Augusta Pool 1 UK Ltd v Williamson

Background

1. As issues of disclosure to group members and the competitive process for securing funding for the litigation loom large in AP1's submissions, it is relevant to set out the history of the entry into and amendment of the litigation funding arrangements. It is also relevant to note, as the Contradictor points out, that the primary judge found that this initial competitive process was undermined by the timing of that contest, and the significant monetary shifts that affected the total deductions, which occurred after that point in time (see his Honour's reasons at [63]-[67]).

Initial discussions as to proposed class action

1. There were discussions in late December 2018 between the solicitors who were ultimately retained to act for the respondents, Corrs Chambers Westgarth (Corrs) and representatives of the Augusta group of companies (a group of companies which carries on the business of litigation funding, and which relevantly include Augusta Ventures Ltd (AVL), the entity which first entered into the funding agreement with the respondents) as to the commencement of a proposed class action on behalf of owners of units in the Opal Tower. Following those discussions, solicitors at Corrs contacted various owners about the proposed class action, including the treasurer of the Owners Corporation, Mr Brian Tan.
2. An owners' committee was established to canvass the market for the funding of the proposed class action (see primary judgment at [22]). That owners' committee subsequently acted as a "legal committee" providing "input" to the respondents' solicitors (though it is not suggested that, other than one person recorded as being a solicitor, its members were legally qualified). It appears that various law firms were either contacted by the owners' committee or themselves made enquiries as to a proposed class action.
3. On about 11 January 2019, competing proposals were put to the unit owners (by Corrs and another firm) for the funding of the proposed class action. There was subsequent correspondence and a further meeting with unit owners on 16 January 2019.
4. The primary judge observed (at [22]), by reference to the evidence of Mr Neill Brennan (the founder of the Augusta group and managing director of Augusta Ventures (Australia) Pty Ltd, another entity in the Augusta group), that there was apparently no disclosure at the meetings in January 2019 of the potential costs of ATE (after the event or adverse costs) insurance.

Corrs/AVL funding proposal

1. The Corrs/AVL funding proposal put to the owners' committee in January 2019 included that AVL's return on investment was to be based on a mix of a profit multiple of 2.6x costs and 15% of any settlement or resolution sum. At the January meeting, the owners' committee negotiated with AVL for the funding to be based on the greater of a 2.6x profit multiple or a percentage based commission of 12.5% (as opposed to a mix of profit multiple and percentage of settlement or resolution sum) (see Mr Brennan's affidavit affirmed 25 October 2022 at [23]). Mr Brennan deposed that, at the time that the 2.6x profit multiple was negotiated, Augusta was in the process of shifting away from funding on the basis of a profit multiple of 2.5x in favour of a profit multiple of 3.3x (see his affidavit at [30]) and that the agreed profit multiple under the litigation funding agreement with the respondents (2.6x costs and expenses) was a compromise by Augusta so that it would be recommended by the committee to the owners for the purpose of funding the proposed class action (see [23] of the primary judgment; [30]-[31] of Mr Brennan's affidavit). The 2.6x multiple was to apply only to deployed costs and expenses (not, for example, the later additional deferred ATE insurance costs).

Recommendation by owners' committee

1. On about 1 February 2019, the owners' committee issued a notice to owners, recommending that Corrs represent them and for the class action to be funded by AVL (see Mr Brennan's affidavit at [26]). The notice included the statement that under Augusta's proposal the funder would receive a commission which was the greater of: 12.5% of any compensation received (except for compensation in the form of a payment to buy back the apartments, to which a rate of only 6.25% applied) or 2.6 times the funds deployed by the funder in investigating and bringing the legal proceeding (the majority of which was said to comprise legal fees). The notice informed owners that the then current best estimate of costs through to a trial was around $5 million plus GST and that, if the case resolved earlier, then the funds deployed would be likely to be less than $5 million and the commission would only be calculated on the amount "deployed" to that date. The notice stated that if there was a successful resolution of the claim the funder would be entitled to recover the costs it had expended.
2. The notice also informed owners that "[t]o provide some context on how competitive the proposed funding is, typical funding agreements are usually around 30%". This is of some relevance given that, as matters transpired, the litigation funder's commission under the contractual arrangements (though subject to the application of the proviso that it not exceed the amount determined by the Court to be fair and reasonable - see below) would actually have been as high as around 50% of the gross settlement sum; and the proposal ultimately put forward for approval by the primary judge was for funder's commission of 36.4% (both those figures being in excess of what the owners had been informed was provided for under "typical" funding arrangements; and both well in excess of the 12.5% figure comprising one of the options for funder's commission provided for under the litigation funding agreements).

Initial "seed funding"

1. On 8 February 2019, Augusta approved "seed funding" of $109,000 for the purpose of briefing Counsel, obtaining written advice on the merits, preparing a draft pleading and obtaining input from an engineering expert (see Mr Brennan's affidavit at [27]).

Initial litigation funding agreement and retainer of Corrs

1. On 9 February 2019, the respondents entered into a litigation funding agreement with AVL (which litigation funding agreement did not commit AVL to fund the whole of the proceeding). On the same day, AVL entered into a retainer agreement with Corrs (see Mr Brennan's affidavit at [28]).

Entry by other group members into litigation funding agreements

1. In the period up to July 2019, AVL entered into a further 371 litigation funding agreements with group members (representing 300 of the 349 unit owners) (see Mr Brennan's affidavit at [32]); i.e., with most of the group members (see [12] of the primary judgment).
2. Under the initial funding agreement, the "Claimant" (see Recital E), being the relevant applicant or group member counterparty, agreed to assign to AVL a share of any Claim Proceeds on the terms of the Agreement. The "Augusta Entitlements", as defined, included the "Augusta Commission", which in turn was defined to mean the amount calculated in accordance with Item (e) of Schedule 2 (being the higher of 12.5% of the Net Claim Proceeds or 2.6x the Claimant's Share of the Project Costs "but not exceeding any such amount as the Court determines to be fair and reasonable in all of the circumstances").
3. Owners who entered into the initial litigation funding agreements with AVL received a summary document setting out the key terms of the litigation funding agreement. That document summarised the entitlements that Augusta would receive out of the proceeds of the claim, if the claim were successfully resolved as follows: (i) a return of the costs and expenses deployed by Augusta; (ii) any GST payable on the amount supplied to you by Augusta; (iii) the Augusta Commission as set out in Schedule 2 to the LFA. The Augusta Commission is, in summary, the higher of: 1. option 1: a percentage of the proceeds of the claim. If you receive "buyback relief", meaning a payment in exchange for returning to title to your property, the commission is 6.25% of that payment. For all other amounts you receive from any judgement [sic] or settlement, the commission is 12.5%; or 2. option 2: 2.6 times the costs and expenses deployed by Augusta.
4. The primary judge noted (at [24]) that the summary document referred to "costs and expenses deployed by Augusta" without any indication of the magnitude of these likely costs and expenses generally or the substantial potential cost of ATE insurance in particular; and that the document did not indicate the potential for the return to owners on a settlement or resolution of the proceeding to be eroded by the cost of ATE insurance.

July 2019 financing application

1. As already noted, the initial funding agreement was to enable preliminary steps to be taken in relation to the claim. By application dated 23 July 2019, prepared by Corrs on what appears to have been an Augusta "Case Financing and Insurance Application" pro forma document, the respondents applied for litigation funding for the conduct of the representative proceeding as a whole. Senior Counsel for AP1, Mr Sulan SC, concedes that there were some internal inconsistencies in this document but says that the net effect is that the ATE insurance premiums were included in this financing application (T 22.6-12). AP1 maintains that the respondents knew the proposed amounts for ATE insurance and that group members who signed the litigation funding agreements knew more generally that ATE costs were part of the project costs (see T 22.16-24) but accepts that the documents did not specifically refer to the deferred aspect of the ATE insurance premium. (The concern of the primary judge, however, was as to the lack of disclosure as to the impact on group members' returns of the ATE deductions - see below.)
2. In the July 2019 financing application, the total estimate of own costs (including insurance premiums) was budgeted at $8,136,807.90. Of that total case budget, there was an item for "disbursement (including insurance premiums where not deferred)" of $2,471,857.40. In the same document, in the table under Item 12 (Budget), the "Augusta Disbursements" are itemised as including an estimated ATE Premium of $1,120,000.
3. The respondents signed that financing application on 25 July 2019; and Mr Christopher Pagent of Corrs signed a declaration confirming, among other things, that the Risk Committee of the Law Firm and fee earner with overall responsibility agreed that the prospects of success on both liability and quantum were greater than 50% should the matter proceed to trial.
4. Meanwhile, it appears that the Investment Committee of AVL had given its internal approval to the case investment as at 17 May 2019 (see the Case Investment Summary dated 7 January 2020, prepared after the Augusta Ventures diligence process, in which the estimated return multiple was stated to be between 2.17 - 3.6x excluding ATE "which attracts no fee").

AP1 assumes obligations of AVL

1. In around October 2019, AP1 (a special purpose vehicle established for the purpose of funding the representative proceeding) assumed the obligations of AVL in relation to the funding of the proceeding. AP1 entered into a Deed of Novation, Amendment and Restatement with AVL, the respondents' solicitors and many, but not all, of the funded group members (see at [12] of the primary judgment; see also [43] of Mr Pagent's affidavit sworn 7 October 2022). That agreement provided for entry into an amended and restated litigation funding agreement. (AP1, in the context of its emphasis on the competitive process by which the funding arrangements were concluded, argues that, if group members were not willing to proceed with the novation proposal one could assume they could have gone to the market for funding (see T 13); though there was some evidence as to the increased difficulty of obtaining such insurance the more advanced the litigation.)

