funding arrangements and to tailor solutions to each individual case. And preferably that regulation should take place closer to the outset of proceedings rather than at the other end, particularly where competing class actions are in play.'

In considering the regulatory pathway ahead it is worth reflecting on the objectives outlined in the second reading speech for the introduction of Australia's class actions regime made back in 1992. During that period, the (then) Attorney General, the Honourable Michael Duffy, said 'the new procedure will enhance access to justice, reduce the cost of proceedings, and promote efficiency in the use of court resources'.²²⁴ Despite these noble objectives espoused by parliament 30 years ago, the ever-changing compliance burdens of Australia's regulated litigation funding market have seen the Australian litigation funding market taken to a crossroads. Since the end of 2022, positive signs are now emerging from the current federal government that a more pragmatic, evidence-based and feasible regulatory environment can be implemented, which will enhance access to justice.

Footnotes

_{1 Jason Geisker and Dirk Luff are principals at Maurice Blackburn Lawyers, the legal advisers to Claims Funding Australia Pty Ltd. The authors wish to thank and acknowledge the assistance with earlier editions of this chapter received from Jenny Tallis and Samuel Sheridan with this edition.
2 IBISWorld, Litigation Funding in Australia (June 2022), page 16.
3 Omni Bridgeway annual report 2021, page 10. The total overall legal market spend was estimated at A$23 billion, making the litigation market just over 20 per cent of the overall legal services market in Australia in 2021.
4 IBISWorld, Litigation Funding in Australia (May 2023), page 11.
5 ibid., pages 10–12.
6 Australian Law Reform Commission, Integrity, Fairness and Efficiency – An Inquiry into Class Action Proceedings and Third-Party Litigation Funders (report No. 134, January 2019) Appendix G.
7 IBISWorld, Litigation Funding in Australia (May 2023) page 6.
8 Also known as representative actions, 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)).
9 IBISWorld, Litigation Funding in Australia (May 2023), page 16.
10 IBISWorld, Litigation Funding in Australia (June 2022), page 19. Specifically, class actions were said to comprise 44 per cent of the litigation funding market in 2022.
11 Professor Vince Morabito, 'Courts see record number of class actions as shareholder proceedings drop in significance' Lawyerly (20 May 2021), https://www.lawyerly.com.au/courts-see-record-number-of-class-actions-as-shareholder-proceedings-drop-in-significance/.
12 ibid. In the 12 months ending 3 March 2021 there was a total of 32 funded class actions filed in Australia (approximately 46.3 per cent of all class actions). This number could be lower if more group costs orders are secured in some of the nine class actions commenced in Victoria during this period.
13 King & Wood Mallesons, The Review: Class Actions in Australia 2021-22, https://www.kwm.com/au/en/insights/latest-thinking/the-review-class-actions-in-australia-2021-2022.html.
14 IBISWorld, Litigation Funding in Australia (April 2021), pages 6 and 10.
15 In FY2021 Australia had 4,235 companies entering external administration and controller appointments, the lowest number in the past 20 years: Australian Securities & Investments Commission, Australian Insolvency Statistics, September 2021, Table 1.1, page 2.
16 In the FY2023, Australia had 7,942 companies entering external administration and controller appointments, returning to base levels: Australian Securities & Investments Commission, Australian Insolvency Statistics, September 2023, Table 1.
17 Australian Restructuring Insolvency & Turnaround Association, 'Insolvency numbers return to pre-COVID levels' (9 August 2022) https://arita.com.au/ARITA/News-2023/ARITA_News/Insolvency_numbers_return_to_pre-COVID_levels.aspx.
18 Australian Securities & Investments Commission, Australian Insolvency Statistics, September 2023, Chart 1.2.
19 Law Partnership Survey, 'Partner boom as top law firms play 'catch-up', (30 June 2022).
20 Explanatory Statement, Corporations Amendment (Litigation Funding) Regulations 2022.
21 [2022] FCAFC 103.
22 ibid.
23 ASIC Media Release published 19 December 2022, https://asic.gov.au/about-asic/news-centre/find-a-media-release/2022-releases/22-368mr-asic-amends-relief-for-litigation-funding-arrangements/.
24 BMW Australia Ltd v. Brewster & Anor; Westpac Banking Corporation & Anor v. Lenthall & Ors [2019] HCA 45.
25 Money Max Int Pty Ltd (Trustee) v. QBE Insurance Group Ltd (2016) 245 FCR 191; [2016] FCAFC 148.
26 ibid.
27 ibid., at [11].
28 [2017] FCA 330.
29 [2016] VSC 784.
30 [2018] FCA 1422 at [25].
31 [2018] FCA 1541.
32 [2019] NSWCA 35.
