R&B Investments Pty Ltd (Trustee) v Blue Sky

Australian Law Reform Commission, Integrity, Fairness and Efficiency - An Inquiry into Class Action Proceedings and Third-Party Litigation Funders (Report 134, 24 January 2019) Australian Law Reform Commission, Grouped Proceedings in the Federal Court (Report 46, December 1988) Dobner A, "Litigation For Sale" (1996) 144 U Pa L Rev 1529 Gleeson CJ, Some Legal Scenery (Conference Paper, Judicial Conference of Australia, 5 October 2007) Jackson LJ, Review of Civil Litigation Costs: Final Report (December 2009) Morabito V, Group Costs Orders and Funding Commissions (Report, January 2024) Slade B et al, "Post-Brewster Jurisprudence - The Future of the Common Fund Doctrine" (2022) 96 ALJR 430 Victorian Law Reform Commission, Access to Justice - Litigation Funding and Group Proceedings (Report, March 2018)

Division: General Division

Registry: New South Wales

National Practice Area: Commercial and Corporations

Sub-area: Corporations and Corporate Insolvency

Number of paragraphs: 133

Date of hearing: 28 May 2024

Counsel for the applicants: Mr W A D Edwards KC with Ms B Ng

Solicitors for the applicants: Banton Group

Counsel for the first respondent: The first respondent did not appear

Solicitors for the first respondent: Gilbert + Tobin

Counsel for the second respondent: Mr M Hodge KC with Mr T Bagley

Solicitors for the second respondent: GRT Lawyers

Counsel for the third respondent: Mr R Foreman SC with Mr R Jameson

Solicitors for the third respondent: Arnold Bloch Leibler

Counsel for the fourth respondent: Mr S Lawrance SC with Mr A Smith

Solicitors for the fourth respondent: Corrs Chambers Westgarth

Counsel for the fifth to eighth respondents: The fifth to eighth respondents did not appear

Solicitors for the fifth respondent: Clyde & Co

Solicitors for the sixth respondent: Wotton + Kearney

Solicitors for the seventh and eighth respondents: Colin Biggers & Paisley

BETWEEN: R&B INVESTMENTS PTY LTD AS TRUSTEE FOR THE R&B PENSION FUND & ANOR Applicant

AND: BLUE SKY ALTERNATIVE INVESTMENTS LIMITED ACN 136 866 236 (ADMINISTRATORS APPOINTED) (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (and others named in the Schedule) First Respondent

order made by: MURPHY, BEACH, LEE JJ DATE OF ORDER: 5 July 2024

1. Order 1 of orders dated 23 November 2023 made by Lee J reserving a question to the Full Court pursuant to s 25(6) of the Federal Court of Australia Act 1976 (Cth) be varied such that the question reserved be in the following terms: Is it a licit exercise of power, pursuant to statutory powers conferred within Pt IVA of the Federal Court of Australia Act 1976 (Cth) for the Court, upon the settlement or judgment of a representative proceeding, to make an order (being a "common fund order", as that term is defined in Davaria Pty Ltd v 7-Eleven Stores Pty Ltd [2020] FCAFC 183; (2020) 281 FCR 501 at [19], [22]-[30]) which would provide for the distribution of funds to a solicitor otherwise than as payment for costs and disbursements incurred in relation to the conduct of the proceeding?
2. The question reserved, as varied by Order 1, be answered "yes".
3. Mr Shand, Mr Kain, and Ernst & Young pay the costs of the applicants of and incidental to the hearing of the reserved question. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

A INTRODUCTION AND A PRELIMINARY POINT 1 For the reasons set out in R&B Investments Pty Ltd (Trustee) v Blue Sky Alternative Investments Limited (Administrators Appointed) (in liq) (Reserved Question) [2023] FCA 1499 (referral judgment), Lee J made an order that the following question be reserved to the Full Court pursuant to s 25(6) of the Federal Court of Australia Act 1976 (Cth) (Act): Is it a licit exercise of power, pursuant to statutory powers conferred within Pt IVA of the [Act], or otherwise, for the Court, upon the settlement or judgment of a representative proceeding, to make an order (being a "common fund order", as that term is defined in Davaria Pty Ltd v 7-Eleven Stores Pty Ltd [2020] FCAFC 183; (2020) 281 FCR 501 at [19], [22]-[30]) which would provide for the distribution of funds or other property to a solicitor otherwise than as payment for costs and disbursements incurred in relation to the conduct of the proceeding? 2 Before going further, it is worth making a preliminary point. The question reserved poses an inquiry into power and not into discretion. Put in broad terms, our focus is whether such an order can be made upon a settlement or upon a judgment in favour of some or all group members providing for such a distribution to a solicitor who has financed the class action (including by provision of security, and indemnity against adverse costs orders). We are not presented with the question as to whether such an order ought to be made in specified circumstances. 3 The exercise of a judicial discretion allows a judge to make a choice between lawful, but different courses of action and the concept necessarily implies choice. As will become evident, given the way the relevant statutory provisions are expressed, if there is no power to make a "common fund order" providing for the distribution of funds or other property to a solicitor otherwise than as payment for costs and disbursements incurred in relation to the conduct of a class action (Solicitors' CFO), that means it is necessary to conclude, irrespective of the circumstances existing at the time of making a proposed Solicitors' CFO, such an order could not be within a conception of a lawful order. 4 To ensure the Full Court is not engaged in dealing with abstract hypothetical issues, given this is a Pt IVA class action, and the applicants have indicated orally the sources of power upon which they propose to rely in seeking a Solicitors' CFO in this case, these reasons deal only with the ambit of the statutory power to make such an order within Pt IVA of the Act. In doing so, we recognise Pt IVA is not a code (s 33ZG of the Act) and nothing in Pt IVA affects the Court's powers under other provisions of the Act, including as a court of equity (see s 5(2) of the Act), and its power under s 23 to make orders of such kinds as the Court thinks appropriate. It follows we do not deal with, for example, the power of a court of equity to make an order analogous to a Solicitors' CFO in a representative proceeding commenced under the Chancery rules reflected in r 9.21 of the Federal Court Rules 2011 (Cth) (FCR) nor, following a "declassing" of a class action, when the statutory powers in Pt IVA are no longer available and a former group member may obtain a bilateral settlement of their individual claim or a judgment inter partes. 5 Moreover, we do not propose to deal with the power of the Court to make a form of Solicitors' CFO under ss 33V(1), 33ZF and 23 of the Act or in equity in the highly unlikely event (in a case such as the present) where a class action settlement comprises the conveyance of property to group members but does not constitute "money paid under a settlement or paid into the Court" (which, as we will see, is a precondition for the applicability of s 33V(2)). 6 To make these limitations plain, we have amended the terms of the reserved question originally made by Lee J by deleting parts of the question (the deletions are those underlined at [1] above).

B FACTUAL BACKGROUND 7 As noted in the referral judgment, the issue as to this Court's power to make a Solicitors' CFO is a matter of controversy in this securities class action brought against Blue Sky Alternative Investments Limited (Blue Sky), a company in liquidation, and seven other respondents. 8 Initially, there had been some ambiguity as to whether the power to make such an order was a live issue. As a consequence of an opaqueness as to the position adopted as to power by the respondents, on 15 November 2023, Lee J posed a specific question to be answered by each respondent. The question was marked MFI-1 and was in the following terms: Is it any respondent's position in this proceeding that if a common fund order is proposed, which order provides for a payment to a solicitor or solicitors for "funding" the proceeding (that is, proposes an amount to be paid to solicitors over and above a payment representing costs and disbursements) that, by reason of that fact alone, such an order could not be characterised as being "just" and hence within power? 9 It eventuated that Blue Sky, and the fifth to eighth respondents took no position concerning any want of power. However, the second, third and fourth respondents, namely Mr Shand, Mr Kain, and Ernst & Young (opposing respondents), contended (and continue to contend before the Full Court) that the Court is bereft of power to make any form of Solicitors' CFO. 10 This issue as to power arose because the applicants and two firms of solicitors (Banton Group and Shine Lawyers) negotiated arrangements for the conduct and funding of this class action in anticipation of two separate class actions being consolidated. The consolidation occurred pursuant to Order 1 of orders dated 24 March 2023 and both firms were granted leave to be jointly named as solicitors on the record for the applicants. The consolidation orders noted that the applicants would enter into a "cooperative litigation protocol" (Protocol) and the solicitors would enter into a "consolidation agreement" (Agreement) (the form of which was annexed to the orders). 11 The Protocol provides by cl 5: 5 LAWYERS' REMUNERATION 5.1 The Applicants will request the Court: a) at an appropriate stage of the proceeding - to make orders that or to the effect that: i legal costs and disbursements be shared among the Applicants and Group Members (Claimants) on a costs-equalisation basis (for instance, but without limitation, under section 33ZJ of the Act): (sic) ii Banton and Shine be further remunerated for their risks in funding the legal costs and disbursements by payment of such percentage of the Resolution Sum as may be approved by the Court (Solicitors' Common Fund Order or Solicitors' CFO); and b) as early as practicable in the proceeding - orders that notice be given to the Claimants of the matters in (a) hereof. 5.2 In default of orders pursuant to clause 5.1b) - the Applicants will: a) seek orders for a transfer of the proceeding to the Supreme Court of Victoria, and upon such transfer a Group Costs Order pursuant to section 33ZDA of the Supreme Court Act 1986 (Vic) (GCO); alternatively b) seek commercial litigation funding. 12 Clause 2 of the Agreement deals with "Costs reimbursement and risk remuneration" and provides, by cl 2.1, that the solicitors will "…take all necessary steps to obtain the orders, alternatively funding, described in clause 5.1 of the Protocol". 13 In accordance with these arrangements, the applicants have instructed the solicitors, upon any settlement of judgment in favour of some or all group members, to seek a Solicitors' CFO of the kind described in the reserved question. 14 Against this background, and as will become evident, the issue of power is acute in this proceeding for three reasons: first, there is a part-heard application under ss 33X and 33Y of the Act, filed by the applicants, seeking orders notifying group members as to the basis upon which remuneration for the funding and conduct of the proceeding will be sought; secondly, if the proposed notice is approved, the arrangements between the applicants and their solicitors contemplate amendments to costs agreements, so as to oblige the solicitors to finance the proceeding (including by provision of security, and indemnity against adverse costs orders) and an acknowledgment that the applicants agree that the solicitors' remuneration will be in the form and value as determined by a subsequent order of the Court; and thirdly, as is evident from the above, if the answer to the question posed is in the negative (that is, the Court lacks power to make a Solicitors' CFO), the applicants have foreshadowed an application to cross-vest this proceeding to the Supreme Court of Victoria in order to seek what has been described as a "Group Costs Order" (GCO) pursuant to s 33ZDA of the Supreme Court Act 1986 (Vic) (SCA), or will proceed to attempt to obtain commercial litigation funding.

