Miciulis v Cimic Group Limited [2025] FCA 307

1. Pursuant to orders made on 20 December 2024 the Notice of Proposed Settlement was distributed to group members, by mail and email, from 20 January 2025 and various notices of objection to the proposed settlement were filed or sent to PFM.
2. The affidavits filed by the applicant for the purpose of the settlement approval application included details of the objections to the proposed settlement. There were 47 notices of objection received from 59 group members at the time of the settlement approval hearing. The objections are discussed further below.

1. The Notice of Proposed Settlement was approved at the hearing on 20 December 2024 in substantially the form proposed by the applicant. The Notice of Proposed Settlement, which was an annexure to the orders made on 20 December 2024, relevantly summarised the proposed settlement in the following terms:

A. WHAT IS THIS NOTICE ABOUT?

1. This notice provides important information about a proposed settlement of AU$45.25 million to resolve the claims of all group members that are the subject of the CIMIC Class Action. As the settlement needs to be approved by the Court, it is referred to in this notice as the "Proposed Settlement". The Proposed Settlement is on the basis that there is no admission of liability by CIMIC.

2. The Applicant (who brought the CIMIC Class Action on its own behalf and on behalf of the group members) is represented by solicitors, Phi Finney McDonald (Lawyers). The CIMIC Class Action is funded by Omni Bridgeway (Fund 5) Australian Invt. Pty Ltd (Funder).

3. A previous Court notice was issued on 11 May 2023 (Registration and Opt Out Notice). In accordance with that notice, it is proposed that only Registered Group Members will be entitled to share in the benefits from the Proposed Settlement. You are a Registered Group Member if, on or before 4:00pm (AEST) on 22 June 2023 (Registration Deadline):

(a) you executed and returned a funding agreement with the Funder; or

(b) you otherwise registered for the CIMIC Class Action by completing and submitting a registration form in accordance with the orders of the Honourable Justice Button dated 26 April 2023 (Registration and Opt Out Orders).

...

D. KEY TERMS OF THE PROPOSED SETTLEMENT

15. The key terms of the Proposed Settlement which the Court will be asked to approve are as follows:

(a) CIMIC will pay the amount of AU$45.25 million to settle the CIMIC Class Action. This payment is an "all in" amount which means it is a fixed and final amount to cover all claims the subject of the CIMIC Class Action, legal costs, funding commission and all costs associated with the settlement;

(b) the settlement covers the Applicant and all group members; and

(c) the payment of AU$45.25 million is in exchange for releases in favour of CIMIC that are commonly agreed in class action settlements.

...

19. At the settlement approval hearing, the Applicant will seek orders from the Court to approve a proposed settlement scheme (Settlement Scheme) which will establish how Registered Group Members' entitlements are to be calculated, and the process to distribute the Settlement Sum.

...

Payments to Group Members from the Settlement Sum

22. The Applicant and Registered Group Members will receive 50% of the total amount of the Settlement Sum, being at least AU$22,625,000 (not factoring any interest which accrues on the settlement amount paid by CIMIC).

23. At this stage it is not possible to provide a final estimate of how much individual Registered Group Members will receive from the settlement. That is because the amount of monies to be distributed to each Registered Group Member under the Settlement Scheme will depend on a number of factors, such as the number of CIMIC Securities purchased, the date of purchase, whether any of those CIMIC Securities were sold in the Claim Period, the overall losses of all Registered Group Members sharing in the Proposed Settlement, the total amount of the deductions from the Settlement Sum which are approved by the Court and any interest earned on the Settlement Sum prior to final distributions.

...

25. A confidential "Loss Assessment Formula" contained in the Settlement Scheme will detail how each Registered Group Member's entitlement will be calculated.

26. Additionally, the Applicant will seek Court approval for the payment of $25,375 to the Applicant to reimburse it in recognition of its time in acting as a representative party in the CIMIC Class Action. The Applicant will seek approval for this amount to be paid from the balance of the Settlement Sum which is available for distribution to Group Members.

Proposed Payments to the Lawyers and Funder from the Settlement Sum

27. The Settlement Scheme will also detail the proposed deductions from the Settlement Sum to be paid to the Lawyers and Funder.

28. The estimated amount of the proposed deductions to be paid to the Lawyers and Funders are set out in paragraph 32 below. The total amount of these deductions will not exceed 50% of the total Settlement Sum.

...

30. The Funder will seek an order for the reimbursement of the Project Costs and, in addition, a "settlement common fund order" for payment of the Funder's commission. Paragraphs 6.1 to 6.11 of the Registration and Opt Out Notice advised that such an order would be sought at this stage of the Proceeding. The final rate of the common fund order to be sought cannot be calculated exactly at this time. It will be up to 25% of the Settlement Sum, but it may be lower to ensure that the total proposed deductions to the Lawyers and Funder do not exceed 50% of the total Settlement Sum (plus accrued interest). For example:

(a) if all of the currently estimated Project Costs, Lawyers' other costs and administration costs (set out in paragraph 32 below) are incurred and approved, the estimated amount of the common fund order will be approximately 12.4%;

(b) if a lesser amount of those costs are incurred or approved, the Funder will seek a higher common fund order of up to 25% (but not exceeding a rate which will return 50% of the Settlement Sum to Registered Group Members).

...

32. While the amount of the final proposed distributions to the Lawyers and Funder cannot yet be calculated precisely, and is subject to Court approval, the total amount of all such deductions will not exceed 50% of the Settlement Sum. The current estimates are as follows:

(a) Legal costs and disbursements paid (and to be paid) by the Funder by the time of the settlement approval hearing (Project Costs), in an estimated amount of approximately $12,743,875 (incl GST).

(b) Funding commission in an estimated amount of $5,627,077 (incl GST) paid to the Funder (as explained above).