33 Westpac Banking Corporation v. Lenthall [2019] FCAFC 34.
34 Brewster v. BMW Australia Ltd [2019] NSWCA 35 at [56]–[61], [64]–[67].
35 ibid., at [96]–[103].
36 BMW Australia Ltd v. Brewster & Anor; Westpac Banking Corporation & Anor v. Lenthall & Ors [2019] HCA 45 at [3].
37 ibid., at [3] to [94].
38 Federal Court of Australia, class actions practice note (GPN-CA) – general practice note, 20 December 2019, [15.4].
39 McKay Super Solutions Pty Ltd (Trustee) v. Bellamy's Australia Ltd (No. 3) [2020] FCA 461 at [31] per Beach J; Uren v. RMBL Investments Ltd (No. 2) [2020] FCA 647 at [47] to [73] per Murphy J; Smith v. Commonwealth of Australia (No. 2) [2020] FCA 837 per Lee J; Webster (Trustee) v. Murray Goulburn Co-Operative Co Ltd (No. 4) [2020] FCA 1053 at [113] to [114] per Murphy J.
40 Uren v. RMBL Investments Ltd (No. 2) [2020] FCA 647 at [47] to [73] per Murphy J; Smith v. Commonwealth of Australia (No. 2) [2020] FCA 837 per Lee J; Webster (Trustee) v. Murray Goulburn Co-Operative Co Ltd (No. 4) [2020] FCA 1053 at [113] to [114] per Murphy J; Court v. Spotless Group Holdings Ltd [2020] FCA 1730 at [80] per Murphy J; Asirifi-Otchere v. Swann Insurance (Aust) Pty Ltd (No. 3) [2020] FCA 1885 at [13]–[15], [33]–[34] where Lee J ultimately approved the settlement CFO pursuant to Section 33V(1) of the FCA Act, but stated that he would have been prepared to make the order in any event relying on Section 33V(2) or in equity; Evans v. Davantage Group Pty Ltd (No. 3) [2021] FCA 70 per Beach J; Hall v. Arnold Bloch Leibler (a firm) (No. 2) [2022] FCA 163 per Beach J; Hall v. Pitcher Partners (a firm) [2022] FCA 1524 per Beach J.
41 In Cantor v. Audi Australia Pty Ltd (No. 5) [2020] FCA 637 at [395] to [405], Foster J expressed the view that the court does not have the power to make a CFO at the time of settlement approval under Section 33V(2) of the FCA Act. In Davaria Pty Ltd v. 7-Eleven Stores Pty Ltd (No. 13) [2023] FCA 84, O'Callaghan J expressed a similar view and at [183] concluded that the reasoning of the majority in Brewster 'points clearly enough to the conclusion that there is similarly no power to make a common fund order upon settlement under s 33V(2)'.
42 Clime Capital Ltd v. UGL Pty Ltd [2020] FCA 66 at [13] per Anastassiou J; Fisher (trustee for the Tramik Super Fund Trust) v. Vocus Group Ltd (No. 2) [2020] FCA 579 at [73] per Moshinsky J.
43 Jade Elliott-Carde v. McDonald's Australia Ltd [2023] FCAFC 162. The docket judge, Lee J, referred the following question to the Full Court: 'If it was just to do so, does the Court have the statutory power, pursuant to s 33V of the Federal Court of Australia Act 1976 (Cth), to make an order distributing money paid under a settlement in the form of a “Settlement CFO”, as that term is defined in Davaria Pty Ltd v. 7-Eleven Stores Pty Ltd [2020] FCAFC 183; (2020) 281 FCR 501 (at 506-507 [19], [22]-[25])?'
44 ibid., at [99].
45 ibid., at [101] where His Honour distinguishes Section 33V(1) as being 'qualitatively different' from the 'gap-filling' power in Section 33ZF.
46 ibid., at [103] where His Honour observed that 'commercial litigation funding has been firmly established as being conducive to the achievement of the legislative objectives of Part IVA. And in that regard CFOs and funding equalisation orders . . . are also conducive to such objectives.'
47 See Lee J at [394] and Colvin J at [468].
48 See Lee J at [388] where the purpose of 33V(2) is analysed together with the operation of 33V(1): 'it is necessary for the Court to be satisfied that any settlement [or discontinuance] of a class action has been undertaken in the interest of the group members as a whole . . . There can only be a settlement if the Court reaches this level of satisfaction, and as a way of providing assurance to the Court that this level of satisfaction should be reached, most provisional settlements the subject of approval applications record, in a contract, promises as to a scheme providing for an amount to be distributed out of the fund in satisfaction of the claims of group members.'
49 ibid., [383] per Lee J.
