Plaintiff v Defendants

2 Victoria Police and Country Fire Authority investigated the cause of the fire. The police investigation observed a twisted, bent and dented star picket on the ground in the Johns paddock. They concluded that there was a possibility that contact between the slasher blades or some other metallic part and the star picket could have created a spark.

3 On 8 December 2016, Mr Schmid commenced a group proceeding as provided for in Part 4A of the Supreme Court Act 1986 (Vic) (the 'Supreme Court Act') on behalf of himself and others who had suffered loss and damage as a result of the bushfire. Initially proceedings were against Mr Skimming only.[1] Upon further investigation, detailed below, Mrs Johns was joined as a second defendant. Mr Skimming held a home insurance policy with the third defendant, Auto & General Insurance Company Ltd who were joined as a party upon their denial of liability to Mr Skimming. The fourth defendant, generally known as Agrison, is pleaded to be the manufacturer of the tractor and the slasher used by Mr Skimming. It was ultimately alleged by the plaintiff that the stabilising chain failed causing contact between the spinning power take off (PTO) shaft and the deck of the slasher which caused the fire. The failure of the stabilising chain was alleged to be a safety defect. The claim against Agrison was made in common law negligence and under the Australian Consumer Law.

4 In August 2019, the plaintiff and the second defendant reached an agreement to discontinue the proceeding on the basis that each bear their own responsibility for legal costs incurred. A summons for approval of that agreement was issued but was then adjourned pending the imminent mediation with the remaining defendants.

5 At mediation in January 2020 the remaining parties settled for the sum of $10,500,000 inclusive of any liability for costs with a denial of liability. Following this successful judicial mediation, a further summons was issued seeking approval of the settlement against the first, third and fourth defendants.[2] Any settlement proposed by the parties must be approved by the Court as required by s 33A of the Supreme Court Act.

6 The further summons, together with the earlier summons, seek orders approving the settlement and the proposed distribution scheme together with legal costs. In essence the parties seek orders dealing with:

(a) Approval of the conditional settlement of the proceeding on the basis that the sum of $500,000 be paid by the third defendant and the sum of $10,000,000 be paid by the fourth defendant.

(b) Granting leave to the plaintiff to discontinue proceedings against the first and second defendant;

(c) Approving the proposed settlement distribution scheme setting out the method of calculating the entitlement to be paid to group members from the settlement;

(d) Appointing an administrator and approving administration of the scheme;

(e) Approving payment toward legal costs and disbursements, provision of which is included in the sums paid by the third and fourth defendants. The legal costs cover both the proceeding itself and the cost of administration of the settlement;

(f) Other ancilliary orders, including a reimbursement payment to the lead plaintiff Mr Schmid.

7 For the reasons that follow, I approve the settlement agreement reached by all parties. I will approve the proposed distribution scheme. I have approved some of the fees and disbursements in accordance with the following table. The plaintiff is directed to provide further specified material in relation to the outstanding matters regarding fees and disbursements.

$176,992.15 (plus GST) (as presently assessed without uplift or loading)

$13,761 (plus GST) (as presently assessed without uplift or loading)

$119,004.42 (fees) (inc GST) plus $5,974 (disbursements) (inc. GST)

8 Mr Skimming pleaded guilty to a single charge of failing to carry the prescribed fire suppression equipment during a fire danger period.[3] The plaintiff's claim against him pleaded breach of a duty of care as occupier by slashing in the conditions as existed on 19 December 2015 and by not having fire suppression equipment in the tractor. He had an informal agreement with Mrs Johns that he have use of her land on condition that he slash the grass from time to time to reduce the fire risk and on this basis was pleaded as an occupier of both parcels of land. The fire began near the fence line joining the Skimming and the Johns properties.

9 In May 2017 Mrs Johns was joined as a defendant. The pleading against her alleged a duty of care to group members on the basis that she was also an occupier of her property. The scope or content of her duty was directed at the risk that use of the tractor and slasher might discharge sparks and that the tractor and slasher might be used under high bushfire risk weather conditions. This, it was pleaded, made the use of the machinery under high bushfire risk conditions a dangerous activity. As a dangerous activity being conducted on her land the duty she owes was said to be non-delegable. Her liability therefore arose from her failure to ensure that Mr Skimming exercised reasonable care when slashing. There is no pleading of any direct negligence on the part of Mrs Johns or arising from the state of her premises. In particular, for reasons elaborated below as to cause of the fire, there is no pleading that the star picket identified on her land in the police investigation or the state of her premises was of any relevance to the cause of the fire.

10 Mr Skimming made a claim on his home insurance policy which indemnified him for legal liability as owner or owner/occupier, for death or bodily injury or property damage which occurs at the insured address. The address was recorded as 260 Finns Rd. There was a policy in place as at the date of the fire but the insurer denied indemnity. In essence their denial stemmed from the fact that the relevant accident occurred on Mrs Johns land and not at Mr Skimming's address. As a result the insurer was joined as the third defendant.

11 Despite the outcome of the police and Country Fire Authority investigations, the plaintiff sought further evidence as to the probable mechanism of ignition of the fire. He retained the services of Dr Barter, metallurgist. Dr Barter inspected the tractor, the slasher, the PTO shaft that connects and provides power from the tractor to the slasher, the star picket implicated by the earlier investigations as well as the chain link that had been recovered from the slasher. Many of the items were cleaned and subject to multiple testing regimes in order to provide an opinion on the matters requested of him. Dr Barter's report dealt with the presence of marks or other signs of damage on the items examined and whether that damage or those marks had caused or created sparks. Subsequent to these inspections and testing, Mr Skimming located some further chain from the slasher. This too was subject to testing.

12 Ultimately Dr Barter concluded that the stabilising chain had failed and the failure of the chain caused the PTO drive shaft to come into contact with the metal deck of the slasher while rotating, and this caused the discharge of molten metal sparks. The chain failed because of a poorly manufactured link. As a result Agrison was joined as a fourth defendant as the manufacturer of goods containing a safety defect under the Australian Consumer Law and in negligence. The expert retained by Agrison, Dr Jeff Gates also concluded that the stabilising chain would not have failed had it been of reasonable quality but reached different conclusions to Dr Barter as to the appropriate practice in the fourth defendant's selection of the chain for use. There remained matters in contest between the experts to be ventilated at trial.

13 Agrison joined as a third party Harley who they said supplied them with the chain. Ultimately that claim was withdrawn. Harley was never added as a defendant and so no more need be said of any role played by them.

14 The plaintiff relied on the following material in support of the application for approval:

(a) Affidavit of Brendan Pendergast and exhibits sworn 28 August 2019;

(b) Affidavit of Joel Martin Kavanagh sworn 4 October 2019;

(c) Affidavit of Kathryn Amy Emeny sworn 24 March 2020 and exhibits 1 and 2 to affidavit;

(d) Affidavit of Brooke Byrne sworn 12 February 2020 and exhibit 3 to affidavit;

(e) Affidavit of Kathryn Emeny sworn 16 April 2020;

(f) Affidavit of Kathryn Amy Emeny sworn 6 May 2020;

(g) Affidavit of Brendan Pendergast sworn 27 May 2020 and exhibit to affidavit;

In addition the plaintiff put before me the following material on a confidential basis:

(a) Exhibits 1 & 2 to Affidavit of Brooke Byrne sworn 12 February 2020;

(b) Exhibit 3 to Affidavit of Kathryn Amy Emeny sworn 9 April 2020;

(c) Exhibit 1 to Affidavit of Kathryn Emeny sworn 16 April 2020;

(d) Affidavit of Catherine Dealehr filed 29 April 2020 (unsworn due to covid-19);

(e) Affidavit of Brendan Pendergast sworn 15 June 2020 and exhibits;

(f) Affidavit of Brendan Pendergast sworn 16 July 2020;

(g) Affidavit of Catherine Dealehr sworn 17 July 2020 and exhibits;

(h) Affidavit of Catherine Dealehr sworn 20 July 2020 and exhibits, (including adoption of matters from her earlier unsworn affidavit);

15 The plaintiff seeks an order pursuant to s 33ZF that some of the material filed confidentially be ordered to remain confidential and be kept in a sealed envelope on the Court file.