C SHOULD THIS COURT ANSWER THE RESERVED QUESTION? 15 Each of the opposing respondents contended that the Full Court should decline to answer the reserved question. 16 Prior to coming to the different ways this argument was put, it is important to identify an argument suggested in written submissions but later expressly abandoned by the opposing respondents in response to questions from the Full Court. 17 Unlike other cases where questions have been reserved (such as Elliott-Carde v McDonald's Australia Limited [2023] FCAFC 162; (2023) 301 FCR 1), in this case, no argument was advanced by the opposing respondents that no "matter" (to use that word in the constitutional sense) has arisen, including because the relevant power to make a Solicitors' CFO can only be enlivened at the time of judgment or settlement approval. More generally, the opposing respondents disavowed any argument that answering the reserved question would be hypothetical and advisory and hence beyond the licit exercise of judicial power in Ch III of the Constitution. Accordingly, no orders were sought, or made, for the service of notices pursuant to s 78B of the Judiciary Act 1903 (Cth). 18 Notwithstanding this, a related argument was advanced, reflecting the reality that questions of jurisdiction, judicial power and the power and discretion to answer a reserved question (which is essentially in the nature of a declaration), can often be seen to be intertwined: National Australia Bank Ltd v Nautilus Insurance Pte Ltd (No 2) [2019] FCA 1543; (2019) 377 ALR 627 (at 629 [7] per Allsop CJ). 19 It was submitted that like a declaration, relief by way of answering a reserved question should "be directed to the determination of legal controversies" and not to answering abstract questions: see Ainsworth v Criminal Justice Commission [1992] HCA 10; (1992) 175 CLR 564 (at 582 [38] per Mason CJ, Dawson, Toohey, Gaudron JJ). Answering a reserved question is discretionary and providing an answer to the question, like making a declaration, ought not occur simply because it might be convenient for a third party or a person advising a third party, or to pre-empt issues that may never arise. 20 The opposing respondents, despite abandoning any argument that the Full Court was being asked to provide an advisory opinion divorced from a controversy, pointed to the discretionary reasons that prompted the Full Court and the Court of Appeal of New South Wales to decline to provide declaratory relief and to answer a separate question regarding the question of power to make a CFO upon settlement: Davaria v 7-Eleven Stores Pty Ltd [2020] FCAFC 183; (2020) 281 FCR 501 (at 516-517 [67]-[72] per Lee J, Middleton and Moshinsky JJ agreeing); Brewster v BMW Australia Ltd [2020] NSWCA 272 (at [28]-[29], [44] per Bell P, Bathurst CJ and Payne JA agreeing). Reliance was placed on various observations that questions of power are best determined in the context of known facts and the precise terms of any proposed order and that the efficient administration of a court's business is incompatible with answering preliminary questions: Brewster (at [29], [44]). This is said to have particular resonance where the criterion for the exercise of power is that the proposed order is "just" (see ss 33V(2) and 33Z(1)(g) of the Act). 21 The opposing respondents point to the reality that whether something is "just" requires a judicial evaluation of all relevant facts and circumstances and it "cannot be assessed by considering only one aspect of the inquiry - here being that the payment is made to a solicitor otherwise than as payment for costs and disbursements". While it is accepted that this aspect of the inquiry is likely to be important, it may not be determinative by itself and other relevant considerations exist including, most obviously, the amount of the payment, in absolute and relative terms. For example, a court may consider it just to make a modest allowance to a solicitor otherwise than as payment for costs and disbursements but may consider it unjust to pay the whole settlement sum to the solicitor. In short, as the argument ended up being presented orally, the opposing respondents submit no answer should be provided because although the question reserved is not impermissibly hypothetical, without facts, any answer can do no more than give "general guidance". Consideration 22 These arguments do not bear scrutiny. It may be accepted that answering a reserved question is discretionary and like the broad discretionary power to grant declaratory relief, the discretion is confined by the considerations which mark out the boundaries of judicial power. It follows that the closer one gets to the boundary of impermissible abstraction, the more careful a court should be to ensure the discretion to answer the question is exercised in such a way so as to resolve a sufficiently substantive controversy. 23 Once it is established (as is now accepted by the opposing respondents) that an answer to the reserved question would not be hypothetical, as it is directed to the determination of an extant legal controversy, the issue of whether to grant relief becomes one of judgment. 24 The discretion should be exercised to answer the reserved question for five reasons. 25 First, certain important facts relevant to the exercise of the statutory right of group members exist. Those facts exist prior to the time the Court proposes to fix a date for opt-out in accordance with s 33J(1) and notify group members of their right to opt-out as required by s 33X(1)(a), which notice must be given "as soon as practicable" (s 33X(6)). 26 The importance of this step of notification of the right to opt-out should not be diminished - it is basal to the Pt IVA "opt-out" scheme. Of course, a group member can opt-out at any time by filing a notice in the Registry (and no date is required to be set prior to a group member opting-out), but notification of a date by which opt-out is required to occur is an important step because this is the method, sanctioned by the legislature, by which the Court may be satisfied that a person, whose claims are swept up in a class action, has sufficient notice of their right to remove their claim from the class action if they so wish. 27 Absent opt-out, a group member's claim against the respondents will be determined, one way or another, in the class action. In accordance with the Court's protective and supervisory role in relation to group members, the Court ought to be anxious to ensure that all known facts, relevant to the exercise of the statutory right to opt-out, are communicated fairly, comprehensively, and effectively to group members and prior to the deadline for the right to be exercised. 28 Ranking high in the calendar of matters of likely interest to a group member is understanding why their claim is the subject of the class action; how their claim, together with others, is proposed to be advanced towards resolution; and how any resolution of their claim by settlement or judgment is likely to affect them from a financial perspective. How it is proposed a class action is to be funded, how any security for costs is to be provided, and how any likely deductions from any settlement sum are proposed to be made are of importance - to the extent such matters are ascertainable at the time of notification. 29 We know with certainty the basis upon which the class action is proposed to be funded. The applicants ask the Court to apprise the group members of these details. It will be a matter for the docket judge as to whether this should occur contemporaneously with the provision of a notice advising an opt-out date, or by a separate notice in advance of setting such a date. The opposing respondents contend it would be sufficient to tell the group members simply that a Solicitors' CFO is to be sought and (in addition to other grounds of opposition which may arise when its precise terms have been identified), that it will be resisted by the opposing respondents on the basis that the Court is bereft of legal power to make the funding order the applicants seek. Whether an opt-out notice in these terms would be sufficient is not really the point. The real question is what course would be preferable. When the issue is properly framed the answer is clear: the Court should apprise the group members of more, rather than less, information as to these important matters provided it is practicable to do so. 30 Secondly, although a judicial evaluation of what is "just" is a broad evaluative assessment informed by all relevant facts and circumstances, we are presently dealing with the question as to whether the existence of a known fact (that the proposed order will provide for payment to a solicitor otherwise than as payment of costs and disbursements), in and of itself, is an insuperable barrier to granting the relief (even if every other relevant consideration pointed to the order being "just"). Providing an answer to this question constitutes more than giving "general guidance". It resolves, in a timely and efficient way, a live issue. 31 Thirdly, and connected to the last point, answering the reserved question now, rather than punting the issue down the road, would, in this case, be consistent with the duty of the Full Court to apply any power conferred by civil practice and procedure provisions in the Act in the way that best promotes the overarching purpose (see s 37M(3) of the Act). 32 Fourthly, as noted above, in this case there are practical considerations militating in favour of obtaining certainty as to whether an insuperable issue as to power exists: the applicants and their solicitors contemplate amendments to costs agreements, and if the Court lacks power, this will inform whether the applicants proceed to take alternative steps to secure the provision of security and protection against adverse costs, including but not limited to considering whether it is in their interests, and those of group members, to bring a cross-vesting application. 33 Fifthly, although the discretionary course taken by the Full Court in Davaria Pty Ltd v 7-Eleven Stores Pty Ltd is relied upon by the opposing respondents, the circumstances of that case are distinguishable; moreover, the result of not providing an answer in Davaria Pty Ltd v 7-Eleven Stores Pty Ltd ended up having less than optimal consequences. 34 Lee J (with whom Middleton and Moshinsky JJ agreed) observed that in Davaria Pty Ltd v 7-Eleven Stores Pty Ltd, like here, no notice under s 78B of the Judiciary Act was served but nonetheless dealt with a contention that the Full Court should not grant relief in the exercise of its discretion. In that case, the Full Court decided the proper exercise of discretion was not to answer the question notwithstanding it could be said that the future course of affairs between the parties would be served by resolving the issue of whether there was power to make a settlement CFO. Partly this was because: (a) of the way the question was framed (see 516 [66]); (b) the applicant and the funder had not participated in the hearing (see 516-517 [69]); (c) a central argument relied upon as to a lack of power was a comparative exercise with funding equalisation orders, which was better assessed by reference to facts and not assumptions (see 517 [70]); (d) questions of equitable remedies were also in play and it was observed that "hypothetical postulation as to the absence of equities, in the absence of knowledge of the facts, is dangerous" (see 517 [71]); and (e) comity considerations were also relevant (see 517 [72]). 35 In any event, although the taking of such a course was understandable given the facts of Davaria Pty Ltd v 7-Eleven Stores Pty Ltd, it ended up being an unfortunate result because despite the considered dicta of two intermediate courts of appeal, the issue of power was perceived to remain unresolved at a single judge level, leading to further uncertainty and disputation and the relevant question of power being required to be dealt with by another Full Court: see Galactic Seven Eleven Litigation Holdings LLC v Davaria [2024] FCAFC 54 (Murphy, Lee and Colvin JJ). 36 The reserved question should be answered. Before coming to the various arguments arrayed as to why a Solicitors' CFO could not be made, it is worth briefly dealing with the specifics of the statutory provisions proposed to be relied upon by the applicants.