50 See for example, [109] per Beach J: 'What is clear from Brewster is that it concerned neither s 33V(2) nor settlement CFOs. The case dealt with the now described gap filling s 33ZF(1) and early CFOs to be made, so it was said, for the purpose of facilitating the interests of funders and to maintain the financial viability of proceedings.'
51 Brewster v. BMW Australia Ltd [2020] NSWSC 1261.
52 ibid., at [44]–[47].
53 Haselhurst v. Toyota Motor Corporation Australia Ltd [2022] NSWSC 1076 at [51]. This was adopted by Stevenson J in Quirk v. Suncorp Portfolio Services Ltd (No. 2) [2022] NSWSC 1457 at [44] and by Beech-Jones CJ at CL in Ellis v. Commonwealth of Australia [2023] NSWSC 550 at [51].
54 On 25 June 2021 the High Court of Australia dealt with an application for special leave to the High Court from the decision of the Full Court of the Federal Court of Australia in the 7-Eleven class action. The High Court dismissed the special leave application with costs, finding that it 'does not present a suitable vehicle for the determination of the issue which the applicant seeks to raise': 7-Eleven Stores Pty Ltd v. Davaria Pty Ltd [2021] HCATrans 113.
55 Pearson v. State of Queensland (No. 2) [2020] FCA 619.
56 In accordance with State of New South Wales v. Kable (2013) 252 CLR 118; [2013] HCA 26.
57 Pearson v. State of Queensland (No. 2) [2020] FCA 619 at [264]–[268].
58 Ben Slade, Simon Gibbs and Vince Morabito, 'Post-Brewster Jurisprudence – The Future of the Common Fund Doctrine' (2022) 96, Australian Law Journal 430, page 3.
59 McKay Super Solutions Pty Ltd (Trustee) v. Bellamy's Australia Ltd (No. 3) [2020] FCA 461 at [34] per Beach J.
60 See, for example, the conclusions of Professor Vince Morabito and Jarrah Ekstein, 'Class Actions Filed for the benefit of Vulnerable Persons – An Australian Study' (2016), 35 Civil Justice Quarterly 61.
61 Section 33ZDA(2) of the Supreme Court Act 1986 (Vic).
62 Section 33ZDA(3) of the Supreme Court Act 1986 (Vic), including but not limited to the percentage ordered.
63 Supreme Court of Victoria, SC Gen 10 Conduct of Group Proceeding (Class Action) (First Revision), July 2020.
64 Fox v. Westpac Banking Corporation [2021] VSC 573, where a group costs order was refused.
65 Allen v. G8 Education Ltd [2022] VSC 32, at 27.5 per cent.
66 Bogan v. The Estate of Peter John Smedley (Deceased) [2022] VSC 201, at 40 per cent.
67 Nelson v. Beach Energy; Sanders v Beach Energy [2022] VSC 424, at 24.5 per cent.
68 Lay v. Nuix Ltd; Batchelor v. Nuix Ltd; Bahtiyar v. Nuix Ltd [2022] VSC 479, where a group costs order was refused.
69 Gerhke v. Noumi Ltd [2022] VSC 672, at 22 per cent.
70 Mumford v. EML Payments Ltd [2022] VSC 750, at 24.5 per cent.
71 Liberman v. Crown Resorts Ltd [2022] VSC 787, starting at 27.5 per cent and subject to adjustment down to 22 per cent or 16.5 per cent.
72 Fox v. Westpac Banking Corporation (No. 2) [2023] VSC 95, at 24.5 per cent.
73 DA Lynch v. Star Entertainment Group; Drake v. Star Entertainment Group; Huang v. Star Entertainment Group; Jowene v. Star Entertainment Group [2023] VSC 561, after considering alternative proposals from four experienced class action firms, and utilising the assistance of a contradictor, the court approved a group costs order in the amount of 14 per cent.
74 Fox at [8].
75 Gerhke at [37].
76 Bogan at [24].
77 The Civil Procedure (Representative Proceedings) Act 2022 (WA), which was given royal assent on 14 September 2022, and which came into operation on 25 March 2023.
78 Section 36(1) of the Civil Procedure (Representative Proceedings) Act 2021 (WA).
79 Section 36(2)(b) of the Civil Procedure (Representative Proceedings) Act 2021 (WA).
80 See recommendation 1, The Law Reform Commission of Western Australia: Maintenance and Champerty in Western Australia, Project 110: final report, February 2020.
81 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.
82 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; Crimes Act 1958 (Vic) Section 322A; Civil Procedure (Representative Proceedings) Act 2021 (WA) Section 36; and Civil Liability Act 2002 (Tas) Section 28E(ba) and (bb). The torts have not been abolished in Queensland or the Northern Territory.