(c) The Lawyers' legal costs which are not Project Costs (i.e legal costs incurred but not paid by the Funder), being deferred fees and a 25% uplift on deferred fees, which total an estimated amount of $4,077,197 (incl GST).

(d) Costs of administering the Settlement Scheme, in an estimated amount of $146,850 (incl GST). It is proposed that Phi Finney McDonald be appointed as settlement fund administrator under Court supervision.

(e) The fees of a court-appointed costs referee who has been appointed by the Court as part of the settlement approval process, to assess the reasonableness of the deductions in (a), (c) and (d) above, in an estimated amount of $30,000 (incl GST). The independent costs referee is to provide an opinion to the Court on the reasonableness of the amount of legal costs and disbursements. It will ultimately be a matter for the Court to determine the amount of legal costs which it considers is fair and reasonable.

[Emphasis in the original]

1. Under s 33V of the FCA Act, a representative proceeding may not be settled or discontinued without the approval of the Court. Section 33V provides:

33V Settlement and discontinuance - representative proceeding

(1) A representative proceeding may not be settled or discontinued without the approval of the Court.

(2) If the Court gives such an approval, it may make such orders as are just with respect to the distribution of any money paid under a settlement or paid into the Court.

1. The central question in determining whether to approve a settlement under s 33V(1) is whether the proposed settlement is a fair and reasonable compromise of the claims made on behalf of the group members who will be bound by the settlement. The Court approaches the task of considering whether a proposed settlement is fair and reasonable by considering:

(a) first, whether the proposed settlement is fair and reasonable as between the parties, having regard to the claims of the group members (inter partes fairness); and

(b) secondly, whether the proposed settlement is fair and reasonable as between the group members and not just in the interests of the applicant and the respondent (inter se fairness).

Williams v FAI Home Security Pty Ltd (No 4) (2000) 180 ALR 459; [2000] FCA 1925 at [19] (Goldberg J); Camilleri v The Trust Company (Nominees) Limited [2015] FCA 1468 at [5] (Moshinsky J); Kelly v Willmott Forests Ltd (in liquidation) (No 4) (2016) 335 ALR 439; [2016] FCA 323 at [3], [62], [68] (Murphy J).

1. The principles applicable to a settlement approval under s 33V of the FCA Act were conveniently summarised by Moshinsky J in Camilleri at [5] as follows:

(a) the central question for the Court is whether the proposed settlement is fair and reasonable in the interests of the group members considered as a whole;

(b) there will rarely be one single or obvious way in which a settlement should be framed, either between the claimants and the defendants (inter partes aspects) or in relation to sharing the compensation among claimants (the inter se aspects) - reasonableness is a range, and the question is whether the proposed settlement falls within that range;

(c) it is not the task of the Court to 'second-guess' or go behind the tactical or other decisions made by the plaintiff's legal representatives, but rather to satisfy itself that the decisions are within the reasonable range of decisions, having regard to: the circumstances which are 'knowable' to the plaintiffs and their representatives; and a reasonable assessment of risks, based on those circumstances;

(d) the list of factors typically relevant to an assessment of the reasonableness of a proposed settlement, set out in Williams at [19], is a useful guide but is neither mandatory nor necessarily exhaustive - it is just a guide ... and additional consideration needs to be given to factors relevant to the fairness of the settlement inter se;

(e) in relation to the inter se fairness, a particular concern of the Court is to confirm that the interests of the lead plaintiff, or signed-up clients of a given firm of solicitors, are not being preferred over the interests of other group members. The arrangement should be framed to achieve a broadly fair division of the proceeds, treating like group members alike, as cost-effectively as possible;

(f) an important consideration will be whether group members were given timely notice of the critical elements, so that they had an opportunity to take steps to protect their own position if they wished. Once appropriate notice is given, the absence of objections or other response action from group members is a highly relevant consideration in support of a settlement, and all its elements;

(g) where a group member does object to the settlement, an important further question is whether the objector is prepared to assume the role − and risks - of being lead plaintiff;

(h) in relation to provisions for costs-sharing among the successful group members, again an important consideration is where the group members were alerted at an early stage to the potential costs-sharing consequences of subsequent participation in the action. It is not, thereafter, the role of the Court to go behind the costs agreements, but rather to satisfy itself that the agreements have been applied reasonably according to their terms;

(i) further, the level of detail which the Court will require in order to be satisfied that costs have been calculated in accordance with the applicable agreements will vary, depending on factors such as whether the group members are all clients, or include non-client claimants, and the proportion of the settlement funds to be applied to costs.

1. The principles and guidance as to settlement approvals established in previous decisions of the Court are now reflected in the Court's Class Actions Practice Note (GPN-CA), which relevantly states:

15.3 When applying for Court approval of a settlement, the parties will be required to persuade the Court that:

(a) the proposed settlement is fair and reasonable having regard to the claims made on behalf of the class members who will be bound by the settlement; and

(b) the proposed settlement has been undertaken in the interests of class members, as well as those of the applicant, and not just in the interests of the applicant and the respondent(s).

...

15.5 The material filed in support of an application for Court approval of a settlement will usually be required to address at least the following factors:

(a) the complexity and likely duration of the litigation;

(b) the reaction of the class to the settlement;

(c) the stage of the proceedings;

(d) the risks of establishing liability;

(e) the risks of establishing loss or damage;

(f) the risks of maintaining a class action;

(g) the ability of the respondent to withstand a greater judgment;

(h) the range of reasonableness of the settlement in light of the best recovery;

(i) the range of reasonableness of the settlement in light of all the attendant risks of litigation; and

(j) the terms of any advice received from counsel and/or from any independent expert in relation to the issues which arise in the proceeding.

1. The Court's task in considering an application for approval of a proposed settlement has been described as an onerous one, that is part of the Court's protective jurisdiction, particularly in relation to the interests of unrepresented group members. In approving a settlement that is fair and reasonable under s 33V of the FCA Act, the Court is making a broad, evaluative and impressionistic decision: Smith v Commonwealth of Australia (No 2) [2020] FCA 837 at [7], [9], [12] (Lee J).