16 As the settlement distribution scheme has been approved it no longer needs to remain confidential and is Annexure 1 to these reasons.

17 The plaintiff seeks an order that the remainder of the confidential material relied on remain confidential. The process of approval by the Court relies on the candid expression of the legal practitioners and on them putting all relevant material before the court.[4] To that end receipt of evidence confidentially is necessary to promote that candour so that the Court is well placed to assess the settlement proposed. However, following approval, confidentiality should not extend beyond what is strictly necessary for the administration of justice.[5] The confidential opinions of Counsel should remain confidential. I was also assisted by the written submissions of Counsel which explained much about the nature of the litigation and the operation of the proposed settlement. These submissions were provided at the approval hearing and were not confidential.

18 I accept that the confidential affidavits of solicitors, their exhibits and the reports of the costs consultant ought remain confidential, save to the extent that I have made express reference to matters contained in them in these reasons. I will make orders concerning their continued confidentiality pursuant to s 33ZF of the Supreme Court Act.

19 Mr Schmid and other group members suffered damage and loss to property in the bushfire. The group also represents persons who have suffered physical and psychiatric injury or property damage. I am informed that there are no claims for pure economic loss as a result of the fire. Orders were made setting a timetable by which group members may opt out of the proceeding and 11 group members did opt out. In April 2020 further orders were made closing the class. Once closed, the group contained 146 members. There are 12 group members including the plaintiff who bring personal injury claims. The group members' claims are substantially property damage.[6] The property loss covers both personal and business losses. Some of the property loss is insured and some is not. Although none of the relevant insurers of group members are a party to the proceeding the proposed distribution method deals with a distribution of damages as between insured and insurer.

20 Section 33V of the Supreme Court Act states that settlement or discontinuance of a group proceeding requires court approval. The purpose of requiring approval is to ensure that the outcome negotiated by the plaintiff, as representative of the group, with the defendant is one that is in the interests of group members as a whole.[7]

21 Goldberg J in Williams v FAI Home Security Pty Ltd (No 4)[8] in applying the equivalent provisions under the Federal Court of Australia Act 1976 (Cth), identified the following considerations as typically relevant to an assessment of an application for approval:

Those factors are: (1) the complexity and duration of the litigation; (2) the reaction of the class to the settlement; (3) the stage of the proceedings; (4) the risks of establishing liability; (5) the risks of establishing damages; (6) the risks of maintaining a class action; (7) the ability of the defendants to withstand a greater judgment; (8) the range of reasonableness of the settlement in light of the best recovery; and (9) the range of reasonableness of the settlement in light of all the attendant risks of litigation.[9] (the 'Williams factors')

22 The assessment by the Court involves considering whether the settlement is in the interests of the group members as a whole having regard to the issues between them and the defendant as well as what might be fair and reasonable as between group members. There may be differences as to amounts or the basis upon which any damages might be distributed that must be considered.

23 This Court has frequently observed that the Williams factors are a useful guide for consideration but that each application for approval must involve consideration for specific factors that might raise issues about the fairness or appropriateness of the proposed compromise.[10] In particular, it involves identifying any features that might be said to be obviously unreasonable or unfair.[11]

24 The outcome will be fair and reasonable if it is within a range of fair and reasonable outcomes.[12] In Darwalla v F Hoffman-La Roche Jessup J said:

It is not, I consider, the court's function under s 33V of the Federal Court Act to second-guess the applicants' advisors as to the answer to the question whether the applicants ought to have accepted the respondents' offer; the court's function is, relevantly, confined to the question whether the settlement was fair and reasonable. There will rarely, if ever, be a case in which there is a unique outcome which should be regarded as the only fair and reasonable one. In settlement negotiations, some parties, and some advisers, tend to be more risk-averse than others. There is nothing unreasonable involved in either such position and, under s 33V, the court should, up to a point at least, take the applicants and their advisors as it finds them. Neither should the court consider that it knows more about the group members' businesses than the applicants, or more about the actual risks of the litigation than their advisers. So long as the agreed settlement falls within the range of fair and reasonable outcomes, taking everything into account, it should be regarded as qualifying for approval under s 33V.[13]

25 Fundamentally, whether or not the settlement is in the best interests of the group members and should be approved requires consideration of the prospects of success or failure and the probable quantum of damages.

Is the settlement fair and reasonable as between the parties?

26 Mrs Johns personally has no means to satisfy any judgment. This fact together with the assessment of the prospects of success as outlined in the confidential opinion of Counsel dated 9 October 2019, satisfied me where the plaintiff sought to discontinue against the second defendant, that the discontinuance was fair and reasonable. I indicated this to the parties when the summons came before me in November last year[14], before adjourning the summons. In circumstances where the group members will now receive a benefit from the settlement achieved with other defendants, I have no hesitation in approving the discontinuance against Mrs Johns.

27 The proceeding against the remaining three defendants settled at a judicial mediation in January 2020. This was shortly prior to the trial which was listed for hearing in March 2020 with an estimate of ten to fifteen days. The parties by that time were in a position to make a detailed assessment of both the legal and factual issues remaining in dispute. Large amongst the considerations of the group members was the ability of the defendants to withstand any judgment that might be obtained. Mr Skimming has no personal means of satisfying any judgment. The third defendant would only be liable to contribute on Mr Skimming's behalf if the plaintiff can establish that the policy relevantly covered Mrs Johns' land where the fire commenced. The third defendant's contribution reflects an assessment of the risk of this were the matter to proceed. Agrison's contribution to the settlement is the limit of its available insurance and, having been reinstated for the purpose of the litigation, has no other capacity to meet any judgment.

28 The potential damages to which the group might be entitled is significantly more than the proposed settlement. However, the group face the real prospect of being unable to recover any greater damages that might be awarded beyond the amount presently offered. In those circumstances the principal consideration is the very real limitation on the group members to recover a more favourable outcome from the third and fourth defendants should the matter proceed to trial. The settlement sum of $10.5 million would, if costs and distribution amongst group members as proposed are approved, result in a payment to each group member of an amount approximately 31% of the value of their claims as provisionally assessed by the plaintiff's solicitors. This may well represent the 'best recovery'[15] that the group could obtain from the litigation.

29 In light of the consensus of expert opinion as to the state of stabilising chain, damages might be considered to be a less than fair reflection of the strength of the case against the fourth defendant. I have read the confidential opinions of Counsel as to the assessment of the claims and the prospects of recovering against the third defendant and fourth defendant. Based upon the opinions expressed there, I accept that in proceeding to trial, the group face a very real risk that no greater sum could be recovered against those defendants.