83 Standing Committee of Attorneys-General, Litigation funding in Australia (discussion paper, May 2006), page 4.
84 (2006) 229 CLR 386; [2006] HCA 41.
85 ibid., at [1].
86 ibid., at [84]–[86].
87 For example, see Wrongs Act 1958 (Vic) Section 32(2).
88 For other examples, see Murphy Operator Pty Ltd v. Gladstone Ports Corporation Ltd (No. 2) [2019] QSC 012 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.
89 (2020) 384 ALR 725; [2020] QCA 250.
90 ibid., at [81], [82].
91 ibid., at [95], [96].
92 Gladstone Ports Corporation Limited v. Murphy Operator Pty Ltd & Ors [2021] HCATrans 114 (25 June 2021).
93 See new Section 33ZDA of the Supreme Court Act 1986 (Vic) applying from 1 July 2020 for the exception in Victoria, and Section 183 of the Legal Profession Uniform Law 2015 (NSW) for a New South Wales example of the common prohibition.
94 See Clyne v. NSW Bar Association (1960) 104 CLR 186.
95 See, for example, Section 182(2)(b) of the Legal Profession Uniform Law 2015 (NSW).
96 Justice Legislation Miscellaneous Amendments Act 2020 (Vic), which received royal assent on 30 June 2020.
97 Treasury Wines Estates Limited v. Melbourne City Investments Pty Ltd (2014) 45 VR 585; [2014] VSCA 351 at [22].
98 Bolitho v. Banksia Securities Ltd (No. 4) [2014] VSC 582.
99 ibid., at [53].
100 ibid., at [51]. That prohibition has since been removed in Victoria.
101 Bolitho v. Banksia Securities Ltd (No. 18) (remitter) [2021] VSC 666.
102 ibid., at [7].
103 Australian Securities and Investments Commission Act 2001 (Cth), Sections 12BF–12BM, 12CA–12C, 12DA.
104 Australian Law Reform Commission, Integrity, Fairness and Efficiency – An Inquiry into Class Action Proceedings and Third-Party Litigation Funders (report No. 134, January 2019), p 62.
105 Brookfield Multiplex Funds Management Pty Ltd v. International Litigation Funding Partners Pty Ltd (2009) 180 FCR 11; [2009] FCAFC 147.
106 Section 601ED of the Corporations Act, where any of the criteria in Section 601ED(1) are met, subject to Sections 601ED(2) and (2A).
107 Section 601FA of the Corporations Act.
108 Section 601ED(5) of the Corporations Act.
109 International Litigation Partners Pte Ltd v. Chameleon Mining NL (Receivers and Managers Appointed) (2012) 246 CLR 455; [2012] HCA 45.
110 Hon Chris Bowen, Minister for Financial Services, Superannuation and Corporate Law 'Government acts to ensure access to justice for class action members', (media release No. 039, 4 May 2010).
111 Corporations Amendment Regulation 2012 (No. 6) (Cth).
112 Corporations Regulations 2001 (Cth), Rule 5C.11.01(d) (since repealed and replaced with Rule 5C.11.01(4) and Rule 5C.11.01(5), which are in materially similar terms).
113 ibid., Rules 5C.11.01(b)–5C.11.01(c) (now repealed).
114 ibid., Rule 7.6.01AB.
115 Australian Securities and Investment Commission, Litigation schemes and proof of debt schemes: Managing conflicts of interest (RG 248, 27 March 2013).
116 See, for example, the criticisms outlined in various submissions by academics, such as Professor Vicki Waye and Professor Vince Morabito in their submissions in response to the 2020 Federal Parliamentary Inquiry into Litigation Funding and the Class Action Industry: https://www.aph.gov.au/Parliamentary_Business/Committees/Joint/Corporations_and_Financial_Services/Litigationfunding/Submissions. The New Regulations were heavily criticised by Beach J of the Federal Court during an interlocutory hearing on 13 September 2021, saying, 'The representative applicant is the one who is supposed to have responsibility . . . subject to the court's supervisory role. If the [representative applicant] doesn't do their job properly then there's the ability to remove them' and 'the [MIS regulation] assumes this is all within the purview of the responsible entity, which simply doesn't work with Part IVA action': Lawyers Weekly, (13 September 2021) https://www.lawyerly.com.au/judge-says-mis-regulation-doesnt-work-with-class-action-regime/.
117 Corporations Regulations 2001 (Cth), Regulation 10.38.01.
118 Australian Law Reform Commission, Integrity, Fairness and Efficiency – An Inquiry into Class Action Proceedings and Third-Party Litigation Funders (report No. 134, January 2019). Page 18 of the ALRC report summarised the conclusions on regulation of funders, noting 'a suite of recommendations to improve the regulation of litigation funders and to support the unique role of the Federal Court in protecting the interests of all group members is recommended in lieu of a licensing regime for litigation funders'.