D THE RELEVANT PROVISIONS 37 Section 33V of the Act provides: Settlement and discontinuance - representative proceeding (1) A representative proceeding may not be settled or discontinued without the approval of the Court. (2) If the Court gives such an approval, it may make such orders as are just with respect to the distribution of any money paid under a settlement or paid into the Court. 38 It is unnecessary to repeat the detailed textual, contextual, and purposive analysis conducted by the Full Court as to s 33V in Elliott-Carde (at 20-50 [95]-[322] per Beach J, 58-66 [371]-[412] per Lee J, and 72-82 [451]-[504] per Colvin J). We agree with the conclusion that power exists to make a CFO on settlement. 39 Additionally, there is nothing in those reasons to suggest that the statutory language of s 33V(2) distinguishes between the objects of the s 33V(2) power and that a CFO may not be made on settlement which provides for a payment to a solicitor. 40 As the Full Court explained, s 33V(2) "employs language importing a wide judicial discretion" with only two requirements: first, that the Court "may make such orders as are just"; and secondly, that the orders be "with respect to the distribution of any money paid under a settlement or paid into the Court", with the phrase "with respect to" itself of wide import: Elliott-Carde (at 20 [97] per Beach J). 41 The words of s 33V(2) are to be construed according to their natural meaning and in their proper context: Elliott-Carde (at 20 [98] per Beach J). In giving the words in s 33V(2) their natural meaning "it would appear uncontroversial, for example that s 33V(2) could be used to make an order for the payment of legal fees to lawyers directly from settlement proceeds" (at 20 [100] per Beach J); s 33V is not limited to distributions to group members and the omission of the words "to group members" in s 33V(2) is not insignificant (at 20 [100], 24 [123] per Beach J). All members of the Full Court considered the words of s 33V(2) should not be read down by implications which are unavailable from the express words. 42 Further, as Beach J explained, the situations in which the question of a CFO made upon settlement will arise are analogous to situations of maritime salvage, where the exertions of a stranger, "which here is the funder who has assumed the financial burden of the litigation commenced by the applicant, result in the obtaining of a fund… which can be levied as the source of remuneration for the stranger. And like salvage, the rate of remuneration ought equitably to reflect not merely the out of pockets incurred by the stranger but also the opportunity cost of forgoing other uses of the funds expended" (at 21 [105] per Beach J). Finally, "it is inequitable for the person who has created or realised a valuable asset not to have their costs, expenses and fees incurred in producing the asset paid out of the very fund or property that that person's efforts have created" (at 21 [106] per Beach J). The net value of group members' rights is properly understood to be subject to the cost of realising the right. The cost of realising any value from the right in representative proceedings will almost always include the expense of a risk premium to secure litigation funding (at 30 [168] per Beach J). 43 Justice Colvin agreed and observed "[t]he Court's approval jurisdiction is sufficiently broad to allow for the Court to consider whether… a settlement which contemplates the payment to a third-party funder of particular amounts should be approved" (at 76 [468] per Colvin J) and compared such an order to where the Court considers orders for payment of costs to lawyers and experts or receivers. 44 Indeed, to the extent anything was said about the topic of a payment out of a settlement fund to a solicitor in Elliott-Carde, Lee J noted (in obiter): "one can readily conceive of circumstances where it could be a "just" order to pay a solicitor (who has taken the necessary risks to get in the settlement fund) a sum in addition to legal costs payable pursuant to a retainer" (at 59 [380]). 45 The other provisions of the Act of present importance relied upon by the applicants are first, s 33Z, which relevantly provides: Judgment - powers of the Court (1) The Court may, in determining a matter in a representative proceeding, do any one or more of the following: … (g) make such other order as the Court thinks just. 46 And secondly, s 33ZJ, which relevantly provides: Reimbursement of representative party's costs (1) Where the Court has made an award of damages in a representative proceeding, the representative party or a sub - group representative party, or a person who has been such a party, may apply to the Court for an order under this section. (2) If, on an application under this section, the Court is satisfied that the costs reasonably incurred in relation to the representative proceeding by the person making the application are likely to exceed the costs recoverable by the person from the respondent, the Court may order that an amount equal to the whole or a part of the excess be paid to that person out of the damages awarded. (3) On an application under this section, the Court may also make any other order it thinks just. 47 These provisions have not been the subject of any discussion by a Court in the context of making a CFO. However, in Davaria Pty Ltd v 7-Eleven Stores Pty Ltd, Lee J (with whom Middleton and Moshinsky JJ agreed) relevantly observed (at 507-508 [26]-[28]): Experience suggests that the three most likely outcomes of a class action are: (a) global settlement before an initial trial; (b) global settlement after an initial trial (if common issues are resolved in favour of the applicant); or (c) dismissal (if common issues are resolved adversely to an applicant). Rarely do class actions proceed to the entry of monetary judgment by an aggregate award or the payment of an individual judgment sum in favour of the applicant and/or group members. As a consequence, there has been no examination in the authorities as to the practical operation of Judgment CFOs, although many Commencement CFOs were previously (but mistakenly) made contemplating operation upon a judgment being obtained by an applicant or group member. A money judgment in favour of a person whose claim is the subject of a class action properly commenced under Pt IVA can occur either during the currency of the class action or, unusually, after the representative proceeding has come to an end. More specifically, and without seeking to exhaust all possibilities: (1) an applicant, a sub-group representative appointed under s 33Q(2), or an individual group member might obtain judgment upon determination of their individual claims at an initial trial pursuant to s 33Z(1)(e) (when common issues and so-called "issues of commonality" might also be determined): see Dillon v RBS Group (Australia) Pty Ltd [2017] FCA 896; (2017) FCR 150 (at 163-7 [62]-[75] per Lee J); (2) in determining "a matter in a representative proceeding", pursuant to s 33Z(1)(e), the Court may make an award of damages for group members, sub-group members or individual group members, being damages consisting of specified amounts or amounts worked out in such manner as the Court specifies, including by the constitution of a "fund" pursuant to s 33ZA; (3) group members might obtain an award of damages in an aggregate amount without specifying amounts awarded in respect of individual group members pursuant to s 33Z(1)(f) (while making provision for the payment or distribution of the money to the group members entitled pursuant to s 33Z(2)); (4) without declassing the class action, if it appeared determination of the common issues would not finally determine the claims of all group members, the Court may give directions pursuant to s 33Q(1) including, as s 33R explains, to allow an individual group member to appear for the purpose of determining the group member's claim; this was the approach initially adopted by Gillard J in Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (No 2) [2003] VSC 212 and allows an individual claim leading to the entry of judgment to be resolved within the structure of the class action; (5) alternatively to (4), and less commonly, an applicant and/or a group member might obtain judgment upon determination of their claim in an individual proceeding following a "declassing"... Dealing with the first four of these examples, and leaving aside any power to make a Judgment CFO which exists other than within Pt IVA, different statutory provisions within the Part could be relevant, depending upon the circumstances in which a judgment is entered in favour of an applicant or group member. The power of most likely practical relevance is s 33Z(1)(g), which has operation whenever a determination of "a matter" is made "in a representative proceeding", which allows the Court, at the same time any award of damages is made to an applicant or group member, to "make such other order as the Court think just". This is also reflected in s 33ZJ which has operation when the Court has made an award of damages "in a representative proceeding" and allows an applicant, or a sub-group representative party, or a person who has been such a party, to apply for an order allowing reimbursement of costs (if costs reasonably incurred are not recoverable against the respondent) and also allows the Court "to make any other order it thinks just" (emphasis added). If a fund was created under s 33ZA, it may be argued that the Court may, under the powers given under that section, provide for the administration of the fund and the payment, on terms (including terms relating to the reimbursement of funding expenses), of the aggregate judgment sum to group members. 48 Subject to [52] below, we agree with these observations and, in particular, do not consider there is any reason why the Court, in an appropriate case, would not have power under s 33Z(1)(g) to make what has been described as a "judgment CFO". 49 As the applicants correctly submit, there is no reason to read down s 33Z(1)(g). It also employs language importing a wide judicial discretion, with two requirements: first, that the Court "may make such orders as are just"; and secondly, that the Court may do so "in determining a matter in a representative proceeding". 50 The miscellany of powers granted to the Court under s 33Z(1) are not mere restatements of powers available at law; as the inclusion of a power to award aggregate damages (s 33Z(1)(f)) illustrates. The word "just" in s 33Z(1)(g) ought not be given any incongruently narrower construction than that which this Court has given the same word in s 33V(2) and the same textual and contextual considerations apply as were remarked upon in Elliott-Carde. 51 While s 33Z(2) provides that in making an award for damages, the Court must "make provision for" payment or distribution to group members, there is no reason why the Court could not, in an appropriate case, "make provision for" distribution to group members of an amount after payment of just costs and expenses (including those arising following any application under s 33ZJ for costs beyond those recoverable from the adverse parties). 52 In the light of the above, it is unnecessary to form a view as to the power to make a judgment CFO pursuant to any other statutory provision. Having noted this, despite some similarity in language, when it comes to s 33ZJ(2), the expression "costs reasonably incurred", does tend to point to this section being concerned with costs and disbursements in the traditional sense and the better view might be thought to be that this provision would not extend, on its natural and ordinary meaning, to the payment of funding costs by way of a CFO (unless, perhaps, the funding costs could be properly characterised as a disbursement of the solicitors, such as a disbursement funding facility). It is, however, unnecessary to form a final view as to the precise ambit of s 33ZJ(2).

