Galactic Seven Eleven Litigation Holdings LLC v Davaria [2024] FCAFC 54

Galactic Seven Eleven Litigation Holdings LLC v Davaria [2024] FCAFC 54

The Full Court held that the Federal Court has power under s 33V(2) of the Federal Court of Australia Act 1976 (Cth) to make a common fund order at settlement approval. The primary judge erred by impermissibly fettering discretion through treating statements of FEO preference in Brewster as decisive. Upon re-exercising discretion, the Court found a $24.5 million CFO (25% of gross settlement) was commercially realistic and just, properly reflecting risks and costs undertaken by the funder.

Jurisdiction
Australia
Judgment Date
02 May 2024
Procedural Posture
Representative Proceedings (class Action), Appeal / Appeal From Settlement Approval and Funding Commission Order (full Court of the Federal Court of Australia)
Outcome
Appeal allowed. Orders set aside. Common fund order made.
Legal Topics
['representative Proceedings' 'class Action Funding' 'settlement Approval' 'common Fund Orders (cfo)' 'funding Equalisation Orders (feo)' 'judicial Discretion Under S 33 V(2)' 'litigation Funding Commission' 'pt IVA Federal Court of Australia Act']
['commercial Law' 'corporations Law' 'class Actions' 'banking and Finance'] ['representative Proceedings' 'class Action Funding' 'settlement Approval' 'common Fund Orders (cfo)' 'funding Equalisation Orders (feo)' 'judicial Discretion Under S 33 V(2)' 'litigation Funding Commission' 'pt IVA Federal Court of Australia Act']

Case Brief

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Procedural Posture

Representative Proceedings (class Action), Appeal / Appeal From Settlement Approval and Funding Commission Order (full Court of the Federal Court of Australia)

Legal Issues

  1. 1 ['Does the Court have power under s 33V(2) of the Federal Court of Australia Act 1976 (Cth) to make a common fund order at settlement approval?' 'Did the primary judge err in preferring a funding equalisation order over a common fund order as a matter of discretion?' "What is a 'just' funding commission under s 33V(2)?"]

Ratio Decidendi

The Full Court held that the Federal Court has power under s 33V(2) of the Federal Court of Australia Act 1976 (Cth) to make a common fund order at settlement approval. The primary judge erred by impermissibly fettering discretion through treating statements of FEO preference in Brewster as decisive. Upon re-exercising discretion, the Court found a $24.5 million CFO (25% of gross settlement) was commercially realistic and just, properly reflecting risks and costs undertaken by the funder.

Court Disposition

Appeal allowed. Orders set aside. Common fund order made.

Orders

  • ['The appeal is allowed.' 'Order 20 of the orders made on 8 March 2023 is set aside.' 'Pursuant to s 33V(2) of the Federal Court of Australia Act 1976 (Cth), the amount payable to the Appellant from the Settlement Scheme on account of litigation funding commission is fixed at $24,500,000 ($24.5 million).'...