Pearson v State of Queensland

Consideration 20 An amendment to the Scheme to limit final distribution payments just to living Claimants residing in Australia will be to the detriment of Registered Representatives of Deceased Claimants and to the detriment of living Claimants residing in PNG and other countries. But it does not necessarily follow that the proposed amendment is not fair and reasonable in the interests of group members. The real question is whether the favourable treatment proposed to be afforded to living Claimants residing in Australia, and the detriment to the other categories of group members is reasonable in all the circumstances. 21 In my view the proposed amendments are fair and reasonable in the interests of group members. I commence by noting that Preliminary Distributions were made to 11,832 individual Claimants and Registered Representatives by way of 20,275 payments. It is appropriate to infer that the same number of Claimants and Registered Representatives are entitled to receive payments in the final distribution. Unless the Scheme is amended as proposed, the average payment to a Claimant or Registered Representative will be approximately $59.03, ranging from a high of $122.66 for a living male Claimant, and a low of $16.96 for a deceased female Claimant, depending on the category of the Claimant or Registered Representative under the AMS. 22 On average there are 1.93 Registered Representatives per Deceased Claimant, which means that, on average, the final distributions to be made to each Registered Representative will be approximately $30. Where a Deceased Claimant had three or more children (which is very common) the average final distribution payment will be $20 or less. 23 Where there is more than one Registered Representative for a Deceased Claimant the amounts to be distributed will often be lower than the Administrators' professional fees for processing the payments, and the bank fees charged. And even where the amount is not lower than the Administrators' professional fees and bank fees the amount to be distributed to Registered Representatives will often be de minimis. 24 Mr Beven estimated that the Scheme will incur $20,000 in additional costs in making final distribution payments to PNG Claimants. Of the 3,257 living Claimants as at 30 November 2020, only 132 reside overseas, the great majority of whom reside in PNG. In an email to my chambers dated 1 March 2023 Mr Beven estimated that (if the final distribution is restricted to living Claimants as at 30 November 2020) living PNG Claimants will receive approximately $174.76 for a male, and $139.81 for a female. On the basis of that estimate, the Scheme will incur costs of approximately $151 per PNG Claimant to make payments of $139.81 and $174.76 to them. 25 In such circumstances it is quite inefficient and wasteful to distribute the residue monies to all Claimants and Registered Representatives, as the Scheme presently requires. It is fair and reasonable that the Scheme be amended so that final distributions are limited to Claimants who were alive as at the date of the preliminary distributions on 30 November 2020 and who reside in Australia. It is therefore appropriate to allow the insertion of new clause 58A into the Scheme. 26 I intend no criticism of Mr Beven for consulting with Mr Pearson regarding his views on this issue, but it is necessary to note that Mr Pearson has no authority to provide instructions in relation to the settlement administration.

The proposed destruction of hard copy records 27 Mr Bevan deposes that the Administrators hold approximately 37 standard archive boxes of hard copy documentation collected through the administration process, primarily comprising Registration Forms or Particulars of Claim Forms from the solicitors for the applicant, BELAW, and photo identification and similar material obtained by the Administrators through the administration process. The vast majority of the material contains private, confidential information relating to individuals. All of the hard copy material has been scanned and is held electronically on the GTAL secure database, in accordance with GTAL's policies relating to the archiving of client records. 28 The Administrators seek orders that upon conclusion of the Scheme administration, those electronic records be archived in accordance with GTAL's document and information management policy and that the hard copy materials be securely destroyed within 12 months of the conclusion of the Scheme administration. Such orders are appropriate.

