Impact of Fiduciary Duties of Solicitors and Issues of Conflict of Interest on Class Actions

Published on 17 August 2019 at 3:41pm

I INTRODUCTION

As early as 1985, the United States Court of Appeals warned that ‘class actions accomplish many salutary goals; at the same time, they can cause great mischief [and] in both instances, the legal profession, judges and lawyers alike, are responsible for the result’.[1] Without effective management, the fiduciary duties of solicitors and issues of conflict of interest have the potential to undermine the integrity of class actions and the civil justice system. The Australian Law Reform Commission (‘ALRC’) highlights that class actions, especially those funded by third-party litigation funders, have great potential to result in actual or perceived conflicts of interest and duties for funders and lawyers.[2] These conflicts have the potential to undermine proceedings by disproportionately benefiting funders and solicitors, rather than claimholders.[3] As the ALRC argues, ‘both the public function of class actions and the private interests of the litigants must take priority over the interests of those whose role it is to provide the services necessary to participate in the system’.[4]

Nevertheless, fiduciary duties of solicitors to their clients can be compromised by the solicitors’ own self-interest and the commercial interests of the funder, with whom they often have an established relationship.[5] This potential for conflict arises at every stage of the proceedings, from the initial engagement with clients to the conduct of the litigation, settlement and fee arrangements. Part II of this paper explain the current class actions regime in Australia. Part III will explain how fiduciary duties impact on this class actions regime. Part IV will analyse how issues of conflict of interest impact on class actions including the issues of obtaining informed consent, the conduct of the litigation, settlement negotiations, adverse costs and lawyer’s fees. This part will also suggest potential solutions to any flaws in the current framework. Parts V and VI will outline the nature of litigation funding as well as evaluate the role of fiduciary duties in litigation funding. Finally, Part VII will examine how litigation funders manage conflicts of interest during the conduct of the litigation, settlement negotiations and when determining funder’s fees. As the ALRC noted, ‘[t]he existing framework prescribing solicitors’ obligations may not adequately address certain circumstances that solicitors acting in class action proceedings are likely to face’.[6] This paper will ultimately highlight this inadequacy and outline any improvements that could be made to the current regime.

II CLASS ACTIONS

In class actions, a single representative litigates a claim on behalf of a group of individuals against the same defendant(s).[7] Section 33C(1) of the Federal Court of Australia Act 1976 (Cth) (‘FCA Act’) stipulates that a class action proceeding may be commenced where seven or more persons have a claim against the same defendant, their claims are all similar or related and their claims give rise to a substantial common issue of law or fact. All represented persons do not need to seek the same relief, have a claim against all defendants or be affected by the same transactions, contracts, acts or omissions of the defendant(s).[8] Moreover, the requirement that each person’s claim occur under ‘same, similar or related circumstances’ is sufficiently broad so as to require that some relationship exists between the claims but they do not need to be identical.[9] The requirement that there be a ‘substantial common issue of law or fact’ simply requires that the issues are ‘real or of substance’ rather than contrived or trivial.[10] Therefore, s 33C does not operate in a narrow or limiting way, rather subsequent judicial interpretation has allowed for groups with a greater degree of difference in their claims to share costs in a single class action proceeding.[11]

Group members to a class action proceeding must be described or identified but ‘it is not necessary to name, or specify the number of group members’.[12] Therefore, in an open class action, the number and identity of all group members may not be known. Members are usually not required to consent to becoming group members but they must be afforded the opportunity to opt out of the proceedings by being given notice of both the commencement of proceedings and the right to opt out by a specified date.[13] Such notice may be ‘given by means of press advertisement, radio or television broadcast, or by any other means’.[14] Group members who fall within the defined class and do not opt out, are bound by the outcome of the proceedings.[15]

The court has the discretion to discontinue a class action proceeding, upon its own motion or on application by the respondent, where it is satisfied that it is in the interests of justice to do so, such as where the class action ‘will not provide an efficient and effective means of dealing with the claims of group members’ or where it is ‘otherwise inappropriate’ to pursue the claims by means of a class action.[16] Despite this broad discretion, the Federal Court has generally relied on case management techniques, consistent with the purpose of part IVA of the FCA Act, to encourage class action proceedings to at least continue to the stage of resolution of the common issues before being discontinued or subject to other directions, such as the creation of sub-groups.[17

III CLASS ACTIONS AND FIDUCIARY DUTIES

In addition to professional, contractual and statutory obligations, solicitors owe fiduciary duties to their clients.[18] They are subject to a duty of undivided loyalty, requiring them to act in the interests of their client, avoid conflicts and not misuse their fiduciary position to obtain unauthorized profits from the relationship.[19] The courts strictly apply fiduciary duties such that breach will occur even where the solicitor acted in good faith and/or the client received a benefit.[20] The precise scope of a solicitor’s fiduciary duty depends upon the terms of their retainer.[21]