1. In considering the fairness and reasonableness of the proposed settlement, both as between the parties and in the interest of the group members as a whole, I have been assisted by a confidential joint opinion provided by leading counsel and junior counsel representing the applicant dated 12 March 2025 (Joint Opinion). The Joint Opinion carefully addresses the matters identified in paragraph 15.5 of the Practice Note, including the complexity of the proceeding, the likely duration of the trial, liability and quantification risks and the reasonableness of the proposed settlement.
2. I have had close regard to the Joint Opinion, the objections and the report by the Costs Referee, Mr Roland Matters, in considering whether to approve the settlement and make the orders sought by the applicant. For the reasons that follow, I am satisfied that the proposed settlement is a fair and reasonable compromise of the claims made on behalf of group members who will be bound by the settlement.

1. In Camilleri, Moshinsky J at [32] identified the kinds of considerations which will be relevant in assessing whether the proposed settlement is fair and reasonable inter partes as including:

(a) the risks of establishing the contraventions alleged - liability risk;

(b) the risks of establishing that the applicant and group members are entitled to compensable damage - quantification risk;

(c) the reasonableness of the proposed settlement in light of the 'best case' outcome for the applicant and group members; and

(d) the extent to which the 'best case' outcome might be affected by delays, potential appeals and unrecoverable solicitor-client costs.

1. The proceeding is a securities class action brought on behalf of group members who purchased ordinary shares in CIMIC in the Relevant Period and are said to have suffered loss as a result of CIMIC's alleged contraventions. The proceeding has been on foot for nearly four years. There have been a number of interlocutory disputes. The discovery in the proceeding was extensive, with CIMIC discovering over 70,000 documents.
2. The proceeding settled at mediation at a time when the proceeding was at an advanced stage, The trial on common issues and the applicant's individual case was to commence on 3 March 2025 on an estimate of six to eight weeks. The applicant's and respondent's tender lists for trial comprised 2,110 and 619 documents respectively. The applicant had filed one lay witness affidavit and the respondent had filed three lay witness statements. The parties intended to call six experts between them on issues of liability, materiality and loss.
3. In the Joint Opinion, the applicant's counsel set out with careful and detailed reasoning the legal and evidentiary issues that arise in the proceeding, what they consider to be the strengths and vulnerabilities of the applicant's and group members' case in respect of liability and quantification issues, their assessment of the applicant's and group members' prospects of success in respect of each issue, and overall, and the 'best case' outcomes for the applicant and group members. Without going into the detail, the Joint Opinion sets out counsels' opinion that the proposed settlement is fair and reasonable and in the interests of group members as a whole having regard to the claims made on behalf of group members.
4. Having considered the opinions set out in the Joint Opinion, I consider the settlement to be fair and reasonable as between the applicant and group members, on the one hand, and CIMIC on the other hand. Without disclosing the details of the Joint Opinion, I note the following matters.
5. First, the proceeding raises allegations that are factually and legally complex. Proving the allegations was likely to involve significant forensic challenges and extensive legal argument. Such complexity arises from the duration of the Relevant Period, the large number of discovered documents, the extensive lay and expert evidence filed and the complex legal arguments that would no doubt surround the issues of causation and quantification of loss.
6. Secondly, the proposed settlement was reached at an advanced stage, when pleadings had closed, discovery was complete and all the lay and expert evidence had been filed. That allowed counsel for the applicant to undertake a comprehensive assessment and analysis of the evidence proposed to be advanced by both parties. That, in turn, provided counsel with good insight into the prospects of success and vulnerabilities at trial, which was central to informing their opinions in relation to the proposed settlement. Furthermore, leading counsel has been involved in the proceeding since it commenced and is familiar with the detail of the case, placing her in a good position to assess the strengths and weaknesses of the case.
7. Thirdly, the alternative to the proposed settlement was a substantial trial, ongoing legal costs, liability and quantification risks and a strong likelihood of appeals by the unsuccessful party given the complexities of the issues involved. The settlement, on the other hand, provides certainty and finality for the applicant and group members.
8. In all of the circumstances, having regard to the opinions expressed in the Joint Opinion and taking into account the considerations mentioned above, I consider that the proposed settlement is fair and reasonable as between the parties.

1. In relation to fairness and reasonableness inter se, the Court must be satisfied that the proposed arrangements for distributing the Settlement Sum between the claimants is fair and reasonable. This includes ensuring that the interests of the applicant or any individual group members are not preferred over the interests of other group members.
2. In Camilleri, Moshinsky J at [43] noted that the factors relevant to the assessment of whether a proposed distribution scheme is fair and reasonable having regard to the interests of the group as a whole include:

(a) whether the distribution scheme subjects all claims to the same principles and procedures for assessing compensation shares;

(b) whether the assessment methodology is consistent with the case that was to be advanced at trial and supportable as a matter of legal principle;

(c) whether the assessment methodology is likely to deliver a broadly fair assessment (where the settlement is uncapped as to total payments) or relativities (where the task is allocating shares in a fixed sum);

(d) whether the costs of a more perfect assessment procedure would erode the notional benefit of a more exact distribution; and

(e) to the extent that the scheme involves any special treatment of the applicants or some group members, for instance via 'reimbursement' payments - whether the special treatment is justifiable, and whether as a matter of fairness a group member ought to be entitled to complain.

1. In addition, procedural factors relevant to the fairness of the proposed distribution process include whether appropriate individuals have been nominated to administer the scheme, the procedures for lodging and assessing claims and whether the scheme includes meaningful opportunities for review: Camilleri at [44] (Moshinsky J).