30 Incurring further costs is itself likely to further reduce the amount of potential damages. The cost involved in the trial are likely to be significant given there would be three defendants. While there may be little factual dispute on the expert evidence as to the cause of the Scotsburn fire, other common questions that would fall for determination at trial are:

(2) What areas were damaged by the Scotsburn bushfire?[16]

(3) Did Mr Skimming owe a common law duty to the plaintiff and group members to exercise reasonable care to reduce or eliminate the Risks so as to avoid:

1. personal injury; and/or
2. physical damage to property;

1. economic loss resulting from damage to property?[17]

(4) Did Mr Skimming breach his common law duty of care?[18]

(5) If Mr Skimming breached his common law duty of care, was such breach a cause of any of the losses suffered by the plaintiff?[19]

(10) Is Auto & General liable under the policy to indemnify Mr Skimming against any liability he has to the plaintiff or group members?[20]

(11) Did Agrison owe a common law duty to the plaintiff and group members to take reasonable care to reduce or eliminate the Risks so as to avoid:

1. personal injury; and/or
2. physical damage to property;

1. economic loss resulting from damage to property?[21]

(12) Did Agrison breach any such duties to the plaintiff and group members?[22]

(13) If Agrison breached any such duties, was such breach a cause of any of the losses suffered by the plaintiff and group members?[23]

(14) Did Agrison as manufacturer supply the Tractor and Slasher in trade or commerce?[24]

(15) Did the Tractor and Slasher have safety defects within the meaning of section 9, ACL?[25]

(16) If the Tractor and Slasher had safety defects within the meaning of section 9, ACL, did the plaintiff and group members suffer injury, loss and/or damage because of the safety defects?[26]

31 The cost and general risk of litigation are a relevant factor especially where the limited pool of potential funds would have to meet both damages and legal costs. Additionally any judgment in favour of the plaintiff on common questions would still require each group member to individually establish their damages claims. The settlement provides the benefit of certainty and maximises the amount of available funds that can be distributed as damages. The finalisation of litigation by agreement affords a certainty to group members, containing not only costs but also avoiding the continuing stress and passage of time that accompany a court determined outcome.

32 As to the other matters relevant to whether the settlement is fair and reasonable as between the parties I note that no group member has objected to the proposed settlement. Although the various insurers of group members are not parties I am informed that they have been given notice of the proposed settlement and none have expressed opposition.

33 Accordingly I have formed the view that as between the parties the settlement is fair and reasonable.

Is the Settlement Distribution Scheme to group members one that is fair and reasonable?

34 The settlement includes a scheme for distribution of settlement funds (described as the compensation pool) to group members including the plaintiff. The scheme of distribution as approved is annexed to these reasons. Legal costs and disbursements and the payment to Mr Schmid described as a reimbursement payment to compensate him for undertaking the obligations of being the lead plaintiff of the group as approved are both to be deducted from the settlement sum prior to calculating the distribution to group members. These matters of legal costs are dealt with below.

35 I will deal first with the way in which each group member's entitlement is calculated under the scheme of distribution. A considerable amount of work has been done by Madden's solicitors to quantify the value of the claims and assess the likely amount recoverable. As the compensation pool is significantly smaller than the total amount that is likely to be assessed, the assessments must be adjusted to reflect each member's entitlement to damages from the compensation pool. The method of distribution proposes that each claimant be treated identically and receive compensation for an equal portion of their loss.

36 The Administrator will assess the loss of all group members, adding them together to form an aggregate loss amount. A formula will then calculate the percentage to be applied equally to the assessed loss of each group member. That percentage will then be applied to each assessment to derive an individual entitlement. This is intended to operate so that all group members, irrespective of the nature of their loss will receive the same pro rata proportion of their damages as assessed.

37 The legal analysis as to a group member's prospects for establishing a liability for loss and damage varies depending on a number of factors. First, the liability of the defendants for claims for damages arising from personal injury is joint and several. However, in relation to the claims for damage to property some different issues arise. As between the defendants, the third defendant has pleaded that the claim against its insured is an apportionable claim within Part IVAA of the Wrongs Act 1958 (Vic) and that the first and fourth defendants[27] are concurrent wrongdoers as provided by s 24AH. If established, the liability of any defendant who is a concurrent wrongdoer is limited to an amount reflecting that proportion of loss and damage that the court considers just having regard to the extent of that defendant's responsibility for the loss and damage. This might limit any liability that the third defendant must indemnify. Further, in claims brought under the Australian Consumer Law, property losses that are of personal property but not business property may be claimed.

38 Therefore in any judgment obtained, it may well be that personal injury damages might be recovered differently to property claims. It may also be that within the group of property claims, there will be different categories of loss that can be recovered depending on the availability of insurance, the nature of the losses and on the cause of action that may succeed. In any judgment there might be greater entitlements recoverable by some group members over others.

39 Despite this the proposed scheme does not differentiate between claims based upon any of those potential distinctions. The most significant reason for this, as was submitted by Mr Tobin SC, was that the satisfaction of any judgment obtained would be reduced by the limitations of insurance coverage. The difficulty in satisfying judgment would apply without discrimination to all group members. In circumstances where what has been offered would result in payment of approximately 31% of the claims as assessed, it is said to be fair and reasonable that the limitation on recovery of any judgment sum be borne equally by all group members.

40 I accept in the circumstances of this proposed settlement that a proportionate allocation applied consistently to all group members is a fair and reasonable method of distributing the compensation pool. Where the settlement sum is not based upon any figure relevant to the potential judgment on the claims but primarily by the ability of defendant tortfeasors to pay, it is both reasonable and fair that group members equally bear any shortfall in damages.

41 Second, I must consider the way in which distribution to group members accounts for losses that were wholly or partly insured. I am informed that there are 79 registered claims, of which 42 involve mixed insured and uninsured losses. Fifteen are insurance only claims. The settlement scheme provides for a group member's insurer to recover a component of the member's assessed entitlement (clause 6.5(a)).[28] The method for determining the amount recovered is to be, where possible by agreement between the Administrator and the Insurer (clause 6.5 (b)) or in the absence of agreement, determined by the Administrator (under clause 6.5(c)), determined in accordance with clause 6.7. There is a right to dispute the Administrator's determination by either of a group member or insurer.

42 Where clause 6.5(b) operates the deed is silent on any need to obtain the agreement of the group member or a mechanism for a group member to dispute any agreement reached between Administrator and Insurer.[29] It is in my view appropriate that a group member can dispute an agreement reached between Administrator and Insurer. The proposed orders provide that distribution of entitlements will not be distributed until seven days after agreement between group member and their insurer in relation to an amount under clause 6.5, however that amount is arrived at. Absent agreement, any distribution will then await the decision of the court in Lenehan v Powercor on insurance issues. In this way, any agreement between the Insurer and Administrator is also subject to agreement from the group member prior to distribution of funds

43 Whilst the steps to agree or make a payment to insurers may be beyond the ambit of this proceeding, having within the process a mechanism to quickly and economically resolve this question in a non-binding way is to the benefit of group members. The Administrator's decision is expressly said to be administrative and not determinative of legal rights between insurer and group member. The absence of any clear mechanism for a group member to participate in agreeing a distribution under clause 6.5(b) or to agitate a disagreement within the scheme might be also be explicable on the basis that legal rights are not determined by the decisions made under the distribution scheme.