E THE ARGUMENTS AS TO WHY THERE IS A WANT OF POWER 53 By the end of oral argument, the opposing respondents accepted that their contentions as to a want of power to make a Solicitors' CFO could be conveniently grouped into four categories that had been identified by the applicants. Those contentions were as follows: (1) the High Court's decision in BMW Australia Ltd v Brewster [2019] HCA 45; (2019) 269 CLR 574 is to be understood as precluding the making of any CFO either as a matter of power, or a matter of preference, let alone a Solicitors' CFO (No CFO Power Contention); (2) a Solicitors' CFO could never be "just" because it creates a conflict of interest which is impermissible having regard to the fiduciary character of both the solicitor's relationship with its client (and the solicitor and the applicants' relationship with group members) and/or professional obligations (Fiduciary/Professional Conflict Contention); (3) a Solicitors' CFO could never be "just" because either it, or the contract which requires the applicants to apply for it, "is inconsistent with" or involves a breach of s 183 of the Legal Profession Uniform Law (NSW) (LPUL) and/or r 12.2 of the Australian Solicitors' Conduct Rules 2015 (NSW) (ASCR) (Statutory Prohibition Contention); and (4) that a Solicitors' CFO could never be "just" because it is contrary to a public policy against contingency-based fees for lawyers, notwithstanding the abolition of maintenance and champerty (Public Policy Contention). 54 Needless to say, the last three contentions are overlapping and interrelated.

E.1 No CFO Power Contention 55 This first aspect of the opposing respondents' argument necessarily involved the contention that aspects of the Full Court decision in Elliott-Carde are wrong and that another Full Court decision, Galactic Seven Eleven Litigation Holdings LLC v Davaria, is also wrong. Consideration 56 As noted above, in Elliot-Carde, Beach, Lee and Colvin JJ, in addition to other matters, dealt with a reserved question involving whether the Court could make a settlement CFO and, in Galactic Seven Eleven Litigation Holdings LLC v Davaria, the Full Court dealt with an appeal from a refusal to make a settlement CFO. Prior to the hearing of the appeal in Galactic Seven Eleven Litigation Holdings LLC v Davaria, the issue of power had been clarified in Elliot-Carde. Far from being convinced that either of these decisions are wrong, we respectfully agree with the conclusions as to power expressed.