Provided that there is no contracting out of the fiduciary relationship, the solicitors for the representative plaintiff clearly owe fiduciary duties to the representative plaintiff and also those claimholders that have entered retainer agreements.[22] However, legislation does not operate to limit solicitors’ fiduciary duties in class action proceedings.[23]Ultimately, the existence and scope of a solicitor’s fiduciary obligations depend on ‘the facts of the case, conduct of the parties and course of dealing between the parties’.[24] However, Federal Court decisions have tended to assume that a fiduciary relationship exists in open class actions between the solicitors for the representative plaintiff and unrepresented or absent group members.[25]

Academic literature also supports the assertion that solicitors owe fiduciary duties to the entire class. Professor Michael Legg argues that group members are clearly vulnerable to the actions of the representative party’s solicitor, as members cannot monitor or control the proceedings but their interests are affected by the outcome.[26] Fiduciary duties can still be owed to group members whose precise identity is unknown, as there is no need for actual trust or confidence in order to form a fiduciary relationship and it is possible that the parties to the relationship may have never met.[27]Although there is no retainer between the unidentified group members and the solicitor, ‘the absence of a contract of engagement between solicitor and client does not prevent fiduciary obligations from arising’.[28] This assertion is supported by the Court’s observations in Beach Petroleum NL v Abbott Tout Russell Kennedy, where the Court noted that it ‘is well-established that a person may take upon herself or himself the role of a fiduciary by a less formal arrangement than contract or by self- appointment’ and the facts of each case will determine what duties are imposed on the fiduciary and the scope and ambit of these duties.[29] The existence and scope of the fiduciary duties of solicitors in class actions will ultimately arise from the course of dealing.[30]

A solicitor’s fiduciary duty is limited to what the solicitor undertakes, or is deemed to have undertaken, to do in the specific circumstances of that case.[31] In class action proceedings, solicitors will typically perform a number of tasks from ‘pre-trial procedure and strategy, drafting an application and statement of claim, deciding and implementing a trial strategy and having carriage of the proceedings’.[32] The nature and variety of these tasks that the representative party’s solicitor agrees to undertake, suggest that the solicitor has undertaken to act for, or assumed responsibility for, all group members of the class action such as would entitle members to expect loyalty.[33] Moreover, there are good public policy reasons why the law should impose fiduciary obligations on lawyers in relation to group members where there are extreme ‘information asymmetries between the lawyer on the one hand, and the class members on the other’ coupled with ‘little or no transparency in the exercise of the lawyer’s powers and discretions’.[34] IV CLASS ACTIONS AND CONFLICTS

The ALRC warned that if conflicts of interest are ‘not adequately identified and managed [they] may benefit some class action participants rather than (or in advance of) all or some of the class members’ and this ‘provides for poor civil justice outcomes and runs counter to the objectives of the class action regime’.[35] This part of the paper will discuss the potential conflicts that arise at each stage of the proceedings and their ramifications.

A Initial Engagement

The courts do not have any power to authorize conduct that would otherwise constitute a breach of a lawyer’s fiduciary duty.[36] Ordinarily, a conflict of interest would be remedied by full disclosure and informed consent. However, disclosure by the representative party’s lawyer is not possible in relation to all or some of the group members due to the operation of s 33H(2) of the FCA Act, which stipulates that non-client members may be merely described and not identified.[37] Moreover, the interests of group members are not all identical, as they may have suffered different damage and be seeking different remedies.[38] There may be insufficient information for a lawyer to determine whether all group members consent to a conflict of interest. As Professors Simone Degeling and Michael Legg explain, the solicitor for the representative plaintiff ‘is systematically unable to determine the required level of disclosure because this is itself a function of a highly unstable set of variables which may produce actual or potential conflict of duty and duty’.[39]

A number of solutions have been proposed to ensure lawyers do not breach their fiduciary duties by failing to obtain informed consent. Class closure allows for the harvesting of the identities and contact details of group members.[40] Once this information is known, lawyers may fully disclose any conflicting engagements in order to obtain informed consent from the class members.[41] Alternatively, lawyers may narrow the class description by relying on ss 33K or 33ZF of the FCA Act and this would have the additional benefit of ensuring that those members who are excluded from the class may retain their choses in action against the defendant.[42] The ideal option therefore appears to be ‘achieving class closure by redefining the class’ such that the identity of all registered group members will be known and anyone falling outside the class would not have their claim extinguished.[43] However, the ALRC notes that narrowing the class would be ‘fundamentally at odds with the requirements of fiduciary law’, as it would run contrary to ‘the very object’ of the statutory class action regime to ‘promote access to justice by allowing for groups with varying degrees of difference in the claims to band together so as to achieve economies of scale and share costs’.[44]