The proposed increase in the Administrators' fee estimate 29 When the application for settlement approval was before the Court I was concerned about the reasonableness of the settlement administration costs proposed to be charged. Accordingly, I directed BELAW to seek tenders from appropriately qualified accounting firms for appointment as the Administrator. BELAW received tenders from four accounting firms, namely KordaMentha, GTAL, Findex and BDO. Unfortunately, the tender invitation failed to clearly delineate between the respective roles of the Administrator and BELAW as the proposed Advisor to the Scheme. The tenderers proposed a wide range of fee estimates, but they reflected different assumptions as to the amount of work to be performed by the Administrator as compared to the Advisor. For example, one tender estimated total Administration Costs of $2.9 million, which included $1.2 million in fees to be incurred by the Advisor, and another tender estimated Administration Costs at $950,000, which included only $50,000 in Advisor's fees. 30 Initially GTAL provided a fixed fee estimate of $762,300 (exclusive of BELAW's costs as the Advisor), subject only to any Court-approved increase. Subsequently, in light of the increased number of participating class members revealed as more data was entered into the Claimant Database, GTAL increased its fixed cost estimate to $1.07 million, again subject to any Court-approved increase. I considered that increase to be reasonable in the circumstances, but at the same time, BELAW dramatically also increased its estimate of its proposed charges as Advisor to a total of $4.54 million, which would have meant total settlement administration costs in the order of $5.6 million. 31 On 20 December 2019, I held a telephone conference with Mr Bottoms of BELAW and Mr Jonsson and Mr Beven of GTAL. Mr Bottoms expressed various difficulties with providing a more accurate and lower estimate of the likely charges, essentially because he considered the characteristics of the class meant that there were likely to be many repetitive communications with group members regarding compensation entitlements, and a high level of disputation in relation to their entitlements under the Scheme. I made it clear to Mr Jonsson and Mr Beven that the appointment of an appropriate Advisor was a matter for the Administrator, the tasks necessary to be performed by the Advisor were a matter for the Administrator, and that it was the Administrator's responsibility to ensure that the settlement administration was conducted efficiently, including by ensuring that the cost of communication with class members was reasonable and proportionate. I directed GTAL and BELAW to propose a better delineation of their respective roles under the SDS and requested them to reconsider the fee estimates they had provided. 32 In a letter dated 6 January 2020 GTAL said that, in consultation with BELAW, it had revised the proposed scope of works to be undertaken under the Scheme and clarified the responsibilities of GTAL as Administrator, including by: (a) GTAL assuming responsibility for many of the tasks previously allocated to BELAW in its capacity as Advisor; (b) reassessing the tasks that could be undertaken at lower levels, particularly in regard to the verification of claimants and standard communications with claimants; and (c) avoiding duplication and monitoring the reasonableness of the Advisor's charges through an oversight mechanism, including a recent legal costs agreement with BELAW. Based on those assumptions, GTAL revised its fee estimate upwards to $1.81 million, subject only to Court-approved increases. BELAW revised its fee estimate downwards to $2.22 million. The revised estimate for settlement administration costs was therefore $4.03 million, being a reduction of $1.57 million from the earlier estimate. 33 I was persuaded as to the reasonableness of GTAL's fee estimate, and I decided it was appropriate to appoint Mr Jonsson and Mr Beven as the Administrators of the Scheme. I was not, however, persuaded as to the reasonableness of BELAW's fee estimate for its work as the Advisor. I made orders for the Costs Referee to assist the Administrators in assessing the reasonableness and proportionality of BELAW's charges on an ongoing basis and for the Costs Referee to report to the Court at three monthly intervals as to that. 34 In the present application, the Administrators seek an increase to their approved professional fees from $1.81 million to $2.93 million. The proposed increase is substantial (being a 61% increase) and my first inclination was not to allow such an increase. However, having given careful consideration to the matters raised in the Second Beven Affidavit I am persuaded that the increase is appropriate. 35 The Administrators seek approval of the increased estimate on the basis that they: (a) have already charged $1.395 million (excluding GST) to the Scheme; (b) have incurred additional fees of $1.492 million (excluding GST) which have not yet been billed to the Scheme; and (c) estimate that further professional fees in the amount of approximately $42,224.17 excluding GST (taking into account the $20,000 reduction in Scheme costs by restricting the final distribution to living Claimants residing in Australia). Those amounts do not include the Administrators' disbursements, of which $109,175.62 have been charged to the Scheme, $10,122.03 has been incurred but not yet charged to the Scheme and $1,500 in disbursements (all amounts excluding GST) are estimated to take the administration to its conclusion. 36 In his second affidavit, Mr Beven provided a detailed account as to why the increased fee estimate is fair and reasonable, doing so under the headings set out below.