E.2 Fiduciary/Professional Conflict Contention 57 The opposing respondents contend that at its core, what is proposed by a Solicitors' CFO is that the solicitors will, in effect, take on the role of a third-party litigation funder bearing risk in exchange for an element of profit and that introducing an element of commercial profit-making "would require careful consideration of the precise facts before the Court could be satisfied that the proposal was consistent with those duties". 58 This is said to occasion difficulties because the applicants' solicitors owe fiduciary or "fiduciary-like" duties to group members even in the absence of a retainer and a Solicitors' CFO would involve solicitors, owing such duties, being involved in settlement discussions, and profiting from the relationship in a way which could conflict with the core elements of the fiduciary "no profit" and "no conflict" duties. 59 Further, it is submitted that solicitors owe professional duties in addition to their fiduciary obligations and these obligations include obligations not to "bargain with his client for an interest in the subject-matter of litigation, or (what is in substance the same thing) for remuneration proportionate to the amount which may be recovered by his client in a proceeding": Clyne v New South Wales Bar Association (1960) 104 CLR 186 (at 203 per Dixon CJ, McTiernan, Fullagar, Menzies and Windeyer JJ). 60 In Clyne, the High Court approved the following statement by Ostler J in Sievwright v Ward (1935) NZLR 43 (at 204): If a solicitor (or a partner of a firm of solicitors) has honestly investigated a client's case, and honestly come to the conclusion that the client has a good cause of action or a good defence to an action, then, so long as he makes no bargain with his client to take a share of the proceeds, he does not, by advancing money for disbursements and by conducting the case without having received any payment on account of his costs, commit the wrong of either champerty or maintenance". (Emphasis added) 61 It is asserted that there is no reason to think that these rules of professional conduct have somehow lessened in importance, and, in this regard, reference was made to Hegarty v Keogh (No 2) [2023] SASCA 30 (at 36-38 [137]-[140] per Livesey P, Doyle and Bleby JJ) for a recent consideration of the High Court's reasons in Clyne. Consideration 62 Whether it is accurate to characterise the relationship between a lawyer retained only by a representative applicant and group members as a fiduciary relationship has been the subject of some debate. In Dyczynski v Gibson [2020] FCAFC 120; (2020) 280 FCR 583 (at 635-636 [209]), Murphy and Colvin JJ observed that the scheme of Pt IVA is that although the applicant conducts the proceeding on behalf of the class members and has fiduciary obligations to them, the precise nature of the duties owed by the applicant's lawyers "is not settled". In the same case, Lee J (at 672-673 [378]-[380]) noted that where a solicitor is retained by a group member, then the duties owed to the group member client will be regulated in both contract and tort, and will also take on a fiduciary character informed by the contract. Moreover, given the existence of a retainer, the solicitor will owe duties specified in the ASCR such as: a duty of confidentiality (r 9); the duty to act in the client's best interests (r 4.1.1); a duty of competence and diligence (r 4.1.3); a duty to avoid conflicts (rr 10, 11, and 12); and a duty to follow a client's lawful, proper and competent instructions (r 8.1). But, in the absence of a retainer (as in the present case), the duties of the solicitors to group members are "to perform the role consistently with the duty not to act contrary to the interests of those in respect of whom the lead applicant acts in a representative capacity, that is, not to take steps contrary to the interests of the group members" (at 673 [379] per Lee J). 63 Justice John Dixon in Bolitho v Banksia Securities Ltd (No 18) (remitter) [2021] VSC 666; (2021) 69 VR 28 provided a useful survey of the authorities that have discussed this topic and concluded by observing as follows (at 95 [1363]-[1364]): Part of the difficulty with the issue of whether fiduciary obligations were owed to group members has been whether group members have a sufficient identity of interest to enliven a fiduciary relationship. The group proceeding regime permits access to justice for persons with varying degrees of interest in the conduct of a wrongdoer. While a group proceeding commonly conclusively determines the rights of the lead plaintiff, for group members all that is determined are the questions that are common to the interests of all group members. The legal interests of a group member and the lead plaintiff only align to the extent that each has an interest in the resolution of those common questions. Group members are not privies in interest of the lead plaintiff for all purposes. Their rights and interests are only determined after their individual claim has been determined, usually following the trial of the common questions. Different considerations apply once an in-principle settlement of the rights and interests of all group members is being negotiated or has been reached. Generally, the (proposed or agreed) compromise is not limited to the common questions, but extends to the resolution of each group members' individual claim. Individual group members' interests in the claims made in the proceeding against the settling defendant will, once the settlement is approved by the court, be extinguished. At this point, the critical feature of a fiduciary relationship identified by Mason J in Hospital Products v United States Surgical Corporation [(1984) 156 CLR 41] - that the fiduciary undertakes or agrees to act for, or on behalf of, or in the interests of, another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense - is clearly present. The duties owed by the Lawyer Parties to group members, beyond [the plaintiff] and any others who may have formally retained them, are properly regarded as proscriptive. (Footnotes omitted) 64 With respect, we agree, and would only add that if a lawyer was, for example, seeking to resolve a group member's claim by obtaining a judgment on their individual claim absent a written retainer (for example, as a "sample" group member at an initial trial), the same proscriptive duties would seem to arise. Further, if there was a "declassing" of a class action, and lawyers were later acting for a former group member in advancing their individual claim, they would be doing so pursuant to a retainer (with all the attendant obligations explained above). 65 In these circumstances, at the time of any settlement application relating to group members' claims generally, or at the time of seeking to obtain a judgment for the benefit of a group member on an individual claim, we consider that the solicitors would owe an obligation of disinterested loyalty and would be unable to obtain any unauthorised benefit from the relationship (consistent with the profit rule), nor permit any conflict to arise between their duty of loyalty to the group members and their own personal interests or duties owed to others (consistent with the conflict rule). 66 But identifying the nature and content of duties is the start and not the end of the relevant analysis. 67 As was explained by Beach J in Wetdal Pty Ltd as Trustee for the BlueCo Two Superannuation Fund v Estia Health Ltd [2021] FCA 475 (at 25 [94]) and Murphy and Lee JJ in Parkin v Boral Limited (Class Closure) [2022] FCAFC 47; (2022) 291 FCR 116 (at 148-150 [126]-[134]), potential or actual conflicts of interest are an inevitable by-product of the Pt IVA regime and those conflicts are addressed not only by the content of the duties owed to group members or owed to the applicant but also the duties of the Court (including the necessity that any conflict of interest must be considered by the Court on any settlement approval hearing or upon considering whether an order upon judgment being delivered is "just"). In the former and more common case, as Lee J noted in McKenzie v Cash Converters International Ltd (No 3) [2019] FCA 10 (at 10 [24]), as part of its supervisory and protective role, the Court will have the onerous burden of being required to "be alive to the possibility that a settlement may reflect conflicts of interest or conflicts of duty and interest between participants in the common enterprise which has conducted the representative proceedings". 68 Those experienced in acting for applicants in class actions will understand, irrespective of how a class action is funded, that tensions can and do sometimes arise between the commercial interests of solicitors or funders in finalising a settlement. The history of class actions is replete with examples of settlement discussions taking place involving solicitors acting on a "conditional" or "No Win-No Fee" basis with large amounts of "work-in-progress" and liabilities for third-party disbursements. For example, the Kilmore East-Kinglake Bushfire Class Action was conducted on a "No Win-No Fee" basis and at the point of settlement, which was not reached until after a trial lasting 208 days, the reasonable Court-approved legal fees and disbursements that were due to the solicitors totalled $60 million: Matthews v AusNet Electricity Services Pty Ltd [2014] VSC 663 (at [10], [386] per Osborn JA). Similar tensions may be seen in cases involving listed funders where reporting dates are important; or smaller funders who need to obtain working capital quickly to fund another opportunity. Experience teaches us that tensions commonly arise during the course of settlement discussions by reason of these different commercial drivers, but what matters is that those with duties recognise the existence of the conflict and do their job, and those conflicts are managed (with the help of an independent bar) and the interests of group members are protected by the supervision of the Court including the need to obtain approval of any settlement and any payments out of a settlement fund. 69 But it is sufficient for present purposes to note that the mere fact that the applicants' solicitors owe the duties they owe to group members would not in and of itself render an order in the form of a Solicitors' CFO anything other than "just". Despite this, of course, one can readily envisage circumstances where an order sought for a payment made to a lawyer on settlement, even if said to be for remuneration for legal services, would be unjust. An obvious example is the payments initially approved at first instance in Bolitho. 70 But even in less extreme cases, nothing about the need to be astute to conflicts and for the Court to supervise closely the conduct of solicitors seeking payment is novel. A recent example of a refusal to make an order reimbursing expenses incurred by a solicitor (in an amount of $32 million for "disbursement funding facilities") on the basis that doing so would not be just (and further illustrating the conflicts that already arise in class actions, particularly involving large incorporated legal firms), is provided by Gill v Ethicon Sarl (No 12) [2023] FCA 902. 71 In that case, Lee J observed (at [133]-[141]): There was significant discussion during the course of the hearing as to potential conflicts between the commercial imperatives of Shine and Shine Justice and the position of its clients and group members. In some respects the tensions exhibited in this case were unusual. Much was made by the contradictor of the failure of Shine to adduce any evidence that anyone within Shine had regard to the interests of group members in making the commercial decision to pursue the disbursement funding facilities. I am satisfied that if there had been some close consideration of the interests of group members at the time [the CFO] made his decision, some evidence would have been adduced of it. Its absence fortifies me in my belief that the decision was made by a non-lawyer without any real examination of how that would impact upon group members. In response, over and again, Shine stressed it would be wrong to find it had "any duty to fund" the litigation and was entitled to arrange its affairs as to the funding of this litigation as it wished, consistently with the law and its broader commercial priorities. This brings into focus the question of where Shine's obligations lay in the circumstances in which it found itself. It also demonstrates the tensions that can exist between the professional, contractual and fiduciary duties owed to clients and duties owed to group members on the one hand; and the duties owed by directors, officers and employees to a solicitor corporation on the other. This requires some explanation. Rule 4.1.1 of the [ASCR] provides that a solicitor must "act in the best interests of a client in any matter in which the solicitor represents the client". The fiduciary duty of a solicitor to his client may be expressed in a similar vein: a solicitor, as a fiduciary for the client, must prefer the client's interests over the solicitor's personal interests: Pilmer v Duke Group Ltd (in liq) [2001] HCA 31; (2001) 207 CLR 165 (at 199 [78] per McHugh, Gummow, Hayne and Callinan JJ). Where a solicitor is acting for a representative applicant, the content of the duty involves advising and assisting the applicant to discharge the obligation to represent the claims of group members in accordance with Pt IVA and Pt VB of the [Act]. The Court is entitled to expect that the applicant's solicitors will not act contrary to the interests of group members as a whole in advancing and dealing with the common aspects of their claims. But, at the same time, the directors of a company owe a fiduciary duty to the company to act in its best interests (Walker v Wimborne (1976) 137 CLR 1 (at 6-7 per Mason J)), which may but need not align with the best interests of creditors and shareholders. There is also, of course, the suite of statutory duties owed by company directors in Pt 2D.1 of the Corporations Act. Historically any tension arising from these various duties, in this form, did not exist, but the commencement of the Legal Profession Amendment (Incorporated Legal Practices) Act 2000 (NSW) (repealed) in July 2001 was a turning point. The present iteration of the relevant legislation, the Uniform Law, provides in s 6 that an incorporated legal practice is a "qualified entity" which may engage in legal practice. This shift precipitated an increase in innovative structures such as incorporated legal practices and corporate relationships between listed entities and wholly owned incorporated legal practices, such as the relationship between Shine Justice and Shine: see, generally Legal Services Commissioner Steve Mark, "The Corporatisation of Law Firms - Conflicts of Interests for Publicly Listed Law Firms" (Australian Lawyers Alliance National Conference 2007, 13 October 2007); Andrew Grech and Kirsten Morrison, "Slater & Gordon: the Listing Experience" (2009) 22 Georgetown Journal of Legal Ethics 535 (at 537). In recognition of its duties, Shine Justice has adopted corporate governance policies to reinforce the primary of professional and ethical obligations of legal practitioners in the company. Notably, cl 6 of Shine Justice's Code of Conduct provides as follows: As legal professionals, we (and our employees) have a paramount duty to the Court, and then to our clients. Those duties prevail over our duty to shareholders. There may be instances where we and our lawyers, in exercising our duties to the court or to the client (or both), act other than in the best interests of shareholders. An example is in settlement negotiations where our duty to our clients would be favoured over any short-term cash flow or funding needs we may have. The Board respects the paramount duty owed by Shine and its lawyers to the courts and their duty to act in the best interests of clients, but believes that doing so will also be in the long term best interests of Shine and its shareholders. The Code of Conduct is silent as to duties owed to group members or representative persons in class actions or in other forms of representative proceedings. This might be thought to be less than ideal in circumstances where it is apparent a large and important part of Shine's practice is class action litigation involving the claims of thousands of group members across many facets of commercial and everyday life. Whether or not a group member has retained the solicitor acting for the representative applicant, the solicitor has a duty not to act inconsistently with the interests of group members: Dyczynski v Gibson [2020] FCAFC 120; (2020) 280 FCR 583 (at 672-673 [378]-[380] per Lee J). This duty complements the representative role assumed by a lead applicant and guards against any asymmetry between a representative applicant, who has the benefit of legal representation, and group members, whose "claim[s]", as that term is used in s 33C, are in the hands of the representative applicant unless they opt out of the proceeding under s 33J of the [Act]. I assume Shine agrees that the duties it has to group members must inform its actions in a similar, albeit different way to the duties owed to its clients. The omission of these duties from the Code of Conduct would not have assisted those within the company keeping these duties at the forefront in considering the issue of funding disbursements, particularly if decisions were being made without the active involvement of individual solicitors (who would be better aware of the content of their professional duties than financial executives). It was not expressly submitted by the contradictor that Shine was in breach of any duty it had to group members. It would be inappropriate for me to explore this issue except to the extent necessary for the purposes of considering the circumstances relevant to the disposition of this application. I will proceed on the basis that I do not find that Shine acted inconsistently with its obligations qua group members. But, at the very least, what this case exposes is the imperative on those in incorporated legal practices, a fortiori solicitors working for the benefit of listed entities, to keep at the forefront of their mind the paramount duty to the Court, and other professional duties. There is always a live risk that "human frailty will prove unequal" to the task: Law Society of New South Wales v Harvey [1976] 2 NSWLR 154 (at 172 per Street CJ). This need for vigilance is acute when decisions are or can be made by non-lawyer officers of a corporation, which can affect the interests of clients and group members and hence the proper discharge of professional duties. 72 We do not consider it is beyond the ability of the Court to be alive to identifying any relevant conflicts and ensuring that the rights of group members have been appropriately protected. Given the Court's supervisory and protective role, whether the exercise of the power to make a Solicitors' CFO is "just" requires a bespoke evaluation of the evidence before the Court on the occasion when the Court is called upon to exercise a discretion. The considerations relevant to the exercise of the discretion and as to whether the proposed order is, or is not, "just" will include the existence of the fully-informed consent of the applicants, and the adequacy of notification to group members and the reaction of those group members - not to mention the Court's ability to scrutinise whether the solicitors had in fact acted in a way consistent with the existence of the obligations explained above (perhaps aided, at that time, by a court-appointed contradictor if necessary). 73 The same can be said as to the related contention based upon the professional obligation of solicitors to act with integrity and independence, and not act where there is a conflict between duty and client interests. These are, of course, relevant matters and may be decisively important in assessing whether a particular order ought be made if there was a suggestion that some professional duty had been breached, but the existence of such professional obligations (as applicable in the particular context of the duties of a solicitor to group members) do not present as some sort of insuperable barrier to ever making such an order if it was otherwise considered just in the circumstances. 74 The reliance on cases involving discussion of champertous agreements between solicitor and client such as Clyne and Hegarty is not of assistance, but it is convenient to explain why below.