44 As to the manner of the Administrator's determination, there is no one approach in principle provided for but rather a case by case approach. The reasons for this approach are set out in the confidential affidavit of Mr Pendergast which set out the difficulties associated with trying to apply a consistent principle across a wide variety of circumstances and applicable contracts.[30]

45 In arriving at a determination in each case, the Administrator is obliged to have regard to six matters:

(1) any agreement reached between insurer and group member;

(3) the Insurance Contracts Act 1984 (Cth);

(4) any notice or submission made by the insurer or group member;

(6) Finally there are a number of issues that might arise in arriving at an appropriate amount because an award of damages is not identical to the contractual entitlements arising under an insurance contract for repayment. The administrator of the settlement in Lenahan v Powercor has referred to this court questions arising under that scheme on the approach to be taken on these insurance issues. Justice Nichols' decision and reasons are presently reserved.[31] Those reasons are the sixth matter that will be considered by the Administrator.

46 Group members and insurers have a limited right of review if they disagree with the Administrator's determination. The legal rights as between group member and insurer are not determined by the Administrator's determination.

47 Once the assessment including the insurer payment, is notified to the group member and their insurer, both have a limited period to notify any error, slip or omission.

48 If group members have to pay or refund any statutory benefits or other regulatory or legal obligations then the scheme provides that group members indemnify the administrator in respect of such obligations. It provides for circumstances in which the Administrator can make payments to satisfy such obligations or withhold or adjust payments otherwise due to group members.

49 I am informed that since settlement occurred in March, while taking the steps necessary to bring the approval before the Court, the process of preparing assessments has been well advanced. The funds have also been paid into an interest bearing trust account pursuant to the settlement deed with interest accruing to the settlement sum. As such the plaintiff's advisors expect to be in a position to make distribution within a short time after approval and no delay in distribution is expected.

50 I am satisfied that the method for determining relevant amounts and for distribution of those amounts is fair and reasonable.

51 The Court is also asked to approve the costs and disbursements claimed by the Plaintiff's lawyers in conducting the representative proceeding. The costs as approved are to be deducted from the settlement sum, there being no other avenue of cost recovery from the third and fourth defendants. It must also be borne in mind that as against the first and second defendants the plaintiff and group members bear their own costs.

53 In scrutinising costs that are claimed I am required to be satisfied that they are reasonable in all the circumstances and proportionately incurred.[32] The need for scrutiny derives from an inability of group members to have control over the costs incurred in conducting the proceeding for their benefit and a limited ability to have information available to them about the costs being incurred. Typically however, group members despite these limitations are generally expected to pay a share of the legal work done from which they benefit.[33]

54 The quantum of costs for which approval is sought has in this case been informed by an assessment of Ms C Dealehr an independent costs consultant of the Australian Legal Costing Group. Ms Dealehr was appointed by the Court in orders made 12 February 2020 and 24 April 2020 to inquire into and report whether the plaintiff's claimed costs are fair and reasonable both as to the work done and the amount claimed. In accordance with the orders, Ms Dealehr prepared two reports dated 22 April 2020 and 16 July 2020 respectively. In reporting to the Court, Ms Dealehr acted as an expert witness reporting in compliance with Civil Procedure Act 2010 (Vic) and the Expert Witness Code of Conduct of the Supreme Court. Ultimately it is for the Court to be satisfied as to both reasonableness and proportionality, the expert opinion of Ms Dealehr providing assistance upon those questions.[34]

55 The plaintiff's claim for legal costs covers three aspects:

(a) a claim for the costs of the proceeding, referred to as the 'common benefit costs' using a gross sum costs methodology in accordance with r 63.07;

(b) a claim for the costs associated with administration of the scheme, both incurred and anticipated; and

(c) a claim for costs to be paid to Mr Schmid to reimburse him for the time and obligations imposed upon him as the lead plaintiff.

56 Rule 63.07(2) provides that a Court may order the calculation of costs by the calculation of a specified gross sum, or some other method of determination rather than by process of taxation. The purpose of a specified gross sum is to minimise the expense and delay that might be associated with a taxation. It requires a broad brush approach but with regard to there being adequate information before the Court to fix a figure that is logical, fair and reasonable.[35]

57 There are a number of questions to be determined in approving the common benefit costs. First, there is the question of whether there has been adequate cost disclosure under the Legal Profession Uniform Law 2014 (Vic) ('Uniform Law'). Second, what is the appropriate assessment under the Supreme Court Scale of costs (the 'Supreme Court scale') for the fees and disbursements incurred, either under a valid cost agreement if there is one, or by general principles in accordance with s 172 of the Uniform Law if not.[36] Third, what discretionary allowances and uplifts is it appropriate to apply to the assessed fees.

58 The plaintiff signed three costs agreements and disclosures, relevantly on 13 October 2016, 3 May 2017 and 9 July 2019. The agreements updated the scope of work and revised estimates as the plaintiff's claim evolved. Some but not all group members have signed one or more of the three cost agreements and disclosures. The terms of the agreements are a factor in determining whether the claimed costs are fair and reasonable. Ultimately, Ms Dealehr reaches the opinion that the first and second agreements would likely be held by the Costs Court to fail to meet the disclosure obligations imposed by the Uniform Law.

59 In addition to updating the scope of work and the nature of the causes of action now being pursued, the third costs agreement also sought to rectify the shortcomings exposed in the earlier two agreements relating to costs disclosures, and replaced the earlier two agreements.

60 The third agreement provided professional fees would be charged pursuant to the costs scale, plus the addition of GST to both fees and disbursements. Within the costs scale, there is a discretionary item for skill care and responsibility: item 17. Rule 63.48 sets out factors that impact on the exercise of that discretion by a court. Typically an allowance under item 17 is based on a percentage of the scale fees ('scale loading'). There was no reference to the scale loading or the manner of its application included in any of the written costs agreements.

61 The third agreement did make provision for a loading on professional fees of 30% pursuant to Rule 63.34 ('special grounds loading'). The rule provides:

63.34 Charges of legal practitioner

(1) Subject to paragraph (3), a legal practitioner for a party to whom costs are payable (whether the basis of taxation is the standard basis or the indemnity basis) shall be entitled to charge and be allowed costs in accordance with the scale in Appendix A unless the Court or the Costs Court otherwise orders.

(2) Witnesses' expenses and interpreters' allowances shall be fixed in accordance with the scale in Appendix B.

(3) The Court may, on special grounds arising out of the nature and importance or the difficulty or urgency of the case, allow an increase not exceeding 30 per cent of the legal practitioner's charges allowed on the taxation of costs with respect to -

(a) the proceeding generally; or

(b) to any application, step or other matter in the proceeding.

(4) Where the Court so directs, the Costs Court shall have the same authority as the Court under paragraph (3) to allow an increase in the fees set forth in Appendix A.

62 In addition the third agreement provided that an uplift fee of 25% would be applied to professional fees on the basis that the agreement was a conditional costs agreement, as provided for by s 182 of the Uniform Law ('conditional uplift fee').

63 The third agreement was identical with the earlier two in terms of identifying the Supreme Court costs scale as the basis for charging, identifying a 30% special grounds loading pursuant to rule 63.34 and a 25% conditional uplift fee.

64 Ms Dealehr is of the view that the third agreement cured the deficiencies she identified in the earlier agreements and operated to cover the whole period of work undertaken. However, she expressed the opinion that the third agreement did not comply with the disclosure obligation on the solicitors to advise the basis of fees charged by Counsel and an estimate of those costs as required under s 175(1) of the Uniform Law.

65 Much of the information to be disclosed was not made available by Counsel to the solicitors, Maddens until January or February 2020. The information was then disclosed to the plaintiff on 26 February 2020. Ms Dealehr was instructed that there has been no disclosure to Maddens yet in relation to the basis of charging or the estimate of fees for almost 45% of the fees incurred by counsel.

