First Plaintiff v First Defendant

(a) The plaintiffs' solicitors would act on a conditional 'no win no fee' basis. Their charges were calculated on a traditional hourly rate basis and they were entitled to an uplift calculated as a percentage of their fees, on accrued but outstanding professional fees.

(b) A litigation funder was to fund 80% of the solicitors costs up to a cap, and disbursements up to a cap.

(c) The litigation funder was to charge a commission on a sliding scale of rates set out in the funding and retainer agreements (redacted from the defendants). The litigation funder was to seek payment of that commission from the recoveries by way of a common fund order that was charged on a plus costs basis. The funder as to be reimbursed for upfront paid legal costs and certain other disbursements such as ATE insurance premiums and the solicitors were to be paid their deferred conditional costs and uplift.

3 The new SOP (and associated funding and retainer agreements) provide in each proceeding that:

(a) The plaintiffs will enter into a funding agreement with the funder International Litigation Partners No 22 Pts. Under that arrangement it will fund 80% of the legal costs capped at a stated sum and disbursements up to a stated sum.

(b) Amounts not paid or funded by the funder are recoverable by Banton Group if there is a successful outcome.

(c) Banton Group will make application for a common fund order to be calculated as a percentage of any recovered sum.

(d) The funding agreement provides for funding commission calculated as a percentage of the recovered sum, on a sliding scale. The commission rates are lower than those proposed in the third SOP and take effect at different monetary thresholds by reference to the recovered amount.

(e) A common fund order (CFO) is to be sought on an 'all inclusive' basis. At the point of resolution of the proceeding there will be no separately sought repayment of the expenditure for legal costs, insurance, or security for costs. If a CFO is made the funder will repay Banton Group's costs and disbursements in excess of the agreed caps, and the uplift fees.

(f) The hourly rates and budget estimates provided in the third SOP and the new SOP are different. Banton Group's hourly rates are higher than the previous solicitors. The budget estimates are said to be higher by approximately $2 million.

4 Edwards and Sims submitted that changes in the funding commissions are not an attempt to alter the commercial position of the carriage proposal, they are necessary changes arising as a result of the revised budget estimates by the new solicitors and the commercial bargain Edwards and Sims have struck with the new third party litigation funder within the parameters of the ruling. They fall within the 'due allowance' for changes of solicitor contemplated at paragraph [152] of the ruling.

In all of the circumstances leave to amend the funding terms should be refused. What that means is that Edwards and Sims will be at liberty to advance a carriage proposal that is in substance equivalent to their existing position, with due allowance made for the change of solicitors and funders and their applicable hourly rates, funding commissions and budget estimates.

6 Edwards and Sims emphasised the words 'due allowance' and those words following that expression.

7 It was submitted that the all‑inclusive basis is attributable to the revised budget estimates of the new solicitors and the consequent need to ensure that group members would not be worse off under the new position. That was said to be consistent with the overriding consideration that multiplicity disputes be conducted in the best interests of group members.

8 It was said that Edwards and Sims were required to enter new costs and retainer agreements with their new solicitors. The revised budget estates were higher than those of their previous solicitors. The funding commission terms being all inclusive of costs would ensure the group members obtain a return that is broadly consistent with the third SOP rather than the additional legal costs arising from the increased budget eating into the returns. This reflects a 'due allowance' for the change in solicitors.

9 It was also said that changes to commission percentage rates and thresholds are the result of commercial negotiations with a new litigation funder that was not a party to the arrangements in the third SOP, and that the funding commission rates are higher than the terms for which Edwards and Sims were refused leave.

10 I will return to the ruling of June 2024 in which I said the following:

(a) [149] Edwards and Sims should be permitted to amend their summonses and SOP to reflect the fact that they are now represented by Banton Group and to remove those parts of the summonses that are otiose because of the effluxion of time.

(b) [150] The remaining question is whether they should also be permitted to amend their commercial terms (and seek a group costs order).