1. It is proposed that distribution of the Settlement Sum be governed by the SDS.
2. Mr Zimet is to be appointed as the Administrator of the SDS, and he is to be assisted by the Funder and Omni Bridgeway Limited. Payments from the "Settlement Distribution Fund" are to be made by PFM, as Trustee of the SDS, in accordance with directions of the Administrator.
3. The Administrator is to distribute one half (50%) of the Settlement Sum as follows:

(a) payment of the "Applicant's Reimbursement Payment" to the applicant; and

(b) distributions to Participating Group Members in accordance with the "Loss Assessment Formula" in Schedule A to the SDS.

1. The Administrator is to establish a "Claimant Database" which will be used to calculate Participating Group Members' distribution entitlements. Participating Group Members' entitlements to a distribution from the Settlement Sum are to be calculated in accordance with the "Loss Assessment Formula" in the SDS.
2. I am satisfied that the proposed arrangements for distributing the Settlement Sum among Participating Group Members is fair and reasonable and note the following.
3. First, in terms of the assessment procedure, the Participating Group Members and the applicant will be subject to the same assessment methodology.
4. Secondly, in terms of the assessment methodology, the Loss Assessment Formula under the SDS broadly reflects the damages assessment methodology that was expected to be advanced at trial. The Loss Assessment Formula is based, in the first instance, on the "inflated price" at which the shares were said to have been traded during the Relevant Period. The level of share price inflation is calculated by reference to an inflation series prepared by the applicant's expert on loss and damage. The inflation series is then overlaid with a discount to adjust the inflation price according to the litigation risks, and thus the relative strengths and weaknesses of the claims, according to the Joint Opinion. This will result in a figure that is a reasonable proxy for the harm suffered and the likely compensable damages. The amount distributed to Participating Group Members will be pro-rated according to the overall amount to be distributed to Participating Group Members. The Loss Assessment Formula and the SDS do not otherwise discriminate among different categories of claimants, except in relation to the reimbursement payment to the applicant. This is dealt with below.
5. Thirdly, Mr Zimet states in the Third Zimet Affidavit that, while it may be possible to devise a more precise assessment procedure, any such procedure would likely be far more expensive.
6. Fourthly, under the SDS, the Administrator will notify Participating Group Members of the calculation of their distribution entitlement and the SDS provides a process for review of the distribution entitlement.
7. Fifthly, the Administrator is experienced in the administration of schemes of this kind.

1. The Opt Out and Registration Notice was sent to approximately 12,488 CIMIC shareholders.
2. As at the date of the settlement approval hearing:

(a) 4,181 group members had registered to participate in the settlement by the Class Deadline (the Registered Group Members). That number included 2,673 Registered Group Members (or 2,672, according to the Funder) who registered their claim by completing a LFA with the Funder. The remaining 1,508 Registered Group Members were "unfunded", having completed and submitted a registration form only;

(b) 67 group members had opted out of the proceeding by filing an opt out notice with the Court prior to the Class Deadline;

(c) 63 group members took some step to have their claim registered in accordance with the Opt Out and Registration Notice after the Class Deadline, but prior to the in-principle settlement reached at the mediation (the Late Registered Group Members);

(d) 59 group members, following receipt of the Notice of Proposed Settlement, objected to the proposed settlement on the basis that they were considered unregistered group members, but wished to be considered registered group members for the purpose of the proposed settlement (the Further Late Registered Group Members); and

(e) the remaining group members had not sought to opt out or register their claim in accordance with the Opt Out and Registration Notice.

1. As mentioned earlier, the Opt Out and Registration Notice stated that the applicant intended to seek an order which would have the effect that group members who were not registered group members would not be entitled to participate in the proposed settlement, without leave of the Court. A similar statement was included in the Notice of Proposed Settlement.
2. Nevertheless, at the settlement approval hearing, the applicant sought approval from the Court to allow the following group members to participate in the settlement and the distribution of the Settlement Sum:

(a) the 4,181 Registered Group Members;

(b) the Late Registered Group Members; and

(c) the Further Late Registered Group Members,

1. First, the Late Registered Group Members followed the Court's process, but did so late in the piece. However, by taking steps to register their claims prior to the mediation, they could be taken to have indicated that they wished to participate in the settlement. I was told that their wish to participate in the settlement was taken into account in the mediation, except in relation to one group member who had not provided sufficient information to allow their claim to be taken into account at the time of the mediation. I was told, however, that the data has now been provided and their claim has been estimated on the basis of the loss assessment procedure to be undertaken under the SDS. Notwithstanding that this group member's estimated claim is not small, I was told that the mediation would not have been conducted on a different footing had they registered prior to the Class Deadline. The applicant neither opposed nor actively supported that group member's claim being included in the settlement.
2. The lateness of this cohort has not caused any prejudice to group members as a whole or contributed to the applicant underestimating the level of interest of group members in a proposed settlement. I am prepared to allow the Late Registered Group Members to participate in the settlement.
3. Second, the Further Late Registered Group Members comprise 59 group members from whom 45 (of the 47) notices of objection were received. The applicant noted that the Notice of Proposed Settlement directed that unregistered group members who wished to share in the benefit of the proposed settlement complete a notice of objection stating the reasons why they should be entitled to participate. The applicant noted that these notices of objection were not completed according to the instructions provided, that is, by stating reasons why they should be entitled to participate. However, the applicant submitted, and I accept, that these notices of objection should be treated as a request to participate in the settlement because they did not contain an objection to the settlement per se. In the Third Zimet Affidavit, Mr Zimet states that the dilutionary impact of including these group members in the settlement is negligible and, indeed, is offset by interest that has accrued on the Settlement Sum and other conservative estimates that were taken into account in preparing the Notice of Proposed Settlement. Whilst these claims were not taken into account for the purposes of the mediation, given the minimal impact they would have had on the aggregated loss and negligible dilutionary impact on distributions, and noting also that the applicant consents, I am prepared to allow the Further Late Registered Group Members to participate in the settlement.
4. There were two further notices of objection that were received from two group members prior to the settlement approval hearing. PFM has reviewed the notices. I was told that the notices did not specify any grounds of objection and otherwise provided insufficient detail to determine the amount of any distribution that may be made to these group members under the SDS. Moreover, PFM attempted to correspond with one of the group members, who did not respond. On the basis of the limited information provided in relation to these group members' circumstances, there is not a sufficient basis to allow them to participate in the proposed settlement.
5. In the result, no objections have been filed from persons who object to the Settlement Sum, the proposed SDS or the proposed deductions from the Settlement Sum. For the reasons explained above, there were only two notices of objection to the settlement as such, however, they did not specify any actual grounds of objection.