June 2020 Matter Review by Corrs

1. Corrs prepared a draft Matter Review for AVL in late June 2020, in which Corrs advised that it might be necessary to revise the likely quantum range expressed in the funding application, having formed the view that the current upper estimate of diminution in value needed to be revised downwards.
2. The Matter Review referred, among other things, to the possible amendment of the claim to bring claims against Icon and WSP. Corrs estimated the adverse costs exposure to Icon and WSP in respect of such a claim to be $3.7 million; and the adverse costs exposure in respect of the cross-defendants' costs of defending the cross-claims brought against them (there being by this stage a number of cross-claims) to be around $2 million.
3. The draft Matter Review noted that $4 million of ATE insurance had been provisioned on an estimated limit of liability of $3.9 million, noting that this estimate was based on an assumption that Sydney Olympic Park Authority's legal costs would be $6 million and that the assessment rate would be 65%; but that the funder had questioned whether there was a prospect that the $4 million ATE insurance would be insufficient.
4. It appears, from the subsequent 27 October 2020 "Proposed Amendments/Quantum Analysis prepared by Corrs, that the draft 29 June 2020 Matter Review was indeed finalised but the copy in the Court Book (to which Mr Sulan took the Court in the course of submissions) is one that is watermarked as a draft. Hence, it is here referred to as a draft. Mr Sulan nevertheless referred to this as indicating that some of the dynamics of the case were by then changing and as indicating that there would be additional exposure to costs.

26 March 2021 letter to respondents

1. By letter dated 26 March 2021, AP1 advised the respondents of Augusta's agreement to increase the budget for the proceeding and further to amend the litigation funding agreement as a result of amendments in the respondents' claim (relevantly, the expansion of the claim to bring claims against Icon and WSP) (see the primary judgment at [13]; see also Mr Pagent's affidavit at [44]).
2. The 26 March 2021 letter noted (consistently with Corrs' "draft" Matter Review) that there was presently $4 million of Adverse Costs Insurance for the claim and that, as a result of the legal representatives' recommendation to include the claims against Icon and WSP, a further $6 million of Adverse Cost Insurance "has or will be incepted", bringing this insurance to a total of $10 million. The letter further noted the total amount of funding committed in connection with that insurance to date was $1.55 million (comprised of Adverse Costs Insurance Premium and estimated cost of providing security for costs) and that $2.27 million had been committed to the cost of incepting the further $6 million Adverse Cost Insurance (similarly comprised of the premium and estimate for security for costs).
3. Pausing here, there is a distinction (to which Mr Sulan drew the Court's attention) between the initial ATE premium paid by AP1 (i.e., the $1.55 million referred to in the 26 March letter) and the deferred ATE premium (i.e., the additional $2.27 million referred to in that letter). A general reference to costs and expenses "deployed" by the litigation funder might arguably have been understood to mean costs actually paid by the funder as opposed to deferred costs but nothing appears to have been made of this distinction. The spreadsheet to which the primary judge referred at [30], which was prepared by the litigation funder, comparing the internal rates of return to AP1 at different points in the proceeding, referred to "Paid ATE" of $2,901,894 and "Deferred ATE" of $2,240,000.
4. The respondents endorsed their consent to the budget variation and amendment to the funding agreement by signing the 26 March 2021 letter on 6 April 2021.

4 May 2021 advice to group members

1. By email dated 4 May 2021 from Corrs, funded group members were advised of the proposed amendments to their litigation funding agreements and asked to indicate if they did not agree thereto (see [14] of the primary judgment). (The primary judge noted that their consent to the amendments was not sought as such.) The email noted that AP1 had agreed to pay around $2.27 million (i.e., the additional ATE premium cover) to cover costs associated with adverse costs insurance premiums and providing security for costs; and referred to the possibility that amending the Commercial List Statement would increase any commission payable to AP1 in the event of a successful outcome. The email stated that "[w]e [i.e., Corrs] remain satisfied that the amendments are in your best interests".
2. The primary judgment accepted (at [15]) the Contradictor's observation that the statement contained in the 4 May 2021 email that AP1 had agreed to pay the adverse costs insurance premium did not draw group members' attention to the fact that the amount would be charged to them in the event of a successful outcome of the proceeding and that the reference to it being "possible" that the amendment would increase the commission to AP1 did not disclose the inevitability that the increased commission and increased ATE costs would in turn increase the amounts deducted from the settlement proceeds in that event. (Mr Sulan cavils with the suggestion that there was an inevitability as to the increase in the commission payable to AP1 (T 23), on the basis that the litigation funding agreement provided two options in relation to the funder's commission - a reference to the fact that the commission was to be the higher of 12.5% or 2.6x costs.) His Honour (at [15]) recorded the acceptance by Mr Sulan that the email did not disclose the increase in the deferred ATE costs that would be deducted from group members' return on a successful outcome, his Honour further noting that a notice dated 20 April 2021 given to group members of amendments to the funding agreement also did not disclose those matters.
3. A further amended litigation funding agreement was later entered into with a small number of previously unfunded group members (see [16]). Ultimately, there were 341 of the group members (some 89% of the group) who had signed funding agreements with AP1 ([17]).

Mediation of the dispute

1. In due course there was a mediation of the dispute. In evidence before the primary judge there was reference to a conversation at the time of the mediation between the respondents and their solicitor (in respect of which privilege was presumably waived) which contemplated that a "good outcome well in line with the market" would be a payment of 50% of the damages to the group members and there was discussion as to a reduction of AP1's costs multiple from 2.6x to 2.3x to achieve that outcome. Mr Brennan deposed that he had formed the view that it was in AP1's interests to achieve a settlement where group members would receive 50% of the settlement sum (on which basis he agreed to reduce the profit multiple to that 2.3x figure) (see as recounted by his Honour at [29]; see also Mr Brennan's affidavit at [55]).
2. AP1 here points to the submission made by the Contradictor on the application before the primary judge to the effect that the voluntary reduction in commission by the litigation funder was a factor that "manifestly militates in favour of its fairness and reasonableness within the context of the proceeding". The Contradictor notes that the primary judge recorded and considered that submission at [9], [50] and [63].

Heads of Agreement

1. On 19 May 2022, the respondents entered into Heads of Agreement with each of the defendants to the proceeding and AP1 to settle the representative proceeding subject to Court approval under s 173 of the Civil Procedure Act (see primary judgment at [4]). The Heads of Agreement contemplated the appointment of an administrator of the proposed Settlement Distribution Scheme (Mr Ayres of Kroll) ([4]).

July 2022 Settlement Notice

1. In July 2022, a settlement notice, in a form approved by the primary judge, (together with a Chinese translation) was distributed to group members (see [8]). The notice stated that (subject to Court approval of the fairness and reasonableness of these costs) those group members who had entered into litigation funding agreements were obliged to pay AP1: (a) The claimant's share of the 'Project Costs'. The Project Costs include legal costs and disbursements associated with the proceedings (including investigations before commencing the proceedings and any alternative dispute resolution process) and the upfront adverse cost insurance premium. As at 31 May 2022, the Project Costs (including work in progress) totalled around $8.7M; and (b) The Funder's Commission, calculated as 2.6X the claimant's share of the Project Costs (excluding any administrative fee or adverse costs insurance premium that is payable from Claim Proceeds). As at 31 May 2022, the Commission totalled around $15M. However [AP1] has agreed to reduce the multiple from 2.6 to 2.3, which means that the Funder's Commission is reduced by around $1.8M to around $13.2M.
2. The settlement notice included on page 5 the statement that: The Funder's Entitlements can only be deducted from the Settlement Sum if and to the extent that they are approved by the Court as being fair and reasonable.
3. The settlement notice also stated on page 6 that: Thirdly, a payment to the insurer for deferred adverse cost insurance premium in the amount of $2.24M will be deducted from the Settlement Sum, in addition to the upfront adverse cost insurance premium noted in paragraph b(a).
4. AP1 points out that the settlement notice disclosed in dollar terms the amounts to be paid to the litigation funder; and that the Contradictor acknowledged in written submissions that this notice "clearly conveys to group members the quantum and methodology of the Funder Entitlements and the implications of those matters for the sum remaining to be distributed among the group", though this was clarified by the Contradictor in oral submissions by the observation that the amount of the upfront ATE premium was not identified in sub-paragraph (a) of the notice (set out above) but it was identified to form part of the "Project Costs".
5. Following the distribution of the settlement notices, no objection was received from any group member as to the proposed deductions from the settlement sum (see [63] of the primary judgment), a matter on which AP1 here (as it did at first instance) places no little weight. There was evidence that a number of queries had been raised by group members but that generally these went to the diminution in value of their unit, as calculated by the valuation expert (which depended on the extent to which the property of the individual group members was affected by the defects) (see Mr Pagent's affidavit at [121]-[123]).

Notice of motion seeking approval

1. A Settlement and Release Deed was executed by 7 October 2022. On that date, the respondents filed a notice of motion seeking an order under s 173 of the Civil Procedure Act approving the settlement on the terms of the Settlement Deed and accompanying Settlement Distribution Scheme. The relief sought in the motion included an order under s 173(2) of the Civil Procedure Act allowing a deduction in favour of Augusta for "Funder's Commission" in the amount of $13,074,063. The respondents, in support of their motion, filed a confidential opinion of counsel as to the fairness and reasonableness of the settlement and made oral submissions both as to the funder's commission and the ATE costs.
2. AP1 was not initially joined as a respondent to the notice of motion but attended in court at the hearing of the application and was initially heard on that application as an interested party. AP1 subsequently sought to be joined as a respondent to the motion, to which application his Honour acceded (see at [5] of the primary judgment). It was then that AP1 adduced evidence from Mr Brennan (deposing to the process in which the funder's commission was agreed and as to Augusta's internal funding model, as referred to earlier) as well as evidence from Mr Warner, the director and head of broking operations at a UK firm which had been engaged by AVL to act as broker in arranging ATE insurance for the proceeding (and who expressed the opinion that the premiums that were agreed in this case compared favourably in his experience with rates available in the market).
3. As adverted to above, Dr Higgins SC appeared as a Court appointed Contradictor on the application.
4. The primary judge heard the application over three days (on 11 October, 11 November and 15 November 2022) and published reasons on 28 November 2022. I will refer to the relevant parts of his Honour's reasons when addressing the respective grounds of appeal. Suffice it at this stage to note that, at [85], the primary judge said that: … On balance, it seems to me that the proper course would be to allow no more than a commission at a multiple of 2.6X less the amount of ATE costs, so that the total commission and ATE costs equates to a multiple of no more 2.6X, being the position originally disclosed by ATE to group members when AP1 was chosen as funder. [emphasis as per original] but ultimately his Honour rejected such an outcome on the basis that it would result in a deduction of 29.56% from the gross settlement ([86]). The primary judge concluded that it was necessary, in order to achieve a fair and reasonable settlement, for the total deduction represented by the funder's commission and ATE costs to be further reduced to 25% of the settlement amount ([86]-[87]).

