Money Max Int Pty Limited (Trustee) v QBE Insurance Group Limited

Federal Court of Australia|2018-07-09|Before: Mr P, Ms J, Murphy J

Date of last submissions: 14 May 2018

Division: General Division

Sub-area: Corporations and Corporate Insolvency

Category: Catchwords

Counsel for the Applicant: Mr B Quinn SC and Ms M Szydzik

Solicitor for the Applicant: Maurice Blackburn Lawyers

Counsel for the Respondent: Ms W Harris SC and Ms S Gory

Solicitor for the Respondent: Allens Lawyers

Counsel for Dr and Mrs Wells: Mr P Travis

Solicitor for Dr and Mrs Wells: Axia Litigation Lawyers

Counsel for Aberdeen Standard Investments: Ms J A Findlay

9 August 2018 In paragraph 89, "0.5%" has been replaced with "0.05%".

BETWEEN: MONEY MAX INT PTY LIMITED (ACN 152 073 580), AS TRUSTEE FOR THE GOLDIE SUPERANNUATION FUND Applicant

AND: QBE INSURANCE GROUP LIMITED (ACN 008 485 014) Respondent

JUDGE: MURPHY J DATE OF ORDER: 4 MAY 2018

Pursuant to ss 33V and 33ZF of the Federal Court of Australia Act 1976 (Cth) (FCAA), the settlement of this proceeding be approved on the terms set out in the Settlement Deed dated 28 December 2017 (being annexure 'SMF-6' to the confidential affidavit of Steven Mark Foale sworn 5 February 2018) (Deed).
Pursuant to s 33ZF of the FCAA, the Court authorises the applicant, nunc pro tunc, to enter into and give effect to the Deed for and on behalf of all class members.
For the purposes of the Deed the following persons shall be deemed to be a 'Registered Group Member': (a) Adeyemi Adesanya; (b) Paul Fiani; (c) Hamid Pashmforoosh; (d) Yolande Shore; and (e) John Rohan Eldridge.
Pursuant to s 33ZF of the FCAA or otherwise, the amount of $21,875,678.51 be approved as the reasonable costs and disbursements of performing the Legal Work as defined in the Funding Terms, and for the purposes of the proposed Settlement Distribution Scheme (SDS) as the amount of the 'Applicant's Legal Costs' as defined therein, up to and including 28 February 2018.
Pursuant to s 33ZF of the FCAA or otherwise, the amount of $33,000 be paid to the applicant by way of compensation for time and expenditure reasonably incurred by the applicant in prosecuting the proceeding on its own behalf and on behalf of class members as a whole, and for the purposes of the proposed SDS, as the amount of the 'Applicant's Reimbursement Payment'.
Pursuant to s 33ZF of the FCAA or otherwise, upon the coming into effect of orders [1]-[4] above, each of the undertakings given by: (a) the applicant (dated 15 November 2016); (b) MBPL (dated 17 November 2016); and (c) ILFP (dated 15 November 2016), to each other and to the Court to comply with their obligations under the Funding Terms and the terms of order 1 of the Common Fund Orders be discharged.
Pursuant to rule 2.43(1) of the Federal Court Rules 2011 (Cth), all amounts paid into Court by or on behalf of the applicant as security for the respondent's costs of the proceeding, and any interest accrued on those amounts, be repaid to the solicitors for the applicant.
Pursuant to s 33ZB of the FCAA, the persons affected and bound by these orders are the applicant, the respondent and class members.
Pursuant to s 37AF(1)(b) of the FCAA, on the ground that the order is necessary to prevent prejudice to the proper administration of justice and until further order, the material contained in the confidential affidavit of Brooke Wendy Dellavedova sworn 26 April 2018 (including the annexures thereto) not be published or disclosed without the prior leave of the Court to any person or entity other than the applicant, the applicant's legal advisers and the Court.
Pursuant to s 54A of the FCAA Ms Elizabeth Harris, Legal Costs Consultant, is appointed as a referee (Referee) to inquire and report in writing on the questions set out below, and on any further questions that may later be ordered.
The Referee's task is to answer the following questions: (a) Are the costs charged or sought to be charged by the solicitors for the Applicant in relation to the conduct of the proceeding for the period from 1 March 2018 (Further Proceeding Costs) reasonable? (b) Are the costs sought by the Administrator of the SDS in relation to administration of the SDS (Administration Costs) reasonable? (c) If not, by what amount should the costs be disallowed?
The Referee shall perform the Reference having regard to the following guidelines: (a) the Referee is to ensure that the reviews of the Further Proceeding Costs and Administration Costs are conducted in a manner which is proportionate to the amount claimed. The Referee is directed to contact the chambers of Justice Murphy if any question arises as to whether or not it is necessary for her to undertake particular work; (b) the Referee is to consider and implement the Reference without undue formality or delay so as to enable a just, efficient and cost-effective resolution of the Reference. This may include enquiries by telephone and without intervention of lawyers any person the Referee believes may have relevant information; (c) the Referee may ask whatever questions of the solicitors for the Applicant and the Administrator of the SDS as the Referee considers necessary, and, subject to any objection they may raise with the Court, the solicitors for the Applicant and the Administrator of the SDS are directed to answer those questions in a speedy and cost effective manner; and (d) the Referee is to make such directions as the Referee considers appropriate to facilitate the just, efficient and cost-effective resolution of the Reference including for the attendance of any person, the production of documents and records relevant to legal costs, and/or the provision of submissions.
On or before 1 June 2018 the Referee shall file a confidential final report in respect of the Further Proceeding Costs and provide a confidential copy to the solicitors for the Applicant.
A timetable for the provision of reports regarding, and approval of, the Administration Costs be fixed following application by the Administrator of the SDS for approval of those costs.
Without affecting the power of the Court as to costs, the solicitors for the Applicant are liable for the reasonable fees of the Referee in the first instance, which fees shall become part of the Applicant's Further Proceeding Costs or Administration Costs as appropriate.
The solicitors for the Applicant shall forthwith deliver to the Referee a copy of these orders and make available all information and records which the Referee believes are relevant to the Reference.
The Referee and parties shall have liberty to seek directions with respect to any matter arising from the Reference upon 24 hours' notice, or such other notice as ordered by the Court. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

BETWEEN: MONEY MAX INT PTY LIMITED (ACN 152 073 580), AS TRUSTEE FOR THE GOLDIE SUPERANNUATION FUND Applicant

AND: QBE INSURANCE GROUP LIMITED (ACN 008 485 014) Respondent

JUDGE: MURPHY J DATE OF ORDER: 29 MAY 2018

Pursuant to s 37AF(1)(b) of the Federal Court of Australia Act 1976 (Cth) (FCAA), on the ground that the order is necessary to prevent prejudice to the proper administration of justice and until further order, the evidence contained in the affidavit of Charles Medovy Wright sworn 11 May 2018 and marked 'Confidential Affidavit' (including the annexures thereto) not be published or disclosed without the prior leave of the Court to any person or entity other than the applicant, the respondent, their respective legal advisers, the Judge with the carriage of the matter from time to time and officers of the Court to whom it is necessary to disclose the evidence.
Until further order, the evidence referred to in [1] above be sealed on the Court file in an envelope marked "Not to be opened except by leave of the Court".
Pursuant to ss 33V and 33ZF of the FCAA, the Settlement Distribution Scheme (SDS) annexed as BWD55 to the affidavit of Brooke Wendy Dellavedova sworn 26 April 2018 is approved with clause 2.6 substituted with the following: 2.6 The Administrator and the Administrator Staff in discharging any function or exercising any power or discretion conferred by this Scheme shall not be liable for any loss to Class Members arising by reason of any mistake or omission made in good faith or of any other matter or thing except wilful and individual fraud and wrongdoing on the part of the Administrator or the Administrator Staff who are sought to be made liable.
Pursuant to s 33ZF of the FCAA or otherwise, Maurice Blackburn Pty Ltd be appointed Administrator of the SDS, and to act in accordance with the SDS and be given the powers and immunities contemplated by the SDS nunc pro tunc from the date of the Court's Orders dated 15 February 2018.
Pursuant to s 33ZF of the FCAA or otherwise, for the purpose of cl 6(b) of the Funding Terms (Funding Terms) set out in Annexure B to the Common Fund Orders, the Court approves the amount to be paid to International Litigation Funding Partners Pte Ltd as consideration for the funding of the Proceeding as 23.208% of the principal Resolution Sum of $132.5 million (being $30.75 million).
Maurice Blackburn have liberty to apply in relation to any matter arising under the SDS.
Such further or other orders as the Court deems fit. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

A INTRODUCTION 1 The applicant, Money Max Int Pty Ltd, seeks court approval of the settlement of a shareholder class action pursuant to s 33V of the Federal Court of Australia Act 1976 (Cth) (the Act). Money Max brought the class action on its own behalf and on behalf of all persons who acquired an interest in fully paid ordinary shares in QBE between 20 August 2013 and 6 December 2013 inclusive (relevant period) and who suffered loss or damage by or resulting from QBE's alleged wrongful conduct. The action is funded by a litigation funder, International Litigation Funding Partners Pte Ltd (Funder). 2 The action has been settled, subject to court approval, by a deed of settlement dated 28 December 2017 under which the respondent, QBE Insurance Group Ltd, has agreed to pay $132.5 million (settlement sum) inclusive of costs in settlement of the claims of Money Max and the class members. It is proposed that the settlement sum be placed into a settlement distribution fund (settlement fund) and then distributed in accordance with the proposed Settlement Distribution Scheme (SDS) to Money Max and those class members who registered under a Court-approved registration process (registered class members). Only registered class members may share in the settlement but all class members, including those who failed to register (unregistered class members) are to be bound by it. 3 Having regard to the complexity and risks of the litigation, the size of the settlement, and the reasonableness of the settlement in light of the attendant risks of the litigation, I have no difficulty in concluding that the proposed settlement is fair and reasonable. There are though some questions in relation to several secondary matters, including: (a) the quantum of legal costs and disbursements of $22.51 million which Money Max seeks be approved; and (b) the quantum of the litigation funding commission of $30.75 million which Money Max seeks be approved. 4 My decision on those matters may be summarised as follows.

The applicant's costs 5 Large, complex and strenuously defended class action litigation is notoriously expensive, but the $22,514,715.33 million estimate Maurice Blackburn provided for its costs and disbursements (costs) incurred and to be incurred in the proceeding was unusually high. The quantum of the costs estimate caused me concern and I appointed Elizabeth Harris, a reputable costs assessor, to be the Court-appointed referee pursuant to s 54A of the Act (the Referee). I directed that she inquire and report in relation to the reasonableness of the costs claimed, doing so by auditing the report of an independent costs expert, Cate Dealehr of the Australian Legal Costing Group, who had been engaged by Maurice Blackburn. Maurice Blackburn cooperated fully in that process and did not object to the outcome of the two reports. 6 The reports proposed a reduction of $639,036.82 from Maurice Blackburn's initial estimate. Even with this reduction the costs remain high and significantly more than the range of costs usually approved in shareholder class actions which settle before trial. However, as I explain, this is an unusually large and complex proceeding and effectively comprises three shareholder class actions rolled up into one. Having regard to this fact and to the comprehensive review undertaken by Ms Dealehr and the Referee, I am satisfied that Money Max's costs are fair and reasonable. I have approved costs in a total of $21,875,678.51.

The funding commission 7 On 15 November 2016 the Full Court made orders to the effect that, upon any successful settlement or judgment in the proceeding, the applicant and class members must pay a reasonable Court-approved funding commission from any monies received, prior to distribution of those monies (Common Fund Orders): see Money Max Int Pty Ltd v QBE Insurance Group Ltd (2016) 245 FCR 191; [2016] FCAFC 148 (Money Max). The orders included the rider that the aggregate funding commission payable by class members could not exceed the aggregate amount that would otherwise be payable by them in the event the Common Fund Orders were not made. 8 Money Max now seeks Court approval of a funding commission of $30.75 million, which represents 23.2% of the gross settlement of $132.5 million (or 27.75% of the net settlement after deduction of approved legal costs). I have given the reasonableness of the funding commission careful consideration and I directed Money Max and the Funder to file further materials in that regard. While the funding commission is large, in all the circumstances I am satisfied that it is fair and reasonable. In summary this is because: (a) the Funder took on substantial obligations and significant risks in agreeing to fund this large, complex and expensive proceeding, doing so at a time when the risks could not be accurately assessed and the outcome was far from certain. The Funder paid a total of $19.82 million ($14,821,214 for the applicant's costs and $5 million in security for costs) over the life of the proceeding and accepted a continuing obligation to meet substantial disbursements if the case went to trial. The case was listed for an eight week trial commencing in October this year. The Funder also took on the risk that it would be required to pay an adverse costs order if the case was unsuccessful at trial, which I estimate at approximately $12-$15 million; (b) a large number of sophisticated class members agreed to funding rates significantly in excess of the 23.2% funding rate now proposed. Approximately 78% of the assessed losses were suffered by sophisticated investors and they have made no objection to this funding rate; (c) the proposed 23.2% funding rate is substantially better for class members who signed litigation funding agreements than the 32.5% or 35% funding rates in place those agreements. They are approximately 9.3% or 11.8% better off and will receive between approximately $12.3 and $15.6 million more than they would have received; (d) the proposed 23.2% funding rate is also substantially better for class members than the 30% funding rate for which Money Max sought approval when it applied for the Common Fund Orders. Class members are approximately $9.01 million better off than they would have been had the Full Court acceded to that application; (e) the proposed 23.2% funding rate was arrived at as part of the settlement negotiations, and the evidence shows that the Funder further reduced the commission it sought; (f) the aggregate funding commission satisfies the rider in the Common Fund Orders that class members not be worse off than if such orders had not been made. That rider was imposed to satisfy QBE's principal argument in opposing the Common Fund Orders that the only party that would benefit from such orders was the Funder. The approved funding commission is just over $5 million less than the $35.77 million funding commission which would be payable under a simple funding equalisation order which does not allow "grossing-up" (as described in Money Max at [56]), and approximately $7.34 million less than the $38.09 million funding commission which would be payable under a funding equalisation order which allows grossing-up; and (g) a 23.2% funding rate on the gross settlement (and 27.75% of the net settlement) is within the broad parameters of the funding rates available in the market, and lower than many available funding rates. 9 The aggregate funding commission means that class members, who took no risk in a large, expensive and complex proceeding will share in more than $100 million after deduction of funding charges, and more than $80 million after deduction of funding charges and legal costs. It avoids excessive or disproportionate charges to class members while recognising the important role that litigation funding played in providing access to justice for Money Max and the class members. In the circumstances of this case a funding commission of $30.75 million is commercially realistic, and proportionate to the Funder's investment and risk. 10 I thank the parties for the quality and focus of the materials in support of the application, upon which I have directly drawn at some points. 11 The reasons are structured under the following headings: B. The relevant principles. C. The class closure orders. D. The late registrants. E. The salient terms of the settlement. F. The reasonableness of the settlement sum. G. The reasonableness of the SDS. H. The reasonableness of Money Max's legal costs. I. The reasonableness of the funding commission. J. The reasonableness of Money Max's Reimbursement Claim.