(c) [151] If allowed, the then proposed new funding regime may deliver benefits to group members over and above those that would be obtained under the Maurice Blackburn proposal, if (and only if) the Edwards and Sims proceedings were to be granted carriage. But as discussed, in a carriage contest that might or might not be the result. In determining who wins carriage, many other considerations will be relevant. As a broad proposition I do not accept that the opportunity for the Court to consider that proposal with the prospect that it might prevail in a carriage contest in order to potentially provide group members with such a benefit ought determine the proper disposition of an application for leave to amend. That a component of a new proposal is better in some ways than an existing one does not self‑evidently require that it must be considered and a grant of leave be made. It is one factor among others. That consideration does not weigh the balance in favour of granting leave to amend funding terms.

(d) [152] In all of the circumstances leave to amend the funding terms should be refused. What that means is that Edwards and Sims will be at liberty to advance a carriage proposal that is in substance equivalent to their existing position, with due allowance made for the change of solicitors and funders and their applicable hourly rates, funding commissions and budget estimates. In this case the plaintiffs and Banton Group are prepared to proceed on a basis equivalent to the existing terms, notwithstanding that it is not their preference. It is their alternative case in the event that leave is refused to amend in whole. I infer from their preparedness to do so that they have the wherewithal to put in place new retainers and funding agreements. The existing position was understood by Banton Group when deciding to act. [102] In the course of argument on the amendment application I was informed by Senior Counsel for Edwards and Sims that they and Banton Group were content to proceed (in the alternative) on the 4 August 2023 proposal. If that course were taken Banton Group would conduct the proceedings but the commercial terms on which the carriage contest occurs would not change.

(e) [153] The effect of allowing leave only in part is to permit the Edwards and Sims proceedings to continue with legal representation but to hold those plaintiffs to the commercial position from which they sought to move. It limits to a significant opportunity for them to benefit from their changes of position by gaining a competitive advantage in the carriage contest. That that occurs is appropriate where those parties have failed to address in any meaningful way the consequences to the other parties, of their conduct of the carriage dispute. [154] This course will to an extent limit future costs arising from change of position in that the most affected parties will not have to entertain the prospect of re‑bidding in response to changed commercial terms.

11 The reference in [152] to 'due allowance' being made for a change of solicitor and funder must be read in context. In particular:

(a) The reference to 'due allowance' appears in the sentence that reads in its entirety, 'Edwards and Sims will be at liberty to advance a carriage proposal that is in substance equivalent to their existing position, with due allowance being made for the change of solicitors and funders and their applicable hourly rates, funding commissions and budget estimates'. Due allowance should not be read as undermining the essential proposition that what Edwards and Sims were at liberty to advance was a carriage proposal that is in substance equivalent to their existing proposal. It does not mean that whatever funding terms are agreed with new funders, may be adopted and advanced.

(b) So much is also apparent from the broader context of the ruling which, in the passaged to which I have referred, makes clear that:

(i) The plaintiffs were to be held to their previous position as set out in the third SOP;

(ii) That result was intended to limit to a significant extent the opportunity for them to benefit from their changes of position by gaining a competitive advantage in the carriage contest; and will limit change of position so that affected parties (Johnston and Moroney) would not have to re‑bid in response to changed commercial terms; and

(iii) If Edwards and Sims were held to the third SOP, Banton group would conduct the proceeding but the commercial terms on which the carriage contest would occur, would not change.

12 I consider that the proposed new SOP does effect a fundamental change to the commercial terms, at least because it proposes a costs inclusive structure. The differences between the two structures are apparent from what I have said. Structurally, the proposed CFO bears similarities to a group costs order made under s 33ZDA(3) of the Supreme Court Act 1986 (Vic) although it could only be made at the conclusion of the proceeding.[1]

13 I am also of the view that that change is not permitted as reflecting only 'due allowance' for the change of solicitors and funders, for these reasons:

(a) First, as I have said, that clause does not permit any change that would substantially alter the commercial terms in contest.