Grounds of appeal

1. None of the primary judge's factual findings is challenged on the appeal. Rather, the challenges that are made to his Honour's reasons go broadly to two main aspects of the decision: first, the criticisms made by the primary judge of the evidence that was before him and the use made by the primary judge of other cases in which common fund orders had been sought (grounds 1 and 2) and, second, the criticisms made by the primary judge as to the extent of disclosure to group members (both as to the ATE amounts and as to the percentage of the deductions to be made from the gross settlement sum) together with the limited weight placed by the primary judge on the lack of objection by group members as to the deductions to be made in favour of the litigations funder out of the gross settlement sum (grounds 3 and 4).
2. AP1 does not challenge the approval of the settlement per se. If successful, AP1 seeks an order setting aside order 7(a) of the orders made by the primary judge on 8 December 2022 and substituting in its place an order authorising deduction from the settlement sum as outlined in the Settlement Distribution Scheme "Funder Commission" totalling $13,074,062.96 to be paid to it.

Leave

1. Before turning to the grounds of appeal themselves, it is convenient to deal briefly with the question of leave and then a dispute between the parties as to the applicable standard of appellate review.
2. AP1 maintains that it has an appeal as of right on the basis that the effect of the primary judge's decision has been finally to determine its substantive legal rights under its litigation funding agreements, by determining that the "fair and reasonable" deduction for commission and ATE premiums was 25% of the gross settlement and hence the decision was a "final" judgment or order within the meaning of s 101(2)(r) of the Supreme Court Act 1970 (NSW) (reference here being made to Carr v Finance Corporation of Australia Ltd (No 1) (1981) 147 CLR 246; [1981] HCA 20 (Carr)) and the amount in issue exceeds $100,000. AP1 maintains that it may appeal as of right from his Honour's decision. The Contradictor accepts that the primary judge finally determined the rights of AP1, as described in Carr, and does not oppose the grant of leave.
3. As noted above, AP1 was joined as a respondent to the notice of motion seeking approval of the settlement and it is accepted that its rights to funding commission are finally determined by the primary judge's decision (the amount in issue being substantial). Accordingly, there is an appeal as of right and it is not therefore necessary to consider whether, if leave had been necessary, it ought be granted (the Contradictor here disputing the suggestion by AP1 that the appeal concerns any issue of principle or question of general public importance concerning the court's approach to litigation funding in representative proceedings; and challenging the proposition by AP1 that the primary judge substituted his own view of what is a "fair and reasonable" commission).

Standard of Appellate Review

1. The second of the preliminary issues noted above relates to the applicable standard of appellate review. The Contradictor argues that the exercise of the power conferred by s 173 of the Civil Procedure Act involves a judicial discretion and, hence, that to succeed on the appeal AP1 must establish error in the House v The King sense (i.e., that the primary judge acted upon a wrong principle, allowed extraneous or irrelevant matters to guide or affect him, mistook the facts, did not take into account some material consideration, or that, on the facts, his decision is unreasonable or plainly unjust). AP1, on the other hand, maintains that the Warren v Coombes (1979) 142 CLR 531; [1979] HCA 9 ("correctness") standard of appellate review applies, noting that the statutory criterion pursuant to s 173(2) of the Civil Procedure Act, in making orders for the settlement or discontinuance of representative proceedings, is that such orders are "just" with respect to the distribution of any money, including interest, paid under a settlement or paid into the Court.
2. AP1 accepts that the court's task, when approving a settlement under s 173(1), requires the determination as to whether the settlement of representative proceedings is "fair and reasonable" having regard to the interests of group members (as the primary judge noted at [34]) but says that this legal criterion (of fairness and reasonableness) demands a unique outcome (see the test as explained by Gageler J in SZVFW at [49]).
3. AP1 says that the observations in Botsman v Bolitho (at [229]-[231] by the Court comprising Tate, Whelan and Niall JJA), namely, that the discretionary standard of review was there applicable, should be distinguished as those observations were directed to an appeal from the discretion under legislation which provided for the court to approve a settlement and "make such orders as [the court] thinks fit with respect to the distribution of any money" (cf the language of s 173(2) in the present case).
4. In any event, AP1 maintains that, even if the decision under appeal was a discretionary decision, it has demonstrated error in accordance with the principles in House v The King, namely that the primary judge acted upon a wrong principle (that the forms of evidence considered in common fund judgments were relevant and necessary) and took into account extraneous or irrelevant matters (namely, the absence of that kind of evidence and the level of funding commission approved in other cases).
5. As Gageler J observed in SZVFW, there is not a bright line distinction between cases where the legal criterion to be applied by the primary judge demands a unique outcome (in which case the correctness standard applies) and those where a range of outcomes is tolerated (in which case the House v The King standard applies). This is well illustrated by the present case, where there is a discretionary decision to be made as to the approval of the settlement in question (having regard to whether it is fair and reasonable in the interests of group members) but the orders made in approving that judgment are required to be "just".
6. The concept of a "discretionary decision" was the subject of observations in Coal and Allied by Gleeson CJ, Gaudron and Hayne JJ at [19], reference there being made to what was said by Mason and Deane JJ in In the Marriage of Norbis (1986) 161 CLR 513; [1986] HCA 17 at 518. See also the observations in Jamsek v ZG Operations Australia Pty Ltd (2020) 279 FCR 114; [2020] FCAFC 119 by Anderson J (with whom Perram and Wigney JJ agreed) at [168]-[169]. In Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd (2020) 279 FCR 631; [2020] FCAFC 122, Allsop CJ, Jagot J (sitting in the Federal Court as her Honour then was) and Lee J affirmed at [79] that the standard of review for an appeal from an evaluative judgment rather than a discretionary decision is that described in Warren v Coombes.
7. It has, however, been recognised that in many cases nothing may turn on the different formulation of the applicable principles of appellate review (see the observation of Leeming JA, with whom Meagher JA and McDougall J agreed, in Hall v State of New South Wales [2014] NSWCA 154 at [32], his Honour there citing Spigelman CJ in Perpetual Trustee Company Ltd v Khoshaba [2006] NSWCA 41 at [40]).
8. For the reasons expressed in Botsman v Bolitho, the power vested in the court pursuant to s 173 of the Civil Procedure Act to decide whether or not to approve a settlement of representative proceedings is a discretionary one to which the House v The King standard of appellate review applies. The issue between AP1 and the Contradictor is as to whether, in the making of orders in that context the requirement that the orders be "just" gives rise to a different standard of review (because the determination of what is "just" demands a unique outcome).
9. The distinction here sought to be drawn by AP1 between the statutory provision that was applicable in Botsman v Bolitho ("make such orders as it thinks fit") and the present case may be more seeming than real, since a judicial discretion to make orders as the court thinks fit is not itself unfettered (and requires account to be taken of what is just in all the circumstances). Moreover, as Bell CJ has noted, there are other contexts in which an evaluative judgment can involve the exercise of a discretionary judgment. Therefore, were it necessary to determine I would agree with Bell CJ that the decision in the present case was a discretionary decision in respect of which the House v The King standard of review is applicable.
10. In any event, ultimately I do not consider that anything turns on the different standards of appellate review in the present case, since on either test I have concluded that his Honour did not err. In particular, if the House v The King test is applicable, I have concluded that there was no House v The King error in the principles that his Honour applied or the matters that his Honour took into account in determining whether the proposed settlement was fair and reasonable and the "just" orders to be made when approving the settlement. In that regard, I do not accept that the primary judge erred in taking into consideration that in other cases (which his Honour well recognised involved applications for common fund orders unlike the case before him) there had been evidence of a kind that was not before him on the present application, Nor did his Honour err in taking into account, effectively as reinforcing his conclusion as to the fairness and reasonableness of the proposed settlement, the level of funding commission approved in such other cases.
11. I turn then to the particular grounds of appeal.

Ground 1 - whether the primary judge held that AP1 had an onus to adduce expert evidence