B THE RELEVANT PRINCIPLES 12 I set out the relevant principles in a settlement approval application under s 33V of the Act in Kelly v Willmott Forests Ltd (in liquidation) (No 4) [2016] FCA 323 [2016] FCA 323 (Kelly) at [62]-[77] and recently summarised them in Caason Investments Pty Limited v Cao (No 2) [2018] FCA 527 (Caason) at [12]-[13]. They are well-established and it is unnecessary to repeat them. I will address the reasonableness of the settlement essentially by reference to the factors set out in Class Actions Practice Note (GPN-CA) which reflect the considerations set out by Goldberg J in Williams v FAI Home Security Pty Ltd (No 4) (2000) 180 ALR 459; [2000] FCA 1925 at [19].

C THE CLASS CLOSURE ORDERS 13 The proceeding was commenced on an open class basis. On 27 October 2017 the Court made orders requiring that a notice (Class Closure Notice) be sent on or before 31 October 2017, utilising QBE's share register, to all persons who acquired an interest in QBE shares between 20 August 2013 and 6 December 2013 inclusive, advising class members of their right to opt out and of the requirement to register with Maurice Blackburn if they wished to share in any settlement distribution (class closure orders). The orders provided for QBE to cause a mail house distribution service to send the notice, using the following methods: (a) by email to any shareholders that have an email address recorded on the share register; (b) by prepaid ordinary post to the postal address recorded on the share register for any shareholders that do not have an email address recorded on the share register; and (c) by prepaid ordinary post to any shareholder where the mail house receives an email delivery failure notice. 14 The Class Closure Notice informed class members that if they wished to opt out or register they must do so by 4.00 pm on 27 November 2017 (class deadline). The notice was headed in bold type: THIS NOTICE IS VERY IMPORTANT - PLEASE READ IT CAREFULLY, AS IT MAY AFFECT YOUR LEGAL RIGHTS It stated on the first page that if a class member did nothing before the class deadline, i.e. did not register, opt out or object to the class closure orders: …you will remain a class member in this proceeding, but will not be entitled to receive compensation from any settlement reached in the proceeding before the trial commences, and you will not be entitled to pursue your right separately (see the section below headed 'Option 4 - Not respond to this notice'). 15 Under the heading "Option 4 - Not respond to this notice" the notice stated: If you do nothing (i.e. you do not act in accordance with Options 1, 2 or 3 above before 4.00 pm AEDT on 27 November 2017), you will remain a class member in the QBE class action and be bound by any orders made in the QBE class action, including any judgment or approved settlement agreement and the proceeding. HOWEVER, if you do nothing and the settlement is reached before the trial commences, you will not receive any payment from the settlement and you will be prohibited from bringing a further claim against QBE in relation to the same issues as are raised in the QBE class action. The notice prominently informed class members that if they did not either opt out or register before the class deadline they would be bound in any settlement but could not receive a payment from the settlement fund. 16 Jennifer Campbell, a partner at QBE's solicitor, Allens, made two affidavits sworn 1 May and 2 May 2018. I accept her evidence that Computershare Investor Services Pty Ltd (Computershare) maintains QBE's share register and that, in accordance with the class closure orders and QBE's instructions, Computershare sent the Class Closure Notice to all persons recorded on the QBE share register as having acquired shares between 20 August and 6 December 2013 inclusive, doing so using the following methods: (a) on 30 October 2017 Computershare (under QBE's supervision) sent the Class Closure Notice: (i) by email to all relevant shareholders that had an email address recorded on the share register; and (ii) by prepaid ordinary post to the address recorded on the share register for any relevant shareholders who did not have an email address recorded on the share register; (b) on 1 November 2017 Computershare (under QBE's supervision) sent the Class Closure Notice by prepaid ordinary post to the address recorded on the share register for any shareholder in respect of whom the email sent on 30 October 2017 resulted in delivery to Computershare of a notice of a delivery failure. 17 In response to the Class Closure Notice: (a) 121 class members filed opt out notices prior to the class deadline; and (b) approximately 1,200 class members (representing approximately 1,700 separate shareholdings) registered their claim with Maurice Blackburn. With those further registrations the total number of registered class members in the proceeding became 2,501.

The possible deficiency in the class closure process 18 The class definition defines class members as persons who "acquired an interest" in QBE shares during the relevant period. Computershare used QBE's share register to send the Class Closure Notice to all persons recorded on the register as having acquired shares between 20 August 2013 and 6 December 2013 inclusive. However under the T+3 rule (the ASX clearing rule in operation at the time, which has since become T+2), settlement and registration of a share trade is taken to occur three days after execution of the purchase contract. 19 Counsel for Money Max did not make submissions on this issue but raised a concern that persons who entered into a share purchase contract on 4, 5 or 6 December 2013 would not yet be recorded on the register, but may nonetheless have an equitable interest in QBE shares at that time. Counsel said this equitable interest may bring them within the class definition and they should therefore have been (but were not) sent a Class Closure Notice by QBE. 20 Without deciding the matter, to address this possible deficiency in the class closure process I made orders on 28 May 2018 which required QBE to send a Court-approved notice to all persons recorded as becoming an owner of ordinary QBE shares on the QBE share register on 9, 10 and/or 11 December 2013, who were not otherwise recorded on the share register as having become the owner of QBE shares in the relevant period (Possible Class Members). The dates of 9, 10 and 11 December 2013 are the three working days following the end of the relevant period.

D THE LATE REGISTRANTS 21 Between the class closure deadline and the settlement approval hearing a large number of unregistered class members contacted Maurice Blackburn to inquire whether they could register out of time, or otherwise participate in the proposed settlement, as well as to know what their expected recovery would have been if they had submitted a timely registration. Unregistered class members who contacted the firm prior to 20 February 2018 (well after the public announcement of the settlement but just before class members were sent the Notice of Proposed Settlement) were told to record themselves as a "late registrant" via an online registration portal on the firm's website so that they were directly sent the Notice of Proposed Settlement. Those who contacted the firm after 20 February 2018 were directed to the relevant sections of the Notice of Proposed Settlement which set out the steps which they should take if they wished to object to the proposed settlement or otherwise apply to be allowed to share in it. 22 Twenty unregistered class members (including some family groupings) applied to the Court for orders that they be deemed to be registered class members and be permitted to share in the settlement fund (late registrants). Having considered the application of each late registrant I made orders to deem five late registrants as registered, and refused to make such orders in relation to the others. I now set out the reasons for refusing the application by each late registrant.

Aberdeen Standard Investments plc 23 Aberdeen Asset Management Ltd is the Australian subsidiary of the Aberdeen Standard Investments plc group of companies (Aberdeen), a large global asset manager with clients in around 80 countries. It operates approximately 17 investment funds (the Aberdeen funds) in which a wide array of investors hold interests. Aberdeen applies for orders that the various investment funds it operates be allowed to participate in the settlement as if each is a registered class member. Money Max neither supports nor opposes Aberdeen's application. 24 Aberdeen filed two affidavits of Shauna O'Sullivan, Aberdeen's Company Secretary and Head of Legal for Australia, sworn 19 April 2018 and 2 May 2018. It made written submissions and is represented in the application by Jennifer Findlay of counsel. 25 The evidence is that the assets held by the Aberdeen funds include shares in publicly listed corporations. All shares in publicly listed corporations which are assets of the Aberdeen funds are held by the relevant Aberdeen fund's external custodian, and are recorded on the share register under the custodian's and name and address. 26 The Operations Department of Aberdeen is based in Edinburgh and is responsible for operating all of the Aberdeen funds, including overseeing the funds' custodians in relation to communications sent to registered shareholders of investee companies about class actions, including opt out and class closure notices. Where the communications relate to ASX-listed shares, the Operations Department's process is to consult with and obtain directions from the Australian equities investment team in Sydney.

Aberdeen's communications with Maurice Blackburn prior to commencement of the proceeding 27 Between April 2014 and June 2015 Ms O'Sullivan was in email and telephone communication with Maurice Blackburn while Aberdeen considered and eventually decided not to participate in the QBE class action (at least at that point). At the point Aberdeen said that it would not participate in the case Maurice Blackburn had advised it that the action would be brought as a 'closed' class action such that only those shareholders that signed a litigation funding agreement could participate in the case. 28 On 4 September 2014 Ms O'Sullivan sent an email to Maurice Blackburn stating that Aberdeen preferred not to sign a funding agreement until after the action had been settled in principle. Joel Phibbs, a Senior Associate at Maurice Blackburn, replied the same day advising that this option would not be open to Aberdeen since no new claimant registrations would be accepted once the matter was settled. On 2 June 2015 Maurice Blackburn notified Aberdeen that the list of class members to participate in the proceeding would close on commencement of the case, and Ms O'Sullivan confirmed on 9 June 2015 that Aberdeen had not made a decision to participate at that stage. 29 In September 2015 Maurice Blackburn proposed to the Funder that the action be run as an 'open' rather than a 'closed' class action, and the proceeding was issued on that basis: see Money Max at [158]. Because the proceeding was commenced on an 'open' class basis the Aberdeen funds became class members even though they had not entered into a funding agreement.

Aberdeen learns of the settlement 30 Ms O'Sullivan says, and I accept, that she first became aware of: (a) the settlement of the proceeding through an article published in the Sydney Morning Herald on 29 December 2017; and (b) the Class Closure Notice when she viewed Maurice Blackburn's website in the week commencing 2 January 2018. 31 After internal consultations at Aberdeen, Ms O'Sullivan received instructions to apply for the Aberdeen funds to become registered class members. On 17 January 2018 she had a telephone conversation about late registration with Samuel Taylor, a solicitor at Maurice Blackburn. In relation to Aberdeen missing the 27 November 2017 deadline for participation, Mr Taylor's file note of the conversation records, relevantly : [Ms O'Sullivan] said they had been having issues with outsourced service providers passing on information about Australian class actions. Ms O'Sullivan disputes the accuracy of this part of the file note. 32 On the same day Ms O'Sullivan emailed a class member registration form to Mr Taylor which stated that 15 Aberdeen funds had acquired QBE shares during the relevant period (she added two further Aberdeen funds which had been inadvertently omitted from the registration form in April 2018), with the shares being held by five separate custodians. 33 On 23 February 2018 Ms O'Sullivan had another telephone conversation with Mr Taylor. His file note of the conversation records, relevantly: [Ms O'Sullivan] said the class closure notice had been received by Aberdeen's 'outsourced admin person' who is based overseas. She said the recipient had been under the impression that because Aberdeen had not lodged participation documents initially, Aberdeen had taken a decision not to participate and therefore had not forwarded on the notice or taken action before the class closure deadline. Ms O'Sullivan also disputes the accuracy of this part of Mr Taylor's file note.

Evidence relating to sending of Class Closure Notices 34 In her affidavits Ms Campbell responds to the suggestion by the late registrants (including Aberdeen) that QBE had not sent the Class Closure Notices in compliance with the class closure orders. She states, and I accept, that Computershare confirmed to Allens on 1 May 2018 that (putting Aberdeen to one side) it sent a Class Closure Notice in accordance with the orders to each of the late registrants (other than Sandpoint Pty Ltd) who asserted that they did not receive the notice and specified the email or postal address to which the notice was sent. 35 In relation to Aberdeen, Computershare advised Allens that it had searched its records and none of the five custodians identified by Ms O'Sullivan were recorded on QBE's share register as having acquired an interest in QBE shares in the relevant period. Accordingly, Ms Campbell wrote to Ms O'Sullivan on 26 April 2018 and requested Ms O'Sullivan to urgently identify the name and HIN or SRN of each custodian that acquired QBE shares on behalf of an Aberdeen fund during the relevant period so that QBE could investigate Aberdeen's claim not to have received the Class Closure Notice. Ms O'Sullivan did not respond to that letter until the day before the settlement approval hearing, and then only partially. 36 On 2 May Ms O'Sullivan sent an email to Ms Campbell which said: Our current understanding is that shares of some of the Aberdeen funds are registered in the name of State Street's sub-custodian/nominee [HIN supplied]. We are continuing to make enquiries in relation to other Aberdeen funds and will respond in that regard shortly. 37 Ms Campbell says, and I accept, that she made further enquiries of Computershare in response to that information. On 2 May 2018 Computershare advised Allens that HSBC Custody Nominees (Australia) Limited was the registered shareholder that corresponded to the HIN supplied. It confirmed that on 30 October 2017 it sent a Class Closure Notice to HSBC Custody Nominees (Australia) Limited by pre-paid ordinary post to the address recorded on the share register.

Aberdeen's contentions 38 Aberdeen accepts that class closure orders are a legitimate mechanism to facilitate settlement of representative proceedings but says, as must be accepted, that the legitimacy of such orders depends on the adequacy of the notice given to class members: see Matthews v SPI Electricity Pty Ltd (Ruling No 13) [2013] VSC 17 at 79 per J Forrest J. That is true of most notices to class members: see Kelly at [153]-[160]. 39 Ms O'Sullivan says that none of the external custodians of the Aberdeen funds or Aberdeen itself received a Class Closure Notice. She states: I have since made enquiries with the Operations department of the Aberdeen group in Edinburgh, who have made enquiries of BNP and State Street. Based on those enquiries, I understand and verily believe that: (a) BNP and State Street have no record of having received any class closure notices in relation to the proceeding on behalf of the Aberdeen funds (in or around October to December 2017, or otherwise); (b) the Aberdeen group has no record of having received any class closure notices in relation to the proceeding on behalf of the Aberdeen funds (in or around October to December 2017, or otherwise); and (c) no member of the Australian equities investment team in Sydney has received any class closure notices in relation to the proceeding from BNP and State Street (in or around October to December 2017, or otherwise). 40 Aberdeen relies on the decisions in Dorajay Pty Ltd v Aristocrat Leisure Ltd (2008) 67 ACSR 569; [2008] FCA 1311 (Dorajay) and King v AG Australia Holdings Ltd (formerly GIO Australia Holdings Ltd) [2003] FCA 1420 (King) to contend that the Court should accept Aberdeen's evidence that it did not receive any Class Closure Notices. 41 In Dorajay, where the class closure notice was sent by prepaid ordinary post, Stone J accepted the evidence of some late registrants that they did not receive the class closure notice, doing so on the basis that their evidence raised sufficient doubt to displace the presumption of postal receipt under s 160(1) of the Evidence Act 1995 (Cth). Her Honour made orders allowing those registrants to participate in the settlement, noting (at [46]) that where a class member's explanation is that the class closure notice was not received at all "it is difficult to imagine what documentation in support of that statement might be expected." 42 In King Moore J accepted the evidence of class members who stated on affidavit or by statutory declaration that they did not receive class closure notices sent by prepaid ordinary post, and made orders to treat those class members as having registered. In Jarra Creek Central Packing Shed Pty Ltd v Amcor Limited [2011] FCA 1115 at [10]-[11] Jacobson J approved Stone J's approach. His Honour considered it important that the inclusion of the late registrants would only reduce the average return to members of the represented class by a very small amount. 43 Ms Findlay contends that the Court should take the same approach as that taken in Dorajay and King and accept Ms O'Sullivan's evidence that no Class Closure Notices were received by or on behalf of the Aberdeen funds. She submits that Ms O'Sullivan having made all due and proper enquiries and having given unchallenged evidence that, before the class deadline: (a) Aberdeen did not receive any Class Closure Notices; (b) the custodians of the Aberdeen funds have no record of receiving any Class Closure Notices; and (c) no member of the Australian equities investment team in Sydney received any Class Closure Notices; her evidence, including her rejection of the accuracy of Mr Taylor's file notes, should be accepted and orders made to allow the Aberdeen funds to share in the settlement fund.