(b) Second, it was submitted that the all‑inclusive basis is attributable to the revised budget estimates of the new solicitors and the consequent need to ensure that group members would not be worse off under the new position, and that that is consistent with the overriding consideration that multiplicity disputes be conducted in the best interests of group members. To this submission it must be said:

(i) The effect of the June 2024 ruling, fairly read, is not that provided a change in commercial terms is linked to the appointment of new solicitors (said to be a consequence of a change of solicitors) the commercial terms can be varied so as to accommodate to group members not being worse off**.** The ruling permits the solicitors to state their applicable hourly rates and the funders to state their commission rates, but only within the parameters described.

(ii) As to group members being no worse off, the ruling does not stipulate that changes are permitted to ensure that outcome; or to make the position of Banton Group competitive. The permissible changes were limited because the plaintiffs and Banton group were to be held to the plaintiffs' existing position, albeit that the hourly rates and commission rates that they offered and the budget estimates they gave may have been different to their predecessors. The proposition advanced by Edwards and Sims on the application determined by the June 2024 ruling, that changes ought to be permitted in order to allow a proposal that would be cheaper for group members, was rejected for reasons explained. This argument was a variant on that one, albeit that it was directed in this instance to characterising the changed commercial terms as a 'due allowance' for the change of solicitors.

(iii) Group members' interests aside, what is proposed is also evidently intended to gain a competitive advantage for Banton Group. So much was made clear by the argument in which counsel said that Banton Group (and also group members) would be prejudiced were they not permitted to amend commercial terms. It was also evidence in the reference in the new SOP to the fact that the proposed funding arrangements will be the subject of evidence and submissions as a factor in favour of the Edwards and Sims proceedings. To be clear, the fact that Banton Group seeks a competitive advantage is not something that they are to be criticised for in a general way. In almost all carriage contests, including this one, the respective solicitors are competing for business. However, it does put in context the reliance on group members' interests in the present dispute.

(c) Third, it was said that changes to commission percentage rates and thresholds are the result of commercial negotiations with a new litigation funder who was not a party to the arrangements in the third SOP. The fact that new litigation funder was not a party is not to the point. As the June 2024 ruling makes clear, the point is that the plaintiffs are to be held to their position, and the parameters within which negotiation may produce an outcome within the grant of leave are set by the grant of leave as explained in the ruling.

(d) Fourth, it was said that the commission terms will deliver returns to group members that are 'broadly consistent' with the returns outlined in the third SOP. It is not possible to make an assessment of that contention on the basis of the material before me; that is a matter for evidence. What the present arrangement delivers to the funder and solicitor will depend on the amount recovered in damages and the amounts expended in costs. But in any case, the proposal nevertheless departs relevantly from the existing position. An equalisation process (making one proposal financially equivalent to another, for group members) might conceivably have been achieved by striking lower commissions in view of higher fees. Whether that would be a commercially desirable outcome is separate question. Although it is not possible to know, on the face of the arrangement, how the 'costs inclusive' structure achieves the desired result, it may be inferred that the funding structure has been reached for reasons including to accommodate the commercial requirements of the solicitors and funder.

14 A point was made about the requirement to adhere to the earlier position being commercially unrealistic. The June 2024 ruling does apply commercial constraints. It does so in the context of the issues discussed in that ruling, for the reasons discussed there. It was accepted that the 'alternative' position embraced reluctantly by Edwards and Sims on the application to amend was a, 'this in preference to nothing' position and not their preferred course. It was open to them to have said at the time, that the only position on which they were to move was the one set out in the then proposed fourth SOP and to take their chances on that basis.

15 I have given consideration as to whether I should make no orders at this time and leave the parties to contest the current issue on the multiplicity contest proper, fixed for 2 October 2024. No party suggested that the issue should be deferred until the parties' evidence was put on, and I have not taken that course.

16 I will direct that Edwards and Sims file statements of position that conform with the June 2024 ruling.

17 However, I will indicate now that any further disputation arising out of the filing of new position statements will have to be taken up in the submissions addressed to the multiplicity dispute proper. If Johnston and Moroney maintain that what is filed still does not comply, they can if so advised, make that contention in support of their application to have those proceedings stayed. The fact that I have said this should not be read as encouragement to take liberties with the document now to be filed.

18 I will allow time for Edwards and Sims to revise their statement of position.

[1] Elliot Carde v McDonald's Australia Limited [2023] FCAFC 162.