119 See for example Brett Cattle Co Pty Ltd v. Minister for Agriculture (No. 3) [2020] FCA 1628; White v. UGL Operations and Maintenance Pty Ltd [2021] FCA 587; Stanwell Corporation Ltd v. LCM Funding Limited [2021] FCA 1430.
120 Miklos Bolza, 'Managed investment scheme rules stall $78M class action against NAB, Walton' Lawyerly (30 September 2021) https://www.lawyerly.com.au/managed-investment-scheme-rules-stall-78m-class-action-against-nab-walton/.
121 [2021] FCA 1430.
122 ibid., at [142].
123 ibid., at [227].
124 ibid., at [175].
125 ibid., at [179]-[215].
126 [2022] FCAFC 103.
127 ibid., at [6] and [156].
128 ibid., at [6] and [156].
129 ibid., at [7].
130 ibid., at [22].
131 Productivity Commission, Access to Justice Arrangements (inquiry report No. 72, December 2014).
132 ibid., vol 2, p. 633, Recommendation 18.2.
133 ibid., vol 2, p. 629, Recommendation 18.1.
134 Victorian Law Reform Commission, Access to Justice – Litigation Funding and Group Proceedings (report, March 2018), 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.
135 Victorian Law Reform Commission, Access to Justice – Litigation Funding and Group Proceedings (consultation paper, July 2017), p. vi.
136 Victorian Law Reform Commission, Access to Justice – Litigation Funding and Group Proceedings (report, March 2018), p. xvi, paras. 28–31.
137 Australian Law Reform Commission, Inquiry into Class Action Proceedings and Third-party Litigation Funders (discussion paper No. 85, June 2018), pp. 4–5, and p. 17, para. 1.17.
138 Australian Law Reform Commission, Integrity, Fairness and Efficiency – An Inquiry into Class Action Proceedings and Third-Party Litigation Funders (report No. 134, January 2019), p. 28, p. 205.
139 ibid., pp. 199–201; Australian Law Reform Commission, Inquiry into Class Action Proceedings and Third-party Litigation Funders (discussion paper No. 85, June 2018), p. 83, paras. 5.10–5.13.
140 Australian Law Reform Commission, Integrity, Fairness and Efficiency – An Inquiry into Class Action Proceedings and Third-Party Litigation Funders (report No. 134, January 2019), p. 28, p. 205.
141 ibid., p. 163, para. 6.42.
142 ibid., pp. 161–162, para. 6.37.
143 ibid., pp. 153–177.
144 ibid., pp. 177–183.
145 ibid., pp. 183–184.
146 On 13 May 2020, the House referred to the Parliamentary Joint Committee on Corporations and Financial Services an inquiry into litigation funding and the regulation of the class action industry for report by 7 December 2020: https://www.aph.gov.au/Parliamentary_Business/Committees/Joint/Corporations_and_Financial_Services/Litigationfunding.
147 The terms of reference provided that particular reference was to be made to 14 separate considerations: https://www.aph.gov.au/Parliamentary_Business/Committees/Joint/Corporations_and_Financial_Services/Litigationfunding/Terms_of_Reference.
148 The PJC inquiry into 'Litigation funding and the regulation of the class action industry' was announced on 13 May 2020, with written submissions closing four weeks later on 11 June 2020. Written submissions were limited to four to five pages.
149 On 13 May 2020, the House referred to the Parliamentary Joint Committee on Corporations and Financial Services an inquiry into litigation funding and the regulation of the class action industry for report by 7 December 2020: https://www.aph.gov.au/Parliamentary_Business/Committees/Joint/Corporations_and_Financial_Services/Litigationfunding.
150 On 28 May 2021 the Federal Treasurer announced a consultation process on recommendations of the PJC report dealing specifically with this proposal: https://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/media-releases/consulting-recommendations-parliamentary-joint.
151 Parliamentary Joint Committee on Corporations and Financial Services, Litigation funding and the regulation of the class action industry, (report, December 2020), paragraphs [5.23]–[5.24].
152 Australian Law Reform Commission, Integrity, Fairness and Efficiency – An Inquiry into Class Action Proceedings and Third-Party Litigation Funders (report No. 134, January 2019), page 70.
153 Parliamentary Joint Committee on Corporations and Financial Services, Litigation funding and the regulation of the class action industry, (report, December 2020), page xiv. Notably many of the PJC report's recommendations were heavily criticised in the minority report authored by Labour members of the PJC, pages 361–371.