Deductions from the Settlement Sum in relation to costs and funding commission

1. The remaining 50% of the Settlement Sum is to be distributed in respect of the applicant's costs and disbursements as approved by the Court, the funding charges as approved by the Court and the costs of administering the SDS. According to the SDS, the remaining 50% of the Settlement Sum will be paid out by the Administrator as follows:

(a) the Applicant's Costs and Disbursements (excluding the Remaining Costs and Uplift Fee) and the Funder Costs are to be paid to the Funder;

(b) the Funding Commission is to be paid to the Funder;

(c) the Remaining Costs and Uplift Fee are to be paid to PFM; and

(d) the Administration Costs are to be paid to the Trustee.

1. The Funder provided litigation funding, pursuant to LFAs entered into with the applicant and 2,673 (or 2,672, according to the Funder) Registered Group Members. Under the LFAs, the Funder agreed to indemnify the applicant against any adverse costs orders and provided security for CIMIC's costs by way of a Deed Poll. In addition, the Funder agreed to pay certain "Project Costs" including, relevantly, 75% of PFM's reasonable legal fees and 100% of disbursements up to the amount of such costs in the "Investment Budget". At the date of the settlement approval hearing, the Funder had funded 75% of PFM's reasonable legal fees and 100% of disbursements to 26 September 2023 and, thereafter, 65% of PFM's reasonable legal fees and 100% of disbursements. Further, PFM had worked on a "no win no fee" (NWNF) basis for 25% of its professional fees prior to 26 September 2023 and 35% of its fees thereafter.
2. The LFAs further provided that, if the Court made a common fund order (CFO), the Funder would be entitled to the lesser of: (a) the rate determined by the Court as part of any CFO to comprise the Funder's funding commission; or (b) 25% of the settlement sum (plus accrued interest) where the sum is $100 million or less. However, this was subject to the overall requirement under the LFAs, and as reflected in the Deed of Settlement, that not less than 50% of the Settlement Sum was to be paid to the applicant and group members.

1. As at the date of the settlement approval hearing, the applicant's total legal costs were $17,087,123.52.
2. Pursuant to orders of the Court dated 20 December 2024, Mr Roland Matters, an expert costs consultant, was appointed as a Referee to prepare a report as to the reasonableness of the legal costs and disbursements incurred by the applicant. Mr Matters report contained his assessment of the reasonableness of the applicant's legal costs of $17,087,123.52 for work done up to the date of the settlement approval hearing, including costs anticipated and yet to be incurred.
3. Of the applicant's legal costs in the sum of $17,087,123.52, assessed by Mr Matters, as at the date of the settlement approval hearing:

(a) the Funder had incurred approximately $12,043,044.59 in legal costs and disbursements, of which $118,466.43 was invoiced but not yet paid;

(b) the Funder was obliged to pay a further estimated $126,500 in legal fees and $73,643 in disbursements, for work done but not yet invoiced at the date of the settlement approval hearing;

(c) the sum of $3,875,149.66 were "Remaining Costs" representing PFM's legal costs, incurred on a NWNF basis, which the Funder had not paid and was not liable to pay.

1. The obvious difficulty was that the total legal costs incurred (i.e., $17,087,123.52) and a funding commission at a rate of 25% of the Settlement Sum (i.e., $11,312,500) exceeded 50% of the Settlement Sum.
2. I was told that PFM and the Funder were in dispute as to the exact quantum of the sums to be paid to PFM and the Funder given that, if nothing were done, the amount of legal costs in combination with a funding commission rate of 25% would breach the requirement under the LFAs to return no less than 50% of the Settlement Sum to group members.
3. Ultimately, a compromise was reached whereby PFM's fees and the Funder's Funding Commission were reduced to ensure that group members received no less than 50% of the Settlement Sum. This involved both PFM and the Funder agreeing to a reduction of approximately $1,137,500 in legal fees and approximately $4,727,766.17 million in funding commission respectively.
4. Nevertheless, the Funder sought an order to, in effect, acknowledge that it was contractually entitled to a CFO at a funding rate of 25%, despite it practically not being possible to pay a commission at that rate because of the requirement to return no less than 50% of the Settlement Sum to the Participating Group Members. The applicant opposed such an order on the grounds the Court was being asked to provide an advisory opinion on what might be ordered in different circumstances and on different facts. Counsel for the Funder was unable to identify any authority in which a court was prepared to make a CFO approving a funding rate that was not the commission paid to the litigation funder under a court approved settlement.
5. After the hearing the Funder reconsidered its position and advised that it no longer pressed for the CFO in the terms initially sought, or the modified form of order suggested by the Funder's Counsel at the hearing. The Funder otherwise maintained their submissions that approval of the Funding Commission was appropriate.
6. As a result, the Court has to assess whether the amount to be paid under the SDS by way of the applicant's legal costs and disbursements in the sum of $15,949,623.52 is fair and reasonable.
7. The Full Court has said that the Court will only allow the deduction of costs from a settlement sum in an amount that the Court is satisfied is fair and reasonable. Whether an amount is fair and reasonable is to be viewed from the perspective of group members, who are the persons likely to bear the ultimate burden of those costs: Bellamy's Australia Ltd v Basil (2019) 372 ALR 638; [2019] FCAFC 147 at [13] (Murphy, Gleeson and Lee JJ).
8. In Camilleri at [53]-[54], Moshinsky J identified the following general factors as being relevant to the Court's assessment of the reasonableness of legal costs:

(a) the overall quantum of costs;

(b) the quantum relative to the settlement sum;

(c) whether group members have antecedent contractual obligations in respect of the costs;

(d) whether the group members were notified of the costs arrangements established for the proceeding; and

(e) the scale and duration of the steps in respect of which the costs were incurred.