66 Despite this Maddens had provided the plaintiff with its own estimates of counsels' fees through until the conclusion of a trial. By the third agreement this was estimated at $1,400,000. Total counsel fees claimed (approximately $470,000) were incurred within disbursement estimates. As at June 2019, Counsels' fees made up approximately one third of disbursements.[37]

67 Ms Dealehr canvasses the potential effect of this non-disclosure. A contravention of s 175 disclosure obligation results in the fee agreement being void by operation of s 178(1)(a) of the Uniform Law. The consequence then would be that the solicitors could only recover 'fair and reasonable costs,[38] which would likely not include any special grounds loading or conditional uplift fee. The Uniform Law provides an avenue to avoid the application of s 178(1). Rule 27A provides:

Non-compliance with disclosure obligations - disapplication of sections 178(1) & (2) of the Uniform Law

(1) This rule applies where a law practice has contravened the disclosure obligations of Part 4.3 of the Uniform Law in relation to a particular matter.

(2) Section 178(1) and (2) of the Uniform Law do not apply in relation to the law practice (so far as they would otherwise apply to the matter concerned) in circumstances where the relevant authority, a costs assessor, a court or a tribunal is satisfied that:

(a) the law practice took reasonable steps to comply with the disclosure obligations of Part 4.3 of the Uniform Law before becoming aware of the contravention, and

(b) the law practice, no later than 14 days after the date on which it became aware of the contravention, rectified the contravention, as far as practicable, by providing the client with the necessary information required to be disclosed under Division 3 of Part 4.3 of the Uniform Law (including, where relevant, an estimate or revised estimate of the costs), and

(c) the contravention was not substantial and it would be reasonable to expect that the client would not have made a different decision in any relevant respect.

68 Subrule (2)(b) applies even though the information or estimate is not provided at the times required by the disclosure obligations of Part 4.3 of the Uniform Law. To rely on the operation of s 178(1)(a) a costs court would need to be satisfied that the law practice took reasonable steps to comply with disclosure obligations before being aware of the contravention, and then took prompt remedial action upon becoming aware of the contravention. It would also have to be satisfied that the contravention is not 'substantial' and of any likely different decision of the plaintiff had the disclosure been made.

69 The breach by the solicitors falls into two parts. First, they did hold a disclosure from Counsel in 2017 for work to be done at that time and failed to disclose that to the plaintiff until 2019. That related to a sum for an appearance estimated at $1,320 and marked in accordance with that estimate. Given the modest amount involved, I can readily accept that the most likely explanation might be an oversight in providing it to the plaintiff in a timely way. The remaining fees could only be disclosed upon receipt of the information from the relevant Counsel. I accept that once provided, the law practice disclosed them promptly to the plaintiff. Given that no disclosure by Counsel of fees totalling nearly $470,000 was made (apart from the $1,320) until the time surrounding the judicial mediation, I would have some hesitation, absent an explanation, accepting that such a breach might not be substantial. However, the law practice's obligation to disclose the estimate of barristers fees is dependent upon it receiving that information from the relevant Counsel. I have nothing before me that allows me to assess whether the law practice took reasonable steps between 2016 and the start of 2020 to comply with s 175 by requesting the outstanding information be provided to it.

70 I am mindful also that under the conditional cost agreement the law firm, and not the plaintiff, would be liable for Counsel's fees if the action was not successful. Ultimately this factor persuades me that it would be reasonable to expect that the plaintiff would not have made any different decision to enter into the agreement had the disclosure been made in a timely and proper way.

71 I accept the opinion of Ms Dealehr that the Costs Court would most likely not find the third agreement was void by a breach of s 175(1).

(ii) Quantum of Fees & Disbursements - Assessment under the Scale

72 The application seeks approval of a gross sum in lieu of a taxation of the costs. Time recording data tracked time spent by lawyers and non-lawyers using practice management software. Time recording is an appropriate tool to use to assess whether the gross sum assessed is 'logical, fair and reasonable'.[39] However, it cannot by itself provide an answer to the question. Additional factors providing useful information to a court include the five matters set out by Gordon J in Modtech Engineering Pty Ltd v GPT Management Holdings Ltd ('Modtech'):

1. whether the work in a particular area, or in relation to a particular issue, was undertaken efficiently and appropriately;
2. whether the work was undertaken by a person of appropriate level of seniority;
3. whether the charge out rate was appropriate having regard to the level of seniority of that practitioner and the nature of the work undertaken;
4. whether the task (and associated charge) was appropriate, having regard to the nature of the work and the time taken to complete the task; and
5. the ratio of work and interrelation of work undertaken by the solicitors and the counsel retained.

The List is not complete. The relevant enquiries will vary from case to case.[40]

73 To address these factors the methodology adopted by Ms Dealehr was to code the entries according to a 'Phase - Task - Activity' coding system, maintaining within the coding a phase to identify non claimable tasks and a phase including tasks pertaining specifically to large scale litigation management. In substance the phases relate to stages of the litigation: steps prior to issue, pleadings, discovery, expert evidence and the like. There were 12 Phases identified. Under each Phase, Tasks were identified. For example under the Discovery phase, tasks were identified relating to subpoenas, the plaintiff's discovery, the other parties discovery, FOI matters and the like. For each task an amount claimed was identified and referenced by the hours undertaken by legal or administrative staff, and also as a percentage of the overall amount and hours claimed. Across all tasks the type of activity was also identified. Activities covered such things as drafting, review and analysis, communication of various types, instructing, travel, data management, travel, non-skilled activity. Again each activity was recorded as to hours and amounts in absolute terms and as a percentage of the total.

74 This coding exercise was then applied to an eight step process to arrive at her opinion of what fees and disbursements are fair and reasonable. The eight step process is described this way:

Calculate the time spent by each of the operators and verify accuracy of time spent by each of the operators

Apply the Supreme Court scale rates and changes to those rates to work done by lawyers and other operators as provided under the CLCAs

Classify time spent by Phase - Task - Activity to provide information on the nature of the work undertaken

Identify and excise number of hours relating to non-recoverable matters by reference to costs not claimable

Apply any discounts after considering the nature of the work claimed or the way that work was done

Apply any loadings pursuant to the scale loading and/or SCR63.34 loading provided for under the CLCAs

Apply the factor of the 25% uplift fee for professional fees on obtaining a successful outcome as claimable under the Uniform Law and as provided under the CLCAs

75 Steps one to three arrive at total fees claimed in the sum of $1,335,912.70. Non claimable hours are then removed as step 4. This totalled 356.9 hours: an amount of $98,357.90.

76 Step 5 requires the application of discounts. Discounts might be applied for a variety of reasons including duplication, whether the work was done by persons of appropriate seniority or skill level, administrative work, inefficiencies or discrepancies.[41]

77 Ms Dealehr identifies five potential discounts that might be applied to the claimed costs on a taxation. This includes the possibility of over calculation by recording a six minute minimum unit for a task that takes much less time than that. The sum total of all five discounts would reduce the fees by a further $53,662.63.

78 Therefore the overall reductions and discounts reduce the claimed fees by $152,020.53, leaving assessed fees at $1,183,892.18.

79 These figures deal with fees incurred to 26 February 2020 as initially requested. I accept this is an appropriate figure.