154 United Nations General Commission on International Trade Law – Working Group III (Investor State Dispute Settlement Reform) Thirty-seventh session, Possible reform of investor-State dispute settlement (ISDS) Third-party funding, UN Doc A/CN.9/WG.III/WP.157 (5 April 2019), page 2.
155 Victorian Law Reform Commission, Access to Justice – Litigation Funding and Group Proceedings (consultation paper, July 2017), 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]. See also IBISWorld, Litigation Funding in Australia (April 2021), page 20.
156 Australian Law Reform Commission, Integrity, Fairness and Efficiency – An Inquiry into Class Action Proceedings and Third-Party Litigation Funders (report No. 134, January 2019) p. 70 and Table 3.7. Professor Morabito also examined a similar review period to the ALRC and concluded that the median percentage of settlement funds 'consumed' by funding fees in funded federal class actions settled during the period from January 2013 to December 2018 was 26 per cent, and the median percentage of settlement funds consumed by funding fees in all funded class actions settled during this period was 25.5 per cent: Professor Vince Morabito, 'An Evidence-Based Approach to Class Action Reform in Australia 'Common Fund Orders, Funding Fees and Reimbursement Payments' (January 2019) p. 12.
157 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, May 2006) p. 4. See also Buiscex Ltd v. Panfida Foods Ltd (in liq) (1998) 28 ACSR 357 at 363–364, where Hodgson CJ in Eq held that a commission as high as 75 per cent was not unreasonable in light of the facts; Re ACN 076 673 875 Ltd (Rec and Mgr Apptd) (2002) 42 ACSR 296 at [33], where Austin J held that commissions of 15 to 40 per cent (where proceedings are commenced) were not excessive in the circumstances of the case; Robinson, re Reed Constructions Australia Pty Ltd (in liq) [2017] FCA 594 (1 May 2017) at [18], where Gleeson J approved the plaintiffs' entry into a funding agreement that entitled the litigation funder to 85 per cent of the settlement amount (less costs incurred in pursuing the claim), but the funder was required by the funding agreement to pay a number of creditors, leaving a final net share of no more than 55 per cent.
158 Professor Vince Morabito, Submission to the Parliamentary Joint Committee on Corporations and Financial Services, Litigation Funding and Regulation of the Class Action Industry (10 June 2020).
159 Similarly, funders may agree to pay a proportion, or all, of the liquidators' fees during the course of the claim. Where liquidators' fees are partially deferred they are generally recovered from any resolution sum if a successful outcome is achieved. In the recent case of Re HRL Limited (in liq) & Anor [2022] VSC 693, the Court approved a 5 per cent success fee in addition to the liquidators' fees, in circumstances where the funder had agreed to fund 60 per cent of the liquidators' fees such that the balance of the liquidators' fees were recoverable only if a successful outcome was achieved and there were sufficient recoveries from the litigation.
160 Fostif v. Campbells Cash & Carry Pty Ltd (2005) 63 NSWLR 203; [2005] NSWCA 83 at [94]–[116].
161 For example, see Supreme Court of New South Wales Proceeding LCM Operations Pty Ltd v. Rabah Enterprises Pty Ltd [2015] NSWSC 1156.
162 Section 100-5 of the Insolvency Practice Schedule (Corporations) at Schedule 2 to the Corporations Act, which commenced on 1 March 2017, allows external administrators (including liquidators) to assign any right to sue that is conferred on them under by the Corporations Act including, for example, voidable transaction claims and insolvent trading claims. Previously, liquidators only had the power to sell, or otherwise dispose of, property of the company pursuant to Section 477(2)(c) of the Corporations Act, including common law rights of action such as debts. However, it has been suggested by the courts that not all claims are capable of being assigned including, for example, statutory causes of action for misleading or deceptive conduct: see Pentridge Village Pty Ltd (in liq) v. Capital Finance Australia Ltd [2018] VSC 633.
163 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'.
164 For contrast see City of Swan v. McGraw-Hill Companies Inc [2016] FCA 343; (2016) 112 ACSR 65 at [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.
165 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].
166 In HFPS Pty Ltd (Trustee) v. Tamaya Resources Ltd (In Liq) (No. 3) [2017] FCA 650 at [105]–[106], Wigney J 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].
167 [2018] FCA 1289.
168 ibid., at [51].
169 ibid., at [52]–[58].
170 ibid., at [47].
171 See, for instance, observations of Justice MBJ Lee, 'Varying Funding Agreements and Freedom of Contract: Some Observations' (Speech, IMF Bentham Class Actions Research Initiative with UNSW Law: Resolving Class Actions Effectively and Fairly, 1 June 2017), p. 7. In other instances, the Federal Court has indicated that under Section 33ZF of the FCA Act 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 at [26]–[31].