1. Mr Matters was provided with access to PFM's files, invoices issued by PFM, a spreadsheet of the professional fees invoiced by PFM, a spreadsheet of disbursements incurred by PFM and a table of professional charge out rates for solicitors and employees at PFM. Mr Matters reviewed the worksheets and considered the reasonableness of the task to which the service or disbursement related, the reasonableness of the nature, extent and allocation of the service addressing that task and the reasonableness of the amount quantified for the service or disbursement.
2. Mr Matters used an alternative methodology to undertake a comparable assessment of the legal costs, or cross-check, the relativities of the total legal costs in this proceeding against the mean relativities of legal costs in other representative proceedings in which Mr Matters has been engaged to provide as a costs expert or costs assessor from 2016-2024. Mr Matters expressed some concerns regarding the total amount of the legal costs in this proceeding, compared to the "mean relativity of legal costs quantified" for services of law practices, barristers' fees and experts' fees in other representative proceedings in which he has been involved. Mr Matters also suggested that the distribution of work to solicitors at PFM, instead of barristers, was higher than in other cases in which he has been involved.
3. The applicant concedes that the total amount to be paid in respect of legal costs is considerable having regard to similar group proceedings in which the Court has approved a settlement. However, the first concern raised by Mr Matters, regarding the total legal costs relative to this proceeding, has been alleviated somewhat by the reduction in the total amount of legal costs claimed. Further, as the applicant noted, Mr Matters considered that the reasons why the quantum of legal costs in this proceeding is particularly high include the fact that this proceeding involves two factually discrete causes of action, the complexity of the pleadings and particulars, the process of reviewing a very large discovery, the "vigour" with which the proceeding has been defended and the length of the proceeding to the time of the settlement approval hearing.
4. In the result, Mr Matters opined that the legal costs in the amount of $17,087,123.52 for work done up to the date of the settlement approval hearing, including costs anticipated and yet to be incurred, are reasonable.
5. As Beach J observed in Blairgowrie Trading Ltd v Allco Finance Group Ltd (No 3) (2017) 343 ALR 476; [2017] FCA 330 at [180]-[181]:

[180] ... subject to the question of proportionality, if unchallenged expert opinion is put before the Court which sets out a commercial and reasonable methodology consistent with the terms of any retainer and which demonstrates that it has been accurately and thoroughly applied to sufficient and probative source records of the solicitors, then it is no part of my function to:

(a) reject that evidence as to whole or part without very good reason; or

(b) apply one's own subjective view of what the legal work is "really worth", divorced from the reality of the commercial context within which the work was carried out and the expenses incurred.

[181] But what is claimed for legal costs should not be disproportionate to the nature of the context, the litigation involved and the expected benefit. The Court should not approve an amount that is disproportionate. But such an assessment cannot be made on the simplistic basis that the costs claimed are high in absolute dollar terms or high as a percentage of the total recovery. In the latter case, spending $0.50 to recover an expected $1.00 may be proportionate if it is necessary to spend the $0.50. In the former case, the absolute dollar amount as a free-standing figure is an irrelevant metric. The question is to compare it with the benefit sought to be gained from the litigation. Moreover, one should be careful not to use hindsight bias. The question is the benefit reasonably expected to be achieved, not the benefit actually achieved. Proportionality looks to the expected realistic return at the time the work being charged for was performed, not the known return at a time remote from when the work was performed; at the later time, circumstances may have changed to alter the calculus, but that would not deny that the work performed and its cost was proportionate at the time it was performed. Perhaps the costs claimed can be compared with the known return, but such a comparison ought not to be confused with a true proportionality analysis. Nevertheless, any disparity with the known return may invite the question whether the costs were disproportionate, but would not sufficiently answer that question.

1. Although Mr Matters did not address the "fairness" of the legal costs, he identified four matters which he says ought to be considered on that question as part of the settlement approval. I will address each of those matters in turn.
2. First, Mr Matters raised a concern about the 14-month period between the filing of the further amended statement of claim and the provision of a costs update to the applicant. Having regard to certain confidential matters referred to in the Third Zimet Affidavit, I am satisfied that PFM was engaged in a process with the Funder whereby they were endeavouring to make sure that the costs update provided to group members was as accurate as it could be in the circumstances, although the process may have taken longer than was desirable.
3. Secondly, Mr Matters raised an issue regarding the uplift fee contained in the Conditional Legal Costs Agreement between the applicant and PFM. This issue has been addressed in the Third Zimet Affidavit in which Mr Zimet deposes that since the commencement of the proceeding, he has held the view that a successful outcome of the matter was reasonably likely.
4. Thirdly, Mr Matters raised an issue regarding certain terms in counsel's costs agreements permitting a "unilateral" entitlement to review or "increase" rates. This issue does not raise any substantive concerns given the quantum of barristers' fees relative to the overall legal costs.
5. Fourthly, Mr Matters raised an issue regarding the legal costs incurred in respect of "book building". Although it is not accurate to say, as Mr Zimet does, that the legal work involved in "book building" was undertaken "pursuant to orders" of the Court, the work was undertaken at a particular stage of the proceeding. The applicant submitted, and I accept, that the work was directed to maximising the number of Registered Group Members to ensure the proceeding remained commercially viable and to facilitate a productive mediation, bearing in mind that any settlement required 50% of the Settlement Sum to be paid to Participating Group Members.
6. Group members were informed of the estimated legal costs in the Notice of Proposed Settlement. Group members who signed a LFA with the Funder agreed to reimburse the Funder for legal costs paid by the Funder. The quantum of the legal costs has been considered and assessed by Mr Matters to be reasonable.
7. For the foregoing reasons, I am satisfied that the Applicant's Costs and Disbursements in the sum sought to be paid to the Funder are fair and reasonable for the foregoing reasons.