Consideration 44 Deadlines set in class closure orders should be taken seriously. Taking such orders seriously means that a class member who does not register before the class deadline should not be permitted to share in a settlement unless the Court is affirmatively satisfied that it would be unjust to exclude that class member: King at [37]; Dorajay at [13]-[14]. 45 I am not persuaded that Aberdeen did not receive any Class Closure Notices nor am I affirmatively satisfied that it would be unjust to exclude Aberdeen from sharing in the settlement. 46 First, it should be kept in mind that this is not a case where the late registrant was unaware of the class action. Aberdeen was in correspondence with Maurice Blackburn over more than a year, and decided not to participate in the class action, at least at that time. Its request to be included now is based solely on its contention that it did not receive any Class Closure Notices. 47 Second, I accept Ms Campbell's unchallenged evidence that QBE complied with the class closure orders and caused a Class Closure Notice to be sent to all persons recorded on the QBE share register as having acquired QBE shares in the relevant period. 48 Third, Ms O'Sullivan's evidence in relation to whether any custodian of an Aberdeen fund received a Class Closure Notice (set out at [37] above) is second or third hand hearsay. I give little weight to what she was told by an unidentified person or persons in Aberdeen's Operations department as to what they were told by various other unidentified employees of the external custodians. 49 Fourth, the contention that none of Aberdeen's external custodians received a Class Closure Notice is inherently unlikely. According to Aberdeen's evidence 17 of its funds acquired an interest in QBE shares in the relevant period doing so through five separate custodians. It is unlikely that each of 17 Class Closure Notices sent to five different custodians - whether by email or post - failed to be delivered. Yet that is the upshot of Aberdeen's submissions. In relation to the only custodian of an Aberdeen fund which has been properly identified thus far (HSBC Custody Nominees) the evidence shows that, contrary to Ms O'Sullivan's assertion, it was sent a Class Closure Notice. 50 In relation to the other 19 late registrants (save for Sandpoint Pty Ltd, which is a Possible Class Member), the evidence shows they were sent the notice. It is unlikely that the only failures in the process of delivering Class Closure Notices occurred in respect of 17 notices sent in relation to Aberdeen's shareholdings through five different custodian. The circumstances of the present case are not analogous to those in King or Dorajay. Those cases involved individual retail shareholders, not an external custodian being sent the notice and (possibly) failing to take appropriate action. It is one thing to infer that the postal service failed to deliver a piece of mail to a particular individual (as in King and Dorajay). It is another to infer that 17 separate Class Closure Notices sent in relation to 17 related shareholdings, sent to five different addresses, were not delivered. I would not readily infer that all of those deliveries failed. 51 Fifth, Mr Taylor's contemporaneous file notes cast further doubt on the proposition that the Aberdeen funds were not sent Class Closure Notices. In cross-examination at the settlement approval hearing Mr Taylor said when he had a telephone conversation with a class member his usual practice was to contemporaneously take a file note. The relevant parts of his file notes, extracted above, record that Ms O'Sullivan said that Aberdeen had suffered "issues" with outsourced service providers passing on information about class actions, and that the recipient of the Class Closure Notice had been under the impression that Aberdeen had decided not to participate in the class action and therefore did not forward on the notice. 52 Ms O'Sullivan does not accept the accuracy of those file notes and says that she does not recall stating at any time during her conversations with representatives of Maurice Blackburn that any Class Closure Notices had been received by or on behalf of an Aberdeen fund. She says that, at that time, she had not made any enquiries of Aberdeen's external custodians as to whether they had received any Class Closure Notices and explains Mr Taylor's account as follows: In at least one conversation with Maurice Blackburn, I had a frank discussion about how class closure notices might have been received by or behalf of the Aberdeen funds and not brought to the attention of Aberdeen. In doing this, I was speculating about what could have happened, rather than confirming what did happen. In particular, I speculated that BNP and State Street might have received the notices and not passed them onto Aberdeen on the assumption that the Aberdeen funds were not interested in participating. 53 When pressed by Ms Findlay, Mr Taylor maintained that his file notes are an accurate record. I prefer his evidence, backed as it is by contemporaneous file notes, to Ms O'Sullivan's evidence in this regard. 54 I am not persuaded on the evidence that the Aberdeen custodians did not receive a Class Closure Notice, or that it would be unjust to exclude Aberdeen from sharing in the settlement fund. Allowing it to do so would undermine the certainty achieved through the class member registration process, and in a smaller class action it might undermine the basis of the settlement. I accept that allowing Aberdeen to share in the settlement fund would only reduce the net recoveries by other class members by (on Mr Taylor's approximate calculations) approximately 1%, but the reduction in settlement monies available to registered class members by approximately $800,000 is not insignificant. 55 I decline to make the orders Aberdeen seeks.

George Wells and Robin Wells 56 George and Robin Wells seek orders entitling them to participate in the distribution of the settlement. They each filed two affidavits affirmed on 18 April 2018 and 1 May 2018 and they are represented in the application by Peter Travis of counsel. 57 In their affidavits of 18 April they state that they jointly acquired QBE shares in the relevant period and attach documentary evidence in that regard. They say that until they received the Notice of Proposed Settlement by email on 22 February 2018 they were unaware of the class deadline because they had not received the Class Closure Notice. Mr Wells says that he undertook a thorough search of their email account and did not locate any previous email communications regarding the QBE class action. 58 Their solicitor subsequently made enquiries of Ms Campbell as to whether they were sent the notice, and Ms Campbell advised that it had been sent by email on 30 October 2017 to the email address they still use (i.e. to the email account that Mr Well said that he searched). In their affidavits of 1 May they say that after this, Mr Wells undertook a further search of the email account and located both the Class Closure Notice and a notice regarding the common fund application sent on 29 January 2016. Mr and Mrs Wells both say that they do not recall opening or reading the emails or notices until 30 April 2018. 59 Mr Travis submits that the Court should accept that sometimes members of the class may not receive important Court notices and should fashion orders to redress that situation. He accepts that the email was received into the inbox of Mr and Mrs Wells' email account but says that it was not read. He argues that Mr and Mrs Wells acted to protect their rights as soon as they had "actual notice". 60 Having regard to their later affidavits it is, however, clear that Mr and Mrs Wells received the Class Closure Notice. I accept their evidence that they did not previously look at it but it was their responsibility to protect their interests in this regard. It would not be taking the class closure orders seriously if shareholders who receive a Court-ordered notice are permitted simply to fail or decline to read them without any reasonable explanation, and are then permitted to share in a subsequent settlement as if they had registered. 61 I accept that the prejudice to the other class members of allowing Mr and Mrs Wells to share in the settlement fund is quite limited. But that is only one of the relevant considerations and it is appropriate to deal with the issue by reference to whether I am affirmatively satisfied that it is unjust for Mr and Mrs Wells to be excluded from sharing in the settlement fund. In all the circumstances I am not so satisfied.

Gordon Alford and Mrs Clare Alford 62 Mr Alford filed an affidavit sworn 6 March 2018 in which he states that he and his wife purchased QBE shares in the relevant period and he attaches documentary confirmation of that purchase. Although he did not say so expressly, Mr Alford seeks that he and his wife be included as registered class members, notwithstanding that they did not register prior to the class deadline. I accept Ms Campbell's evidence that Computershare sent him a Class Closure Notice by prepaid ordinary post on 30 October 2017. Computershare sent it to the same postal address that Mr Alford has provided the Court. Mr Alford provided no explanation as to why he and his wife failed to register before the class deadline and I am not affirmatively satisfied that it is unjust that he and his wife are excluded from sharing in the settlement fund.

Chris & Shan Super Pty Ltd as trustee for the Chris & Shan Super Fund 63 Christopher Athanasiou filed an affidavit affirmed 10 March 2018 and made written submissions. He states that Chris & Shan Super Pty Ltd, of which he is a director, purchased QBE shares in the relevant period and he attaches documentary confirmation of that purchase. He states that Chris & Shan Super Pty Ltd was not sent a Class Closure Notice by post or by email and submits that the company should be permitted to share in the settlement fund. 64 I am not persuaded that Mr Athanasiou did not receive the Class Closure Notice. I accept Ms Campbell's evidence that Computershare sent Chris & Shan Super Pty Ltd a Class Closure Notice by email on 30 October 2017, and that if an email delivery failure notification were received by Computershare it would have then sent the notice by prepaid ordinary post. I am not affirmatively satisfied that it would be unjust that Chris & Shan Super Pty Ltd be excluded from sharing in the proceeds of settlement, and I decline to make the orders sought.

Michael Broun as trustee for the Broun Super Fund 65 Michael Broun wrote to Maurice Blackburn on 22 March 2018 stating that he purchased QBE shares in the relevant period and he attaches documentary confirmation in that regard. He says that he did not receive a Class Closure Notice by email or post, and that he had never received any correspondence by post regarding the class action despite not having changed his address. In response to enquiries he made of Computershare he says he was advised on 29 January 2018 by Computershare that it had emailed a notice to him on 19 October 2017. He states: It appears around that time my son was repairing my computer and inadvertingly [sic] cleared a section of emails of around that timeframe and which cannot be retrieved. Mr Broun seeks orders that he be allowed to share in the settlement fund. 66 I am not persuaded that Mr Broun did not receive a Class Closure Notice. I accept Ms Campbell's evidence that Computershare sent Mr Broun the notice by email on 30 October 2017, to the same email address which Mr Broun used in his recent correspondence with Maurice Blackburn. Mr Broun did not put on sworn evidence and his explanation is doubtful. While Mr Broun states that his son inadvertently deleted some emails around 19 October 2017 he was not sent a Class Closure Notice until 30 October 2017. I am not affirmatively satisfied that Mr Broun did not receive the notice nor that it is unjust for him to be excluded from sharing in the settlement fund.

Capehead Pty Ltd and Capehead Superannuation Pty Ltd 67 Tony Edwards, an accountant and director of Capehead Pty Ltd and Capehead Superannuation Pty Ltd, wrote to Maurice Blackburn and to the Court on 9 March 2018. He states that he was unaware of the requirement to register until after the class deadline because he was travelling in the USA from 3 November 2017 until 24 November 2017 and was not monitoring his emails while he was travelling. He says that on his return to Australia it took him some time to catch up on the accumulated emails. He seeks that the Capehead companies be permitted to share in the settlement fund. 68 I am not persuaded that Mr Edwards was not aware of the Class Closure Notice prior to the class deadline. He did not put on sworn evidence in that regard and in the absence of sworn evidence I am disinclined to accept that he had no access to his emails while travelling in the USA for a month. I accept Ms Campbell's evidence that Computershare sent him a Class Closure Notice by email on 30 October 2017 which meant it was sent to him three days before he went overseas. I expect he would have checked his emails before he left. I am not affirmatively satisfied that it would be unjust to exclude the Capehead companies from sharing in the settlement fund.

Anthony Farrell 69 Anthony Farrell provided a statutory declaration made on 21 March 2018 in which he states that he purchased 514 QBE shares on about 17 June 2006, and holds 871 QBE shares at present, but did not attach documentary evidence in that regard. He states that he had no knowledge of the class action until recently and seeks to be permitted to share in the settlement fund. 70 The share purchase to which he refers is, however, outside the relevant period and there is no evidence that he is a class member. There is no evidence as to when he acquired the other 357 QBE shares which he holds. I am not affirmatively satisfied that it is unjust that Mr Farrell is excluded from sharing in the proceeds of settlement.

Marisa Fruscalzo as trustee of the I & M Fruscalzo Property Trust 71 Marisa Fruscalzo filed an affidavit sworn 18 April 2018 in which she says that she and her husband are trustees of I & M Fruscalzo Property Trust which acquired 11 QBE shares in the relevant period, doing so through the QBE dividend reinvestment scheme. She says that she was not aware of any legal obligation to register by the class deadline and only decided to put her claim forward upon receiving the Notice of Proposed Settlement. 72 I am not persuaded that Ms Fruscalzo did not receive a Class Closure Notice. I accept Ms Campbell's evidence that Computershare sent a Class Closure Notice to her by prepaid ordinary post on 30 October 2017, doing so to the same postal address as Ms Fruscalzo has provided to the Court. Ms Fruscalzo does not state, in terms, that she did not receive the Class Closure Notice and says only that she was "not aware" of the legal obligations. Finally, it is perhaps worth noting that the amount involved is de minimis. I am not affirmatively satisfied that it is unjust that the I & M Fruscalzo Property Trust is excluded from sharing in the settlement fund.

Mei Lai Lim 73 Mei Lai Lim has filed an affidavit affirmed 28 March 2018 in which she states that she acquired a small parcel of QBE shares in the relevant period, doing so through the QBE dividend reinvestment plan. She states that she moved from Singapore to Macau in China in early August 2017 to take up a job at the University of Macau, and she attached documentary confirmation of that move. She further says that it took some time to settle into her new job, that Macau suffered a major typhoon on 23 August 2017 and that her personal effects were held up and did not arrive in Macau until October and November 2017. She says that because of various "disruptive and stressful circumstances" she was not attentive to email notices (if any) distributed by QBE to shareholders and failed to inform Computershare of the change in her address from Singapore to Macau. She seeks orders that she be allowed to share in the settlement fund. 74 I am not persuaded that Ms Lim did not receive a Class Closure Notice. The fact that she changed her place of residence and failed to inform Computershare in that regard has little relevance when the evidence shows that Computershare sent her the Class Closure Notice by email, doing so to the email address which Ms Lim still uses. Further, Ms Lim does not state, in terms, that she did not receive an email attaching the Class Closure Notice and says only she was not attentive to email notices sent by QBE at the relevant time. Finally, the disruptive and stressful period that Ms Lim said occurred arose over the course of August 2017 and the Class Closure Notice was not sent to her until 30 October 2017. There is no evidence to show that Ms Lim's life was substantially disrupted during November last year.

Nicholas Mellow 75 Nicholas Mellow wrote to Maurice Blackburn and to the Court on 6 March 2018. Mr Mellow does not deny receiving a Class Closure Notice but says that at the time he received it he was "very distracted by workplace stressors" and as a result failed to adequately consider the notice. He says that he put the notice to one side and by the time he was well enough to return to the document he realised the class deadline had passed. 76 Mr Mellow did not put on sworn evidence as to his psychological condition. Nor does he say that he suffers from any psychological condition which might justify a failure to take any step in relation to the Class Closure Notice. I do not accept an unsworn assertion of stress as a sufficient explanation for his failure to protect his rights. In the absence of more persuasive evidence I am not affirmatively satisfied that it is unjust for Mr Mellow to be excluded from sharing in the settlement fund.