The significant reallocation of work from the Advisor to the Administrators. 37 I accept Mr Beven's evidence that over the life of the administration the tasks allocated to the Administrators significantly expanded and the scope of the Advisor's role significantly narrowed. 38 For example, clause 8A of the Scheme provides that the Advisor will be: …a primary point of contact with Claimants and Registered Representatives" in relation to specified tasks and to work as directed. It is envisaged that the Advisor will be engaged to assist with communications with Claimants and Registered Representatives, complex verification and eligibility cases, the resolution of multiple claims and the review process. The evidence shows that the practical requirements of the Scheme administration were significantly impacted by COVID-19 restrictions on workplaces, the COVID-19 related closure of PNG and Aboriginal and Torres Strait Islander communities until July 2020, and the specialised Aboriginal, Torres Strait Islander and Papua New Guinean workforce employed by the Administrators. As a consequence, the Advisor's tasks under clauses 8A and 15 of the Scheme were almost entirely undertaken by the Administrators. 39 This has led to a marked reduction in the fees charged by the Advisor. Instead of the estimated $2.2 million, BELAW's costs as approved by the Costs Referee comprise $172,357.60 in professional fees and disbursements of $63,734.14 (both excluding GST). By a letter to my chambers dated 11 May 2022 BELAW estimated that, combined with fees for work already undertaken but not invoiced, its fees and disbursements to the end of the administration would be approximately $73,000 (excluding GST), subject to approval by the Costs Referee. Thus, by the end of the administration BELAW's fees will be $207,279.99 (excluding GST) meaning that total administration fees will be $3,137,279.99 (excluding GST). That total is substantially lower than the estimate of $4.03 million provided to the Court in the Administrators' letter of 6 January 2020. 40 I accept that at the time of making their fee estimate on 6 January 2020, the Administrators could not reasonably have anticipated the COVID-19 pandemic and the effect that would have in relation to the allocation of work under the Scheme, and that this accounts for the great majority of the increase in the Administrators' fee estimate.

The various amendments to the Scheme 41 I accept Mr Beven's evidence that at various points the Administrators identified errors or improvements to the Scheme. They sought and obtained orders from the Court on 8 September 2020 and 15 October 2020 to make amendments to the Scheme, which included substantive amendments. I accept that at the time of making their fee estimate on 6 January 2020, the Administrators were not aware that the Scheme would require amendment, and that this accounts for some of the increase in the Administrators' fee estimate.

Incomplete or missing Claim Data in the Claimant Database 42 I also accept Mr Beven's evidence that the Claim Data available for New Registrants was incomplete or missing, largely as a result of the reduced or abridged registration requirements allowed by orders made in October and November 2019. 43 Clause 15 of the Scheme provides that the Administrators "must use reasonable endeavours to ensure the accuracy of the Claimant Database and the Claim Data." I accept that in order to ensure the accuracy of the Claim Data the Administrators were required to undertake a huge amount of work to address the missing or incomplete data, including by a series of community visits in remote Aboriginal communities after the relaxation of COVID-19 lockdowns in July 2020. Then, following orders of the Court on 8 September 2020, the Administrators undertook further community visits and consultations in eight more remote Aboriginal communities for the same purpose. 44 I accept that the extent of the missing or incomplete data was significantly more than the Administrators could reasonably have anticipated when they made their fee estimate on 6 January 2020, and that this accounts for some of the increase in the fee estimate.