E.3 Statutory Prohibition Contention 75 The opposing respondents advance the same argument related to statutory prohibition similarly, but with different emphases. 76 All refer to s 183 of the LPUL, which is in the following terms: 183 Contingency fees are prohibited (1) A law practice must not enter into a costs agreement under which the amount payable to the law practice, or any part of that amount, is calculated by reference to the amount of any award or settlement or the value of any property that may be recovered in any proceedings to which the agreement relates. Civil penalty: 100 penalty units. (2) Subsection (1) does not apply to the extent that the costs agreement adopts an applicable fixed costs legislative provision. (3) A contravention of subsection (1) by a law practice is capable of constituting unsatisfactory professional conduct or professional misconduct on the part of any principal of the law practice or any legal practitioner associate or foreign lawyer associate involved in the contravention. 77 Mr Shand contends this provision "evinces at least an implied legislative intention not to allow" a Solicitors' CFO. Mr Shand does not assert the making of a Solicitors' CFO contravenes a statutory prohibition per se, but rather the proposed amendments to the applicants' contractual retainer with their solicitors "conflict with s 183 of the LPUL" as it requires the applicants to instruct the solicitors to apply for an order which includes the solicitors being remunerated for the risks of funding the claim "by payment of such percentage of the sum recovered as a result of the Consolidated Proceeding (Resolution Sum) as may be approved by the Court". It is said this proposed contractual promise cannot be reconciled with the prohibition in s 183(1) because part of the amount payable to the solicitors "is calculated by reference to the amount of any award or settlement or the value of any property that may be recovered in any proceedings to which the agreement relates". 78 Mr Shand also relies on the observations of Middleton and Beach JJ in Klemweb Nominees Pty Ltd v BHP Group Ltd [2019] FCAFC 107; (2019) 369 ALR 583 (at 588 [22]), to the effect that the provision prohibiting contingency fee agreements indicates a legislative policy tending against the payment of a contingency fee. While that policy may not directly inform or constrain the exercise of Federal judicial power, matters of public policy are not irrelevant to the exercise of this Court's powers, including to make a CFO. What is "just" includes an examination of public policy, including state public policy. 79 In addition to the above points, Mr Kain emphasises that even if it is thought a Solicitors' CFO does not offend s 183 directly on the basis that it does not create a legal or equitable interest in the subject matter of the litigation, and merely provides that the solicitors' remuneration is to be approved by the Court, this is "a distinction without a difference insofar as s 183 is concerned" and represents "a transparent attempt to downplay the importance of the clear wording of s 183" and "there is still clearly an agreement which contemplates a payment or charging of an amount calculated by reference to the amount of an award". 80 Ernst & Young goes somewhat further and expressly asserts that the proposed amended costs agreement would amount to a breach of s 183. They also point to r 12.2 of the ASCR (that is, part of an instrument authorised under Pt 9.2 of the LPUL), which provides that: 12 Conflict concerning a solicitor's own interests A solicitor must not do anything - (i) calculated to dispose the client or third party to confer on the solicitor, either directly or indirectly, any benefit in excess of the solicitor's fair and reasonable remuneration for legal services provided to the client; or (ii) that the solicitor knows, or ought reasonably to anticipate, is likely to induce the client or third party to confer such a benefit and is not reasonably incidental to the performance of the retainer. 81 If the applicants' solicitors enter into the proposed addendum to the costs agreement or make an application for a Solicitors' CFO, they will, it is contended, have contravened r 12.2(i), because they will have procured agreement from the applicants to seek an order, the effect of which is, explicitly, to confer a benefit over and above the appropriate remuneration for legal services by rewarding the solicitors for the provision of other services. 82 In this regard, it is submitted that each of s 183 and r 12 are laws that govern the manner of the exercise of the Court's power within the conception of Rizeq v The State of Western Australia [2017] HCA 23; (2017) 262 CLR 1 and Masson v Parsons [2019] HCA 21; (2019) 266 CLR 554. Those laws are directed to preserving the integrity of the profession in the context of litigation and therefore to the proper administration of justice. The provisions of the relevant Commonwealth law (that is, the Act) do not "otherwise provide" within the meaning of s 79 of the Judiciary Act. The fact a law of the Commonwealth is silent on the issue of contingency based fees is sufficient for the purposes of s 79 and, in this regard, the Full Court was wrong to hold in Herron v HarperCollins Publishers Australia Pty Ltd [2022] FCAFC 68; (2022) 292 FCR 336 (at 417-419 [347]-[356] per Lee J, Wigney and Rares JJ agreeing) that the test relevant to "picking up" under s 79 of the Judiciary Act was identical to that required by s 109 of the Constitution. In any event, it is contended that the provisions of the Act are not "inconsistent", either directly or indirectly, with the State laws governing a solicitor's conduct with respect to its client (including solicitor/client fee arrangements). Consideration 83 The initial point to be made is that these arguments, to the extent they are reliant upon some notion of "implied" legislative policy, are again directed to questions of discretion rather than power. It will be necessary to come back to this issue in E.4 below. 84 What is equally fundamental, however, is that the terms of any variation or addendum to the costs agreement between the applicants and the solicitors are neither here nor there when it comes to the question of power raised by the reserved question. 85 Moreover, even if it was relevant, an instruction from the applicants to seek a Solicitors' CFO is not an agreement contrary to s 183 of the LPUL. There is no promise to pay any amount; a promise to make an application for an order directing approved remuneration on a particular basis is a quite distinct notion. The proposed addendum does not create any right in any subject matter of the litigation; nor does it provide for the applicants and group members to remunerate the solicitors as a proportion of what may be recovered. 86 Any payment made by a Solicitors' CFO would not be pursuant to any bargain struck which forms part of a retainer. As is evident from the terms of s 33V(2), the payment would be made pursuant to a Court order from an identifiable settlement fund controlled by the Court. 87 Reliance by the opposing respondents on what was said in Klemweb as to any "implicit" policy is incomplete without having regard to all of what their Honours pointed out (at 577-8 [17]-[22]). Middleton and Beach JJ noted that: first, the relevant prohibition is on the act of a legal practitioner entering into a costs agreement containing a contingency fee rather than the payment of a contingency fee; secondly, the stipulated consequences for infringing the prohibition, in addition to a civil penalty, is that the costs agreement is void; thirdly, s 183(1) does not speak to this Court's powers under the Act or "indeed its express or implied powers more generally to order and thereby permit the payment of a contingency fee to a legal practitioner before it as part of any common fund order and out of any settlement proceeds (s 33V) or any judgment (s 33Z)"; and fourthly and inferentially, any "direct and indirect policy underpinning" prohibitions such as s 183, would not be an extraneous consideration when exercising any discretion to make a CFO, which provided for such a payment. 88 Rule 12.2 is similarly inapplicable. The solicitors have not done anything which is "calculated to dispose [the] client… to confer on the solicitor… any benefit in excess of the solicitor's fair and reasonable remuneration for legal services". To the extent any benefit is conferred, it will be conferred by the Court because it is "just" to do so in all the circumstances. 89 Once that is understood, any discussion as to how s 183 of the LPUL and r 12.2 apply and are relevantly "picked up" in federal jurisdiction can be seen to be beside the point.

