Litigation funder JustKapital went on the attack in court on Wednesday, saying Westpac’s objections to the terms of a proposed funding order in a class action against the bank were dangerously suspect.
“It’s very dangerous to rely on a word they say,” the funder’s barrister Noel Hutley, SC, told Federal Court Justice Michael Lee during an interlocutory hearing in the Shine Lawyers-led case, which alleges Westpac’s life insurance advisers charged excess premiums to tens of thousands of customers.
“The respondent has an interest and it’s an interest to harm the class,” Hutley said.
Westpac barrister Alec Leopold, SC, has previously argued that JustKapital’s capped 30 percent commission in the proposed common fund order to cover 88,000 group members would result in a “windfall” for the funder.
The funding agreement, under which JustKapital will cover 80 percent of the total legal costs and any adverse court orders from the proceedings in return for the commission, has been signed only by the four lead applicants.
Leopold on Wednesday defended against Hutley’s attack, saying there was “no inference that we were there to wreck the case or come in like a wrecking ball”.
“I’m under no misapprehension that you’re advancing Westpac’s interests,” Judge Lee told Leopold.
The judge reserved his decision on the form of the common fund order.
The class action, which names Westpac Banking Corporation and Westpac Life Insurance Services as respondents, alleges the bank’s advisers routinely ripped off customers for years by charging higher premiums on life insurance than were charged to other people who obtained identical insurance on the advice of financial advisers outside Westpac’s network.
According to the statement of claim, filed in October last year, Westpac breached its fiduciary duty to customers by charging premiums that were 4.5 per cent higher than the premiums payable on insurance obtained from Westpac Life through independent advisers.
Westpac did not disclose the inflated premiums to customers, according to the suit, and its conduct was unconscionable under the Australian Securities and Investments Commission Act.
In its defence, filed in December, Westpac said the premium paid by customers for life insurance was “a function of various factors” that included “discounts, multipliers, loadings or shavings” on a base rate. The rate depended on a medical assessment of the proposed insured, and their age, gender and smoking status.
Shine Lawyers has said it will cover 20 percent of its costs on a no-win, no-fee basis. The law firm has estimated its fees will come to between $6.5 million and $9 million.
Leopold is from Eleven Wentworth and Hutley is from 5th Floor St James’ Hall Chambers. Anthony Martin, SC represented the class action and is from Ninth Floor Selborne Chambers.
Westpac is represented by Allens. JustKapital is represented by Roberts & Partners Lawyers.
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