Data matching with Register of Births, Deaths and Marriages 45 The evidence also shows that the Claimant Database was incomplete or inaccurate in terms of the dates of birth and death of Deceased Claimants because the Registered Representatives of those Claimants did not always have access to definitive evidence of those dates. Under Queensland legislation, a child or spouse of a deceased is only able to obtain the birth certificate of a person from the Register of Births, Deaths and Marriages (the Register) if they have written authority from the person or a power of attorney, or they are the executor or administrator of their estate. Similarly, but less restrictive access requirements apply in relation to access to the death certificate of a deceased person. 46 Under the AMS, the date of birth and death, if applicable, of a Claimant was essential Claim Data for the Administrators to allocate a Claimant to a particular category. In order to address the absence of accurate dates of birth and death, the Administrators negotiated a service agreement with the Queensland Registrar of Births, Deaths and Marriages (the Registrar) between 28 January 2020 and 6 May 2020. 47 Under that agreement, the Registrar undertook a data matching exercise to match Claimants and Registered Representatives in the Claimant Database against the Register. The result was that the Registrar provided the Administrators with potential options for missing dates of birth and death, and also dates of birth and death in the Register which were inconsistent with the Claimant Database. The Administrators then reviewed those results and discussed them with Claimants and Registered Representatives. 48 I accept that the necessity for Administrators to arrange for the Registrar to conduct the data matching exercise and for the Administrators to review the results could not reasonably have been anticipated by the Administrators when making their fee estimate on 6 January 2020. This also accounts for some of the increase in the Administrators' fee estimate.

Additional staffing to address COVID 19 closure of communities and incomplete or missing Claim Data 49 I accept Mr Beven's evidence that the closure of remote communities in Australia and PNG because of the COVID-19 pandemic led to higher than predicted staff numbers in Australia and the necessity to employ staff in PNG added to the Administration Costs. Mr Beven says, and I accept, that the Administrators' fee estimate was made on the basis that most of the communication with Claimants and Registered Representatives would be done by way of personal consultation and community presentations, which was the more efficient method given the characteristics of the claimant group. 50 When the remote communities closed in March 2020 due to the onset of COVID-19, the communication had to be undertaken by way of either the Stolen Wages telephone line, or by way of staff based in the relevant communities. Over the course of the administration, 19 casual staff were employed by the Administrators to work at the Stolen Wages telephone call centre, with five identifying as Aboriginal, six identifying as Torres Strait Islander and three as Papua New Guinean. Two PNG residents were employed to provide face-to-face assistance to Claimants and Registered Representatives located in the PNG treaty villages in the Western Province of PNG. 51 I accept that the requirement for higher than predicted staff numbers in Australia and the necessity to employ staff in PNG could not reasonably have been anticipated by the Administrators when making their fee estimate on 6 January 2020. This too explains some of the increased fee estimate.

Difficulties communicating with PNG Claimants and Registered Representatives 52 The evidence shows that the Administrators experienced greater difficulties in engaging with PNG Claimants and Registered Representatives than they could reasonably have anticipated. The modes of communication with the PNG treaty villages in the Western Province of PNG were always limited due to there being no electricity, roads or telephones in most of the treaty villages, and had non-existent or unreliable postal services, but communication became significantly more difficult. Once the international border between PNG and Australia was closed due to COVID-19. These difficulties added to Administration Costs. 53 I accept that these additional Administration Costs could not reasonably have been anticipated by the Administrators when they made their fee estimate on 6 January 2020.

Alternative determination of eligibility of Papua New Guineans 54 I accept Mr Beven's evidence that the Administrators experienced significant difficulties in verifying the claims of Papua New Guineans, which resulted in additional administration costs. In part, this issue was resolved through amendments to the Scheme sought by the Administrators, which were made on 8 September 2020. 55 The amendments allowed the Administrators to verify the claims of PNG Claimants through data matching exercises of those claimants against the Queensland Government database for PNG claimants assessed by the Queensland Government as being entitled to reparations under its Indigenous Wages and Savings Reparations Scheme. I accept that this work could not reasonably have been anticipated by the Administrators when they made their 6 January 2020 fee estimate.

PNG banking difficulties 56 I am satisfied on the evidence that the significant number of changes in the names and the spelling of the names of PNG Claimants and Registered Representatives led to unforeseen difficulties in making distribution payments to them. 57 The Administrators found that, unlike the Australian banking system, PNG banks would only accept payments to a person if the name on the payment and the name of the bank account exactly match. This led to a large number of return payments from PNG Claimants and Registered Representatives, even though they represented only a small percentage of the total Claimants. I accept that this difficulty and increased cost could not reasonably have been anticipated by the Administrators when they made their 6 January 2020 fee estimate.