80 The remaining steps in the process deal with the application of loadings and uplift. I will return to this below.

81 The supplementary report deals with costs from 26 February 2020 up to and including hearing of the Settlement approval. It uses the same methodology based upon the time management software to 14 July 2020 (the last date available) and an estimate for the period to 21 July 2020. For these periods, claimed professional fees total $196,849.10 and an estimate of a further 33 hours. Excising work that is not claimable ($3,582) and the application of relevant discounts ($15,856.95) leave professional fees assessed to 14 July 2020 at $176,992.15 in Ms Dealehr's opinion. A further 33 hours at scale gives an estimate of $13,761. In total fees for the period amount to $190,753.15. To the figures Ms Dealehr applies a 30% loading and 25% conditional fee uplift.

82 I accept that this is a reasonable method and in this case has been based upon sufficient material provided to her. However, for reasons elaborated below, I will not presently approve the costs incurred from 26 February 2020 to 21 July 2020.

83 The process for assessing disbursements in both reports is identical. It involved a costs lawyer at ALCG inspecting all invoices, auditing them for error and reconciling them with billing records. Then Ms Dealehr considered the quantum of those disbursements. In total the first report dealt with $1,023,874.54 in claimed disbursements. They covered Counsel's fees, expert fees, loss assessment (for both property and personal injury assessments), travel and discovery and document management. In the supplementary report, disbursements totalling $116,141.03 are claimed up to 14 July 2020 and no reductions have been applied to these figures. A further $6,600 disbursement is anticipated and approved.[42] Total disbursements therefore as assessed by Ms Dealehr are $1,146,615.57.

84 With two qualifications I am satisfied with the allowances made by her to disbursements. First I have insufficient information to be satisfied that the disbursement invoiced by Dr Barter is reasonable. I say this because although the hourly rate as disclosed in Ms Dealehr's report appears reasonable, the total sum requires some explanation. The report of Ms Dealehr states that the invoices generally provided breakdowns or summaries of time spent by each expert, personnel assisting and disbursements incurred by them. Given the sum involved, ($205,211), in my view some additional information is necessary. In saying this I am in no way questioning either the integrity of Dr Barter or of the invoicing process, or underestimating the importance of his opinion to the successful outcome of the plaintiff's claim. I accept both matters. I will direct the plaintiff to provide either a copy of the detailed invoice or an affidavit setting out how the total was derived to assist me in forming my own assessment of its reasonableness.

85 The second qualification is the fees associated with the discovery hosting platform Everlaw. I understand from Counsel's opinion and from the instructions given to Ms Dealehr that 1364 documents were discovered or produced spanning approximately 4063 pages.[43] It doesn't strike me immediately that fees of $20,102.40 and $1,827.62[44] would be required to electronically manage that volume of documents. Again I will direct the plaintiff to file any additional material that explains why such a disbursement ought be considered reasonable.

86 I will at present order payment of disbursements in the sum of $919,474.55, being total disbursements as assessed by Ms Dealehr up to 21 July 2020 of $1,146,615.57 less $227,141.02.

(iii) The application of loadings and fee uplift

87 The overriding obligation of the Court is to assess the reasonableness of the settlement. In cases where the legal costs are to be paid from the settlement sum the quantum of those costs has the potential to affect whether the settlement is fair and reasonable. There is what Justice J Forrest described as an 'inherent tension' in any settlement that must pay damages and legal costs from a single sum, between the two interests. He said:

It follows that if a court perceives that the allowance claimed by the lawyers in acting for the class is either disproportionate or excessive in relation to the distribution of the settlement sum to the group members then it should (and indeed, must) put to one side claims for uplifts, and loadings upon loadings - even if they fall within the ambit of the costs rules.[45]

88 Three loadings or uplifts are sought to be applied to the costs as assessed. First the scale loading provided for in the rules applicable for the skill care and attention, a matter ordinarily in the discretion of the Court in the application of the costs rules. Ms Dealehr ultimately assessed this at 30%. Second the special grounds loading also at 30% as provided for in the costs agreements relying on Rule 63.34. If both of these loadings apply, then duplication should be avoided. Thirdly the fee uplift of 25% charged on the basis that the cost agreement was a conditional agreement and permitted[46] reflecting the risk borne by the law practice.

89 Ms Dealehr approaches the task of applying the loadings as step six of eight.

90 She approaches the exercise on the basis that as a matter of general principle there is nothing unfair or unreasonable in the application of a loading pursuant to both Rule 63.48 for skill care and experience, and a loading for special circumstances under Rule 63.34, although the potential for overlap between the two would likely exist and must be accounted for. She opined that on taxation, a costs court would look at both loadings to determine overall or in combination what loading should be applied. In her initial view the overall range is said to be between 25% and 35%. This is on the basis that both loadings would typically be considered but with regard for a degree of overlap.

91 In the supplementary report, the opinion was revised to 30% being the midpoint of her earlier two assessments. The loading was expressed to be one applicable to the scale loading only and was not arrived at by a combination of the two loadings.

92 In my view there are some misconceptions in adopting a 30% allowance in this case either on the basis that it is a fair and reasonable reflection of combined scale loading and special grounds loading or as an appropriate figure as a scale loading alone. I do not accept the conclusions reached by the reasoning of Ms Dealehr.

93 First, before any allowance is considered for a loading under Rule 63.34, special grounds must be identified. In Thomas v Powercor,[47] Beach J summarised the applicable principles for a discretionary increase in the fees allowed on taxation pursuant to Rule 63.34. The special grounds must be identified and must arise out of 'the nature and importance, or the difficulty or urgency of the case'.[48] That the case was one of importance or difficulty is not enough, the special grounds must arise out of that importance or difficulty.[49]

94 Neither in the fee agreement itself, nor otherwise before the Court, are the factors that might make out 'special grounds' set out. If a court is to award a loading on the basis of special grounds, it must be satisfied that those grounds exist.

95 Although this loading is provided for in the fee agreement, the entitlement to rely on such a loading is generally a matter where a court is satisfied that the grounds for applying such a loading are made out. In my view there are a number of unsatisfactory aspects to the agreement for a loading based upon 'special grounds'. The fee agreement does not disclose any basis for the allowance, nor does it specify that 30% is the maximum allowable as a discretionary matter under the Rule when awarded by the court. There is no reference to what matters were relied on by the solicitors, or understood by the client that might amount to special grounds.

96 Ms Dealehr was also concerned that the reference to Rule 63.34 in the costs agreement left a number of matters unclear. First it was not clear whether Maddens wished to apply 'complexity factors' that amounted to special grounds. She expressed concern that the reference to the Supreme Court Rules in the fee agreement might risk a finding that the additional loading had the imprimatur of the Court rules and so could not be negotiated or questioned by the client. I am mindful of what Tadgell J said in Redfern v Mineral Engineers Pty Ltd of the court's role in surveillance over costs when dealing with a taxation of costs:

It stems, it seems, from the notion that ordinarily a solicitor is presumed to be in a position of dominance in relation to [a] client as a result of [their] presumed knowledge of the law and of what may and may not be properly charged by way of fees.[50]

97 I do not think a costs agreement that simply applied an increase in scale fees per se of 30% by reference to Rule 63.34 without explanation of the discretionary nature of the Rule and its purpose adequately discloses the nature of a special loading.[51]

98 The approach in Williams v Ausnet was also referenced to support the opinion that the loadings in combination as assessed by Ms Dealehr were fair and reasonable. In Williams Emerton J, approving a bushfire class action referred a question to the Costs Court:

Should the legal costs allowed by the Court include both the increase allowed under r 63.34 and an increase for discretionary costs under r 63.48 and, if so, what should be the percentages?