E.4 Public Policy Contention 90 Closely connected to the last two points is the broader issue described in the submissions of the opposing respondents as "public policy" not only evident from the various statutory and regulatory prohibitions on contingency fees but also from observations in the case law about champertous agreements between solicitor and client being inimical to the proper discharge of the professional obligations of solicitors. 91 Mr Shand and Mr Kain submit that "common issues of policy" are reflected in the way in which the fiduciary character of the solicitors' duties, the nature of the solicitors' profession and conduct rules and the provisions of the LPUL all impact upon a consideration of what is "just". 92 Ernst & Young agree and then develop a somewhat broader contention. They point to the fact that s 183, and the rest of the LPUL, was drafted by the federal government under the auspices of the Council of Australian Governments between 2009 and 2011, but the prohibition of award-based contingency fees is deeply rooted and has a long history. At the time Pt IVA was enacted, maintenance and champerty was still a crime and a tort in States other than Victoria and award-based fee agreements were champertous. Even when various jurisdictions came to abolish the crime and the tort (or one but not the other), the circumstances in which a contract was to be treated as contrary to public policy or as otherwise illegal were unaffected. In most Australian States and Territories, the abolition of the crime and the tort of champerty was accompanied by the enactment of statutory prohibitions on award-based fee agreements. It is said that this history "reflects an uninterrupted policy to prohibit award-based fee agreements between solicitors and their clients". 93 The position was essentially the same in the United Kingdom, and in Wallersteiner v Moir (No 2) [1975] 2 WLR 389, the Court of Appeal rejected the submission that the abolition of criminal and civil liability for maintenance and champerty meant that contingency fees (including award-based fees) were lawful. Lord Denning MR explained that the reason why contingency fees were generally unlawful was not because they were criminalised, but because they were contrary to public policy and cited the following observations of Lord Esher MR in Pittman v Prudential Deposit Bank Ltd (1896) 13 TLR 110 (at 111): In order to preserve the honour and honesty of the profession it was a rule of law which the court had laid down and would always insist upon that a solicitor could not make an arrangement of any kind with his client during the litigation he was conducting so as to give him any advantage in respect of the result of that litigation. 94 Reference was also made to Buckley LJ's consideration (at 405Gff) as to the public policy arguments for and against the availability of contingency fees in minority shareholder litigation and concluded that before such a system was introduced in England, it ought to be the subject of comprehensive consideration by a body such as the Law Commission and any change would have to be affected by an alteration in the relevant professional rules or by legislation (at 407A-C). 95 Similarly, in Trendtex Trading Corporation v Credit Suisse [1980] 1 QB 629, an interlocutory appeal involving an assignment of a cause of action after the 1967 abolition of the crime and tort of maintenance (including champerty), the Court of Appeal (Lord Denning MR, Bridge and Oliver LJJ) all agreed that officers of the court must not put themselves in a position where their own interests may conflict with their duties to the court by agreeing "contingency fees" (654A-B, 657H, 663E-F) and Lord Denning and Oliver LJ (with whom Bridge LJ agreed) made observations on the circumstances in which a contract is to be treated as contrary to public policy or otherwise illegal for maintenance and champerty (653B-E, 6570, 6680-H, 669F-G, 674E-F). Ernst & Young place particular reliance upon the observation of Oliver LJ (at 663C-F), where his Lordship noted there was a "clear requirement of public policy that officers of the court should be inhibited from putting themselves in a position where their own interests may conflict with their duties to the court by the agreement, for instance, of so called 'contingency fees'". 96 It is then said the "distinction drawn in Wallersteiner and Trendtex between agreements for award-based contingency fees and the general law of maintenance and champerty" is important in understanding Campbells Cash & Carry Ltd v Fostif Pty Ltd [2006] HCA 41; (2006) 229 CLR 386, where Gummow, Hayne and Crennan JJ noted (at 429 [77], 433 [86]) that the abolition of the crime meant that any wider rule of public policy against maintenance and champerty (wider, that is, than the particular rule or rules of law preserved by the abolishing Acts) lost its footing. These observations are said to have limited force because the High Court was considering the notion of third-party funding rather than the "long history of the prohibition of award-based contingency fees nor the policies that underpin the prohibition". 97 It follows that at least in New South Wales, it is asserted, consistently with Clyne, it "remains contrary to public policy for a solicitor to bargain with their client for an interest in the subject matter of the litigation". Consideration 98 The initial point is that it is difficult to understand how these public policy considerations go to statutory power, rather than discretion. In any event, even though public policy is often a slippery concept, in the present context it is necessary to tread especially warily. 99 A good starting point is recognising how things have changed; not only since the expressions of public policy relating to contingency fees relied upon by the opposing respondents, but even over the course of the last generation. 100 Outside insolvency litigation, until the turn of the century, there was little litigation funding (as we now know it) in this country. Several factors coalesced to encourage the growth of third-party funding: the introduction of court procedures that overcame perceived deficiencies in Chancery-style representative proceedings thus facilitating the effective grouping of claims, such as under Pt IVA; the introduction, since the 1970s, of a miscellany of statutory causes of action allowing individuals to obtain statutory compensation in the event of contravening conduct of various types; an increased focus upon, and awareness of, consumer rights; and what Gleeson CJ described as the "remorseless mercantalisation of legal practice" which now reflects "the dominance of the culture of the market, with its tendency to reduce society to the single dimension of producers and consumers": Gleeson CJ, Some Legal Scenery (Conference Paper, Judicial Conference of Australia, 5 October 2007) 8. 101 The first of these factors most obviously reflected an express recognition of policy objectives far removed from the medieval origins of maintenance and champerty. These ancient concepts reflected norms arising in the 11th and 12th centuries that infused the law with the attitude that forgiving transgressions was a virtue, and unnecessary recourse to law courts was discountenanced: see Ari Dobner, "Litigation For Sale" (1996) 144 U Pa L Rev 1529, 1545. They also were bound up with the conception of the champertous officious intermeddler (a characterisation reflected in the judgment of Callinan and Heydon JJ in Fostif, who stressed that the purpose of court proceedings is not to provide a means for third parties to make money (at 486-488 [266])). 102 But as was explained by the Australian Law Reform Commission (ALRC), in its seminal December 1988 report entitled Grouped Proceedings in the Federal Court upon which Part IVA of the Act was largely, but not wholly, based (at 44): The main objective of [the class action regime]…is to secure a single decision on issues common to all and to reduce the cost of determining all related issues arising from the wrongdoing. To achieve maximum economy in the use of resources and to reduce the cost of proceedings, everyone with related claims should be involved in the proceedings and should be bound by the result. 103 Consistently with this, in describing the general objectives of the Bill which inserted Part IVA in the Act, the then Attorney-General stated that it would: [P]rovide a new representative action procedure in the Federal Court. The new procedure will enhance access to justice, reduce the costs of proceedings and promote efficiency in the use of court resources…The Bill gives the Federal Court an efficient and effective procedure to deal with multiple claims. Such a procedure is needed for two purposes. The first is to provide a real remedy where, although many people are affected and the total amount at issue is significant, each person's loss is small and not economically viable to recover in individual actions. It will thus give access to the courts to those in the community who have been effectively denied justice because of the high cost of taking action. The second purpose of the Bill is to deal efficiently with the situation where the damages sought by each claimant are large enough to justify individual actions and a large number of person wish to sue the respondent. The new procedure will mean that groups of person, whether they are shareholders or investors, or people pursuing consumer claims, will be able to obtain redress and do so more cheaply and efficiently than would be the case with individual actions. Commonwealth, Second Reading Speech, House of Representatives, 14 November 1991, 3174-3175 (Attorney-General) 104 Then, as Lee J explained in Perera v GetSwift Limited [2018] FCA 732; (2018) 263 FCR 1 (at 10-15 [15]-[29]), by a series of faltering steps, we have reached the position where open class proceedings grouping the claims of all persons affected by an alleged wrong are now the norm and there is a mature competitive market in which funders and solicitors are in competition for carriage of class actions which they subjectively perceive as having prospects of success (and hence bring the prospect of delivering a commercial return). This is the world any considerations based on public policy must now confront. That world was recognised by the ALRC in its 2019 report which recommended permitting solicitors to charge contingency fees, limited to class actions, with aims "to provide for a greater return to group members" and "further enable medium-sized class action matters to proceed", while noting that "as class actions are strictly supervised by the Federal Court, representative plaintiffs and group members remain protected from paying a single yet disproportionate or unreasonable fee": see ALRC, Integrity, Fairness and Efficiency - An Inquiry into Class Action Proceedings and Third-Party Litigation Funders (Report 134, 24 January 2019) 185 [7.3] (ALRC Report 134). 105 Given the abolition of the tort and crime of maintenance and champerty, the reality of a highly developed market for litigation funding of class actions, the perceived value of open class actions providing redress for wrongs, the existence of "uplifts" based upon success, and the recent introduction of GCOs in Victoria, statements made in decisions prior to these related developments, which might suggest a policy-based aversion to remuneration of solicitors in exchange for funding class action litigation require, at the very least, re-examination. No matter how distinguished the judge, the views of the 54th Master of Rolls (Lord Esher) in 1896 or the 58th (Lord Denning) in the 1970s and early 80s as to prohibitions of modalities of solicitors' remuneration might, with no intended disrespect, be regarded as being of limited present assistance. 106 While it is correct that Oliver LJ in Trendtex thought it was a "clear requirement of public policy that officers of the court should be inhibited from putting themselves in a position where their own interests may conflict with their duties to the court" by entering into a champertous agreement, his Lordship recognised, in speaking of public policy and maintenance and champerty generally, unless the law is capable of keeping up with modern thought, it must die in a lingering and discredited old age. In the end, the law of maintenance depends upon the question of public policy, "and public policy is not a fixed and immutable matter. It is a conception which, if it has any sense at all, must be alterable by the passage of time" (at 663E-F). In this regard, it is notable that percentage-based fee agreements for solicitors and counsel, termed "damages-based fees", have been generally permitted in England and Wales since 2013 (having previously been restricted to employment matters) following the recommendations of Lord Justice Jackson in his Review of Civil Litigation Costs: Final Report (December 2009): see Courts and Legal Services 1990 (UK) s 58AA. 107 Although it is unnecessary to decide (as it is a matter going to discretion rather than power), for our part, leaving aside the public policy prohibiting champertous bargains between solicitor and client, we would need some persuasion that it is contrary to the public policy of the common law of Australia for this Court to exercise power sanctioning and providing for just remuneration to solicitors for providing services to participants in a class action, which include but extend beyond the provision of pure legal work, on a contingency percentage basis. There is much to be said for the notion that there is no longer a coherent basis for a rule of public policy that precludes solicitors being remunerated in class actions on the same basis as litigation funders where providing overlapping services (namely, taking on risk, including as to adverse costs, in relation to class action litigation benefitting numerous other persons). 108 Two related points should be made in relation to the availability and experience of GCOs. 109 First, if, as it is urged upon us, it is relevant to power that a different rule of public policy now applies in New South Wales as compared to Victoria, one would be faced with the prospect that a different outcome, in terms of this Court's power to make a Solicitors' CFO would pertain depending upon whether an application was determined in the Victorian or New South Wales Registry of this Court. As the applicants correctly submit, this shows the illogicality of finding that a common law public policy rule precludes the making of a Solicitors' CFO as a matter of power. 110 Secondly, even when public policy is properly considered when one comes to discretion, its consideration must involve much more than a recognition of the historical aversion to contingency fees as between solicitor and client. As is explained in the Victorian Law Reform Commission report Access to Justice - Litigation Funding and Group Proceedings (March 2018), which preceded the introduction of GCOs, the considerations driving public policy in this area in the third decade of the 21st century include improving access to justice, lowering barriers to competition and reducing the overall cost to claimants of bringing mass litigation, balanced against the reality that many lawyers already are faced with managing conflicts and ensuring they continue to act independently under existing "No Win No Fee", and deferred fee arrangements. 111 As is well known, since GCOs were introduced in Victoria in 2020, solicitors have been able, in limited circumstances, to fund the litigation as well as act for a representative plaintiff in a class action, and to receive a fee contingent upon, and proportional to, the final damages award or settlement. 112 As John Dixon J explained in Bogan v Smedley [2022] VSC 201 (at [93]): [T]he purpose of s 33ZDA is to confer on the court the power to affect the manner in which legal costs in the proceeding are calculated and funded. This is central to the question of whether a proceeding can and will viably provide the opportunity for group members to seek vindication of their rights. Enabling a law practice to charge [proportionate fees for class actions], can promote access to justice by removing the disincentive to representative plaintiffs of disproportionate exposure to financial risk compared to the value of their own claim, to reduce costs to group members by having a single fee, and to provide transparency and simplicity. (Emphasis added) 113 To the extent relevant, the GCO regime, at least at this stage of its development, has assisted the just resolution of the disputes (constituted by the grouped claims) as inexpensively as possible from the perspective of group members. One of Australia's foremost academics specialising in class action litigation, Professor Vince Morabito, in his recent report, Group Costs Orders and Funding Commissions (Report, January 2024) (at 27-8), has provided data demonstrating that in contrast to a model where a class action settlement is subject to separate and cumulative deductions for litigation funding costs and legal costs and disbursements resulting in a 51% average median percentage of settlement returned to group members in funded finalised class actions between 2013 to 2018, the expense imposed upon group members in class actions where there is only one deduction, by way of GCO, is likely to be much less: see ALRC Report 134, 83 (Table 3.7). This is demonstrated in the following table showing a range of ordered GCO rates and median GCO rates for class actions in different circumstances (see Vince Morabito, Group Costs Orders and Funding Commissions, 20): Number Range of GCO rates Median GCO rate No competing class actions 9 (56.2%) 22-40% 24.5% Competing class actions 3 (18.7%) 22-24% 24% Competing class actions where GCO application considered as part of carriage motion 4 (25%) 14-24.5% 21.2%