1. PFM also acted on a NWNF basis for a portion of its professional fees, being 25% of PFM's fees prior to 26 September 2023, and 35% of its fees thereafter. As part of the settlement approval orders, the applicant seeks approval for the payment of the Remaining Costs, which were reduced by PFM from $3,875,149.66 to $2,965,149.61, plus an Uplift Fee of $741,287.21.
2. The Remaining Costs and Uplift Fee were assessed in Mr Matter's report. I am satisfied that the Remaining Costs and Uplift Fee are fair and reasonable.

1. The Funder incurred costs of $22,248.64 in relation to brokerage reports and the fees of an external adviser who undertook a review of the legal costs. I was told that those costs were paid directly by the Funder as opposed to being disbursements that would otherwise have been paid by PFM. These costs fall within the definition of "Project Costs" under the LFAs, for which the Funder is entitled to be reimbursed.
2. I am satisfied that the Funder's Costs are fair and reasonable.

1. The SDS provides for payment of the "Applicant's Reimbursement Payment" in the amount of $25,375 to the applicant.
2. A compensation or reimbursement payment of this kind requires consideration of whether such special or preferential treatment is justifiable and in the interests of the group members as a whole: Yasmin v Commonwealth of Australia [2023] FCA 1661 at [74] (Horan J).
3. In Darwalla Milling Co Pty Limited v F Hoffman-La Roche Ltd (No 2) (2006) 236 ALR 322; [2006] FCA 1388 at [76], Jessup J considered that it was:

... prima facie reasonable that particular parties who have sacrificed valuable time and incurred expenses in the interests of prosecuting this proceeding on behalf of group members as a whole should be able to look to the corpus of the settlement sum for some degree of compensation and reimbursement.

1. Since Darwalla, it is not uncommon for settlements in representative proceedings to include a payment to compensate or reimburse the lead applicant for the time, expense and inconvenience attributable to the representative role: see for example the authorities cited in Caason Investments Pty Ltd v Cao (No 2) [2018] FCA 527 at [176] (Murphy J).
2. The applicant seeks payment of the reimbursement amount in recognition of the time in acting as a representative party in the proceeding. The applicant is a self-managed superannuation fund and, it was submitted, it is appropriate that the reimbursement amount be paid in recognition of the time and effort expended by Mr Miciulis, the director of the applicant, in acting as a representative party in the proceeding, providing instructions and undertaking work on behalf of group members.
3. The Zimet Third Affidavit exhibits a detailed record of the time Mr Miciulis has spent in connection with this proceeding. I am satisfied that it is appropriate for the Reimbursement Payment of $25,375 to be paid to the applicant.

1. The sum of $146,850 is to be paid to PFM for the Administrator to administer the SDS.
2. Mr Matters has opined that the proposed sum of $146,850 for administering the SDS is reasonable. Mr Matters' opinion is based on a comparison of settlement administration costs per eligible group member in other proceedings.
3. I am satisfied that the amount sought for "Administrators' costs" is appropriate.

1. The Funder has funded the proceeding pursuant to LFAs entered into with the applicant and 2,673 (or 2,672, according to the Funder) Registered Group Members.
2. The Funder had paid or was liable to pay approximately $12,243,187.39 in legal costs prior to the settlement approval hearing. In addition, I was told that the Funder had committed to funding a further $1,356,310.41 in legal costs and disbursements if the matter proceeded to trial.
3. The applicant seeks orders pursuant to s 33V of the FCA Act for a CFO requiring all Participating Group Members to pay a pro-rata percentage of the Funding Commission from any distribution received from the settlement.
4. The Court has power to make a CFO upon approval of the settlement of a representative proceeding under s 33V of the FCA Act to allow the deduction of litigation funding charges from the common fund of the group members' recoveries on settlement in an amount that the Court considers to be "just": Elliott-Carde v McDonald's Australia Limited (2023) 301 FCR 1; [2023] FCAFC 162 at [170] (Beach J), [423] (Lee J), [504] (Colvin J); Galactic Seven Eleven Litigation Holdings LLC v Davaria (2024) 302 FCR 493; [2024] FCAFC 54 at [32] (Murphy J), [136] (Lee J), [142] (Colvin J); Davaria Pty Ltd v 7-Eleven Stores Pty Ltd (2020) 281 FCR 501; [2020] FCAFC 183 at [22]-[25] (Lee J).
5. The issue is whether, in the circumstances, the Court should exercise its power under s 33V, on the basis that it is a just order with respect to the distribution of the Settlement Sum. This necessarily requires consideration of the amount which should be ordered and involves a commonsense evaluative assessment by the Court: Galactic at [76]-[77] (Murphy J); [136] (Lee J), [156], [159] (Colvin J). A non-exhaustive list of potentially relevant factors was identified by the Full Court in Money Max Int Pty Ltd (Trustee) v QBE Insurance Ltd (2016) 245 FCR 191; [2016] FCAFC 148 at [80] (see also Galactic at [86]) where the Full Court (Murphy, Gleeson and Beach JJ) stated:

[80] We do not seek to and cannot predetermine the relevant considerations for the approval of a reasonable funding commission rate. They will be a matter for the judge hearing the approval application and it will depend upon the circumstances. However, it seems likely that the relevant considerations would include the following:

(a) the funding commission rate agreed by sophisticated class members and the number of such class members who agreed. That can be said to show acceptance of a particular rate by astute class members;

(b) the information provided to class members as to the funding commission. That may be important to understand the extent to which class members were informed when agreeing to the funding commission rate;