Taxation matters 58 I accept Mr Beven's evidence that the administration of the Scheme involved some complex taxation questions that necessitated regular interactions between the Administrators' taxation advisers (being GTAL's Sydney office) and the ATO. This included questions relating to the structure of the Scheme, the nature of, and process for, payments to Claimants and Registered Representatives, and whether GST was payable on the payments to the litigation funder and claimable as an input tax credit by the Administrators. I accept that these taxation matters were important to the Scheme and to the payments received by claimants under the Scheme, and that the Administrators could not reasonably have anticipated the extent of this work when they made their 6 January 2020 fee estimate. 59 Having regard to the matters set out above I am persuaded that it is appropriate to approve an increase in the Administrators' estimated fees until the conclusion of the administration by the amount sought, being a maximum of $1.12 million.

The proposed distribution to an erroneously excluded Claimant 60 In relation to the Final Claimant, Mr Beven says that he was erroneously determined by the Administrators not to be a "Participating Claimant" and was therefore not sent a Distribution Statement and he did not receive a Preliminary Distribution. 61 Clause 39 of the Scheme provides that the Administrator will send a Distribution Statement to each Participating Claimant by no later than 30 October 2020. The Administrators seek an order that, for the purpose of sending a Distribution Statement to the Final Claimant, they be permitted to extend the date to 14 days from the date of these orders, and that they be permitted to make a Distribution to the Final Claimant in accordance with the terms of the Scheme. Such an order is appropriate.

The proposed enlargement of time to make final distributions 62 Clause 49 of the Scheme provides that the Administrator shall "as expeditiously as possible", following the day that is three months after the date of the Distribution Statements are mailed to eligible claimants, make the final distribution payments to eligible claimants. 63 The Administrators seek an order that, for the purposes of the final distribution the Administrators be permitted to extend the date in clause 49 to a date which is three months from the date of these orders. It is appropriate to make such an order.

The proposed Administrators' report at the conclusion of the Scheme 64 Clause 69 of the Scheme provides that, at the conclusion of the Scheme, the Administrators shall prepare a report for the Court (and provide a copy to the applicant and the respondent) which sets out the following: (a) the total number of Claimants who applied to participate in the Scheme, including the names of Deceased Claimants; (b) the total number of Registered Representatives who applied to participate in the Scheme, and the number of Deceased Claimants and Claimants who have died in respect of those Registered Representatives; (c) the number of people the Administrator notified were ineligible to participate in the Scheme, and the reason therefore; (d) the amount distributed under the Scheme to Claimants and Registered Representatives; (e) the amount distributed under the Scheme by reference to the categories of persons specified in the AMS; (f) the amount of the Administration Costs, including a breakdown of the constituent components of those costs; (g) whether any time period specified in the Scheme was missed; (h) the total of the Uncollected Amounts; and (i) the amount of any residue in the Settlement Distribution Fund and the manner of any application of that residue. 65 The Administrators seek an order that the report also be published on the stolen wages settlement website, www.stolenwages.com.au, which is operated by the Administrators. 66 The Court's obligation to protect the interests of group members does not cease with settlement approval and, as the Federal Court Class Actions Practice Note (GPN-CA) recognises, it will often be appropriate for the Court to require reports as to the progress and costs of the administration. This case involved an issue of significant public interest and it was settled for a great deal of money. As was recently noted: …given their genesis and objects, and the public interest often associated with such large and high-profile cases, class action settlements are rightly subject to a degree of scrutiny not generally applied to more traditional forms of litigation. Parliaments, lawyers, academics, litigants, and the public at large are entitled to expect that they will have access to sufficient information about the resolution of class actions to enable them to evaluate whether the system is achieving its purposes. Jagot J, Murphy B and Moss A, Open Justice and Class Actions: Including a Judicial Perspective, The Australian Class Action - A 30-Year Perspective (Ed. Legg M and Metzger J, Federation Press, 2023). In my view it is appropriate that the Administrators' report regarding the administration of the settlement be made publicly available.

Conclusion 67 I have made the orders the Administrators seek. I certify that the preceding sixty-seven (67) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Murphy.