1. Ground 1 is predicated on the primary judge having held that AP1 had an onus to adduce expert evidence: 1. The primary judge erred in holding that the appellant had an onus to adduce expert evidence as to the "objective reasonable rate of return" on its investment (J[52], [68], [69], [84]-[86]), in circumstances where the appellant was not seeking a common fund order and had adduced evidence of the competitive process that led to the funding terms and the basis for its investment decision.
2. AP1 identifies the expert evidence that it says his Honour considered it was required to lead as being expert evidence of its "return on invested capital, the equity beta for funders locally or globally, or the rate of return on equity that a funder in its circumstances might reasonably expect having regard to the level of risk assumed".
3. Focusing carefully on what the primary judge said, in the paragraphs to which reference is here made by AP1, I do not accept that the primary judge held that AP1 had an onus to adduce expert evidence; nor did his Honour proceed on the basis that there was such an onus on AP1. Rather, what his Honour was addressing was the adequacy of the evidence that had in fact been adduced (by reference to submissions as to what other evidence might have been available) and whether it permitted a conclusion to be drawn as to the fairness and reasonableness of the settlement for which approval was sought. Moreover, by the time that the hearing concluded AP1 had in fact chosen to adduce evidence as to particular matters (such as the process by which the funder's commission had been negotiated) and it was not inappropriate for the primary judge to consider the adequacy of that evidence.
4. At [52], his Honour recorded (and expressly accepted) a submission by the Contradictor, that the funder commission could be understood as a factor of the capital invested by AP1, which represented the cost of bearing the risk of all relevant costs and disbursements and the associated risk of recoverability. However, his Honour noted that this observation required the qualification that AP1 outsourced the risk of adverse costs orders through ATE insurance and was seeking to recover the cost of so doing in addition to its funder commission. There can be no criticism of that observation since the function of ATE insurance is self-evidently to outsource the risk of adverse costs orders.
5. The primary judge then attached weight (as indicated by the prefatory word "[i]mportantly) to the following observation by the Contradictor: No expert evidence has been led in the proceeding to contextualise the resulting return to the Funder. There is no evidence from the Funder, such as financial accounts, addressing whether the return on equity is within or outside a reasonable range, or as to its return on invested capital, the equity beta for funders locally or globally, or the rate of return on equity that a funder in its circumstances might reasonably expect having regard to the level of risk assumed. The Funder has given no evidence of its portfolio of funding activities or as to the parameters of the funding commissions available in the market. The inputs that guided the Funder's initial investment decision to finance the proceeding are not exposed. Such evidentiary deficits may not be fatal, however, where the information available to the Court allows an assessment of the relative reasonableness of the Funder's commission in comparison with the costs incurred, the security paid out, the damages claimed and the recovery achieved.
6. AP1 points out (and the Contradictor accepts) that the submission to which his Honour referred (at [52]) was made at a time before AP1 had become party to the proceeding (and before Mr Brennan's affidavit evidence as to the process by which the funding was agreed had been filed). That said, it is clear from later paragraphs of his Honour's reasons (in which his Honour expressly addressed the evidence that AP1 had in fact adduced in this regard) that his Honour was well aware that AP1 had indeed adduced evidence going to some aspects of the matters referred to in the Contradictor's earlier submission.
7. His Honour's reference to the submission that had been made by the Contradictor does not provide a basis for the criticism here levelled against him by AP1 (i.e., that the primary judge was effectively treating it as having an onus to adduce such evidence). His Honour was there noting (and accepting, a submission that went to the state of the evidence that was before him; and, indeed, the primary judge also recorded the submission made by the Contradictor (and seemingly also accepted by his Honour) that such "evidentiary deficits" might not be fatal.
8. At [68], having earlier referred to the evidence of Mr Brennan as to the background to entry into the litigation funding agreements and ATE insurance, his Honour referred to (and again expressly accepted) the Contradictor's observation that the evidence of the respondents and AP1 largely adopted a "top down" analysis of funding commissions, by contrast with the more detailed analysis contemplated in Bolitho v Banksia Securities Ltd (mgrs and recs apptd) (in liq) (No 18) [2021] VSC 666 (Bolitho No 18) at [1966] per Dixon J). His Honour went on to note the Contradictor's observation that no expert evidence had been led to contextualise the resulting return on investment generated for AP1 or to address a reasonable rate of return on its invested capital or the equity beta for funders locally or globally or the rate of return on equity that a funder in its circumstances might reasonably expect having regard to the level of risk assumed and the submission that there was a real issue as to whether the evidence permitted an answer to the "basal question [of] how to determine a commercially realistic return properly reflecting the costs and risks taken by [AP1]" (there clearly quoting from the Contradictor's submissions). His Honour also recorded and addressed Mr Sulan's submission in response thereto.
9. At [69], his Honour said: 69. I also recognise, of course, that AP1 is not "required" to lead evidence of the kind identified by Dr Higgins, at least in the sense that AP1 has a choice whether to lead evidence, or adequate evidence, or to justify the Funder Commission or deductions that it claims. However, it seems to me that the Courts should be vigilant to ensure that litigation funders are not recovering funding commissions or other deductions which they cannot or choose not to justify by adequate evidence, and that the trend to increased scrutiny of funding arrangements in recent case law is to be welcomed. In undertaking that scrutiny, Courts may ultimately be forced to decline settlement approval if litigation funders choose not to lead adequate evidence to support funding commissions, possibly anticipating that a Court will prefer to allow an inflated return to a funder rather than deprive group members of the benefit of a settlement. I recognise that it might be said that I ultimately do not adopt that approach in this judgment, where I ultimately accept a reduced Funder Commission despite the deficiencies in the evidence led by the Plaintiffs and AP1, largely in order to avoid depriving the Plaintiffs and group members of the benefit of their settlement. Despite the inadequacies in that evidence, it seems to me preferable here to approve the settlement after reducing the total deduction of the Funder Commission and ATE costs to a reasonable level, rather than to disapprove it. There is no utility in further delaying the approval of that settlement and consequentially delaying a distribution to the Plaintiffs and group members in order to seek better evidence as to these matters, where I cannot compel any party to lead that better evidence.
10. The first sentence of [69] is, to my mind, fatal to ground 1 of AP1's grounds of appeal. The primary judge there well recognised that AP1 had no onus to adduce evidence of the kind to which the Contradictor had referred in her submissions; and his Honour's subsequent conclusions on the issue as to the adequacy of the evidence that was before the Court to permit a finding as to the fairness and reasonableness of the settlement do not depart from that recognition.
11. At [84]-[86], the primary judge said: 84. It seems to me that the position for which AP1 contends, namely that the Funder Commission be allowed at a multiple of 2.3X, and that AP1 also be entitled to deduct Paid ATE costs and Deferred ATE Premiums from the settlement amount, is not consistent with a fair and reasonable settlement of the proceedings. It does not reflect the position disclosed to group members at the time they entered the LFAs, where no specific disclosure was made of a deduction for Paid ATE costs or a Deferred ATE premiums, or of the potential amount of that deduction. It is not to the point that, as Mr Sulan submitted, those amounts had not been paid at the time, where AVL's and AP1's business practice and the expectations of its investors had the consequence that those amounts would inevitably be incurred, although I recognise that the costs were increased when additional Defendants were joined to the proceedings. So far as that approach would lead to a deduction in excess of 36.4% of gross settlement proceeds, it is not justified by evidence led by AP1 to support that return, and it is well above the return permitted in several of the cases noted above, including on the better evidence led by the parties in Toyota. 85. I do not consider I can take ATE's agreement to accept a multiple of 2.3X, reached with the Plaintiffs' and their solicitors at the mediation on the basis that AP1 would deduct ATE costs from the settlement, and simply vary that position to exclude the deduction for ATE costs, as that would fundamentally change the basis of that agreement. On balance, it seems to me that the proper course would be to allow no more than a commission at a multiple of 2.6X less the amount of ATE costs, so that the total commission and ATE costs equates to a multiple of no more 2.6X, being the position originally disclosed by ATE to group members when AP1 was chosen as funder. 86. However, that would result in a deduction of 29.56% of the gross settlement sum, paid to AP1 and for ATE costs, and that percentage deduction is not justified by any evidence that that would be an objectively reasonable rate of return on AP1's investment. I accept Dr Higgins' submission that a fair and reasonable settlement can be achieved, in this situation, if the total deduction from the settlement for AP1's commission and ATE insurance expenses is further reduced to 25% of the settlement amount. As I have noted above, that figure was found to be justified in several of the cases to which I have referred, including Toyota, by reference to better evidence than has been led by AP1 in this application. I recognise that AP1's calculation (MFI-3) suggests that its Funder Commission will then be a multiple of less than 1.7 times deployed costs; however, that is not reason not to take that approach, where that is the consequence of AP1's business model which contemplates that it will take out external ATE insurance, and its position in doing so is not different, in principle, from that of a funder which received the same commission and applied its own capital to achieve the same costs protection as ATE insurance. That approach is, as Dr Higgins and Mr Darke point out, also consistent with the approach taken by Lee J in Asirifi-Otchere and by Murphy J in Petersen Superannuation Fund Pty Ltd v Bank of Queensland Ltd (No 3) (2018) 132 ACSR 258; [2018] FCA 1842 ("Petersen").
12. AP1 contends that the primary judge proceeded on the basis that the litigation funder had some form of evidentiary onus to call expert evidence to justify the reasonableness of the deductions and that this was erroneous for three reasons: first, that its contractual right to the funding commission specified in the funding agreement "not exceeding any such amount as the Court determines to be fair and reasonable in all of the circumstances" did not import a requirement that it satisfy the court that the specific funding commission be fair and reasonable and there is no warrant in the litigation funding agreement for the imposition of an evidentiary onus of this kind on a non-party to the litigation; second, that, even if it had such an onus, the best evidence of the fairness and reasonableness of the funding commission was the "real world" evidence that the funding arrangements had been negotiated with the owners' corporation following a competitive process (AP1 here referring to the observation made in Liverpool City Council v McGraw-Hill Financial Inc [2018] FCA 1289 at [55] by Lee J to the effect that "[j]ust because the funder's ship has come in" is not a "principled basis for changing the bounty, the terms of which were struck when the voyage commenced"); and, third, that to require expert evidence in a case such as this would create a "cottage industry" of funding commission experts.
