Funder gets $30M in landmark class action creating common fund
Class Actions May 30, 2018 11:56 am By Christine Caulfield | Melbourne

The litigation funder behind the Federal Court’s precedential ruling that established the first common fund order in an Australian class action has secured a $30.75 million payout in the case.

Justice Bernard Murphy issued an order Tuesday approving a 23 percent cut of the $132.5 million settlement for International Litigation Funding Partners, which financed the proceedings against QBE Insurance.

The order also established Maurice Blackburn, the law firm that led the shareholder class action against the insurer, as administrator of the settlement distribution scheme.

The Full Court’s ruling in the case in October 2016 ushered in a new era in class action litigation in Australia. The common fund order meant that every member of the ‘open’ class action is liable to pay ILF commission out of the settlement proceeds, not just class members who signed a funding agreement with the firm.

“It is time that the court gives further consideration to the interests of class members in relation to the reasonableness of litigation funding charges,” the Full Court wrote in its game-changing opinion.

The court reasoned that if the funder was allowed to charge a “commercially realistic but reasonable percentage” commission to the whole class, they would be less likely to bring class actions limited to group members who signed agreements.

“The encouragement of open class representative proceedings should reduce the potential for conflicts of interest between funded registered class members and unfunded class members and between the solicitors for the applicant and unfunded non-client class members,” the court said.

“Open class proceedings will also act to inhibit competing class actions and avoid the multiplicity of actions which they represent. Competing class actions can cause significant delay, increased costs and wastage of the resources of the parties and the courts.”

Recent competing class actions against AMP and GetSwift suggest the ruling may not have had the intended effect of discouraging multiple proceedings, but the decision has meant that common fund orders are now routine in Australia class actions.

Tuesday’s order on ILF’s commission comes three weeks after Judge Murphy signed off on the QBE settlement and approved $21.8 million in legal fees to Maurice Blackburn, whose costs in the case were subject to audit by a referee.

Maurice Blackburn filed the case in September 2015 alleging that QBE engaged in misleading conduct and failed to meet its continuous disclosure obligations prior to announcing a shock loss of $254 million in the 2013 financial year.

Expectations were raised by QBE’s half yearly report in August 2013, which predicted an expected profit of $1 billion. The announcement of a loss in December of the same year, surprised many and led to share values plummeting by 30% over two days.

QBE first agreed to the deal in principle in December 2017. In an ASX announcement at the time, the company said it had not admitted any wrongdoing and the settlement would have no material impact on 2017 second half earnings.

The next case management hearing is scheduled for June 22.

QBE is represented by Allens.

The case is Money Max Int Pty Ltd v QBE Insurance Group Ltd.

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Christine Caulfield

Christine Caulfield has been a journalist for 18 years. She was most recently the Co-Managing Editor at US legal news publication Law360. Prior to that she worked as the County Court reporter for The Herald Sun. She is Co-Founder and Editor of Lawyerly.