Paul Morton 77 Paul Morton wrote to Maurice Blackburn on 23 February 2018 stating that he purchased QBE shares during the relevant period and seeks to be permitted to share in the settlement fund, notwithstanding that he did not register by the class deadline. 78 I decline to make such an order. I accept Ms Campbell's evidence that Computershare sent Mr Morton a Class Closure Notice by email on 30 October 2017, doing so to the email address Mr Morton still uses. I note that Mr Morton did not state that he did not receive the Class Closure Notice and he has provided no explanation for his failure to register. I am not satisfied that it is unjust that he is excluded from sharing in the settlement fund.

Neale Super Pty Ltd as trustee for the Neale Super Fund 79 Rowland Neale, a director of Neale Super Pty Ltd, wrote to Maurice Blackburn on 19 March 2018. He states that he purchased QBE shares in the relevant period and attaches documentary confirmation. He says that he did not know of the QBE class action and was unaware of the class deadline, and he seeks orders permitting him to share in the settlement fund. 80 I am not persuaded that Mr Neale did not receive a Class Closure Notice. I accept Ms Campbell's evidence that Computershare sent him a Class Closure Notice on 30 October 2017 by prepaid ordinary post, doing so to the postal address which he produced to evidence his share purchase. He did not adduce sworn evidence and it is unlikely that he did not know of the QBE class action when the action was the subject of significant media attention and he was sent notice of the common fund application in January 2016. I am not affirmatively satisfied that it is unjust that Neale Super Pty Ltd is excluded from sharing in the settlement fund.

Nitin and Manjula Shirwaiker 81 Nitin and Manjula Shirwaiker wrote to Maurice Blackburn on 4 March 2018. They state that they acquired QBE shares in the relevant period through the QBE dividend reinvestment plan and they seek orders to be permitted to share in the settlement fund. 82 I accept Ms Campbell's evidence that Computershare sent Mr and Mrs Shirwaiker a Class Closure Notice by email on 30 October 2017, doing so to the email address they still use. Importantly, Mr and Mrs Shirwaiker do not state that they did not receive the Class Closure Notice and they gave no explanation as to why they failed to comply with the class deadline. I am not affirmatively satisfied that it is unjust that they are excluded from sharing in the settlement fund.

Michael West and Helene West as trustees for MH Superfund 83 Michael and Helene West wrote to Maurice Blackburn and the Court on 19 March 2018. They state that they purchased QBE shares in the relevant period and attach documentary confirmation in that regard. They say that in early 2014, following the purchase of QBE shares, they moved from Australia to the United Kingdom, closed the MH Super Fund, and were consequently unaware of any requirement to register in the class action. They say that they recently became aware of the settlement when they received a Notice of Proposed Settlement by email from Maurice Blackburn, and they seek orders allowing them to share in the settlement fund. 84 The fact that Mr and Mrs West moved to the United Kingdom is of little relevance when the evidence shows that Computershare sent them a Class Closure Notice by email, doing so to the same email address that was used in sending them the Notice of Proposed Settlement, which they admit they received. It is also relevant that they did not put on sworn evidence. I am not persuaded that Mr and Mrs West did not receive the Class Closure Notice and am not affirmatively satisfied that it is unjust that they are excluded from sharing in the settlement.

Sandpoint Pty Ltd 85 Keith and Isabel King, the directors of Sandpoint Pty Ltd, wrote to Maurice Blackburn on 18 March 2018 stating that Sandpoint purchased QBE shares during the relevant period and attaching documentary confirmation. That document records that while the share purchase was made 4 December 2013 the "ASX settlement date" was 9 December 2013, which is outside the relevant period. Ms Campbell concedes that Sandpoint was not sent a Class Closure Notice because it was not recorded on QBE's share register as having acquired QBE shares during the relevant period. 86 Sandpoint is a Possible Class Member and I deal with its application under that heading.

Possible Class Members 87 Pursuant to the orders of 28 May 2018, Possible Class Members were sent a notice informing them of the QBE class action and the proposed settlement, and advising that: (a) if they wish to be considered for compensation from the settlement and have not already registered their claim they must complete and submit a registration form by 15 June 2018; (b) if they have not already registered their claim and wish to reserve the right to pursue a separate claim against QBE they must complete and submit an opt out notice by 15 June 2018; and (c) if they have not already registered their claim, and do not wish to now register or opt out, their rights against QBE (if any) may be determined without their participation. They will not receive any compensation from the settlement of the proceeding and if they are class members they will be precluded from pursuing a separate claim against QBE; (Possible Class Member Notice). 88 Brooke Dellavedova, the partner at Maurice Blackburn with conduct of the proceeding, filed a confidential affidavit affirmed 22 June 2018 in which she states that the Possible Class Member Notice was sent in accordance with the orders. She states that between 1 June 2018 and 15 June 2018 Maurice Blackburn received 55 Class Member Registration Forms in the form approved by the Court (Registration Forms) from claimants who had not previously registered with Maurice Blackburn. 89 Having made further inquiries of Ms Campbell, Ms Dellavedova states that 29 of those persons including Sandpoint (new registrants) acquired shares in QBE on 4, 5 or 6 December 2013 (and not on any other day between 20 August 2013 and 6 December 2013 such that they would have received a Class Closure Notice anyway). The aggregate amount of their claims, calculated in accordance with the confidential loss assessment formula, comprises less than 0.05% of the estimated losses of registered class members. 90 In Ms Dellavedova's view, taking the broadest possible approach to the class definition, it is possible that the 29 new registrants have an interest in the shares that arose at the time of acquisition and thus fall within the class definition. In the settlement approval hearing Wendy Harris QC for QBE took a contrary position. She submitted that for the purposes of the class definition an "interest" in QBE shares is not an interest falling short of a legal or beneficial interest, such as an equitable interest that arises under an executory contract for sale of shares on the ASX. Ms Harris was not, however, called on to develop that argument and QBE consents to orders allowing the new registrants to participate in the settlement. 91 I have not had the benefit of argument on this matter on this issue and, given the parties consent and that the amount is not material, it is unnecessary to decide. On 6 July 2018 I made orders to permit each of the 29 new registrants to share in the settlement. With respect to the other 26 QBE shareholders who completed a Registration Form Ms Dellavedova states that they had also acquired shares during the Relevant Period prior to 4 December 2013. She states that: (a) the eight persons or entities for whom Equity Trustees Wealth Services Limited submitted a Registration Form are recorded as having made at least one acquisition of QBE shares within the Relevant Period prior to 4 December 2013; (b) none of the 26 persons or entities for whom Integrated Portfolio Solutions submitted a Registration Form are recorded as having acquired QBE shares on 4, 5 or 6 December, and each is recorded as having acquired shares within the Relevant Period prior to 4 December 2013; and (c) Robert Sutherland Investments Pty Ltd submitted a Registration Form but the share register records several matching pairs of acquisitions and disposals of QBE shares separated by no more than two business days between 17 October 2013 and 28 November 2013, followed by the acquisition of QBE shares on 4 December 2013. Ms Campbell informed Ms Dellavedova that each of these 29 persons or entities first appeared on QBE's share register as becoming the owner of QBE shares on a date between 20 August 2013 and 6 December 2013, and had accordingly been sent the Class Closure Notice on or about 30 October 2017. 92 I am not affirmatively satisfied that it is unjust that these persons be excluded from sharing in the settlement.

E THE SALIENT TERMS OF THE SETTLEMENT 93 The key feature of the settlement is that QBE agrees to pay $132.5 million in full and final settlement of the claims of Money Max and the class members inclusive of costs, without admission of liability. The mechanical provisions require: (a) QBE to pay the settlement sum into an escrow account by 28 January 2018 (which QBE has done). If the settlement is approved the monies in the escrow account are to be transferred into an interest-bearing account; and (b) a verification process to allow QBE to verify the legitimacy of the claims of those registered class members which it had, as at the date of the deed, been unable to verify. If, at the end of the verification process, the unverified claims exceed a certain threshold QBE is entitled to withdraw from the settlement and the monies in the escrow account are to be repaid to QBE. 94 I deal with the other salient terms of the settlement below.

The releases and bars against suit 95 The settlement deed includes the following clauses: (a) clause 9.1 provides that Money Max and class members release QBE and its related entities in relation to: …any and all Claims [which is broadly defined] arising from, connected with or related to: (a) any matter which is or ever has been the subject of the Proceeding; (b) the circumstances or allegations giving rise to or referred to in the Proceeding; (c) losses allegedly suffered by Money Max (and its Related Entities) or any Group Member arising or resulting from or connected with QBE's financial performance and market disclosures in respect of the 2012 and 2013 financial years; and (d) Money Max's and/or any Group Members' costs of, or incidental to, the Proceeding. (b) clause 9.2 provides that QBE will have no further liability in relation to any and all Claims arising from, connected with or related to the matters in cl 9.1(a)-(d); (c) clauses 10.1, 10.2 and 10.3 provide that Money Max and class members covenant not to bring or procure that another party brings or pursues a claim against QBE in respect of any matter which is the subject of cll 9.1 and 9.2. Clause 10.4 provides that the settlement deed may be pleaded by QBE and its related entities in bar to any claim being brought, pursued or procured in breach of the covenant in cl 10 or arising from, connected with or relating to the matters cl 9.1(a)-(d). (d) Maurice Blackburn and the Funder covenant not to act in, fund, bring or otherwise aid, abet, counsel or procure the bringing of any such claim. 96 These terms are no doubt based in QBE's desire to achieve finality in relation to class members' claims. It is not uncommon for full releases to be provided in relation to all outstanding claims, whether directly at issue in the proceeding or not, as the price of finality: Harrison v Sandhurst Trustees Ltd [2011] FCA 541 at [26] per Gordon J. 97 The release in cl 9.1(c) in relation to losses suffered by class members "arising or resulting from or connected with QBE's financial performance and market disclosures in respect of the 2012 in 2013 financial years" can, however, be argued to travel beyond the claims which are the subject of the proceeding (the existence of which claims is anterior to and separate from the proceeding). It arguably operates to release QBE from claims by class members that are individual to the class member and outside the subject matter of the proceeding. 98 In Timbercorp Finance Pty Ltd (In Liquidation) v Collins [2016] HCA 44; (2016) 259 CLR 212 (Timbercorp) at [52]-[53] the plurality said (in relation to Pt 4A of the Victorian class action regime which is relevantly the same as the federal regime): Part 4A creates its own kind of statutory estoppel. Section 33ZB requires that a judgment in a group proceeding identify the group members affected by it and, subject to a provision not presently relevant, provides that that judgment "binds all persons who are such group members at the time the judgment is given". In order to understand that to which the group members are bound, it is necessary to read s 33ZB in the context of Pt 4A as a whole and ss 33C(1) and 33H in particular. By that process it will be seen that group members are bound by the determination of the claims giving rise to the common questions. The provisions of Pt 4A therefore confirm that a plaintiff in group proceedings represents group members only with respect to the claim the subject of that proceeding, but not with respect to their individual claims. The lead plaintiff is not a privy in interest with respect to the respondents' claims. This is so regardless of whether they should have been raised in the group proceeding. That leaves for consideration the question whether the respondents themselves are estopped from raising them in these proceedings. 99 Timbercorp makes it clear that the applicant in class proceedings does not represent class members with respect to their individual claims. There is no evidence that class members have given individual instructions to provide releases which travel beyond the claims in the proceeding. It may be doubted that Money Max has authority to settle the individual claims of class members which are not the subject of the proceeding. 100 Even so, and having regard to the importance of achieving finality, I do not consider that the fact that the releases, bars against suit and covenants not to sue (releases) arguably go beyond the claims which are the subject of the proceeding means that I should refuse to approve the settlement. I say this because: (a) it is legitimate for QBE to seek to achieve finality in relation to class members' claims through the settlement, and the releases are connected to the subject matter of the proceeding; (b) it is unknown whether there are any class members who have a claim which is outside the subject matter of the proceeding and who wish to pursue that claim. That is, the concern is theoretical; (c) Counsels' Opinion states that attention was given to all possible claims which might be pleaded prior to commencement of the proceeding, and the decision was made to plead only those thought to be viable and to have sufficient prospects of success. Subsequent investigations did not reveal viable causes of action beyond those pleaded and there is nothing to indicate that any class member contends that there are other viable causes of action; (d) the Notice of Proposed Settlement expressly informed class members regarding the terms of the release to be provided and no class member made any objection in that regard; and (e) if class members with a claim which is outside the subject matter of the proceeding emerge it is open to them to file proceedings, even class proceedings, and to have the validity of those claims judicially determined. That could include a determination as to whether the releases are valid.

The preclusion of unregistered class members from sharing in the settlement 101 All class members are bound in the settlement notwithstanding that only registered class members are entitled to share in the settlement sum. Unregistered class members are precluded from sharing in the settlement as a result of the class closure orders made on 27 October 2017. They were informed by the Class Closure Notice that if they wished to share in the proceeds of any settlement, or wished to opt out, they were required to do so by the 27 November 2017 class deadline. They were informed that should they neither register nor opt out before the class deadline they would be bound by the terms of any settlement and barred from making a claim against QBE in respect of or relating to the subject matter of the proceeding. 102 Order 10 of the class closure orders states: Pursuant to s 33ZF of the Act, any class member who neither opts out nor registers as a class member on or before the Class Deadline shall remain a class member for the purposes of any judgment or settlement but, in the event that a settlement is reached before the trial of the common issues commences and that settlement is ultimately approved by the Court, shall be bound by the terms of the settlement agreement and barred from making any claim against [QBE] in respect of or relating to the subject matter of this proceeding, including participating in any form of compensation or otherwise benefiting from any relief that might be ordered or agreed. Unregistered class members are not precluded from sharing in any settlement achieved after the trial of the common issues has commenced or from sharing in any judgment achieved following trial. 103 In Melbourne City Investments Pty Ltd v Treasury Wine Estates Limited [2017] FCAFC 98; (2017) 252 FCR 1 at [74] per Jagot, Yates and Murphy JJ, the Full Court said: …if a class closure order operates to facilitate the desirable end of settlement, it may be reasonably adapted to the purpose of seeking or obtaining justice in the proceeding and therefore appropriate under s 33ZF of the Act. The courts have accepted on numerous occasions that, in order to facilitate settlement, it is appropriate to make orders to require class members to come forward and register in order to indicate a willingness to participate in a future settlement, and to make orders that class members be bound into the settlement but barred from sharing in its proceeds unless they register... An important aspect of the utility of a class proceeding is that they may achieve finality not only for class members but also for the respondent. (Citations omitted.) 104 The class closure orders were appropriate to ensure justice in the proceeding, and this aspect of the settlement does not justify refusal to grant settlement approval.