114 Following a detailed and thorough comparative analysis, Professor Morabito drew the data together and made the following general observation regarding the distribution to group members of any sum secured for their benefit (at 23): With respect to this latter issue, the GCO regime provides a vastly superior outcome for class members. As the data provided in this report shows, to date the median GCO rate has been only slightly higher than the median funding commission received by commercial litigation funders pursuant to settlements in Australian funded class actions judicially-approved during the post-GCO era; and the GCO rate is almost identical to the median funding commission for the longer post-Money Max period. But, as already noted, the most crucial fact is that the GCO rate constitutes the only deduction from the gross settlement sum - before a distribution of the settlement proceeds is made to class members - whilst in funded class actions the funding commission is only one of the deductions to be made, although it is usually the biggest deduction. Further deductions include legal costs, settlement administration costs and, on some occasions, After-the-Event Insurance. (Footnotes omitted) 115 Further, and again by reference to judicial decisions approving GCO's since 2020, Professor Morabito correctly identified (at 23) that they "reveal a universal judicial acceptance of the fact that the GCOs would provide a far better financial return for class members than what would be received by them in funded class actions". 116 Having noted this, it is important to recognise that GCOs are, of course, different to a Solicitors' CFO. 117 Following the decision of the Full Court in Money Max Int Pty Ltd v QBE Insurance Group Ltd [2016] FCAFC 148; (2016) 245 FCR 191 in October 2016, a number of what were called "Commencement CFOs" were made in favour of third-party litigation funders which the data suggests had the effect of obviating the previous need for funders and plaintiff solicitors to "book build" before the commencement of a class action; substantially increased the number of funded open class actions; reduced funding commissions; and changed the mix of class actions by making consumer protection and employment claims more economically viable: see Ben Slade et al, "Post-Brewster Jurisprudence - The Future of the Common Fund Doctrine" (2022) 96 ALJR 430, 431. 118 But in December 2019, a majority of the High Court in BMW Australia Ltd v Brewster determined that the federal and New South Wales class action regimes do not empower the Court to make "Commencement CFOs", explaining (at 605 [68] per Kiefel CJ, Bell and Keane JJ) that the provisions of Pt IVA expressly provide for the making of orders distributing any proceeds of a representative proceeding and that "the occasion for the making of such an order is the conclusion of the proceeding" because this "stage is the appropriate occasion for orders for meeting and sharing the cost burden of the litigation because the value of the litigation and the extent of the burden will have been rendered certain". The Court held that an application for a CFO at an early stage of a proceeding "necessarily involves speculation on the part of the parties and the court in respect of these matters". 119 Accordingly, there is no statutory power under Pt IVA to make an order akin to a GCO, being an early-stage order similar to those made, prior to Brewster, purportedly under s 33ZF of the Act. Hence s 33ZDA of the SCA is a funding mechanism unique to Victoria because it may (but not must) be put in place early in the life of the proceedings: Bogan v Estate of Peter Smedley (Deceased) [2022] VSC 201 (at [12] per John Dixon J); Gawler v FleetPartners Group Ltd [2024] VSC 365 (at [12], [15] per Waller J). 120 Despite any temporal differences, given the extent of similarity between the orders, there is no reason to think the availability of a Solicitors' CFO would not, consistently with the experience of GCOs, make the resolution of group member claims in large class actions significantly less expensive. Although the discretionary analysis will be ex post rather than ex ante, it is apparent that a number of the principles relevant to the application of s 33ZDA of the SCA in making GCOs could, depending upon the circumstances, be relevant to the exercise of discretion to make a Solicitors' CFO (as articulated in cases such as Fox v Westpac Banking Corporation [2021] VSC 573; (2021) 69 VR 487 (at 497-501 [24]-[38] per Nichols J); Allen v G8 Education Ltd [2022] VSC 32 (at 9-13 [15]-[31] per Nichols J); Bogan v Estate of Peter John Smedley (Deceased) [2022] VSC 201 (at 4-15 [6]-[30] per John Dixon J); Kilah v Medibank Private Limited [2024] VSC 152 (at 4-6 [10]-[12] per Attiwill J); Raeken Pty Ltd v James Hardie Industries PLC [2024] VSC 173 (at 2-6 [6]-[25] per M Osborne J). 121 What is sufficient for present purposes is to note that any appeal to public policy which does not take into account the benefits of open classes and any significant disparity in the likely comparative financial impost on group members is incomplete, a fortiori in circumstances where the Court has a protective and supervisory role in relation to group members and is required, by Pt VB of the Act to facilitate, among other ends, the just resolution of disputes as "inexpensively… as possible" (see s 37M). 122 None of the arguments based upon public policy constitute some insuperable barrier to reaching a conclusion that a Solicitors' CFO could be within the range of deductions to form a settlement fund or judgment sum that could be considered as being just.

F BOGAN V THE ESTATE OF PETER JOHN SMEDLEY (DECEASED) 123 During the course of oral argument, the Full Court raised with the parties the effect, if any, of the recent decision of the Victorian Court of Appeal in Bogan v The Estate of Peter John Smedley (Deceased) [2023] VSCA 256 on the answer to the reserved question. 124 The reason why the Full Court raised the issue was because some comments made by the Victorian Court of Appeal in Bogan seem to suggest that the sort of powers sought to be invoked by the applicants in these proceedings may not be available to it in this Court. 125 The plaintiffs in Bogan had applied for a GCO prior to the first case management hearing in the proceedings on the basis that a GCO made early in the proceeding would provide certainty to the plaintiffs and group members that the proceeding would continue; certainty as to the percentage net return to group members (at [31], [69]); and certainty as to the return to the funder (at [60]). As the applicants point out, that was precisely why the High Court held that the making of an early CFO was outside the scope of s 33ZF of the Act: Brewster (at [67]-[68]). 126 The class action was said to involve conduct that took place in New South Wales, which is also where most of the parties and their legal advisers were based, and a defendant sought to have the class action transferred to the Supreme Court of New South Wales. The Victorian Supreme Court (Nichols J) decided to determine the plaintiff's application for a GCO before determining the transfer application and, in April 2022, John Dixon J ordered a GCO, which provided that the legal costs payable to the solicitors for the plaintiffs be calculated as a percentage of the amount of any award or settlement that may be recovered in the proceeding, being 40% inclusive of GST (subject to further order): Bogan v The Estate of Peter John Smedley (Deceased) [2022] VSC 201 (at [104]). 127 The cross-vesting application thus gave rise to a question as to what weight, if any, ought to be given to the existence of the GCO and Nichols J reserved three questions for the consideration of the Court of Appeal (Bogan v The Estate of Peter John Smedley (Deceased) (No 3) [2023] VSC 103 (at [3])) being: Question 1 In exercising the discretion to transfer proceedings to another court under s 1337H(2) of the Corporations Act 2001 (Cth), is the fact that the Supreme Court of Victoria has made a group costs order under s 33ZDA of the Supreme Court Act 1986 (Vic) relevant? Question 2 If the proceedings are transferred to the Supreme Court of New South Wales: (a) will the GCO made by the Supreme Court of Victoria on 3 May 2022 remain in force and be capable of being enforced by the Supreme Court of New South Wales, subject to any order of that Court; and (b) if the GCO will remain in force, does the Supreme Court of New South Wales have power to vary or revoke the GCO? Question 3 Should this proceeding (S ECI 2020 03281) be transferred to the Supreme Court of New South Wales pursuant to s 1337H of the Corporations Act 2001 (Cth), as sought in prayer 3 of the summons filed by the fifth defendant on 26 February 2021? 128 Relevantly, the Victorian Court of Appeal (Ferguson CJ, Niall and Macaulay JJA) answered the questions as follows: (1) "Yes"; (2)(a): "No"; (2)(b): "Does not arise"; and (3): "No": see Bogan at [7]. 129 What is evident from the questions posed and the reasons of the Court of Appeal is that the question of what power the Supreme Court of New South Wales may have at the end of proceedings to make a CFO in favour of solicitors was not argued in Bogan. More particularly, no argument appears to have been presented to the Court of Appeal in Bogan of the kind made by the applicants in the present case. 130 Despite statements in Bogan (at [2], [3], [4], [146], [152], [155]) concerning "charging" contingency fees or a want of power of the Supreme Court of New South Wales (and inferentially the Federal Court) to make a GCO or a like order, they are of no direct relevance to the question reserved for our determination. Apart from the obvious fact that this Court, for reasons explained above, does not have power to make an order such as was made in Bogan, and a GCO is a funding mechanism unique to Victoria, it was not in dispute in Bogan that, as a matter of public policy, lawyers have been prohibited from charging "contingency fees" and there was a want of power of the Supreme Court of New South Wales to make an order "like" that made by the Victorian Supreme Court. 131 It is apparent that the submissions before the Victorian Court of Appeal seeking transfer were to the effect that the making of the GCO was irrelevant because it would "travel". The submission of those resisting the transfer was that no power existed for the Supreme Court of New South Wales "to make the same or similar order as the GCO (which is to be distinguished from orders like common fund orders made at the conclusion of the proceeding)". As the applicants submit, the parenthetical words of those submissions are important; they indicate what was not part of the argument. 132 The Victorian Court of Appeal's answers to the questions posed in Bogan (which are now the subject of consideration by the High Court in M21/2024) do not bear on the reserved question in this case.

G CONCLUSION AND ORDERS 133 For the reasons set out above, the reserved question should be amended and should be answered "yes". There is no reason why costs ought not follow the event and the opposing respondents should pay the cost of the applicants. I certify that the preceding one-hundred and thirty-three (133) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Murphy, Beach and Lee.

SCHEDULE OF PARTIES No: NSD665/2022 Federal Court of Australia District Registry: New South Wales Division: General Applicants: Second Applicant: DAVID FURNISS Respondents: Second Respondent: ROBERT WARNER SHAND Third Respondent: JOHN BRUCE KAIN Fourth Respondent: ERNST & YOUNG (A FIRM) ABN 75 288 172 749 Fifth Respondent: CHUBB INSURANCE AUSTRALIA LIMITED ACN 001 642 020 Sixth Respondent: DUAL AUSTRALIA PTY LTD ACN 107 553 257 ON BEHALF OF CERTAIN UNDERWRITERS AT LLOYD'S BEING: (i) LIBERTY MANAGING AGENCY LIMITED FOR AND ON BEHALF OF SYNDICATE 4473; (ii) ASTA MANAGING AGENCY LTD FOR AND ON BEHALF OF SYNDICATE NO. 2786 EVE; AND (iii) HARDY (UNDERWRITING AGENCIES) LIMITED, MANAGING AGENT FOR AND ON BEHALF OF LLOYD'S SYNDICATE HDU 382 Seventh Respondent: ZURICH AUSTRALIAN INSURANCE LIMITED ACN 000 296 640 Eighth Respondent: XL INSURANCE COMPANY SE ARBN 083 570 441