In that case, there were competing opinions from two costs experts, one engaged by the plaintiff's solicitors and another engaged by some registered insurers. Both experts accepted a loading pursuant to Rule 63.34 was appropriate, but differed in the percentage to be allowed. Her Honour was concerned that loadings under both Rules (63.34 and 63.48) were 'included for costs incurred in connection with common cause liability work for much the same reasons'.[52]

99 Associate Justice Wood, in answering the question looked himself at whether special grounds existed. In addition to the listed features going to the scale and complexity of the litigation, he also considered the fact that eight experts covering a variety of fields and expert conclaves had occurred.[53] In combination these satisfied the criteria for special grounds in that case. On this basis he then considered whether there was any allowance pursuant to Rule 63.48 that did not overlap with the factors already considered. He determined that the scale of discovery required in the litigation was not reflected in the special grounds loading. On that basis he allowed an additional 5%.

100 Thereafter Justice J Forrest approved the costs in accordance with the answer provided by Wood AsJ. In so doing, His Honour had to determine the appropriate calculations that arose from the answer. His Honour observed that in exercising its role under Part 4A of the Act the Court is not obliged to apply the costs rules or to apply them in the way that might be anticipated generally in disputes between parties. Rather it is to make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding.[54]

101 So, the first question is whether a basis for a special grounds loading is made out and if so at what percentage. Only if it is made out does there need to be attention to an adjustment of the scale loading amount to avoid double dipping.

102 Even though it is specified in the fee agreement, it is not at all clear that it was explained to the clients that the fee agreements contained two or three loadings or uplifts. The letter of instruction detailing the explanation given as to the fee agreements described confusion in relation to the percentage uplift. It said "the uplift" was explained. There was no explanation that described the operation of more than one uplift or the compound nature of the uplifts.[55] I am not satisfied that there are special grounds identified that would attract an increase in the fees assessed under Rule 63.34.

103 What then is the appropriate allowance for a scale loading that should be applied to the assessed sum in accordance with Rule 63.48? Ms Dealehr opines 30% is reasonable being the midpoint of her earlier assessment and being consistent with the amount permitted in Francis v Powercor Australia Ltd[56] ('Francis') and Lenehan v Powercor Australia Ltd[57] ('Lenehan'). I do not accept this figure.

104 Ms Dealehr opines that in isolation a scale loading applied by the Costs Court would be applied to professional fees at a rate of 30%. She gives a number of reasons why in her opinion a costs court would likely arrive at this figure.

105 First she arrives at 30% on the basis it is the midpoint of the earlier assessment range. This ignores the fact that the first assessment allowed for two loadings. If only a scale loading was allowed under Rule 63.48 she had estimated it at 25% in her first report.[58] No explanation for the increase to 30% on the same basis is revealed.

106 Second she references the scale loading accepted by the Court in Francis and Lenehan. In determining an appropriate allowance under Rule 63.48 only, there is danger in adopting a percentage figure found to be reasonable in another case as if there were a tariff or benchmark for the exercise of a discretion. A number of bushfire class actions involved complex legal and factual issues associated with the role of power lines in fire ignition. In particular, comparison with Matthews given the size, complexity and scope of that litigation arising from Black Saturday Kilmore East bushfire, emphasised the difference between the two cases rather than the similarities. This case, although it is factually about a bushfire, has more in common with occupier's liability or product liability claims as are more commonly seen albeit commenced as a group proceeding.

107 Third, she references the Supreme Court Practice Note SC Gen 11. That Practice Note deals with the practice in relation to various matters in the Costs Court. Clause 12 deals with discretionary items in the bill of costs and describes how the discretions are commonly exercised. It says, at clause 12.6 that for item 17, "upon consideration of the factors listed in Rule 63.48 and work already allowed, research (item 13) and allowances made for Counsel, the discretion is commonly exercised to allow a percentage amount in the bill of costs commonly between 0-15%". Despite this The opinion expressed is that a costs court would allow 30% in this case.

108 Her reasons explain that common exercise of discretion is applicable to taxations on an inter partes basis and suggests that this would not be so limited in assessing costs as between solicitor and client. She enlists clause 12.9 of the practice note to support the full discretion of the Costs Court to allow a higher loading.

109 Leaving aside whether clause 12.9 is of any relevance or whether it is in fact dealing with limits on the Costs Court power to fix counsel's fees, the Practice Note doesn't purport to limit the discretion of Costs Court in relation to scale loading, it merely sets out how that discretion is commonly exercised. It is a relevant piece of information and, as I am not engaged in a taxation exercise but the unique exercise of assessing what is fair and reasonable, it is useful because it expresses the common experience.

110 Costs as between parties are now generally assessed on a standard basis in accordance with Rule 63.30. Previously what were known as party party costs were assessed on the basis of what was necessary and proper. Rule 63.30 provides that for standard costs 'all costs reasonably incurred and of reasonable amount shall be allowed'. This has been so since 2013. The 2018 Practice Note is plainly referencing practice where costs are taxed on a standard basis. I do not accept the distinction between solicitor - client and inter partes costs as explaining why the percentage loading would be double or more that which might commonly be allowed on taxation. This is because standard costs now import a significant amount of work that would formerly have been only covered by solicitor client fees.

111 The scale loading references 'skill care and attention' and it is to those matters that regard is to be had.

112 As I have concluded that the third fee agreement would likely be upheld as valid, it is appropriate to allow an uplift of 25% for the risk and expense borne by the legal practice in undertaking the litigation on a conditional fee basis.

113 A consideration for the Court in assessing whether the fees are fair and reasonable is the effect of each loading and uplift on the overall quantum. The uplifts are compound and each substantially increases the legal costs that are payable. Let me demonstrate.

114 The common benefit legal fees assessed by Ms Dealehr are $1,183,892 plus $176,992, totalling $1,360,884.[59] Applying a 30% uplift would result in additional fees of $408,265. Then applying a 25% conditional fee uplift to the total fees of $1,769,149 would result in further uplift of $442,287. Fees would be finally calculated at $2,211,463. The end result would be a near doubling of the fees. GST is then payable on those total fees. The overall reasonableness of such a result requires careful scrutiny.

115 I can readily accept that using Part IV Supreme Court Act to bring the claims as a representative proceeding achieves an access to justice and an outcome that directly impacts, and benefits, a sizable group of the local community. There is skill, experience and complexity in conducting a group proceeding. However, the lawyers' fees as assessed by Ms Dealehr include an accounting for the work that was reasonably required to manage the proceeding as a group proceeding. In assessing the fees up until settlement one of the twelve phases identified was Large Scale Litigation Management. The work attributed to that Phase amounted to 11.5% of the total claimed fees to 26 February 2020.[60] Almost all work necessary to seek approval of the settlement after that time is work undertaken because the action is one under Part 4A of the Supreme Court Act. To take account of these matters again when considering an allowance under Rule 63.48 would be to double dip.

116 In all the circumstances I consider a scale loading within the current Practice Note guidelines at 12%.

117 Therefore I allow as fair and reasonable fees to 26 February 2020 in the sum of $1,326,000 (rounded but excluding GST) before conditional fee uplift. With a conditional fee uplift fees to 26 February 2020 total $1,657,500.