13. AP1 relies on the fact that the primary judge had before him evidence of its investment process and the actual assessment it made of the risk of the case; and that his Honour was aware that no group member had objected to the deductions, once being informed of them.
14. As to the first of those (the evidence adduced in respect of AP1's investment process and the actual assessment it made of the risk of the case) the Contradictor argues that this principally concerned its "intra-proceeding" assessment of possible rates of return (a proposition with which AP1 cavils); and says that, to the extent that any broader business-wide analysis of commissions was the subject of evidence, that material (when read together with the consideration of commissions in the present case) indicated such fluctuations in acceptable internal rates of return as to suggest a very generous margin of error. It is noted that, in referring to this evidence generally, his Honour observed (at [30]) that the spreadsheet referred to by Mr Brennan compared the internal rates of return to AP1 at different points in the proceeding. His Honour considered that that spreadsheet provided limited assistance in determining any issue in the proceeding, since it provided no objective basis for determining what is an appropriate rate of return for the level of risk assumed by AP1 in funding the proceedings.
15. As to the second of the matters on which AP1 places weight (that no group member had objected to the deductions, once being informed of them), the Contradictor refers to the caution (noted at [59] of the primary judgment by the Full Federal Court in Money Max Int Pty Ltd v QBE Insurance Group Ltd (2016) 245 FCR 191; [2016] FCAFC 148 (Money Max) at [50], to the effect that the likely low level of engagement of many class members means that an absence of objection or a low level of objection to a particular proposition is often weak evidence of class members' assent and carries little weight. AP1 also cavils with this proposition, maintaining that it can be inferred that group members here had a level of sophistication and displayed a high level of engagement in the litigation.
16. Insofar as the primary judge had in contemplation (as to the type of "better evidence" that might have been adduced) survey evidence of average and mean commission rates in prior cases (noting that at [57]) his Honour quoted from Haselhurst v Toyota Motor Corporation Australia Ltd t/as Toyota Australia [2022] NSWSC 1076 (Haselhurst v Toyota) at [55]-[56] per Rees J), AP1 submits that the probative value of such survey evidence is doubtful when each case is bound to be different (pointing to the observation of Beach J in Kuterba v Sirtex Medical Limited (No 3) [2019] FCA 1374 at [12] that "lower rates in some cases may simply be a reflection of the lower risks").
17. As to the type of evidence referred to at [52] (namely evidence of "the equity beta for funders locally or globally, or the rate of return on equity that a funder in its circumstances might reasonably expect having regard to the level of risk assumed", noting the comment made by Beach J in Blairgowrie Trading Ltd v Allco Finance Group Ltd (mgrs and recs apptd) (in liq) (No 3) [2017] FCA 330; (2017) 343 ALR 476 (Blairgowrie) at [122] as to the equity beta for funders), AP1 says that expert evidence of this kind has been considered relevant in common fund order cases which raise different considerations, submitting that the problem with market evidence is that one would need to know much more as to the cases themselves to form a view as to whether the lender's return was outside a reasonable range.
18. AP1 emphasises that the ultimate question for the primary judge was not whether the litigation funder was receiving a reasonable rate of return but, rather, whether the proposed settlement was, in its entirety, a fair and reasonable compromise of the claims made (a proposition that is not disputed by the Contradictor but which to my mind tends to downplay the fact that the contractual entitlement to funder's commission itself contained the proviso that the amount not exceed what the Court determined to be fair and reasonable). AP1 argues that, in making that assessment, the starting position ought to be that there is nothing unfair or unreasonable about upholding valid contracts (a submission that similarly tends to overlook the operation of the contractual proviso) and requiring the payment of an agreed funding commission absent any objection to that amount (this last submission must be seen in the context of the criticisms made by the primary judge as to the disclosure made to group members).
19. Insofar as AP1 has here submitted that it was entirely within the Contradictor's remit to adduce such evidence, the Contradictor points to the rejection by Dixon J, on the remittal of the Bolitho matter (Bolitho No 18 at [1809]-[1810]), of the proposition that it was incumbent on the contradictor to place evidence before the court of what reasonable amounts in costs and commission ought to be included in the counterfactual; and the Contradictor points to the authorities that have explained the proper role of a contradictor (not necessary here to expound).
20. The Contradictor says that the legal onus here lay with the respondents (as the persons seeking approval of the settlement), they bearing the legal or persuasive onus of proof of any fact in issue that was required to be proved on the evidence; and the Contradictor accepts that while, it was not a party, no legal burden fell on AP1. However, the Contradictor argues that, once joined as a party, the legal onus fell upon AP1 (as the person interested in seeking the relief sought, unaffected by any risk of conflict) so far as it concerned recovery of the commission and the ATE costs; and the Contradictor submits that this onus was not discharged (referring to [69] and [84]) of the primary judgment and his Honour's conclusion (at [66]) that the evidence AP1 had led provided no objective basis for allowing a return in excess of the several cases which had accepted returns of about 25% on "better evidence" than led by AP1.
21. I do not accept that the primary judge proceeded on the basis that there was a legal onus of any kind on AP1 (and hence it is not necessary to address the submission made by the Contradictor to the effect that such an onus was cast on AP1 once it was joined as a party to the proceeding and sought orders in its interests), as opposed to his Honour commenting on the content and quality of the evidence that had in fact been adduced in the application before him. Whether AP1, on becoming a party, assumed a persuasive or evidentiary onus is a different question but ultimately does not lead anywhere. It is clear that the primary judge was focused on whether the evidence before him (whoever had adduced the evidence) was sufficient to lead to the conclusion that the proposed settlement was fair and reasonable in the interests of group members; and that his Honour considered it relevant to take into account, as part of the relevant circumstances, matters such as the return on the funder's investment. His Honour's conclusions did not turn on whether an onus of proof had been discharged.
22. Insofar as AP1 has expressed concern at the prospect of the emergence of a "cottage industry" of funding commission experts (the equivalent one might think of the not uncommon emotive "floodgates" argument), a cynic might think it difficult to imagine that any result would discourage the proliferation of experts in the area of class actions (where expert evidence is already commonly relied upon even if this is usually in the context of applications where common fund orders are sought). Indeed, academic commentators have noted the continued entry of new litigation funders into the market, suggesting that above normal returns are being earned while no expert evidence as to the fairness and reasonableness of the funder's fee is required or provided despite the fact that these are not matters which would clearly fall within the bounds of judicial notice (see M Legg, 'A Critical Assessment of Shareholder Class Action Settlements - The Allco Class Action' (2018) 46 Australian Business Law Review 54; see also Dr J Kirk, 'The Case for Contradictors in Approving Class Action Settlements' (2018) 92 Australian Law Journal 716).
23. The ultimate enquiry on an application for approval of a settlement under s 173 of the Civil Procedure Act is, as AP1 has noted, whether the proposed settlement is fair and reasonable and the orders to be made are just. However, in my opinion one matter properly able to be taken into account in assessing this is whether a litigation funder is receiving a reasonable rate of return (as explained, albeit in a different context, by Beach J in Blairgowrie (at [122])). Such a consideration can hardly be said to be irrelevant. Moreover, in the context of applications for approval of settlements under s 33ZF of the Federal Court Act 1976 (Cth) (which is broadly analogous to the power conferred by s 173), the courts have shown a greater willingness to test the reasonableness of a funder's fee. In Pharm-a-Care Laboratories Pty Ltd v Commonwealth (No 6) [2011] FCA 277 (cited with approval by the primary judge at [43] of the primary judgment), Flick J observed (at [38];[42]): 38. Some reservation, however, was expressed during the course of the hearing (and still remains) as to the extent to which this Court should scrutinise both the quantum of monies proposed to be paid to a litigation funder and the percentage that that amount bore to the overall settlement. If the amount payable in any particular case is considered to be inappropriate, it would be regrettable if the only power that the Court has is to refuse approval of the settlement. It would be regrettable if a settlement which otherwise satisfied the legitimate but competing concerns of the parties to the litigation was not approved only by reason of the quantum of the amount payable to a litigation funder. … 42. Short of refusing approval to a settlement, it may be that the power of the Court conferred by s 33ZF(1) to "make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding" confers a power to grant approval - but subject to a condition limiting the amount payable to the litigation funder. Obviously enough, even if the power could be so exercised, it should not be done without hearing submissions and perhaps evidence from the funder concerned. That evidence may address both the risks of providing funding in the proceeding presently before the Court and the risks incurred more generally in providing funding in other proceedings. Such a conditional order would not itself operate as any variation of the contractual agreement reached between the funder and each group member.
24. Similarly, the Full Court of the Federal Court of Australia examined the fees charged by litigation funders in Australian Securities and Investments Commission v Richards [2013] FCAFC 89, ultimately finding (at [52]) that there was "no rational explanation" for the quantum of the funders' premium: 52. … The ultimate "uplift" secured by a litigation funder in any litigation is a result of a number of complicated and interconnecting factors including but not limited to the nature of the proceedings, the risk (legal, factual and commercial) of the specific litigation, competition between funders for the right to fund the litigation, negotiations with solicitors about the terms on which the funding will be advanced and the nature and composition of the overall business (or "book") of the litigation funder. In the present case, the evidence adduced was insufficient in the circumstances to support the imposition of a premium of 35%.
25. As to the reliance placed by AP1 in its submissions on the upholding of valid contracts, the approach taken by the primary judge does not gainsay that principle. Indeed, the contractual context in the present case is one where the funded group members expressly contemplated that the Court would have a task in determining whether the proposed funder's commission exceeded an amount that was fair and reasonable.
26. As to the difficulties in assessing evidence in other cases, this is considered in relation to ground 2.
27. Insofar as AP1 refers to the evidence before the primary judge that it says established a series of factual circumstances that militated strongly in favour of a finding that the funding commission provided for in the contracts, as reduced by agreement as part of the settlement, did not exceed a fair and reasonable amount (AP1 referring, by way of example, to: evidence of the market process that the owners' committee engaged in before engaging Corrs and AP1; evidence of the funder's investment decision and the risks that it took into account when deciding to fund the case (including the legal risks arising from running a novel case based on recovery of diminution in property value of units due to "stigma damage"); and evidence of the lack of objection by group members to the deductions), those matters are undermined by the criticism made by the primary judge as to the disclosure that was made to the funded group members (and will be considered in grounds 3 and 4).
28. For those reasons, ground 1 is not made good.