172 Clarke v. Sandhurst Trustees Ltd (No. 2) [2018] FCA 511 at [26]–[27]. See also more recently in Queensland Nickel Sales Pty Ltd v. Park in his capacity as liquidator of Queensland Nickel Pty Ltd (in liq) [2023] FCAFC 150, where at [122]–[132] the Full Court of the Federal Court held that the primary judge had not erred in her Honour's approach in assessing the evidence as to the reasonableness of the funding premium in question, or in finding that the funding premium was reasonable by ordinary standards. Depending on the circumstances, the funding premium would be an amount equal to the greater of between 15 per cent and 35 per cent of the proceeds or an amount calculated by reference to certain costs. The Court noted that the finding was 'entirely unexceptional' given the absence of: (1) any other funding proposals from the Commonwealth or other creditors; (2) any objectively superior funding proposals; (3) the absence of any available funds to pursue the proceeding; (4) the assessment of the merits made by the liquidator; and (5) the time pressures imposed on the commencement of proceedings by an impending expiry of limitations periods.
173 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]; See also Endeavour River Pty Ltd v. MG Responsible Entity Ltd (No. 2) [2020] FCA 968, where Murphy J approved a settlement sum of A$42 million inclusive of costs and interest, but initially declined to approve the funder commission of 32.1 per cent and proposed a rate of 25 per cent, which was ultimately agreed by the funder. In providing reasons for approving the settlement and considering the matters that might be relevant to the approval, at [38], Murphy J noted that the court may 'also take into account the funder's rate of return over time as that may assist in understanding the range of fair and reasonable funding rates'. In Williamson v. Sydney Olympic Park Authority [2022] NSWSC 1618, Black J did not approve the proposed deductions from a settlement sum for the funder's commission and the costs of after the event insurance, which would have delivered the funder 36.4 per cent of the gross settlement, and determined that a fair and reasonable settlement would be achieved if the total deduction was 25 per cent of the gross settlement sum. His Honour found that the funder had not justified by any evidence the funding commission nor adequately disclosed the potential size of the insurance costs. His Honour observed that no question arose as to the Court's power to override the parties' contractual entitlements in the course of approving the settlement, because the funding agreement expressly provided that the funder's commission was not to exceed any amount that the Court determined to be reasonable in all the circumstances. However, at [69] his Honour said that 'the trend to increased scrutiny of funding arrangements in recent case law is to be welcomed.' In Augusta Pool 1 UK Ltd v. Williamson [2023] NSWCA 93, the funder unsuccessfully appealed the decision of Black J.
174 The new Treasury Laws Amendment (Measures for Consultation) Bill 2021: Litigation Funders proposes the introduction of a new Part 5C.7A to the Corporations Act, which, if passed through federal parliament, will introduce a new statutory regime empowering the court to review, approve or vary litigation funding agreements in connection with a new statutory concept known as a class action litigation funding scheme. This proposed legislation appears to respond to, but go beyond, the recommendations in the Australian Law Reform Commission, Integrity, Fairness and Efficiency – An Inquiry into Class Action Proceedings and Third-Party Litigation Funders (report No. 134, January 2019), pp. 169–177; Parliamentary Joint Committee on Corporations and Financial Services, Litigation funding and the regulation of the class action industry, (report, December 2020), pp. 157–158.
175 [2023] FCA 902.
176 ibid., at [205].
177 [2022] NSWSC 459.
178 Re Jabiru Satellite Limited (in liq) and NewSat Limited (in liq) [2022] NSWSC 459 at [38] and [44].
179 Federal Court of Australia, Class Action Practice Note (GPN-CA) – General Practice Note, 20 December 2019, paras. 5.3 and 6.1–6.7.
180 ibid., paras. 6.1, 6.4.
181 ibid., para. 6.4(b).
182 Federal Court of Australia, Class Action Practice Note (GPN-CA) – General Practice Note, 25 October 2016, para. 6.1.
183 Spatialinfo Pty Ltd v. Telstra Corporation Ltd [2005] FCA 455.
184 Dorajay Pty Limited v. Aristocrat Leisure Limited [2005] FCA 588.
185 See for example Order 9A Rules 1 & 2(1) of the Western Australian Rules of the Supreme Court 1971 (WA); See also Section 477(2B) of the Corporations Act 2001 (Cth), which requires approval of agreements entered into by a liquidator exceeding three months in duration.
186 Kogan, in the matter of Rogulj Enterprises Pty Ltd (in liq) [2021] FCA 856 at [18].
187 [2005] NSWSC 731 at [13].
188 The power of the Federal Court of Australia to make confidentiality orders (termed suppression orders and non-publication orders) is contained in Section 37AF of the Federal Court Act and the grounds for making them are found in Section 37AG.