118 I have one reservation about the assessed costs incurred to date. In the supplementary report Ms Dealehr assesses fees and disbursements incurred between 26 February 2020 and the hearing to approve the settlement. She identifies work done to bring about the settlement. The activities identified 523 hours from 8.8 hours has been removed as non-claimable and then discounts were applied to arrive at the figure of $176,992.15. An estimate of a further 33 hours work to 21 July 2020 was anticipated as set out above at paragraph 81.

119 I was informed at the hearing that, given the passage of time since settlement, 'the administrator has in effect carried out an assessment of all the claims by this time because of the delay in seeking this approval due to a company being struck off but having to be in a situation to get the deed signed there's been plenty of time to do most of this work'.[61] I cannot tell whether this work is included in the 523 hours that have been identified. It seems likely as the settlement administration costs only refer to anticipated costs, not costs incurred to date. Otherwise the administration costs between February and July have been overlooked. It is appropriate that the fees associated with the approval of the settlement and the fees associated with the administration of that settlement in the period between February 2012 and 21 July 2012 be separately identified.

120 Orders for a reimbursement payment are often made in favour of the lead plaintiff of the group. It is recognised that it is appropriate to compensate the lead plaintiff for the personal burden, inconvenience and time that the person bears by taking on and undertaking the obligations associated with being a party.[62]

121 The proposed amount is $30,000. The Notice of Settlement sent to all group members referenced such payment. No objection to the payment was made by any group member. The time spent by Mr Schmid on tasks associated with the group proceeding (but not his individual claim) was estimated by Mr Pendergast in his affidavit of 15 June 2020. In addition, Mr Schmid spent time assisting with the preparation of the quantum of his individual claim. The methodology for proving his loss, which covered both personal injury and property loss, would at trial be likely to result in findings that would be applicable to assessments of all group members. The role of lead plaintiff also requires being a public figure for events that were undoubtedly personally traumatic. I accept that $30,000 is fair and reasonable.

122 In conclusion I will approve fees to 26/2/2020 in the sum of $1,657,500 (excluding GST) and disbursements in the sum of $919,474.55 (including GST).

123 I will consider the following matters upon provision of further material:

(a) Outstanding disbursements to 21 July 2020;

(b) Fees in conducting the proceeding claimed between 26 February and 21 July 2020; and

(c) Incurred and anticipated fees in administering the scheme.

AUTO AND GENERAL INSURANCE COMPANY LIMITED (ACN 111 586 353)

[1] The Third and Fourth Defendants were added by amendments to the Writ and Statement of Claim on 29 May 2017 and 16 May 2018 respectively.

[2] Although the third defendant did not appear at the return of the summons it's solicitors send an email indicating consent to the Court on 20 July 2020.

[3] Country Fire Authority Act 1958 (Vic), s 50.

[4] See Lopez v Star World Enterprises Pty Ltd [1999] FCA 104, 16.

[5] Matthews v AusNet Electricity Services Pty Ltd & Ors [2014] VSC 663 (Osborn JA) ('Matthews')[437] and quoting Pathway Investments Pty Ltd v National Australia Bank Limited (No 3) [2012] VSC 625, [5] (citations in original).

[6] Third Amended Statement of Claim dated 16 May 2018 [35].

[7] Australian Competition and Consumer Commission v Chats House Investments Pty Limited & Others [1996] FCA 1119; (1996) 71 FCR 250 (Branson J).

[8] (2000) 180 ALR 459 (Goldberg J) ('Williams').

[9] Williams (n 7), quoting Re General Motors Corp Pick-Up Truck Fuel Tank Products Liability Litigation [1995] USCA3 325; 55 F3d 768,785 the United States Court of Appeals for the Third Circuit.

[10] Wheelahan v City of Casey [2011] VSC 215 [62] (Emerton J).

[11] Darwalla Milling Co Pty Ltd & Ors v F Hoffman-La Roche Ltd & Ors (No 2) [2006] FCA 1388; (2006) 236 ALR 322 [39] (Jessup J) ('Darwalla').

[14] On this date Ms C Nicholson appeared for the Plaintiffs and Mr Cagney appeared for the Second Defendant.

[15] The eighth of the Williams factors 'the range of reasonableness of the settlement in light of the best recovery'.

[16] Taken from the Fourth Amended Statement of Claim dated 1 November 2019, [45(2)].

[21] Taken from the Fourth Amended Statement of Claim dated 1 November 2019 [45(11)].

[27] Pleaded by the second defendant as against the first defendant and by the third defendant against the fourth.

[28] The group member's assessed entitlement cannot include any allowance for loss adjustor fees or other administration fees incurred by an insurer ( Clause 6.4 Deed).

[29] See Clause 6.5 (b) which requires only agreement between Administrator and Insurer. While either of a group member or insurer can dispute the Administrator's determination under clause 6.7, there is no mechanism for a group member to be party to the agreement with the Insurer or to dispute any agreement reached under 6.5(b).

[30] Affidavit of Brendan Pendergast sworn 15 June 2020.

[31] Judgment in Lenehan v Powercor Australia Limited, reserved on 16 March 2020. Referred to in Lenehan v Powercor Australia Ltd (No 2) [2020] VSC 159 [4] (Nichols J).

[32] Lenehan v Powercor Australia [2020] VSC 82 [10] (Nichols J).

[33] Modtech Engineering Pty Ltd v GPT Management Holdings Ltd [2013] FCA 626 [24].

[35] Beach Petroleum v Johnson (No 2) (1995) FCR 119, 123 ('Beach Petroleum') (von Doussa J).

[36] In absence of a valid costs agreement s 172 provides that legal costs are "no more than fair and reasonable in all the circumstances".

[37] As estimated by Ms C Dealehr in Confidential Exhibit "CMD-1" to Affidavit of Catherine Mary Dealehr dated 24 April 2020 ('April Dealehr Report') [78].

[40] Modtech (n 27) [37] (Gordon J).

[41] Reference is made in the report to Seven Network Ltd v News Limited [2007] FCA 2059 in this respect.

[43] April Dealehr Report (n 31) [159].

[44] $1,827.62 is found in the July Dealehr report. The sum of $20,102.40 is found in the April Dealehr report.

[45] Williams & Ors v AusNet & Ors (Ruling No 4) [2017] VSC 619 [39].

[46] Conditional costs agreement as permitted by s 181 Uniform Law with an uplift that must not exceed 25% (s 182).

[47] [2012] VSC 207.

[48] Jenkins & Ors v G J Coles & Co Ltd [1993] VicRp 10; [1993] 1 VR 155, 156.

[49] Mayor Councillors and citizens of the City of Warrnambool v Tabone, unreported, Full Court, delivered 25 August 1992.

[50] [1987] VicRp 47; [1987] VR 518 [523].

[51] April Dealehr Report (n 31) [152].

[52] Williams v AusNet Electricity Services Pty Ltd [2017] VSC 474 (Emerton J) [71].

[53] Williams v AusNet Electricity Services Pty Ltd (Ruling No 3) [2017] VSC (Wood AsJ) [25].

[55] The letter of instruction was Attachment 2B to the confidential Affidavit of Cate Dealehr of 16 July 2020.

[56] [2020] VSC 405 (Nichols J).

[57] [2020] VSC 82 (Nichols J).

[58] April Dealehr Report (n 31) [155].

[60] Table 8 Undertaken as part of Step 3 of the 8 Step process.

[61] Transcript of Proceedings, Schmid v Skimming & Ors (Supreme Court of Victoria, S CI 2016 05027, Forbes J, 21 July 2020) 18.