Ground 2 - reliance on common fund cases

1. Ground 2 raises a complaint that the primary judge equated the proceeding with those in which common fund orders had been sought: 2. The primary judge erred in limiting the funding commission and after the event (ATE) insurance premiums recoverable to 25% of the gross settlement sum by equating the proceedings below with different proceedings, including proceedings where were [sic] a common fund order was being sought for the benefit of the litigation funder (J[54], [55], [56], [57], [63], [66], [72], [74], [76], [84], [86]).
2. The portions of his Honour's reasons to which reference is here made include those in which his Honour recounted the Contradictor's submissions by reference to decisions in other cases (see at [54]-[56]) and his Honour's reference to the "better evidence" that was led in Haselhurst v Toyota (at [57]), though his Honour clearly recognised that the evidence there adduced was not probative of any fact in the proceeding before him.
3. At [63], his Honour noted that he was not persuaded by Mr Sulan's submission as to the process by which AVL had been selected as funder by the owners (in particular, because of the absence of explanation to group members of the potential size of the ATE cost or its impact in reducing the return to group members and the "lack of transparency" about the fact that group members would be asked to pay separately for the substantial cost of a protection that was often included within the funding commission). (At least insofar as his Honour here expressed criticism of the disclosure to group members, this raises issues to be dealt with in ground 3 below.)
4. At [66], his Honour broadly accepted the proposition made by Mr Sulan (referring to Money Max at [82]) as to the danger of hindsight bias and the need to look at the reasonableness of the funding rate at the time it was agreed; but his Honour said that it did not follow that approaching these issues in a "commercially realistic manner" or on a "prospective basis" had the consequence that a litigation funder should be entitled to 36.4% of settlement proceeds "particularly where the evidence it has lead provides no objective basis for allowing a return in excess of the several cases which have accepted returns of about 25% on better evidence than led by AP1".
5. At [72], the primary judge referred to Asirifi-Otchere v Swann Insurance (Aust) Pty Ltd (No 3) [2020] FCA 1885; (2020) 385 ALR 625 (Asirifi-Otchere) at [31] per Lee J, expressly acknowledging (at [73]) that this was a case involving an application for a common fund order; and at [74] to Evans v Davantage Group Pty Ltd (No 3) [2021] FCA 70 (Davantage) per Beach J at [84]).
6. At [76], his Honour referred to Mr Sulan's submissions as to the first of those cases (Asirifi-Otchere) (by reference to the position in Wetdal Pty Ltd as Trustee for the BlueCo Two Superannuation Fund v Estia Health Ltd [2021] FCA 475).
7. The remaining paragraphs to which reference is made in ground 2 ([84] and [86]) have been extracted above.
8. AP1 says that the primary justification provided by his Honour for the reduction in the amount to be paid to it for commission and ATE costs was that a total deduction of 25% was found to be justified in several other cases, including Haselhurst v Toyota, "by reference to better evidence than has been led by AP1 in this application" (see at [86]). AP1 complains that, although the primary judge had earlier acknowledged that "caution should be exercised in embarking on a comparative assessment of funding rates by reference to other cases" (at [64], where recording Mr Sulan's acceptance of that proposition; and at [50], where agreeing with the criticism of comparative funding commissions), ultimately a comparison with funding commissions in other cases became the major consideration in setting the appropriate level of deductions ([86]) and had the effect of finally determining the commission rate recoverable by the litigation funder under its contracts with funding group members. (As adverted to earlier, AP1 complains that this ignores the "free choice" made by group members.) The Contradictor's response to the submission that this comparison became the major consideration is that this overlooks that the primary judge was "forced back" upon material of comparative funding rates in the absence of sufficient cogent evidence filed by the respondents or AP1 (referring to the concern expressed by his Honour to that effect at [69] and [85]).
9. AP1 argues that some of the cases on which the primary judge relied bear almost no resemblance to the present case; in particular, referring to Haselhurst v Toyota (a product liability class action where the settlement was to result in payment to some 33,400 group members of $1,558 per vehicle before deduction of funding commission, legal costs and administration expenses) and Asirifi-Otchere (a financial services class action, in which the applicant represented approximately 450,000 group members, none of whom had executed a litigation funding agreement), in both of which cases a common fund order was sought. In this regard, the Contradictor points to his Honour's reasons at [73] and [76], where the primary judge expressly recognised that Asirifi-Otchere was a case involving an application for a common fund order, as contradicting any suggestion that the primary judge had equated the present case with cases involving common fund orders; and says, rather, that the primary judge adopted propositions that he considered to be matters of general principle, not tied to any specific procedural context (referring to the observation by his Honour to that effect at [76]).
10. AP1, however, emphasises that the reasoning process (at [85]), after his Honour had reached the view that the proper course would be to allow no more than a commission at a multiple of 2.6x less the amount of ATE costs, being the position originally disclosed to group members when the litigation funder was chosen (an approach which contemplated reversion to the costs multiple provided for in the contract before AP1's agreement to reduce this to 2.3x costs but removing the amount of ATE costs), was to take the further step (at [86]) of reducing the commission below that amount. AP1 says that the primary judge did so solely on the basis that a figure of 25% was "found to be justified" in several other cases to which his Honour had referred (and in which his Honour considered that there had been better evidence than had been led by AP1 in the present application). AP1 complains that, in so doing, the primary judge undertook no analysis of the facts of those cases to determine whether or not they were comparable to the cases to which he had referred. Rather, AP1 says that his Honour's conclusion appears to have been based almost entirely on the expert opinion evidence received in Haselhurst v Toyota (summarised at [57] of the primary judgment) that the average and median rate of commission in "legal decisions in the Australian judicial system" was 25%. Pausing here, it may be observed that such a conclusion would be consistent with the very advice given to owners at the outset as to the commission payable under typical funding arrangements.
11. As noted above, AP1 maintains that (to the extent that it is necessary to establish House v The King error) error is shown by the reliance on common fund order cases. AP1 says that expert evidence of equity betas and market returns has prominence in common fund decisions where the court has accepted that it has the power to set the rate of funding commission and, AP1 says, has a price-fixing role "outside of a free exchange of contractual promises". AP1 says that this form of evidence has limited (if any) significance where a funding equalisation order is sought.
12. AP1 argues that, as the import of a funding equalisation order is that the funder only receives its contractual entitlement and the court is not being asked to interfere with the bargain, there is no need to assess the funder's return against an external benchmark (assuming such a benchmark can be identified). AP1 submits that the rate of funding commission arises at the anterior stage, when the court is determining whether the settlement as a whole is fair and reasonable; and thus it argues that the fairness and reasonableness of a funding commission is only relevant insofar as it may affect the assessment of that statutory question (and that fairness and reasonableness should be answered by reference to the circumstances of the case "without some roving inquiry into, for example, the equity beta for funders locally or globally").
13. It is not necessary in my opinion to explore the differences between common fund orders and funding equalisation orders or the different terminology used to describe different types of orders (terminology that Lee J recognised could be obscure - see Davaria Pty Ltd v 7-Eleven Stores Pty Ltd [2020] FCAFC 183; (2020) 281 FCR 501 per Lee J, Middleton and Moshinsky JJ agreeing, at [8]) both because it is clear from the primary judge's reasons (see at [73] and [76], for example) that his Honour was aware of the distinction between such orders (and did not misapprehend the nature of the other cases to which reference had been made and in which a figure of 25% funder's commission was considered to be reasonable) and because it cannot in my opinion be said that the reasonableness of the funder's commission was an irrelevant consideration when assessing whether the settlement was fair and reasonable in the interests of group members. One only need postulate cases at the extreme to test that proposition - say, a situation in which there was very little risk but a high level of funder's commission in comparison with the potential return to group members - and then the opposite, in order to make good the proposition as to the relevance of taking into account the rate of return to the funder as part of all the relevant circumstances when considering the fairness and reasonableness to group members of the proposed settlement.
14. As to the complaint that the primary judge did not analyse the facts of those comparative cases in order to assess what made the 25% figure something within a reasonable range for commission, in the present case his Honour was referring to those cases as consistent with the submission made by the Contradictor that a fair and reasonable settlement could be achieved if the total deduction from the settlement for AP1's commission and ATE insurance expenses was further reduced to 25% (not as justification for that result) (see at [86]). In my opinion, the driving consideration for his Honour's adoption of that figure was the reference to what was originally disclosed to the funded group members (since that is the basis for the preliminary conclusion that no more should be allowed than a multiple that equated to that which was originally disclosed ([85]) and the basis for the further deduction from that amount was that his Honour was not satisfied that a higher (29.56%) deduction from the gross settlement sum was justified by any evidence that it would be an objectively reasonable rate of return on AP1's investment (see at [86])).
15. Particularly having regard to the criticisms that the primary judge made as to the disclosures made to the group members, it is not an irrelevant consideration that the group members were initially told that typical funding arrangements were for "about 30%" commission and the commission would be calculated (on one of the two options) by a percentage amount.
16. I am thus not persuaded that his Honour erred in having regard to the figure set in common fund order cases for funding commission in the context of considering the fairness and reasonableness of the proposed settlement. It is clear that it was by reference to the interests of the group members that his Honour was considering the amount payable for funder's commission and ATE insurance overall.
17. Ground 2 is not made good.