(c) a comparison of the funding commission with funding commissions in other Part IVA proceedings and/or what is available or common in the market. It will be relevant to know the broad parameters of the funding commission rates available in the market;

(d) the litigation risks of providing funding in the proceeding. This is a critical factor and the assessment must avoid the risk of hindsight bias and recognise that the funder took on those risks at the commencement of the proceeding;

(e) the quantum of adverse costs exposure that the funder assumed. This is another important factor and the assessment must recognise that the funder assumed that risk at the commencement of the proceeding;

(f) the legal costs expended and to be expended, and the security for costs provided, by the funder;

(g) the amount of any settlement or judgment. This could be of particular significance when a very large or very small settlement or judgment is obtained. The aggregate commission received will be a product of the commission rate and the amount of settlement or judgment. It will be important to ensure that the aggregate commission received is proportionate to the amount sought and recovered in the proceeding and the risks assumed by the funder;

(h) any substantial objections made by class members in relation to any litigation funding charges. This may reveal concerns not otherwise apparent to the Court; and

(i) class members' likely recovery "in hand" under any pre-existing funding arrangements.

1. At [82], the Full Court in Money Max stated:

[W]e expect that the courts will approve funding commission rates that avoid excessive or disproportionate charges to class members but which recognise the important role of litigation funding in providing access to justice, are commercially realistic and properly reflect the costs and risks taken by the funder, and which avoid hindsight bias.

1. Recently, in Street v State of Western Australia [2024] FCA 1368 at [284]-[285], Murphy J stated that the proper analysis of a proposed litigation funding rate is multifactorial and the relevant considerations in a particular case, and the weight to be provided to each consideration, will depend on all of the circumstances, rather than just by reference to the amount of the settlement and a comparison with other funding rates in the market. The analysis should include regard to the specific funder, including the level of funding provided or promised and the period of exposure to risk.
2. The effect of the orders sought by the applicant is that the Funding Commission to be paid to the Funder will be 50% of the Settlement Sum less the deductions for the Applicant's Costs and Disbursements, the Remaining Costs and Uplift Fee, the Funder's Costs and the Administration Costs, which will result in estimated commission of approximately $6,663,189.82 to be paid to the Funder. It is unnecessary to express the Funding Commission as a percentage of the Settlement Sum.
3. I am satisfied that a CFO is appropriate for the reasons that follow.
4. First, group members have been informed of the potential for funding commission to be paid to the Funder. This was explained in the Opt Out and Registration Notice and the Notice of Proposed Settlement.
5. Secondly, the Funder has funded the proceeding pursuant to LFAs entered into with the applicant and 2,673 (or 2,672, according to the Funder) Registered Group Members. This amounts to approximately 64% of Registered Group Members, of whom 2,201 are institutional or sophisticated investors.
6. Thirdly, the Funder had incurred or was liable to pay approximately $12,243,187.39 in legal costs and disbursements at the date of the settlement approval hearing. In addition, I was told that the Funder had committed to funding a further $1,356,310.41 in legal costs and disbursements if the matter proceeded to trial.
7. Fourthly, the Funder assumed risks in relation to the litigation, including the risk of adverse costs exposure, and had provided a Deed Poll as security for CIMIC's costs. I was told that the Funder had incurred substantial fees in connection with the Deed Poll, which it was not seeking to recover specifically under the settlement.
8. Fifthly, the Participating Group Members stand to benefit from the litigation funding, which has allowed the proceeding to be advanced and contributed to a settlement being achieved. Further, the Settlement Sum is substantial, funded and unfunded group members are to be treated equally and no group member objected to the settlement on the basis of the funding commission.
9. Sixthly, having regard to the quantum of the Settlement Sum, the litigation risks and the quantum of funding provided, the Funding Commission could not be said to be a disproportionate reward for the risks and burdens assumed by the Funder.
10. Taking all of these matters into account, I consider a "just" order to be that the Funding Commission be paid (that is 50% of the Settlement Sum less the deductions for the Applicant's Costs and Disbursements, the Remaining Costs and Uplift Fee, the Funder's Costs and the Administration Costs) to the Funder.

1. The applicant sought suppression and non-publication orders under ss 37AF and 37AG of the FCA Act in respect of the Confidential Zimet Affidavit and certain other confidential materials filed in support of the application, including the Joint Opinion and personally identifying information about group members. The Funder sought suppression and non-publication orders on the same grounds in respect of certain confidential information contained in an affidavit of Martin del Gallego dated 17 March 2025.
2. It is the usual practice in applications of this kind to make suppression orders over confidential opinions: Haswell v Commonwealth of Australia (No 3) [2023] FCA 1093 at [8] (Lee J); Camilleri at [59] (Moshinsky J). The rationale for doing so was expressed by Button J in Ewok Pty Ltd as trustee for the E & E Magee Superannuation Fund v Wellard Limited [2024] FCA 296 at [103]:

In settlement approval proceedings, the Court is much assisted by the responsible counsel and solicitors expressing their views on the proceeding in frank and candid terms. It would be inimical to the interests of the administration of justice for counsel and solicitors providing those opinions to be reticent in what they say, lest their opinions be disseminated to the world at large. In addition, orders in respect of the confidential opinions are warranted on the basis that they disclose information that is the subject of legal professional privilege claims. I do not consider that any time limit needs to be imposed on orders in respect of these two categories of information in order to ensure that the orders only go as far as is necessary to prevent prejudice to the proper administration of justice.

1. It is similarly appropriate that personally identifying information about group members be suppressed. There is no public interest in information of this kind being disclosed, and any disclosure of such information may be detrimental to the privacy and well-being of group members and inhibit people from registering for, or seeking to participate in, group proceedings in the future.

1. I will make orders substantially in the terms sought by the applicant.

I certify that the preceding one hundred and fifteen (115) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Neskovcin.