Blairgowrie Trading Ltd v Allco Finance Group Ltd (Receivers & Managers Appointed) (In Liq) [2015] FCA 811

Blairgowrie Trading Ltd v Allco Finance Group Ltd (Receivers & Managers Appointed) (In Liq) [2015] FCA 811

The application for a 'common fund' style order binding all group members to pay litigation funding commissions and costs at the outset of the proceeding is neither appropriate nor necessary to ensure justice is done under s 33ZF (or s 23) of the FCA Act because (1) the proposed order prematurely imposes obligations and cannot be assessed as reasonable in the absence of knowledge about group member recoveries, numbers, or fund size; (2) there is a specific statutory regime for recovery of representatives' costs; (3) the position of a representative party is not analogous to a liquidator; and (4) the real benefit of the proposed order would flow to the litigation funder, not group members....

Parties
First Applicant: Blairgowrie Trading Ltd; Second Applicant: Alan Flitcroft and Chrystine Flitcroft (as trustees to the Te Coco Trust); First Respondent: Allco Finance Group Ltd (Receivers & Managers Appointed) (In Liq) (ACN 077 721 129); Second Respondent: Gary James Jones (as administrator ad litem of the estate of the late David Raymond Coe); Third Respondent: KPMG
Jurisdiction
Australia
Judgment Date
07 August 2015
Procedural Posture
Interlocutory Application in Representative Proceedings / Interlocutory: Application for Approval of Litigation Funding Order
Outcome
Application for proposed order dismissed
Legal Topics
Litigation Funding, Class Actions, Common Fund Doctrine, Costs in Representative Proceedings, Court's Power Under S 33 ZF, Court's Power Under S 23 FCA Act
Practice and Procedure Representative Proceedings Civil Procedure Litigation Funding Class Actions Common Fund Doctrine Costs in Representative Proceedings Court's Power Under S 33 ZF +1 more

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Parties

Blairgowrie Trading Ltd

First Applicant

Alan Flitcroft and Chrystine Flitcroft (as trustees to the Te Coco Trust)

Second Applicant

Allco Finance Group Ltd (Receivers & Managers Appointed) (In Liq) (ACN 077 721 129)

First Respondent

Gary James Jones (as administrator ad litem of the estate of the late David Raymond Coe)

Second Respondent

KPMG

Third Respondent

Procedural Posture

Interlocutory Application in Representative Proceedings / Interlocutory: Application for Approval of Litigation Funding Order

Legal Issues

  1. 1 Whether the Court has power to make an order approving and binding all group members to litigation funding agreements entered into by the applicants and the litigation funder under ss 23 and 33ZF of the Federal Court of Australia Act 1976 (Cth)
  2. 2 Whether the proposed order is appropriate or necessary to ensure that justice is done in the proceeding
  3. 3 Whether the proposed order is consistent with the statutory scheme for representative proceedings

Ratio Decidendi

The application for a 'common fund' style order binding all group members to pay litigation funding commissions and costs at the outset of the proceeding is neither appropriate nor necessary to ensure justice is done under s 33ZF (or s 23) of the FCA Act because (1) the proposed order prematurely imposes obligations and cannot be assessed as reasonable in the absence of knowledge about group member recoveries, numbers, or fund size; (2) there is a specific statutory regime for recovery of representatives' costs; (3) the position of a representative party is not analogous to a liquidator; and (4) the real benefit of the proposed order would flow to the litigation funder, not group members....

Court Disposition

Application for proposed order dismissed

Orders

  • The application for the order referred to as 'Primary Relief' in paragraph 1 of the interlocutory application dated 8 May 2014 is dismissed.
  • The Applicants pay the Respondents' costs of and associated with the interlocutory application.