Gill v Ethicon Sarl (No 12) [2023] FCA 902

Gill v Ethicon Sarl (No 12) [2023] FCA 902

The deduction sought by Shine for over $32 million in disbursement funding interest is not 'just' within the meaning of s 33V(2) of the Federal Court of Australia Act because Shine did not act prudently and reasonably in incurring the funding, failed to sufficiently disclose such deduction to group members, exposed group members (but not applicants) to disproportionate and contractual costs, and did not exhaust less costly alternatives or maximize recovery against respondents. Such a deduction would risk under-compensation and breach the Court's supervisory role in representative proceedings.

Jurisdiction
Australia
Judgment Date
03 August 2023
Procedural Posture
Representative Proceeding (class Action) / Interlocutory Application Concerning Deduction From Approved Settlement Fund Pursuant to S 33 V(2) Federal Court of Australia Act
Outcome
Application dismissed with costs
Legal Topics
['just Distribution of Settlement Funds' 'recovery of Interest on Disbursement Funding' 'professional Conduct of Incorporated Legal Practices' 'disclosure Obligations to Group Members' 'conflicts of Interest in Representative Proceedings']
['class Actions' 'commercial Law' 'corporations Law' 'consumer Protection' 'legal Practice'] ['just Distribution of Settlement Funds' 'recovery of Interest on Disbursement Funding' 'professional Conduct of Incorporated Legal Practices' 'disclosure Obligations to Group Members' 'conflicts of Interest in Representative Proceedings']

Case Brief

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Procedural Posture

Representative Proceeding (class Action) / Interlocutory Application Concerning Deduction From Approved Settlement Fund Pursuant to S 33 V(2) Federal Court of Australia Act

Legal Issues

  1. 1 ["Whether it is 'just' to deduct over $32 million for interest incurred on disbursement funding facilities from a settlement fund, otherwise payable to group members" 'Whether solicitors acted prudently and reasonably in incurring interest charges at high rates' 'Adequacy of disclosure to applicants and group members about intended deductions' 'Whether group members can be burdened with costs not recoverable against respondents' 'Potential conflicts of interest between solicitor corporations and group members']

Ratio Decidendi

The deduction sought by Shine for over $32 million in disbursement funding interest is not 'just' within the meaning of s 33V(2) of the Federal Court of Australia Act because Shine did not act prudently and reasonably in incurring the funding, failed to sufficiently disclose such deduction to group members, exposed group members (but not applicants) to disproportionate and contractual costs, and did not exhaust less costly alternatives or maximize recovery against respondents. Such a deduction would risk under-compensation and breach the Court's supervisory role in representative proceedings.

Court Disposition

Application dismissed with costs

Orders

  • ['Application for a deduction from the settlement fund in excess of $32 million for disbursement funding interest is dismissed' 'For the avoidance of doubt, this order does not bar a further application concerning a different deduction under s 33V(2)' 'Solicitors for applicants to pay costs of the contradictor as...