The prohibition on QBE making submissions regarding costs and funding commission 105 Clause 8.1(c) of the settlement deed provides: QBE will provide reasonable assistance to support Maurice Blackburn and Money Max to obtain the Approval Order, and (subject to retaining the ability for its lawyers to comply with their obligations to the Court) will not make submissions with respect to the approval of Maurice Blackburn's costs of the Proceeding or the amount of the funding commission to be paid to ILFP out of the Settlement Sum. 106 I found this clause of concern. I do not accept Money Max's submission that QBE could have no legitimate interest in making submissions as to Maurice Blackburn's costs or as to the amount of the funding commission, although it may be appropriate to approach any such submissions with caution. I accept that the assistance the Court could derive from submissions from a respondent as to the applicant's costs might be limited, but the Court has a protective role in relation to class members' interests and such a quelling clause may operate against their interests. 107 I invited QBE to inform the Court as to whether, if not for this provision of the settlement, it would make submissions in relation to the applicant's costs and the funding commission. Ms Harris QC submitted that having regard to: (a) Ms Dealehr's experience as a costs consultant and the comfort of the Referee's independent opinion, QBE could not usefully add anything to the submissions before the Court as to the reasonableness of the applicant's costs; and (b) the fact that arriving at a view on whether a Funder's commission is reasonable is not an exact science and will depend on many factors to which QBE is not privy, the substantial experience of the Court in the area and the matters set out in the applicant's submissions, QBE did not feel a need to make any submissions on the issue. 108 Such clauses are to be discouraged for the reasons I have expressed. However in these circumstances there is no requirement to take the issue further and it is not a reason to refuse settlement approval.

The confidential Counsel's Opinion 109 The Court has had the benefit of a detailed opinion by Mr Quinn QC, William Edwards and Melanie Szydzik of counsel, each of whom has been closely involved in preparing the case for trial. Counsel's Opinion is thorough and it comprehensively deals with the factors relevant to whether the Court should approve the proposed settlement. 110 Counsel recommend that the settlement be approved by reference to the factors set out in the Class Actions Practice Note (GPN-CA) including: (a) the stage of the proceeding at which settlement occurred; (b) the reaction of the class to the settlement; (c) the complexity and likely duration of the litigation; (d) the risks of establishing liability and quantum; (e) the risks of maintaining a class action; (f) the ability of QBE to withstand a greater judgment; and (g) the range of reasonableness of the settlement in light of the attendant risks of the litigation and best recovery. I will address the reasonableness of the settlement sum by reference to these factors.

The stage of the proceedings at which settlement was reached 111 The proceeding was set down for an eight-week trial to commence in August 2018. The settlement was reached after Money Max had completed discovery and served its lay and expert evidence, and after QBE had served a substantial body of evidence from its senior executives and on damages. QBE had not yet filed its expert evidence but the detailed lay evidence by a raft of QBE senior executives set out its case. As Mr Quinn QC for Money Max submitted, substantial further work was likely be necessary on the evidentiary case in reply. 112 The settlement was reached following a two-day mediation at a stage when Money Max and its lawyers were in a position to make an informed assessment of the evidence to be adduced at trial, the strength of their case and of QBE's defences, and the costs likely to be involved should the proceeding continue to trial. The further work to be done in preparation for trial, the further significant costs likely to be incurred and the stage at which the settlement was reached all point towards settlement approval.

The reaction of the class to the settlement 113 There are only two objections to settlement approval, both by unregistered class members, and neither objection has any force. No person entitled to share in the settlement has objected to its approval.

Mr and Mrs Shirwaiker 114 If their application to be treated as registered class members is refused (as it has been) Mr and Mrs Shirwaiker object to Court approval of the settlement on the ground that unregistered class members are not permitted to share in the settlement. I do not accept that objection. The fact that they are excluded from sharing in the settlement arises from the class closure orders rather than the settlement itself and those orders were appropriate in the interests of justice in the proceeding. It is not a proper basis for refusing to approve the settlement.

Roles SMSF Pty Ltd 115 Peter Roles, a director of Roles SMSF Pty Ltd, wrote to Maurice Blackburn on or about 19 April 2018. It appears that Roles SMSF is a current QBE shareholder but Mr Roles does not state that Roles SMSF purchased QBE shares in the relevant period and it is not clear that it is a class member. Mr Roles objects to approval of the settlement on the basis that if it occurs it will operate to transfer wealth from innocent shareholders who did not elect to join the class action to those shareholders who did. 116 I will resist the invitation to deal with this hoary chestnut, regularly advanced in debates about the legitimacy of class actions, and which is more of a political statement than an objection. It suffices to note that if the proceeding is successful on the common questions in relation to the alleged breaches of the Corporations Act 2001 (Cth) (Corporations Act), the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) and the Australian Consumer Law (ACL), which is Schedule 2 to the Competition and Consumer Act 2010 (Cth), the class members will have a statutory entitlement to compensation for any resultant losses. The Court does not know whether the settlement will be met by QBE's insurer or from its own resources but the fact that some or all of the burden of the settlement may affect other shareholders is not a consideration to take into account in deciding whether it is fair and reasonable.

The complexity and likely duration of the litigation 117 The proceeding is both factually and legally complex. Counsel's Opinion and a confidential affidavit of Ms Dellavedova set out the intricacies and difficulties of the case in detail. Counsel state that the proceeding is one of the most forensically complex shareholder class actions in which they have been involved. 118 The proceeding concerns the running of a large international insurance business in the USA, which includes various sub-businesses each with its own concepts, practices and terminology, requiring investigation and analysis of a large number of highly technical actuarial and accounting concepts. 119 In a non-confidential affidavit Ms Dellavedova summarises the Amended Statement of Claim (ASOC) in the following terms: 12 In 2013 QBE (and its subsidiaries) conducted business in several different geographic locations, including (relevantly for present purposes) in North America (QBENA). QBENA was one of QBE's largest geographic divisions. QBENA itself comprised several distinct businesses, including (again, relevantly for present purposes): (a) the Program Business (which wrote various forms of insurance through approximately 150 separate programs); (b) the Financial Partner Services (or 'FPS') Business (which predominantly wrote lender-placed property insurance (LPI) through relationships with mortgage lenders / servicers); and (c) the Crop Business (which wrote crop and crop revenue insurance for farmers). 13 On 26 February 2013 QBE published its Annual Report for the year ended 31 December 2012, and also convened a 'Q4 2012 Earnings Call' with various share market analysts. In the Annual Report, in the accompanying ASX announcement, and/or during the 'Q4 2012 Earnings Call', QBE made various statements to the effect that: (a) the Program Business required an increase of US$316 million to its reserve provision for prior accident year claims, but that QBE had 'undertaken a very extensive review' of its 'entire claims portfolio, with particular emphasis on the U.S.', that it was confident that it had 'done that job as thoroughly and as completely as you could ask', and that for various reasons it had confidence in the appropriateness of its year-end claims provision; (b) the long-term profitability of the Crop Business was demonstrated by an average combined operating ratio (COR) of 88% over the last ten years, and it saw 'no reason as to why the Crop Business should not return to its long-term average COR of 88% or better in 2013'; and (c) it saw 'no reason why' it could not achieve a group-wide COR of '92% or better' in 2013, and an insurance margin of 11%. 14 On 20 August 2013 (being the start of the Relevant Period) QBE published its Half-Year Report for the half-year ended 30 June 2013, and also convened a 'Q2 2013 Earnings Call' with various share market analysts. In the Half-Year Report, in the accompanying ASX announcement, and/or during the 'Q2 2013 Earnings Call', QBE made various statements to the effect that: (a) although there had been some further adverse prior year development since February 2013 in respect of the reserve provisions in the Program Business, it did not 'see a significant prior year issue in the U.S.'; (b) the FPS Business was impacted by various factors, including loan sales by its largest client (Bank of America (BoA)), and was showing a small loss through the half-year, but nevertheless QBE was 'very confident' it could win new banking clients for that business; (c) the Crop Business was impacted by delayed planting, but the outlook for the remainder of the year was promising, and 'the early indications for the crop portfolio are very good and we're certainly looking at what we believe to be a better than average year'; (d) in respect of QBENA, that 'if you take a step back', the 'specialty businesses should be able to run with a combined operating ratio of less than 90%', and the property and casualty business was one that could 'run in the early 90%s', and therefore QBE believed it could 'get to or around a COR of 90%' for QBENA; and (e) in respect of QBE's 2013 financial results, it was 'on track' to deliver a group-wide 'full-year target for COR 92% and insurance profit margin 11%', and that the group-wide goodwill balance of US$4,558 million was appropriate. 15 On 6 December 2013 (being the end of the Relevant Period) QBE requested, and was granted, a trading halt by ASX. 16 On 9 December 2013 QBE issued an ASX announcement titled 'QBE increases North American claims provision and writes down North American goodwill, identifiable intangibles and other assets', and also convened a 'Business Update Call' with various share market analysts. In the ASX announcement and/or during the 'Business Update Call', QBE made various statements to the effect that: (a) it was making an additional provision of US$300 million for prior year claims development in respect of the Program Business (and an additional provision of US$200 million to strengthen risk margins); (b) it was making a charge of US$150 million for impaired assets and was writing down US$330 million in identifiable intangibles for its FPS Business; further, the FPS Business had been unsuccessful in securing at least one other major banking client, and although it was still a viable business, it would be on a much smaller scale, such that, after 'right-sizing the fixed cost base, QBE now expects this business will break even in 2014 and generate more acceptable returns thereafter'; (c) the Crop Business was reporting higher than expected claims, and QBE was now estimating a COR for that business in 2013 of 99% and lower profit by US$125 million; (d) in respect of QBENA, it was forecasting a COR of 96% for 2014, which was driven by the fact that the FPS Business would 'run at breakeven level for 2014, no better', and that the Crop Business 'having had two disappointing years, we've taken the decision to move our predicted [COR] … up 3 points from 88% to 91%'; and (e) it was expecting a group-wide COR for 2013 of 97%-98% and insurance profit margin of around 6%; it was making an impairment charge of US$600 million against goodwill (which was primarily attributable to QBENA); it was expecting to report a net loss after tax of around US$250 million for the year ending 31 December 2013; and it was targeting a COR of 93% and an insurance profit margin of around 10% in 2014. 17 Following the 9 December 2013 ASX announcement and the 'Business Update Call' on the same day, the price of QBE shares fell by approximately: (a) 22.3% on 9 December 2013 (from a closing price of $15.45 on 6 December 2013 to a closing price of $12.00 on 9 December 2013); and (b) a further 9.8% on 10 December 2013 (from a closing price of $12.00 on 9 December 2013 to a closing price of $10.82 on 10 December 2013). 18 In the Amended Statement of Claim, the applicant alleges that during the Relevant Period QBE: (a) was aware of certain material information (as set out more fully in paragraph [19] below), and by failing to disclose that information before 9 December 2013, contravened s 674(2) of the Corporations Act 2001 (Cth) (CA); and (b) engaged in misleading or deceptive conduct in contravention of ss 1041E and 1041H of the CA, s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) and s 18 of the Australian Consumer Law (as applicable pursuant to the various state Acts listed in paragraph [4(b)] of the Amended Statement of Claim) (ACL) by making certain express or implied representations as to: (i) its compliance with its continuous disclosure obligations (in light of the matters referred to in sub-paragraph (a) above); (ii) the adequacy of its provisions in respect of the Program Business as at 20 August 2013; (iii) the outlook for the FPS Business as at 20 August 2013; (iv) the expected profitability of the Crop Business, as well as for QBENA and QBE generally, in 2013 and beyond; and (v) the appropriateness of its goodwill balance of US$4,558 million as at 20 August 2013. 19 The information which the applicant alleges was material, and which QBE knew or ought to have known throughout the Relevant Period, was: (a) in respect of QBENA, that it was likely, or there was a material risk, that QBE's financial performance, and financial results for 2013, would be adversely affected by the performance of QBENA; and/or that earnings guidance given by QBE in respect of its financial performance, and financial results for 2013, was unreliable; (b) in respect of the Program Business, that: (i) it was likely that in the year ending 31 December 2013 QBE would need to make further provisions materially in excess of the provisions already announced prior to the Relevant Period; (ii) QBE had not completed the remediation of the Program Business, or the process of reviewing the adequacy of reserves for prior year development in the Program Business, and that process may require additional provisions in respect of prior year development; and (iii) it was likely that earnings guidance given by QBE in respect of its financial performance, and financial results for 2013, was unreliable to the extent it incorporated guidance based on the financial performance of the Program Business without allowing for the matters referred to above; (c) in respect of the FPS Business, that: (i) the strategic future of the FPS Business largely depended on whether or not QBE won one particular new customer account, but regardless of whether that account was won or not, the business would not perform better than break-even in 2013 and 2014, and if the particular new customer account was not won, QBE would need to significantly restructure the business to align its cost base with its smaller revenues; (ii) it was likely that QBE would recognise significant further material impairments to identifiable intangibles associated with the FPS Business and its goodwill associated with QBENA; and (iii) it was likely that earnings guidance given by QBE in respect of its financial performance, and financial results for 2013, was unreliable to the extent it incorporated guidance based on the financial performance and position of the FPS Business without allowing for the matters referred to above; and (d) in respect of the Crop Business, that it was likely that: (i) the business would achieve a COR of 99% or greater in 2013 (and not a COR of 88% or lower), and that such a COR was higher than the COR which would be reasonably expected to be achieved by the Crop Business in an average year, including 2014 (which was 91% and not 88%); and (ii) the guidance given by QBE was unreliable to the extent it did not make allowance for the above matters. 20 Based on the above matters, the applicant sought: (a) compensation pursuant to s 1317HA of the CA (arising from QBE's alleged contraventions of s 674(2) of the CA); and (b) compensation pursuant to s 1041I of the CA, s 12GF of the ASIC Act and s 236 of the ACL (arising from QBE's alleged contraventions of ss 1041E and 1041H of the CA, s 12DA of the ASIC Act and s 18 of the ACL). 120 The proceeding alleges that, at the time that QBE announced to the ASX on 20 August 2013 that it was maintaining its FY13 guidance, it lacked reasonable grounds for so doing because it was aware of information relating to the profitability of three parts of its North American insurance business (QBENA) which ought to have been disclosed. There are four main aspects to the applicant's case. 121 First, as to QBE's "program business" it is alleged that: (a) QBE would likely need to make additional provisions of at least US$225 million for this business; (b) that it had not completed the processes of remediating that business and reviewing the adequacy of reserves and provisions; and (c) that it was likely that earnings guidance given by QBE was unreliable to the extent it incorporated guidance based on the performance of the business without allowing for (a) and (b) (the Program Case). 122 Second, as to QBE's lender placed insurance business (FPS) it is alleged that: (a) the strategic future of the FPS business depended largely on whether it won the JP Morgan Chase customer account, that regardless of whether that account was won FPS would not perform better than break-even in FY13 and FY14, and that if the account was not won the FPS business would need to be significantly restructured; (b) that it was likely QBE would recognise a material impairment charge of at least US$330 million in relation to identified intangibles and a goodwill impairment of at least US$600 million associated with the FPS business; and (c) it was likely that earnings guidance given by QBE was unreliable to the extent it incorporated guidance based on the performance of the FPS business without allowing for (a) and (b) (the FPS Case); and 123 Third, as to QBE's crop insurance business it is alleged that: (a) the crop insurance business would likely achieve a Combined Operating Ratio (COR) of 99% or greater in FY13, that being worse than the COR it would be expected to achieve in an average year (91% - not the 88% QBE had attributed to it); and (b) it was likely that earnings guidance given by QBE was unreliable to the extent it incorporated guidance based on the performance of the crop insurance business without allowing for (a) (the Crop Case). 124 Fourth, these three cases are alleged to support an overarching case that QBE had information showing that it was likely, or there was a material risk, that its financial performance and its financial results for FY13 would be adversely affected by the performance of QBENA and that earnings guidance given by respect of those things was unreliable (the Combined Case). 125 The proceeding alleges that each item of information that was allegedly not disclosed in relation to each of the three relevant parts of QBENA ought to have been disclosed individually and cumulatively. The proceeding identifies numerous permutations of the disclosures that QBE was required to make. 126 Each of the three cases, if commenced separately, would itself have involved a substantial trial. The complexity of the proceeding may be illustrated through the expert evidence filed on Money Max's behalf: (a) on the Program Case, a report comprising 85 pages plus annexures by a US-based actuary, Michael Toothman, who was briefed with more than 5,000 documents; (b) on the FPS Case, a report comprising 108 pages plus annexures by a US-based economist and force-placed insurance business expert, Birny Birnbaum, who was briefed with more than 3,500 documents; (c) on the FPS Case, a report comprising 98 pages plus annexures by an accounting expert, Madeleine Mattera (a partner of the Audit and Assurance Division of Grant Thornton Australia), who was briefed with more than 5,500 documents; (d) on the Crop Case, a report comprising 83 pages plus annexures by a US-based expert in crop insurance, Richard Bill, who was briefed with more than 4,700 documents; (e) on the Combined Case, a supplementary report by Ms Mattera comprising 19 pages plus annexures; (f) a materiality expert report comprising 112 pages plus annexures by Professor Raymond Da Silva Rosa, who was briefed with more than 2,000 documents; and (g) an event study report comprising 45 pages plus annexures by an expert economist, Professor Mark Zmijewski, who was briefed with more than 1,800 documents. 127 At the point of settlement QBE had filed 10 lay witness statements by senior company executives and actuaries and an event study report by John Holzwarth, but it had not yet filed the balance of its expert evidence. Its evidence thus far, much of which is technical in nature and akin to expert evidence, comprehensively attacks the factual substratum of the applicant's case and rejects the claims advanced in the proceedings. At a high level it contends that: (a) to the extent that the claims in the proceeding arose from forward-looking statements made by QBE (which for the most part they did) those statements were inherently and inevitably uncertain, were based on reasonable grounds, and in any event came with appropriate disclaimers, qualifications and disclosures of risks; (b) all of the "information" which was the subject of the applicant's claims fell within the exception to disclosure in ASX Listing Rule 3.1A, on the basis that it comprised matters of supposition, was insufficiently definite to warrant disclosure, was generated for internal management purposes, and was confidential and a reasonable person would not expect the information to be disclosed; (c) the risk that QBE might not achieve its earnings guidance, might need to increase its provisions and/or might need to record an impairment to its goodwill and other intangible assets was information that was generally available and was not information which a reasonable person would expect to have a material effect on the price or value of QBE shares. It contends that such a risk always exists in circumstances where those matters are inherently and inevitably uncertain; (d) the applicant's claim focuses on some isolated sentences in ASX announcements and telephone conferences with analysts, divorced from their overall context; and (e) after 10 December 2013 QBE share price recovered to some extent thereby indicating that the market over-reacted on 9 and 10 December 2013 and that class members' losses were less than the loss if the price reaction is measured as at those dates. 128 QBE's expert evidence is likely to have further increased the factual and legal complexity of the case. 129 If the case proceeds its final resolution is likely to be some years away. The proceeding was commenced on 9 September 2015 and it was listed for an initial trial to commence in August 2018, on an estimate of eight weeks. In a case of this size and complexity any judgment on the common issues would likely not be handed down until approximately mid-2019. If the applicant was successful on the common issues there is a real prospect of an appeal by QBE. That would take at least a further year to be heard and decided. Whether "market-based" causation is available may require determination by the High Court which would take longer again. 130 Following determination of any appeal it may be necessary to individually determine class members' claims or at least a representative sample of such claims. It is reasonable to expect that the applicant and class members would not receive any money from the litigation before 2020, at least. 131 The factual and legal complexity and likely duration of any trial and appeal strongly point to approval of the settlement. It is difficult for an applicant to be confident of the outcome in a case like the present one and that provides a strong basis for settlement approval.