189 See for example Kelly (Liquidator), in the matter of Halifax Investment Services Pty Ltd (in liquidation) v. Loo (No. 2) [2022] FCA 1078 (at [48]) where Markovic J held that if the material 'was available to the proposed respondents to the proceeding, [it would] provide them with an unfair forensic advantage and which could well undermine the conduct of the proceeding and the administration of the insolvent estate. In those circumstances it is in the interests of the administration of justice that material of that nature be kept confidential until the conclusion of the proposed proceeding.'
190 See for example Thorn (liquidator), in the matter of South Townsville Developments Pty Ltd (in liq) [2022] FCA 143 at [44] where Justice Stewart allowed specific redactions to prevent prejudice to the administration of justice.
191 Hastie Group Ltd (in liq) v. Moore [2016] NSWSC 1315.
192 Hastie Group Ltd (in liq) v. Moore (2016) 339 ALR 635; [2016] NSWCA 305 at [59]–[60].
193 Knight v. FP Special Assets Ltd (1992) 174 CLR 178; [1992] HCA 28 at [192]–[193]; see also Gore v. Justice Corporation Pty Ltd (2002) 119 FCR 429; [2002] FCAFC 83; Dymocks Franchise Systems (NSW) Pty Ltd v. Todd (No. 2) [2004] 1 WLR 2807 (on appeal from New Zealand); see also Fostif Pty Ltd v. Campbell's Cash and Carry Pty Ltd [2005] NSWCA 83; 63 NSWLR 203 at 230 [120].
194 [2021] NSWSC 1202.
195 ibid., at [73].
196 ibid., at [23].
197 ibid., at [52].
198 ibid., at [68].
199 Hardingham v. RP Data Pty Limited (Third Party Costs) [2023] FCA 480 (Thawley J).
200 ibid., at [26].
201 See Green (as liquidator of Arimco Mining Pty Ltd) v. CGU Insurance Ltd (2008) 67 ACSR 105; [2008] NSWCA 148 at [51], [61] (Hodgson JA), [85]–[88] (Campbell JA) and [80] (Basten JA).
202 (2020) 384 ALR 340, (2020) 300 IR 446, [2020] FCFCA 194.
203 Under the Fair Work Act 2009 (Cth).
204 In the first instance decision the trial judge found that the Court had power to make such an order and exercised the Court's discretion to order security for costs be provided by the funder: Turner v. Tesa Mining (NSW) Pty Ltd [2019] FCA 1644.
205 Augusta at [83] (Allsop CJ).
206 Augusta at [68]–[73] (Allsop CJ); at [89] (Middleton J); and at [93], [131]–[134] (White J).
207 [2021] FCA 304.
208 Duck v. Airservices Australia (No. 3) [2021] FCA 304 at [9] and [69] per Bromwich J.
209 ibid., at [51] per Bromwich J.
210 ibid., at [9] and [67]–[69] per Bromwich J.
211 ibid., at [47] per Bromwich J.
212 Jeffery & Katauskas Pty Ltd v. SST Consulting Pty Ltd (2009) 239 CLR 75; [2009] HCA 43.
213 See also Grave, Adams and Betts, Class Actions in Australia, (Law Book Co of Australasia, 2nd ed, 2012) para. 17.1000.
214 ibid.
215 ibid.
216 Domino's Pizza Enterprises Limited v. Precision Tracking Pty Ltd (No. 2) [2017] FCA 211.
217 [2017] FCA 699.
218 [2020] QSC 269. In this case, Bond J determined that security in the form of a deed of indemnity between a foreign third party insurer of the plaintiff's litigation funder and the defendants was not adequate, and ordered that security be provided by way of payment into court, payment into a solicitors' trust account or bank guarantee.
219 Petersen Superannuation Fund Pty Ltd v. Bank of Queensland Ltd (Petersen) [2017] FCA 699 at [92].
220 See Perera v. GetSwift Limited [2018] FCA 732 at [194]–[195] per Lee J; Kelly v. Willmott Forests Ltd (in liquidation) (No. 4) [2016] FCA 323 at [105] per Murphy J; Hardy v. Reckitt Benckiser (Australia) Pty Limited (No. 3) [2017] FCA 1165 at [13]–[15] per Nicholas J.
221 [2020] FCA 1885.
222 Asirifi-Otchere v. Swann Insurance (Aust) Pty Ltd (No. 3) [2020] FCA 1885 at [32]; Williamson v. Sydney Olympic Park Authority [2022] NSWSC 1618.
223 [2020] FCA 461 at [34].
224 Commonwealth, Parliamentary Debates, House of Representatives, 14 November 1991, 3174–3175 (Duffy).}