Ryan Jameson

The High Court has agreed to rule on whether common fund orders can ever be made in class actions, including so-called solicitors’ common fund orders allowing lawyers to earn a cut of any settlement.

If it takes up the Federal Court’s ruling in favour of solicitors seeking to earn a cut from a class action, the High Court will be asked to overrule its 2019 decision against common fund orders.

Michael Hill has won its challenge to a decision that found the jewellery retailer breached an exclusivity clause and minimum order requirements in a sales agreement with a packaging supplier. 

The High Court has been asked to overturn a Full Court decision finding lawyers can take a cut from a class action settlement under a solicitors’ common fund order and to finally settle the question of whether the court has the power to issue common fund orders at all.

Lawyers are allowed to take a cut from a class action settlement or judgment under a so-called solicitors’ common fund order, the Full Federal Court has ruled, saying they are a permissive use of the court’s power.

Hearing arguments Tuesday on whether lawyers should be permitted to earn contingency fees in Federal Court class actions, judges on a Full Court bench appeared to lean in favour of allowing so-called solicitors’ common fund orders, rejecting claims they are “unjust”. 

The Full Federal Court has found the court’s recently-affirmed power to make common fund orders at settlement means the litigation funder that backed two class actions against 7-Eleven is entitled to a $24.5 million cut from a $98 million settlement, in a decision that slammed the parties for a settlement approval process that “went off the rails”, costing group members $2.5 million.

The majority shareholders of vitamin giant Nature’s Care have been hit with the costs of the company’s failed bid for an injunction against its founding family, after a judge found the shareholders appear to have caused proceedings to be commenced as part of a strategy to “override the rights” of the family. 

A judge hearing an appeal by a funder over its cut of a $98 million settlement in franchisee class actions against 7-Eleven has said the $12 million commission was “plainly too little”, and questioned if the class action judge had been “stuck” on the idea that common fund orders are bad. 

Weeks after giving the thumbs up to common fund orders at settlement, the Full Federal Court has been asked to decide whether judges have power to order payment of a commission to class action solicitors — not just funders.