The risks of establishing liability 132 In relation to the risks of establishing liability I have relied on the confidential Counsel's Opinion and Ms Dellavedova's confidential affidavit which set out the risks. I have also had some regard to the evidence filed which shows: (a) in relation to the Program Case there is a risk that Money Max would be unable to establish that QBE knew or ought to have known that it would likely need to make additional provision of at least US$225 million in relation to the business, and a risk that QBE's evidence about its internal analysis would be accepted. This part of the case is particularly complex; (b) in relation to the FPS Case QBE contended that the performance of the FPS Business in 2012 and 2013 was adversely impacted by various matters which were public knowledge, it had only limited insight into the timing, quantity and quality of BoA's loan sales thus making it difficult to forecast future performance, and at all times up to 15 November 2013 it had a good chance of winning the JP Morgan Chase account which would go a substantial way towards replacing the revenue lost from other sources. It noted that PwC had reviewed and endorsed the goodwill associated with QBENA as part of its review of the 2013 half-year accounts. Money Max faced real risks in the FPS Case including that it would be unable to establish the nondisclosure case in relation to JP Morgan Chase for any period prior to 15 November 2013, and unable to establish that the carrying value of QBENA was materially impaired at the time of preparing the 2013 half-year accounts. If it did not establish that the carrying value was materially impaired at that time it was not then obliged to conduct further impairment testing until the next reporting date, which was after the end of the relevant period; (c) the Crop Case requires consideration of a complex, regulated insurance product in a regime peculiar to the United States, and involves a critique of a large number of complex actuarial concepts. There is a question as to whether earnings statements on behalf of QBE constitute a representation that the Crop Business would achieve a COR of 88% or better for 2013. Even if Money Max established that that they were representations and that it was not reasonable to make such a forecast, there remains a question as to what a "reliable" COR would have been; and (d) the Combined Case incorporates the risks in each of the Program Case, the FPS Case and the Crop Case. To succeed on the Combined Case Money Max has to establish that the part or parts of the case that it makes out are sufficiently material to QBE's financial results that its earnings guidance was unreliable. While Money Max has reasonable prospects of succeeding on some parts of its case, there are real risks that it will be unable to establish the whole. If Money Max is only successful on one or two of those cases that will affect the prospects or materiality of the Combined Case. 133 It is impossible, or at least very difficult, to make a definitive assessment of risk in a case like this but it is plain that the case has significant forensic uncertainties and real risks on liability. The existence of such risks strongly favours settlement approval. 134 Further, provided the settlement falls within the range of what is fair and reasonable the Court should not second-guess the applicant's lawyers as to whether the settlement ought be accepted, or proceed as if it knows more about the actual risks of the litigation than those lawyers. The Court takes the applicant's lawyers as it finds them, recognising that different applicants and different lawyers will have different appetites for risk: Darwalla Milling Co Pty Ltd & Ors v F Hoffman-La Roche Ltd & Ors (No 2) [2006] FCA 1388; (2006) 236 ALR 322 at [50]; Kelly at [74].

The risks of establishing loss or damage 135 Counsel's Opinion and Ms Dellavedova's confidential affidavit also comprehensively deal with the risks of establishing loss or damage. Even if Money Max is successful on liability in all respects there are risks associated with establishing quantum in the amount claimed. The event study evidence shows that Professor Zmijewski and Mr Holzwarth arrived at very different measures of inflation per share. 136 The question of causation also carries risks since it is not settled that market-based causation is available to establish causation of loss and damage for the purposes of the various statutory causes of action pleaded. If market-based causation is not available then class members will need to prove reliance. These matters too point in favour of settlement approval.

The risks of maintaining a class action 137 There has been nothing to indicate that QBE will seek to de-class the proceeding and no risk that Money Max will be unable to maintain the proceeding as a class action.

The ability of QBE to withstand a greater judgment 138 There is no question that QBE would have the capacity to withstand a greater judgment.

The range of reasonableness of the settlement in light of the best recovery and the attendant risks of the litigation 139 The share price inflation series modelled by each of Professor Zmijewski and by Mr Holzwarth generate substantial estimates of aggregate loss, but there is a sizeable difference in their estimates. On a gross basis (without taking account of costs) the settlement sum represents a recovery of approximately 53% of the "best recovery" based on the midpoint between the competing event study experts' views and approximately 44% of the best recovery if legal costs are deducted. In a case like this that is a good result. 140 In my view, however, it is not particularly useful to assess the settlement against best recovery in a case like this, since it unrealistically assumes that the applicant will fully succeed on every issue on liability and quantum. It is more useful to assess the reasonableness of the proposed settlement by reference to what class members might reasonably expect to achieve having regard to the attendant risks of the litigation. If that measure is used the settlement is a strong one. 141 When an appropriate discount for the risks of litigation in relation to liability and quantum is taken into account the settlement sum is plainly fair and reasonable.

G THE REASONABLENESS OF THE SDS, INCLUDING THE REASONABLENESS OF SETTLEMENT ADMINISTRATION COSTS 142 The SDS gives effect to the Common Fund Orders, which equalise the position of all class members so far as legal costs and litigation funding commission are concerned. The essential elements of the SDS include: (a) subject to any contrary order of the Court, any class member who did not register their claim prior to the class deadline will remain a class member for all purposes but will not be entitled to receive a distribution from the settlement fund nor to receive any notices under the SDS; (b) Maurice Blackburn is appointed as administrator of the SDS (Administrator); (c) the following amounts are to be deducted from the settlement fund: (i) Money Max's Court-approved legal costs; (ii) the Funder's Court-approved commission; (iii) the costs of administering the SDS (settlement administration costs); and (iv) a payment to Money Max's director for the time spent in providing instructions and acting on behalf of class members (the Reimbursement Payment); (d) terms concerning: (i) the timelines for each step in the SDS; (ii) establishment of a database of registered class members (Participants); (iii) verification of the relevant share trading data (trade data) supplied by Participants; (iv) an opportunity for Participants to notify any errors in the Notice of Trade Data sent to them; (v) the assessment of each Participant's claim, based on the verified trade data, by application of a confidential Loss Assessment Formula (Loss Assessment Formula) in proportion to the total assessed value of all Participants' claims; (vi) an opportunity for Participants to notify any errors in the Notice of Estimated Distribution sent to them; (vii) an opportunity for Participants to seek a formal review of the Notice of Estimated Distribution through Independent Counsel, who is a member of the New South Wales or Victorian Bar of at least five years' post-admission experience; (viii) the requirement for Participants to pay the costs of Independent Counsel in conducting the review, which are to be reimbursed from the settlement fund if the review is successful; (ix) distribution of the settlement fund pro rata between all Participants; and (x) provision for what is to be done with any unpresented cheques and residue monies after settlement distribution is complete. 143 Most of the terms of the SDS are similar to terms approved by the Court in numerous settlement administrations in shareholder class actions, and they are unremarkable. There are though three matters which require comment. 144 First, the SDS provides that a separate company (NewCo) will be incorporated, and that (in accordance with the proposed constitution of NewCo which is contained in Schedule C of the SDS) Maurice Blackburn will at all times be the sole shareholder of NewCo and it will hold those shares in its capacity as administrator of, and as an asset of, the SDS. The sole director of NewCo will at all times be a principal of Maurice Blackburn (who will not be entitled to any remuneration for acting in that role). 145 The reason for the proposed incorporation of NewCo and its proposed function in the settlement administration process is based in confidential advice which Maurice Blackburn has obtained from PricewaterhouseCoopers (PwC) dated March 2018 as to the structure which is most tax-effective for class members as a whole. Having regard to PwC's advice, I am satisfied that the incorporation of NewCo and its function in the settlement administration process is in the interests of registered class members. 146 Second, cl 2.6 of the SDS initially provided: The Administrator and the Administrator Staff in discharging any function or exercising any power or discretion conferred by this Scheme shall have the same immunities from suit as attach to the office of a judge of the Court. After I expressed concern as to the breadth of the immunity from suit to be provided to the Administrator, Money Max proposed the following clause in substitution: The Administrator and the Administrator Staff in discharging any function or exercising any power or discretion conferred by this Scheme shall not be liable for any loss to Class Members arising by reason of any mistake or omission made in good faith or of any other matter or thing except willful and individual fraud and wrongdoing on the part of the Administrator or the Administrator staff who are sought to be made liable. 147 In my view the amended immunity from suit for the Administrator reflects the accepted position for trustees in relation to exclusion of liability clauses, and it is fair and reasonable in the interests of class members: see Australian Securities and Investments Commission v Drake (No 2) (2016) 240 ALR 75 at [281]-[284] per Edelman J and the cases cited therein. 148 Third, there is a question as to the likely costs of the settlement administration process if Maurice Blackburn is appointed as Administrator and whether it is appropriate to do so. As I said in Caason, there is something to be said for using a limited and inexpensive tender process for settlement administration work in shareholder class actions, as it may be an accounting firm or claims administration company could undertake this work just as well as the applicant's solicitor and do so more cheaply. 149 Accordingly, I directed Money Max to provide a quote for the settlement administration costs if Maurice Blackburn is appointed as Administrator, and said that I would then decide whether to undertake a tender process. Having regard to the quote and the further materials provided I am satisfied that a tender process is not required. It is appropriate to appoint Maurice Blackburn as the Administrator because: (a) it is highly experienced in acting in such a role; (b) the quote of $251,202 it provided is low in my view, and the amount is not material given the other costs and the quantum of the settlement; (c) the firm has already undertaken a substantial amount of work in verifying the trade data which will assist with a streamlined distribution process, some of which may have to be redone if another entity is appointed Administrator. Ms Dellavedova estimates that distribution of the settlement fund will commence as early as December 2018 and be finalised by approximately late May 2019. The speed of the distribution is significant my decision. I expect there would be some delay if I now commenced a tender process; (d) the use of NewCo for tax purposes introduces a further complication into the settlement administration which points away from putting the settlement administration work to tender; (e) the work will be performed by an identified junior solicitor with assistance from paralegals as required. It is intended that senior lawyers will have only a limited supervisory role; (f) the quote of $251,202 is reasonable by comparison with amounts recently approved for settlement administration work in other shareholder class actions, being: (i) Camping Warehouse v Downer EDI [2016] VSC 784 at [177] and [181], in which an amount of $25,000 per calendar month and a further amount of $22 per month for each class member for a maximum of approximately 12 months was approved. If a similar calculation was applied to the present proceeding, assuming a timeline of six months to distribution, it would amount to $480,132; (ii) Earglow Pty Ltd v Newcrest Mining Ltd [2016] FCA 1433 (Earglow) at [111], in which an amount of $429,706.25 (including the costs of the settlement approval hearing) was approved; (iii) Dillon v RBS Group (Australia) Pty Ltd (No 2) [2018] FCA 395 (Dillon) at [81], in which an amount of $250,000 was approved in circumstances where there are only 130 participating class members; (iv) Clarke v Sandhurst Trustees Ltd (No 2) [2018] FCA 511 at [3] at [36], in which an amount of $260,000 was approved; and (v) Caason at [273], in which an amount of $551,270 was approved for administration costs, with a possible additional allowance of up to $181,000 for reviews that were conducted; and (g) Maurice Blackburn's successful conduct of the litigation and experience in administering class action settlement means it is likely to have the trust of many class members. I would be disinclined to appoint another entity to undertake the settlement administration unless there were material savings to be achieved. 150 The SDS as amended is fair and reasonable in the interests of class members. Further to the matters mentioned above, I consider that: (a) each of the proposed deductions from the settlement fund are in Court-approved amounts, which are reasonable; (b) the SDS subjects all claims to the same principles and procedures for assessing each registered class member's share of the available compensation and the SDS's terms are in line with terms approved by the Court in numerous class action settlement administrations; (c) the loss assessment methodology is likely to deliver a broadly fair relative payout as between individual registered class members. It does not involve matters of judgment by the Administrator, it is consistent with the case that was to be advanced to trial and it is supportable as a matter of legal principle. It is likely that the cost of a more perfect assessment procedure would erode the notional benefit of a more exact distribution: see Camilleri v The Trust Company (Nominees) Limited [2015] FCA 1468 at [43]; and (d) the review mechanisms in the scheme allow class members the opportunity to correct any perceived errors in the trade data and/or the Administrator's assessment and provide for independent review. The costs provisions in relation to the independent review operate to discourage unmeritorious requests but still allow an appropriate avenue by which legitimate concerns can be resolved.