Ground 3 - lack of disclosure to group members as to ATE premiums

1. Ground 3 raises the first of the disclosure issues: 3. The primary judge erred in finding that there was a lack of disclosure to group members as to the ATE insurance premiums and by attributing any lack of disclosure of such matters to the applicant funder (in circumstances where his Honour did not take into account that the group members were represented by Corrs) (see J [13], [14], [15], [30], [32], [49], [61], [63], [67], [71], [76], [84]).
2. In oral submissions for AP1, Mr Sulan added to the above list of references from his Honour's reasons that which was said by the primary judge at [24] and [77], indicating that [24] was the key finding in this regard. In submissions the disclosure issue was described as twofold: the criticism made as to the disclosure of ATE premiums (extending beyond the deferred ATE premium to those premiums generally - see T 23); and the criticism made as to the failure to specify a percentage amount in respect of funder's commission. The further complaint raised by ground 3 is as to the alleged attribution of lack of disclosure to the litigation funder (and the assertion that the primary judge did not take into account that the group members were represented by Corrs). AP1's complaint is that any lack of disclosure should not be visited on the funder in terms of its claim to commission in circumstances where sophisticated lawyers were acting for each of the group members (see at T 26).
3. I summarise the various paragraphs put in issue by ground 3 below but, to put those references in context, it is relevant to note other paragraphs of his Honour's reasons in which issues as to disclosure that were addressed by the primary judge, in respect of a number of which there is no complaint (for example, see the matters referred to at [9]-[11]).
4. It is convenient to start with his Honour's observation (at [10]), in respect of the Corrs' email dated 14 January 2019, that "it did not disclose the extent to which an ultimate recovery may be reduced by ATE costs, or the risk that that would give rise to a worse result for group members than alternative funding models".
5. At [22] (which is not referred to in ground 3), his Honour said (as noted earlier) that "[t]he potential costs of ATE insurance were not, so far as Mr Brennan's evidence goes, disclosed at the meetings in January 2019 prior to the entry into arrangements between AVL and group members".
6. At [11], his Honour noted that the initial notice to owners (being the recommendation by the owners' committee to accept the Corrs/AVL funding proposal) also "did not disclose the extent to which funding costs would be increased by the entry by the funder into ATE insurance arrangements, or the fact that a multiple of 2.6X the funds deployed by the funder would potentially substantially exceed the funding rate attributed to 'typical funding agreements' of around 30%, when costs increased and the costs of ATE insurance were also deducted from a settlement, as has now occurred".
7. At [24] (the key finding on which AP1 relies for this ground), his Honour referred to the summary of key terms document (see above), noting that it did not indicate the potential for the return to owners to be eroded by the cost of ATE insurance.
8. Later, at [49], in respect of ATE costs, his Honour said that "[t]he evidence to which I have referred above indicates that the fact of the Funder Commission was disclosed to group members before they entered funding agreements, but the information provided to them did not disclose, or adequately disclose, the real possibility that their returns from a settlement or resolution of their claims would be substantially eroded by deductions for ATE costs".
9. Still later, at [84], as to the proposition that the funder commission should be allowed (at a multiple of 2.3x) and that AP1 also be entitled to deduct paid ATE costs and deferred ATE premiums from the settlement amount, his Honour said that "[i]t does not reflect the position disclosed to group members at the time they entered the LFAs, where no specific disclosure was made of a deduction for Paid ATE costs or a Deferred ATE premiums, or of the potential amount of that deduction".
10. As to the position at the time of the increase in the litigation funding budget, his Honour referred at [13], the first of the paragraphs to which reference is made in ground 3, to the 26 March 2021 letter, extracting part of that letter and referring to the agreement of AP1 to increase the budget (and which made express reference to the Adverse Costs Insurance Premium to date and the amount committed to the cost of incepting the further adverse costs insurance at that time).
11. At [71], having accepted the Contradictor's submission that there was no evidence that group members gave consent to AP1 incurring further ATE costs in March or April 2021, beyond the initial consent given in cl 8.2(b) of the litigation funding agreement, his Honour said that "it seems to me more significant that any initial consent of group members in cl 8.2(b) of the LFA was not informed, so far as the evidence goes, by any disclosure as to the extent to which the combination of the Funder Commission and ATE costs would erode the return to group members on a successful result in the proceedings".
12. At [14]-[15], to which reference is also made in ground 3, his Honour referred to the 4 May 2021 email, observing that group members' consent (as distinct from their lack of objection) to those amendments was not sought; and, as noted earlier, his Honour said in respect of this email (and a notice given to group members on 20 April 2021 as to amendments to the funding agreement) that "the reference to it being "possible" that the amendment would increase the commission to AP1 did not disclose the inevitably that the increased commission and increased ATE costs would increase the amounts deducted from the settlement proceeds, in the event of a successful outcome". His Honour expressly noted that Mr Sulan accepted that the 4 May email also did not disclose the increase in the deferred ATE costs which would also be deducted from group members' return on a successful outcome.
13. Finally, as to the July 2022 settlement notice, his Honour said (at [9]) that "[t]he settlement notice informed group members that, after the proposed deductions, the amount available to them would be approximately $24.6 million, but did not disclose (and the Court had not then been informed) that AP1's commission was in the order of 26.1% of the settlement proceeds and the total deductions from the settlement proceeds for that commission and ATE insurance costs ("ATE costs") would together be 36.4% of the settlement proceeds".
14. On the issue as to adequacy of disclosure, AP1 maintains that the primary judge was wrong to conclude that there was inadequate disclosure of the terms of the funding agreement to group members. AP1 emphasises that the funded group members (those being the only group members from which it is seeking to recover its commission) had the funding agreement before they signed it and AP1 say that they also had the opportunity to reconsider the agreement when it was novated by AVL and when the budget was increased (at which time they were represented by Corrs).
15. Further, AP1 says that the alleged lack of disclosure concerned the deductions for ATE premium and their potential implications for the ultimate recovery of group members but that the ATE premium was for the benefit of the group (referring to Stevenson J's recognition of this in Quirk v Suncorp Portfolio Services Ltd in its capacity as trustee for the Suncorp Master Trust (No 2) [2022] NSWSC 1457 at [55]-[56]). AP1 says that it is reasonable to assume that it is unlikely that it would have agreed to fund the proceedings at the rate agreed if it was required itself to bear the entire risk of adverse costs exposure; and AP1 notes that Mr Brennan's unchallenged evidence was to that effect (referring to Mr Brennan's affidavit at [60]-[62]).
16. As to this last submission, the Contradictor says that this does not grapple with the primary judge's finding at [30], where his Honour observed that: … because Augusta and AP1, and the Plaintiffs' solicitors, were in competition with several other firm [sic] of solicitors, at least one of which had offered to conduct the proceedings on an alternate funding basis. Had Augusta declined to fund the proceedings or offered to fund them at a higher multiple, a potential outcome was that the other firm would have instead funded the proceedings on that other basis, rather than the AVL or AP1 funding them with a higher multiple.
17. The Contradictor argues that the primary judge's opinion that there was a lack of disclosure comprised multiple unchallenged findings (based upon all the evidence) that the disclosures to group members had not fully informed them of matters relevant to the decision as to whether to accept certain proposals or to object to the proposed settlement (reference here being made to the findings at [9]-[11], [14]-[15], [22], [49], [71], and [84], relied upon, inter alia, at [30], [32], [61], [67], [76]); and the Contradictor submits that no error affects the primary judge's reasoning based upon on these unchallenged findings. The Contradictor thus submits that the reiterated reliance by AP1 in its submissions on the free choice of group members (and the fact that group members had a copy of the litigation funding agreement before they signed it) does not grasp the consequences of the inadequate disclosure that the primary judge found had occurred.
18. Ground 3 in my opinion is not made good. The point that his Honour was making, when addressing the issue as to adequacy of disclosure, was that the group members were not told explicitly and in plain terms the effect of the treatment of the ATE premiums on the overall percentage of the settlement sum that would be paid to the litigation funder (albeit as a separate component to its funder's commission); and that this undermined the weight that could be placed, relevantly, on the lack of objection by group members to those deductions.
19. A review of the materials on which his Honour based that conclusion (see as set out earlier) does not reveal any error. That the ATE premiums represented a separate component of the deductions from the settlement does not alter the fact that the ultimate percentage recovery of group members out of the settlement proceeds is reduced; and the fact that this reduction was not expressed in percentage terms means that there was not a ready comparator for group members (bearing in mind that the initial funding arrangements were recommended to group members on the basis that the percentage funder's commission was competitive as against a typical funding arrangement of 30% commission). Indeed, the fact that the risk of adverse costs was being borne effectively by group members (as it was a deduction from the gross settlement sum instead of comprised within the funder's commission) cannot be said to be irrelevant to whether the funder's commission is fair and reasonable (an issue that the proviso itself calls for determination).
20. Tellingly, it is clear from the exchanges with Mr Sulan during the hearing of the application for approval of the settlement (see T 9.13ff; 11/11/22) that the primary judge, when approving the terms of the settlement notice to be sent to group members, did not appreciate the import of the deductions for ATE costs and deferred premiums on the amount that group members would receive from the gross settlement sum. His Honour made clear that, had he known at the time of approving the settlement notice that the percentages were those as had been disclosed to him for the first time during the approval application hearing, he would not have approved the case settlement notice that did not disclose those figures and the extent to which the ATE insurance costs increased the deduction from the settlement sum (see at T 9.11-35). His Honour considered it plain that recipients of the notice had not been told that the increase in the deduction was a percentage from 26% to 36% (see also at T 10.10-24).
21. The reason this is telling is that if the primary judge, with his considerable experience in the Corporations List, did not appreciate this, then it is inherently unlikely that the average group member would do so (and there is no suggestion that Corrs had appreciated, or remedied, that deficiency in its communications with group members). This is of relevance when coming to consider ground 4 but it also reinforces the conclusion that the concern expressed by the primary judge as to deficiencies in disclosure was not without foundation.
22. As to the proposition embedded in ground 3 that the primary judge attributed the lack of disclosure to AP1, there is nothing in his Honour's reasons to support such a conclusion. As the Contradictor notes, the primary judge made clear who sent the relevant emails and communications. The tenor of AP1's submissions on the appeal is that it was denied its contractual entitlement to commission by reference to the perceived defects in disclosure (and in effect that any blame for lack of disclosure should be at the feet of the lawyers - see T 26.16-19). Apart from anything else, this does not in my opinion adequately take into account that the litigation funding agreements themselves contemplated that the court would determine whether the amount for commission was fair and reasonable; and therefore the criticism implicitly made in AP1's submissions that the court was not upholding valid contracts is without foundation.
23. As to the further proposition embedded in ground 3 (that the primary judge did not take into account that Corrs represented the group members), his Honour was clearly well aware of Corrs' role in the proceeding (referring, among other things, to Mr Pagent's evidence and noting the correspondence and communications from Corrs). The nub of AP1's complaint in this regard seems to be that the primary judge did not attribute to group members the knowledge that Corrs had as to the funding arrangements (i.e., as to the deduction of the ATE premiums from the gross settlement sum and resultant increase in the percentage out of that sum for AP1's funder's commission and ATE premiums), which I address below.
24. The Contradictor argues that the information conveyed by AP1 to Corrs (as the agent of the respondents and the group members), could bear upon the exercise of the primary judge's discretion in AP1's favour only to the extent that the information was fully and accurately conveyed by Corrs to those persons. AP1's response to this is that any issue as to the failure by the solicitor to pass on the matters disclosed by AP1 to group members is a matter between the solicitors and group members and is not a "principled basis to deny the funder its commission". This response by AP1 illustrates the essence of its complaint - namely, that it has been "denied" its contractual entitlement to commission. That, however, ignores the proviso contained in the litigation funding agreements which expressly places a ceiling on recovery of commission (by reference to an amount that the Court determined to be fair and reasonable).
25. In any event, AP1's submission does not to my mind adequately recognise that the relevance of the knowledge or understanding of group members of the funding arrangements and the impact of the deduction from the gross settlement sum of ATE premiums goes to the weight to be accorded to the lack of objection (after receipt of the settlement notice) to the deductions from the gross settlement sum. The fact that in certain circumstances a solicitor's knowledge will be imputed to the client is not to the point when considering the weight to be placed on the lack of objection by group members to the deductions. If the disclosure to group members was inadequate, as the primary judge found, then this must necessarily affect the weight to be placed on their lack of objection to the deductions whatever their solicitors knew about that issue. Accordingly, the fact that group members were (to his Honour's knowledge) represented by Corrs goes nowhere on this issue.