H THE REASONABLENESS OF MONEY MAX'S LEGAL COSTS 151 The Court has a supervisory role in relation to costs paid by class members and should scrutinise costs as part of the settlement approval process: Kelly at [11], [333] and [346]. As I said in Earglow at [91]: The Court should satisfy itself that the arrangements in relation to legal costs meet any relevant legal requirements, contain reasonable and proportionate terms relative to the commercial context in which they were entered, and that the costs and disbursements are in accordance with the terms of the relevant agreements and are otherwise "reasonable": Courtney v Medtel Pty Limited (No 5) (2004) 212 ALR 311; [2004] FCA 1406 at [61] (Sackville J); Modtech at [32]; Newstart at [14]. 152 The SDS provides that the Court-approved costs incurred by Money Max be deducted from the settlement sum prior to any distribution to class members, which reflects the Common Fund Orders. It is fair and reasonable that all class members who share in the benefits of the settlement pay a proportionate share of the costs incurred to obtain it: see Caason at [108] and the cases there cited. 153 The real question is whether the legal costs claimed are reasonable. 154 Money Max informed the Court at the first case management hearing of the settlement approval application that Maurice Blackburn estimated the legal costs it had charged and proposed to charge at $22.514 million, representing approximately $16.2 million for Maurice Blackburn's professional fees and approximately $6.3 million for disbursements. It said that it had engaged Cate Dealehr of Australian Legal Costing Group to provide an expert independent opinion as to the reasonableness of those costs. 155 Ms Dealehr is a competent and reputable independent costs expert who has been engaged in a great many cases including in 11 class actions. In those class actions her opinion in relation to the reasonableness of costs was accepted in all but one, where her estimate was reduced by only 3.5%. 156 Notwithstanding that Ms Dealehr had been engaged, Maurice Blackburn's initial estimate as to its costs caused me concern. I concluded that class members' interests in relation to costs would be best protected through the appointment of a Court-appointed referee to review the costs: see Caason at [111]-[124] and also the remarks of Lee J in Lifeplan Australia Friendly Society Limited v S&P Global Inc (Formerly McGraw-Hill Financial, Inc) (A Company Incorporated in New York) [2018] FCA 379 at [40]-[41] and Dillon at [66].

The Dealehr Report 157 Ms Dealehr provided an expert report dated 26 March 2018 (Dealehr Report), which thoroughly deals with the relevant issues in relation to the reasonableness of Money Max's legal costs. It gave detailed consideration to the different costs agreements in place over the course of the proceeding, the scope of the retainer, the pre-retainer costs, the significant complexity of the issues in the proceeding and Maurice Blackburn's time and disbursement recording systems. Ms Dealehr adopted a rigorous method in calculating the time spent by each Maurice Blackburn employee, verifying the accuracy their time records, applying the claimable rates for each employee, identifying and excising non-recoverable work, classifying time spent and applying discounts after considering the nature of the work claimed and applying an uplift fee on the conditional charges made. To determine the reasonableness of disbursements she conducted an audit of the accounts and invoices provided by Maurice Blackburn, examined the invoices and checked for errors and then considered the fees claimed and determined whether any allowances or discounts were to be applied. 158 Ms Dealehr said that in comparison to other commercial class actions in which she had prepared expert reports this matter has the highest level of complexity in relation to subject matter and the second highest level of complexity in relation to the conduct of the litigation. In the finish Ms Dealehr reached the view that Maurice Blackburn's professional fees should be reduced by $302,071.11, and she considered that the disbursements should only be reduced by a minimal amount. In her opinion a reduction in the claimed fees and disbursements of $311,441.82 is appropriate, reducing allowable costs to a total of $22,225,623.20. 159 Ms Dealehr also raised a concern, although she did not express a concluded view, as to whether the 2014 Costs Agreement between Money Max and Maurice Blackburn was void because it did not provide an estimate of the uplift fee which might be applied to the unpaid portion of Maurice Blackburn's professional fees. If that agreement is void Maurice Blackburn would only be entitled to charge for the work under that costs agreement on the Federal Court scale without an uplift, which would involve a further reduction in fees of $176,383.25, thereby reducing costs to a total of $22,049,239.95.

Appointment of the Referee 160 The orders appointing Elizabeth Harris as the Referee under s 54A of the Act required her to inquire and report in relation to the reasonableness of the applicant's costs, doing so by auditing Ms Dealehr's opinion. 161 Ms Harris is also a competent and reputable independent costs expert who regularly provides expert evidence in large commercial litigation including the C7 litigation and 11 class actions. Among other professional and academic roles she is currently the joint editor of Quick on Costs. 162 The review by the Referee included examining and making inquiries as to various aspects of the matter, including time recording practices, categorisation of time records and in relation to discovery which was one of the major cost items. She had access to the Maurice Blackburn file containing all the documents provided to Ms Dealehr and to Maurice Blackburn's electronic file records relevant to this matter, against which she sampled time records to test their reasonableness. For comparative purposes she also had access, on a confidential basis, to information about QBE's costs and disbursements. She raised questions and gave careful consideration to the matter including in relation to time recording practices, categorisation of time records, and the veracity of the time records. In order to test the time records the Referee sampled the time records against the file. 163 The Referee provided a report dated 2 May 2018 in which she accepted Ms Dealehr's conclusions in relation to: (a) the costs agreements; (b) the uplift fees; (c) the scope of the retainer; (d) the accuracy and the application of the solicitor's rates; (e) the reasonableness of counsel's fees; and (f) the reasonableness of non-counsel and non-expert disbursements. 164 The report gave particular attention to those aspects of the Dealehr Report where the level of reasonable costs appeared to be high having regard to the Referee's previous experience in these types of matters, where there were significant differences in the fees and disbursements incurred between Maurice Blackburn and Allens, and where these differences were not readily explainable by reference to the different approach likely to be required by the differing roles of the parties.

Solicitors' and counsel's rates and estimates of total legal costs 165 The Referee concluded that the rates charged by solicitors and counsel were within the market range and overall reasonable. With respect to estimates of total legal costs the Referee considered that while the estimates were not always reflective of likely costs, the Funder was in a position to control and manage costs and it was in the Funder's interest to do so.

Discovery costs 166 Discovery costs were significant and thus important in the review. The Dealehr Report identified fees of $6.7 million relating to discovery by both parties, subpoenas and discovery planning. The Referee accepted that the proceeding had been attended by significant complexity which required much greater discovery expenditure than is typical in shareholder class actions, essentially because of: (a) the scale of the litigation, including the volume of the evidence to be reviewed and the fact that the relevant events took place primarily in the US but also in Australia; (b) the technical nature of the facts underlying the pleaded allegations and the specialised nature of the relevant insurance business lines; (c) the large and complex structure in QBE's business operations and the consequent information symmetry faced by the applicant's experts and legal team in contextualising the discovered documents; and (d) the fact that the pleaded allegations relate to three functionally independent insurance business lines, effectively requiring the preparation of evidence to establish three separate factual cases as well as to show the combined effect of the pleaded contraventions. Maurice Blackburn reviewed in the order of 130,000 documents discovered by QBE or produced under subpoena. Approximately 20% of QBE's discovered documents were spreadsheets, which the Referee accepted often required review by a senior lawyer, were necessarily time-consuming and in relation to which Technology Assisted Review (TAR) processes were of limited assistance. 167 The Referee gave careful attention to this important aspect of the costs incurred but concluded that only a modest further reduction of $52,000 was appropriate under this heading.

Expert evidence costs 168 The Referee identified the fees of expert witnesses and the cost of expert evidence work as meriting review, largely due to the discrepancies between the fees and costs of the applicant's and respondent's solicitors. The Referee concluded however that the differences were largely explained by the need for expert evidence as to each aspect of the case, and the retainer of the six experts referred to above. In contrast, at the time of settlement the respondent had only served one expert report. 169 The expert evidence costs comprise (a) disbursements for experts' fees which total $4.3 million; and (b) professional costs associated with the engagement of experts totalling $1.583 million. 170 The Referee noted in relation to (a) that experts' fees are usually fully recoverable, even on an inter partes basis, unless, for example, it can be demonstrated that the expert has addressed matters outside the scope of his or her brief, the expert was briefed on matters which are not necessary, or the expert has unreasonably undertaken work. Having reviewed the reports of the experts retained in the matter to understand the complexity of the issues the Referee concluded that the experts' fees were reasonable. In relation to (b) the Referee concluded that it was appropriate to reduce the professional fees allowed by Ms Dealehr by $79,189.

Validity of time records 171 The Referee identified some discrepancies in some time entries, in particular delays between the performance of the work and the posting of the time entry on the electronic time recording system. On the basis that the longer the period of time between the work being undertaken and the record being posted the greater the likelihood that the record did not accurately reflect the time spent, the Referee considered it appropriate to discount the time records which were not posted in a timely manner by 15% and so further reduced the professional fees allowed by Ms Dealehr by $52,206.

Internal conferences 172 The time records categorised by Ms Dealehr as "Communicate with internal team" totalled $1.58 million, which includes regular team meetings of the solicitors working on the matter, many single internal attendances between solicitors working on the matter, and emails between solicitors working on the matter. 173 The Referee accepted it was appropriate to allow a significant number of internal conferences and communications between the solicitors engaged on the matter given: (a) the complexity of the factual matters being investigated; (b) the number of solicitors working on the matter; (c) the clear division of labour amongst the solicitors working on the matter giving rise to a need for internal communication about the work being undertaken by each person; (d) the ongoing provision of discovery; (e) the level of discovered documents to be reviewed; and (f) the complexity of many of the discovered documents. 174 Taking a broad brush approach the Referee concluded that it was appropriate to reduce the amount allowed for shorter internal conferences and communications by $84,200.

Funding and budgets phase 175 The Dealehr Report allowed all pre-retainer work on the basis that the costs agreements entered into by Money Max acknowledged that significant pre-retainer work had been undertaken for the benefit of the case and it should be paid for. The Referee considered not all of this time was recoverable and concluded it was appropriate to reduce the professional fees allowed by Ms Dealehr by a further $50,000.

Status, strategy and supervision 176 Ms Dealehr's report identified $98,063.90 as related to "staff training and transitions" and disallowed 25% ($24,515) of this work. The Referee considered that this category included handovers arising from a change of staff which would not be recoverable from a client, and concluded that a reduction of a further $10,000 better reflected both this work and the additional reductions merited in this category.

The 2014 Costs Agreement 177 Ms Harris noted Ms Dealehr's concern regarding the disclosure under the 2014 Costs Agreement, and agreed that if there was a disclosure issue the costs under that agreement would be assessed under the Federal Court scale, without an uplift. However, in Ms Harris' view, the Funder managed the litigation on behalf of the applicant and class members and paid the invoices. She considered it to be a "commercial government client" as defined under the Legal Profession Uniform Law, and said the practical reality was that the agreement would not be held to be void as against the Funder. Ms Harris did not propose reducing the allowed costs under the 2014 Costs Agreement by $176,383.25.

Conclusion 178 The Referee concluded that a further reduction of the professional and uplift fees allowed by Ms Dealehr totalling $348,069.69 is appropriate, and allowed total costs and disbursements of $21,875,678.51, representing professional fees of $14,446,822.46, uplift fees of $901,051.40, and disbursements of $6,527,804.65. I note however that Money Max also incurred some further costs in the period from 1 March which were not the subject of review by either Ms Dealehr or the Referee (Further Proceeding Costs). On 4 May 2018 I made orders for the Referee to provide a further report in relation to those costs by 1 August 2018. 179 The Referee proposes only a modest further percentage reduction to the costs found to be reasonable by Ms Dealehr. Although Maurice Blackburn did not accept that the further reductions were appropriate it did not oppose adoption of the Referee's report. In the circumstances it is appropriate to adopt the Referee's report. 180 Having regard to the complexity and size of the case and the careful attention both Ms Dealehr and the Referee gave to the issue I am satisfied that while they are high, the costs should be approved. I approve Money Max's costs in the sum of $21,875,678.51, being a reduction of $639,036.82 from the initial estimate.