Ground 4 - discounted weight placed on lack of objection by group members

1. Ground 4 raises the second of the disclosure issues: 4. The primary judge erred in discounting the weight to be placed on the lack of objection by group members because the notice advising them of the settlement referred to the headline numbers to be deducted, rather than the percentage deductions to be made from the settlement sum and by assuming that there was a low level of engagement by the group members or a lack of sophistication which could be equated to the position often seen in shareholder class actions (see J [9], [39], [60], [63]).
2. Complaint is made by AP1 that the primary judge placed excess weight on the "purported inadequate disclosure" and thereby placed no weight on the free choice of the respondents (as expressed in their agreement to the funding terms and lack of objection to the deductions from the settlement once notified).
3. As to the portions of his Honour's reasons to which reference is here made, I have already noted the finding at [9] that the settlement notice did not disclose that AP1's commission was in the order of 26.1% of the settlement proceeds and that the total deductions for that commission and ATE costs would together be 36.4% of the settlement proceeds. The primary judge went on to say that "the limits of that disclosure undermines the weight put by AP1 at this hearing on the lack of objection to its commission received from group members".
4. At [39], his Honour noted the submissions made as to the group members' response to the proposed settlement (including that none of the objections took issue with the overall settlement sum and that they principally raised questions, rather than concerns, as to the distribution of the settlement proceeds between group members). His Honour expressly accepted the submission made for the group members that the relatively small number of "objections" and the lack of any particularly sustained criticism of the proposed settlement suggested that, overall, the proposed settlement was fair and reasonable to group members as a whole; but his Honour qualified that by excluding from his acceptance of that submission the treatment of AP1's funder commission and the treatment of ATE costs.
5. At [60], his Honour accepted that group members had been given information about the quantum of legal fees and disbursements to be deducted from the settlement and that none had indicated opposition to them but his Honour concluded that "[i]t does not follow, however, that they have engaged closely with that matter, as distinct from the more pressing question of how much each of them will recover, or that they have been provided sufficiently detailed information, particularly as to the extent to which their return would be eroded by the combination of the Funders' Commission and ATE costs, to allow them to do so".
6. At [63], after addressing a submission for AP1 as to the selection process carried out in relation to the litigation funding, and turning to submissions as to the reasonableness of the funder commission, his Honour said that: … The fact that the deductions have been disclosed to group members and no objection has been received can only be given limited weight, where there is no reason to think that group members are sufficiently sophisticated or motivated to address this issue [i.e., as to the deductions from the gross settlement sum in respect of the ATE costs and the impact this would have on the percentage of the settlement sum that would be paid in funder's commission and ATE costs together].
7. AP1 says that there was no basis for the primary judge to conclude that group members were not sufficiently involved or motivated to understand and respond to notices sent to them by the court, relying on the fact that the group members had effectively put the class action out to tender and had sought proposals from various law firms and funders, as well as the involvement of the owners' committee in the litigation (noting that the owners' committee was consulted by Corrs on keys issues). AP1 submits that it is highly significant that, when "full disclosure" had been made of the proposed deduction amounts (in the court approved notice), no group member objected thereto.
8. AP1 complains that the primary judge adopted an "exceptionally formalistic" approach when considering that the absence of objections was not significant (notwithstanding the fact that this proceeding concerned the property of group owners and considerable sums) because of the failure of the settlement notice to state a percentage of the settlement sum that the proposed deductions represented. AP1 says that the notion that there might have been objections from group members to the deductions in favour of AP1 if those deductions had been presented in a different form in the notice "has an air of unreality". Further, AP1 points out that it had suggested to the primary judge that if there were concerns about the notice his Honour should order that an additional notice be sent so as to see if any group members then complained.
9. AP1 also invokes the emphasis given in other cases to an absence of objections from group members (particularly where those group members are legally represented).
10. The Contradictor maintains that none of the concerns expressed by the primary judge was formalistic in character; rather, the Contradictor submits that the primary judge was properly concerned about the quality of disclosure made to group members, and the kinds of disclosure likely to engage group members on the topic of funder deductions, such as would allow weight to be ascribed to the absence of objection (referring to his Honour's reasons at [59], [60], [63] and [67]).
11. The Contradictor says that various matters indicated a structural lack of engagement by the group members, including that the group members were not asked affirmatively to consent to the funding agreement amendments and the increased ATE costs they incurred, but were instead asked to indicate if they did not agree (referring to the primary judge's reasons at [14]); a distinction to which the Contradictor attaches significance when assessing the primary judge's view of the character and quality of disclosure to group members. (AP1 points out that the respondents signed the 26 March 2021 letter, initially every page, in which the proposed budget variations and increase in ATE costs were disclosed; and that Corrs subsequently notified group members of the variation and advised that the amendments were in group members' best interests.)
12. Responding to AP1's criticism of what was said by his Honour at [63], the Contradictor says that the primary judge did not find that there was a lack of sophistication among the group members equivalent to that which might be found in shareholder class actions; rather, his Honour relevantly found (at [49]) that there was no evidence to suggest that group members who entered into funding agreements with AVL or AP1 were "generally sophisticated" and accepted the Contradictor's submission that it was "more likely they had varying degrees of sophistication where their common characteristic is only their ownership of a unit in a particular unit block". It is noted that, at [16], his Honour was of the view that "a layperson would have had substantial difficulty understanding the commercial effect of that agreement, given its very complex provisions and definitional structure, without independent legal and financial advice". The Contradictor notes that none of these findings (nor that at [63] referred to above) is challenged.
13. The Contradictor argues that no evidence was led about the composition of the group that would permit an inference of greater than average sophistication (and hence it is said that AP1's reliance on cases such as P Dawson Nominees Pty Ltd v Brookfield Multiplex Limited (No 4) [2010] FCA 1029 at [23] per Finkelstein J goes nowhere). Further, in circumstances where no evidence was led as to the composition or sophistication of the group (notwithstanding that this issue was raised in the Contradictor's written submissions of 10 October 2022 at [66]), the Contradictor submits that AP1 cannot now be heard to submit that the group included sophisticated persons whom it can be inferred would come forward if they were unhappy with the proposal. In reply, AP1 says that it is incorrect to suggest that there was evidence of a "structural lack of engagement by the group members". AP1 maintains that the evidence disclosed that the group members in this case were "unusually engaged" (here referring to the tender process and the involvement of the owners' committee).
14. As to the submission by AP1 to the effect that the hearing should have been adjourned and a fresh notice sent out (to see if any group members then complained), the Contradictor says that this does not recognise the multifactorial nature of the protective jurisdiction of the Court under s 173 of the Civil Procedure Act. The Contradictor points out that AP1 was represented by senior and junior counsel; that AP1 had the opportunity to make submissions and to file evidence; and that AP1 did so. The Contradictor submits that it was correct for the primary judge to resist such a course, given the time value of money for group members (especially where the likely quantum of individual recovery was high) and the public time and cost already devoted to the application across several adjourned hearings (referring by way of example to his Honour's reasons at [69], where his Honour referred to the lack of utility in delaying the approval of the settlement and consequential delay in distribution to the respondents and group members "in order to seek better evidence …, where I cannot compel any party to lead that better evidence"). In this regard, I note that there is no challenge to the decision by the primary judge not to accede to the oral application (if indeed it be properly so characterised) for an adjournment to permit a fresh notice to be issued; and the Contradictor submits that it is hard to see how that discretion miscarried in the circumstances to which his Honour referred at [69].
15. The Contradictor submits, and I accept, that the weight to be given to an absence of objection by group members is rationally affected by the quality of the disclosure provided to those group members. Further, insofar as AP1 argues that the best evidence of the fairness and reasonableness of the funding commission was the "real world evidence" that the funding arrangements had been negotiated with the owners' corporation following a competitive process, the Contradictor submits (and again I agree) that the weight that can be placed on this is undermined by the timing of that contest, and the significant monetary shifts that affected the total deductions, which occurred after that time.
16. I do not accept the criticism by AP1 as to his Honour's conclusion that the weight to be accorded to the lack of objection by group members was undermined by the issues as to the adequacy of disclosure. As noted above, I consider it telling that the primary judge himself did not appreciate (at the time the settlement notice was approved) the import of the increased ATE costs on the percentage that was to be deducted from the gross settlement sum in respect of funder's commission and ATE premiums. Nor do I accept that his Honour erred in expressing the opinion that it was more likely that there was a range of sophistication amongst the group members. The only indication as to the sophistication of group members comes from the description of some of the occupations of members of the owners' committee (including real estate agent and chemist) and of one of the lead plaintiffs (and even then it would be unsafe to speculate on what that means as to their level of appreciation of the financial implications of the settlement or their involvement or engagement in the process).
17. Ground 4 is not made good.

Conclusion

1. For the above reasons, I propose that the appeal be dismissed. As to costs, the Court was informed that there is an agreement for the payment of the Contradictor's costs and that AP1 agrees to bear the costs of the respondents in any event. Accordingly, the appropriate order is that the appeal be dismissed with costs.
2. ADAMSON JA: I have had the benefit of reading the reasons of Bell CJ and Ward P in draft. I agree with Bell CJ that the Court's approval under s 173 of the Civil Procedure Act 2005 (NSW) is a discretionary decision and therefore can only be disturbed by this Court if House v The King (1936) 55 CLR 499; [1936] HCA 40 error is established. I also agree with Ward P's conclusion at [78] that the difference in tests is not material in the present case since neither test has been made out.
3. I agree with the order proposed by Ward P, largely for the reasons given by her Honour. As to ground 1, I agree that this ground has not been made out, for the reasons given by Ward P in [100], [102] and [104]. As to ground 2, I agree that this ground has not been made out, for the reasons given by Ward P at [120]-[124]. As to ground 3, I agree that this ground has not been made out, for the reasons given by Ward P at [142]-[149]. As to ground 4, I agree that this ground has not been made out, for the reasons given by Ward P at [164]-[165].

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