I THE REASONABLENESS OF THE FUNDING COMMISSION 181 Before the commencement of the proceeding Money Max and approximately 500 class members entered into funding agreements with the Funder for the purpose of funding their participation in the proceeding. Following commencement a further approximately 790 class members entered into funding agreements. 182 In total 1,292 persons out of 2,501 registered class members, being 52% of registered class members, entered into a funding agreement. The claims of these funded class members make up approximately 81% of total assessed losses. The funded class members include approximately 190 institutional investors, including superannuation funds, international pension funds, domestic and international banks and global asset management firms, which comprise approximately 78% of total assessed losses. Only 11 institutional investors registered in the proceeding without entering into a funding agreement. 183 In the common fund application Money Max sought Court approval of a 30% funding rate. The Full Court made the Common Fund Orders but did not approve the 30% funding rate sought or indeed any percentage rate, preferring to leave approval of a reasonable rate to a later stage when the Court had more complete information. The Full Court's reasons for doing so included protecting class members' interests against the risk of an excessive funding commission in the event of a very large settlement or judgment. 184 Largely in response to QBE's principal argument that a common fund order would mean that class members would receive significantly less in hand than if a funding equalisation order were made, the Full Court imposed a floor condition that class members could not be worse off under the Common Fund Orders than they would be if such orders were not made: see Money Max at [11]-[12]. 185 Money Max (or more accurately the Funder) now seeks approval of a funding commission of $30.75 million which equates to 23.2% of the gross settlement sum of $132.5 million (or 27.75% of the net settlement sum after deduction of approved legal costs). 186 In Money Max the Full Court said that the relevant considerations for determining a reasonable funding commission include the following (at [80]): (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. 187 The proposed funding commission is sizable and I have given careful thought to whether such an amount should be approved, but having regard to the circumstances of the case I am satisfied that it is are fair and reasonable. 188 First, and fundamentally, the Funder took on substantial obligations and significant risks at the outset of a large, complex and difficult proceeding. I have already described the risks on liability and quantum and I need not reiterate them. The size and difficulty of the litigation is also indicated by the fact that, unusually for a shareholder class action, no other funder or legal firm sought to bring a similar class action against QBE, and another litigation funder approached by the Funder to share the risk by co-funding declined to do so. 189 At the point of settlement the Funder had paid a total of $19.82 million, being $14,821,214 for Money Max's costs and $5 million in security for costs. If the case had proceeded to trial, the Funder's total costs would have been closer to $23.4 million, with a further $1.4 million in disbursements and $2 million for security for costs. By that point the Funder was no longer paying professional fees because costs had exceeded the budget, and Maurice Blackburn was conducting the case on a conditional fee basis. 190 The Funder also indemnified Money Max in respect of any adverse costs order made in the proceeding, which indemnity was not capped. Based on the materials, including confidential information provided on QBE's behalf, I estimate the Funder faced a risk of an adverse costs order approaching $12-15 million if the case was unsuccessful at trial. The evidence is that the Funder would meet any such order from its own balance sheet, and it did not lay off that risk through After the Event insurance. 191 The quantum of the adverse costs exposure assumed from the commencement of the case, as well as the legal costs expended and to be expended, are important considerations: Money Max at 80 and (f). The litigation risk assumed by the Funder is critical factor and the Court must recognise it took on substantial obligations and risks from the commencement of the proceeding, when the outcome was far from certain: Money Max at 80. 192 Second, a large number of sophisticated class members agreed to funding rates significantly in excess of the 23.2% of the gross settlement now proposed: see Money Max at 80. It is also relevant that (a) very few class members objected to the funding rate of 30% advised to them in the common fund application; (b) the funding fee is less than the 30% rate advised in the Class Closure Notice sent to class members in October 2017; and (c) no class member objected to the proposed 23.2% funding rate or the aggregate funding commission: Money Max at 80. This tends to show class members' acceptance of the proposed funding rate in circumstances where 78% of the assessed losses were suffered by sophisticated investors. 193 Third, a funding commission of $30.75 million is substantially better than the commission that would have been payable under the pre-existing funding arrangements: Money Max at 80. Class members who signed funding agreements make up the great bulk of assessed losses in the case (approximately 81%) and agreed to funding rates of either 32.5% or 35%. In broad terms funded class members are between approximately $12.3 million and $15.6 million better off than they would have been prior to the Common Fund Orders, and $9.01 million better off than under the 30% rate Money Max sought when applying for the Common Fund Orders. 194 Fourth, the evidence shows that the 23.2% funding rate was negotiated during the mediation and represents a further reduction from the rate the Funder sought. The funding rate it sought started at 32.5% and 35% under the funding agreements, moved down to 30% in the common fund application, and further reduced to 23.2% in the mediation. 195 Fifth, a funding commission of $30.75 million satisfies the rider in the Common Fund Orders that class members could not be worse off than if such orders had not been made. Under a simple funding equalisation order which does not allow "grossing-up" (described in Money Max at [56]) class members would have paid a funding commission of approximately $35.77 million. Under a funding equalisation order which allows grossing-up class members would have paid a funding commission of approximately $38.09 million. In broad terms class members will be approximately $5-$7.34 million better off than they would have been if the Common Fund Orders had not been made. 196 Sixth, a funding rate of 23.2% of the gross settlement and 27.75% of the net settlement is within the broad parameters of the funding rates available in the market: Money Max at 80. It is lower than the funding rates in many funding agreements available in 2015 and 2016 when book building for the case began. 197 The publicly available material regarding funding rates commonly available in the market (which I set out in Earglow at [167]-[177]) indicates that funding rates at the relevant time commonly ranged between 25% and 40% of the gross settlement, and more usually between 30% and 40%. In 2014 Australia's largest litigation funder IMF Bentham Australia (previously IMF (Australia) Ltd) charged funding rates of between 25% and 40% of the gross settlement plus a percentage of the legal budget as a project management fee. For all completed cases from 19 October 2001 to 30 June 2013 IMF received approximately 33.5% of settlement or judgment monies: IMF (Australia) Ltd, "Submission to the Productivity Commission: Access to Justice Arrangements" (18 November 2013) p 4. 198 Professors Waye and Morabito state in an article in late 2015 that the average funding commission rate charged in funded class actions is approximately 31% (I infer of gross settlements): Waye V and Morabito V, "Financial Arrangements with Litigation Funders and Law Firms in Australian Class Actions" (Paper presented at the Litigation Costs Funding and Behaviour Symposium, Leiden University, December 2015) p 21. 199 In Re Banksia Securities Ltd (Rec & Mgr Apptd) (in liq) (No 2) [2018] VSC 47 at [90] Croft J reviewed the gross and net funding rates approved in six class actions in 2016 and 2017. That review indicates that the approved funding rates ranged from 17% to 27% of the gross settlement and 26% to 45% of the net settlement (excluding one idiosyncratic case which can be excluded for the purposes of comparison: see Blairgowrie at [156]). 200 It is appropriate to be cautious in comparing headline funding rates since the reasonableness of a funding rate usually depends on case-specific factors including the risks assumed by the funder through the particular funding terms: see in Earglow (at [179]). Having said that, the proposed funding rate falls within the broad parameters of the litigation funding market at the relevant time. 201 There are some indications that lower funding rates are now available. Recently, in Perera v GetSwift Limited [2018] FCA 732 (GetSwift) three competing funding offers were made; (a) the lesser of 25% of net proceeds or 22.5% of gross proceeds; (b) 10% of gross proceeds before an early date, 20% of gross proceeds until 42 days prior to the initial trial and 30% thereafter; and (c) the lesser of 2.2 the costs of the proceeding (or 2.8 times depending upon when a successful resolution of the case occurs) and 20% of net proceeds: see at [68] and following. 202 I would not use those funding rates as a comparator when they reflect a phase of the current market rather than the market in 2015 and 2016 and they are likely to reflect what appears to be the significantly lower complexity and difficulty of that case. But even if those funding rates are treated as relevant, in a case as complex as the present case a 23.3% funding rate on gross recoveries is in the range. In that case at [283]-[291] Lee J expressed the view that tethering the amount of the funding commission to the costs of the case has advantages. The proposed funding commission of $30.75 million represents approximately 1.4 times the costs of the proceeding, which is less than the costs multiples offered in GetSwift. 203 Another way of analysing whether a proposed funding commission is broadly within market parameters is to do so by reference to the return on invested capital (ROIC), which is a measure used by some litigation funders in the market. IMF Bentham Ltd has obtained a global ROIC of 1.55 times, including cases lost, over the past 16 years: Investor Presentation, IMF Bentham Ltd, February 2018, p 7, located at https://www.imf.com.au/shareholders/investor-presentations. Another litigation funder, Litigation Capital Management Ltd states that it has achieved a ROIC of 2.5 times at an average time to maturity of 26 months at an internal rate of return (inclusive of losses) of 82%: 2018 Half Year Results Presentation, Litigation Capital Management Ltd, 28 February 2018. 204 According to Professors Waye and Morabito, for a return on investment of equivalent to that expected by a venture capitalist litigation funders would expect a return of 2.5 times, which is equivalent to funding rates of 25% to 50% for a $100 million claim with costs of $5-$15 million plus security for costs. They said that IMF's ROIC of approximately 1.55 over 16 years is slightly less than the ROIC for venture capital funds from 2000-2008: Waye V and Morabito V, "When Pragmatism Leads to Unintended Consequences: A Critique of Australia's Unique Closed Class Regime" (2018) 19 Theoretical Enquiries in Law 303 at 322-323. 205 In the present case the Funder's total invested capital is $19.82 million for costs and security for costs, and it seeks a commission of $30.75 million, which provides a ROIC of 1.55 times. That is within the range of other litigation funders in the market. 206 Seventh, while the size of the settlement can be argued to indicate that a lower funding rate is appropriate, it must depend on the circumstances: see Blairgowrie at [160]. In this case I consider a funding rate of 23.2% of the gross settlement and 27.75% of the net settlement of $110.8 million are reasonable and proportionate to the Funder's investment and risk: Money Max at 80. 207 Eighth, as the Full Court accepted in Money Max at [147] and [203] and Beach J suggested in Blairgowrie at [160], a sliding scale may sometimes be appropriate. I agree, although I am concerned that there is a risk that calculating the funding commission in class actions by reference to a sliding scale will distort negotiations. In settlement negotiations the final amounts are usually hardest to get and it is in that stage that a funder's preparedness to continue to support the case is most likely to be tested. Setting lower funding rates for the upper end of settlement amounts that might be achievable may affect a funder's willingness to proceed. 208 In the present case adopting a sliding scale is unlikely to have yielded a materially different result, although it must be accepted that a range of different sliding scales can be seen as reasonable. For example: Gross Settlement Sum Funding Rate Funding Commission $0 - $50m 30% $15 m $50m - $100m 20% $10 m $100m - $132.5m 15% $4.875 m Total $29.875 m

209 That produces a funding commission which is not materially less in percentage terms and other 'reasonable' sliding scales could produce a worse outcome for class. For example: Gross Settlement Sum Funding Rate Funding Commission $0 - $25m 35% $8.75 million $25m - 50m 30% $7.5 million $50m - $75m 25% $6.25 million $75m - $100m 20% $5 million $100m - $125m 15% $3.75 million $125m - $132.5m 10% $0.75 million Total $32 million

210 Finally, it is appropriate to keep in mind that this proceeding could not have been undertaken without litigation funding. The funding has allowed class members to share in a net settlement of more than $100 million after funding charges, or more than $80 million after funding charges and legal costs. In Money Max the Full Court said (at [82]) that it expected 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. I consider a funding commission of $30.75 million to be commercially realistic, and in my view it properly reflects the high level of cost and risk the Funder took on, while avoiding hindsight bias.

J THE REASONABLENESS OF MONEY MAX'S REIMBURSEMENT CLAIM 211 Money Max seeks orders for a $50,000 reimbursement payment to be deducted from the settlement fund and paid to its director and shareholder, Richard Bungey, in reimbursement of the time he spent advancing the claims of Money Max and the class members. 212 It is established that that an applicant in a class action who has sacrificed time and/or incurred expenses in prosecuting the action on behalf of the class should be entitled to some reimbursement from the corpus of any settlement or judgment. The compensation is for the time and expense attributable to the representative features of the applicant's involvement as a party in the litigation, not to compensate the applicant for the time and expense which are an ordinary incident of the applicant's involvement in his, her or its own interests: Caason at [176] and the cases there cited. The question is whether the claimed reimbursement payment is reasonable. 213 Money Max relies on an affidavit of Mr Bungey affirmed 27 April 2018 in which he states that he spent a significant amount of time attending to tasks required to advance Money Max's and the class members' interests. He says that he: (a) spent considerable time locating, reviewing and collating documents for discovery, and affirming five affidavits annexing lists of documents which were filed; (b) prepared a witness statement which, together with the documents he produced by way of discovery, comprises Money Max's lay evidence in the proceeding; and (c) undertook numerous other tasks to ensure Money Max fulfilled its obligations as a party and as the class representative, including taking advice and providing instructions, reading the voluminous experts' reports, reading QBE's voluminous lay witness statements, regularly reviewing Maurice Blackburn's statements of accounts and budgets to monitor the amount of legal costs and disbursements incurred, attending numerous conferences with lawyers in Melbourne, Brisbane and Rockhampton, reviewing and considering the mediation position papers and estimates of quantum, and taking advice and providing instructions in relation to settlement. 214 Mr Bungey attached to his affidavit a schedule listing time entries relating to conferences and communications in which he was involved since becoming the applicant (Time Schedule), which records that he spent just over 398 hours on the proceeding. He makes no claim for expenses incurred in relation to the proceeding as they were paid or reimbursed by Maurice Blackburn as incurred. On that basis the reimbursement claim represents an hourly rate of $126 per hour. 215 I am not prepared to allow reimbursement payment of $50,000 and instead I allow the reduced amount of $33,000. I say this, first, because while I accept Mr Bungey's evidence that he undertook the tasks he described and conscientiously attended to his obligations as the representative applicant, he is retired and there is no evidence that he suffered any loss or expense through undertaking those tasks. I am though prepared to infer that some proportion of the time he devoted to the litigation would otherwise have been spent on other income-generating activities for Money Max. 216 Second, Mr Bungey did not keep contemporaneous records of his time. Most of the entries in the Time Schedule are generated from Maurice Blackburn's billing software, and he supplemented those entries with additional entries based on his own records and recollection. Where the contemporaneous time entries generated by Maurice Blackburn show that Mr Bungey was involved in a telephone call or attended a conference I accept that he spent that time, and such entries comprise the bulk of the time upon which the reimbursement claim is based. 217 However, the balance of the Time Schedule has numerous deficiencies, including that: (a) some entries in the schedule are reconstructions, made years after the event, of the time Mr Bungey thinks he would have spent. For example, one entry records 70 hours spent reading QBE's expert reports. Another entry records 124 hours checking 1,498 pages of statements of accounts rendered by Maurice Blackburn over the period 2015-2018. They are little more than a (very) rough estimate made a long time later. The schedule is not however as deficient as the schedule relied on by the applicants in Caason (at [198]-[199]); (b) another entry records 15 hours spent in tabulating and collating the entries for the Time Schedule, which is time spent in Mr Bungey's own interest rather than in the interests of class members; and (c) entries in June and December 2017 record 32 hours (8 hours a day over 4 days) set aside for mediations held on those dates. Mr Bungey did not attend the mediations; he merely held himself available in case he was required to provide instructions. As a retiree this is unlikely to have been a large imposition. 218 Third, notwithstanding these deficiencies in the evidence the claimed reimbursement payment is higher than the average payment per class representative of $36,751, as reported by Professor Morabito: Morabito V, "An Empirical and Comparative Study of Reimbursement Payments to Australia's Class Representatives and Active Class Members" (2014) 33 Civil Justice Quarterly 175 at 186. 219 Taking a broad brush approach, I consider a reimbursement payment of $33,000 is fair and reasonable.

K CONCLUSION 220 It is appropriate to approve the settlement pursuant to s 33V of the Act. The Administrator is directed to file a short-form report at the conclusion of the settlement administration setting out the principal steps taken in the administration of the SDS, when those steps were completed and whether they were completed on time, and the overall costs of the settlement administration. I certify that the preceding two hundred and twenty (220) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Murphy.

(Corporations Act), the Australian Securities and Investments Commission Act 2001(Cth)

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