The ALRC suggests that specialist accreditation for class action lawyers would be a more suitable means of overcoming issues of conflict of interest.[45] They also propose that the Federal Court Class Actions Practice Note should be amended to require that the first notices provided to prospective group members by lawyers clearly outline the details of any conflicts in that particular case and describe the duties of lawyers and litigation funders to avoid and manage conflicts of interest.[46] However, this may not be an efficient means of managing conflicts because even if the lawyer were to send a notice to all identified class members notifying them of the conflict of interest and requesting their consent, there ‘is no way of knowing the group member received the notice or accepted the modified terms of representation’ and the absence of objection does not equate to informed consent.[47] Ultimately, what is required for informed consent depends on the facts of each case and ‘the requirements of fiduciary disclosure may be more (or, indeed, less) onerous on a case-by-case basis in order to meet the particular intelligence, sophistication and understanding of the principal’.[48]Due to the complexity of class action proceedings, notices to members should be clear and concise, rather than a source of further confusion but even then it may be difficult to prove that group members have been afforded sufficient information to reach a fully informed decision to agree to the lawyer’s conflicted activity.[49]

B Conduct of Litigation

Lawyers take instructions from the representative plaintiff, rather than from group members.[50] The group members do not have any direct input in decision-making and the representative plaintiff ‘is the party of record and the face of the litigation for the represented group’.[51] They have been described as having ‘near total dominion’ over the proceedings, which creates great potential for their interests to take precedence over the interests of the other group members.[52] This could create ‘conflicts of duty and duty’ especially where the representative party’s solicitors already struggle to ‘act in the best interests of all group members when these interests may not necessarily align, and may in fact compete with each other’.[53]

Section 33T of the FCA Act attempts to solve this conflict by allowing individual group members to apply to the court requesting the replacement of a representative plaintiff who ‘is not able adequately to represent the interests of the group members’.[54] Justice Beazley explains that due to the relatively small size of the individual claims in a class action, the court in the course of its overview of an action will often manage the practical implications of a solicitor’s fiduciary obligations to the group.[55] In Carnie v Esanda Finance Corporation Ltd, it appeared that there was a conflict of interest between group members who wanted to keep certain contracts and those members who wanted their contracts rendered void.[56] The representative plaintiff who was seeking to avoid the contract was therefore not an adequate representative for the interests of the group.[57] Where the court is satisfied that the interests of all members of the group are not being properly advanced, it is also able discontinue the class action.[58]

However, the difficulty arises where unidentified group members are unaware that they are members of the class action and therefore are unable to raise objections.[59] These members cannot take advantage of s 33T and therefore have no means of resolving any conflict of interest between themselves and the representative party.[60] This inevitably also creates a ‘conflict of duty and duty’ for the representative party’s lawyers who must act in the interests of all members in an open class action.[61] As Degeling and Legg explain, it ‘is no answer for the representative party’s solicitor to say, in relation to a potential conflict of duty and duty, that this conflict is contemplated and indeed mandated by the class action regime’ because it is clear that a solicitor’s fiduciary duties continue to exist despite the statutory regime.[62]

In the Centro class actions, Finkelstein J proposed that a litigation committee would be an efficient means of ensuring that the representative party is an adequate representative for all group members, including absent members.[63]He argued that s 33ZF of the FCA Act, which stipulates that ‘the Court may, of its own motion or on application by a party or a group member, make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding’, effectively allows the court to appoint a litigation committee.[64] Some US courts have also supported the creation of a committee of unrepresented class members who are designated as a subclass with the right to have separate counsel.[65] A litigation committee could assist the court in determining the group members’ views in order to act in their best interests.[66] Legg suggests that the appointment of a litigation committee may ‘result in better representation for the group, including monitoring of the lawyers and litigation funder, but will require an assessment of its membership and guidance (possibly in the form of court directions) as to its operation’.[67] Ultimately, it appears that class action proceedings require ‘a meaningful inquiry into the representative party’s ability to be an adequate representative’ in order to effectively limit conflicts of interest and provide the group members with a voice.[68]

C Settlement

Section 33V of the FCA Act requires court approval for a representative proceeding to be settled or discontinued. The relevant Practice Note requires that the proposed settlement is ‘fair and reasonable’ and ‘has been undertaken in the interests of group members, as well as those of the applicant, and not just in the interests of the applicant and the respondent/s’.[69] However, the settlement process often involves conflicting interests between group members and inevitably causes a ‘conflict of duty and duty’ for solicitors. In Williams v FAI Home Security Pty Ltd (No 4), the class action potentially included 100,000 members but the approximately 500 group members who had signed retainers with the representative party’s lawyers sought to settle with the defendant in order to receive nearly the full value of their loss at a relatively early stage in the litigation.[70] At the time of the offer of settlement, no notice had been given to group members informing them of the proceedings and their right to opt out.[71] Justice Goldberg refused to approve the settlement because there was a clear conflict of interest within the class of group members and they had not been given the relevant notice required by statute.[72] Similarly, in Mobil Oil Australia Pty Ltd v Victoria, some class members agreed to settle for less than they claimed but the case then proceeded to the High Court such that they would have received much more if they had declined to settle.[73]

The current class actions framework relies on a lack of objections by group members, which is problematic because silence may not reflect acquiescence ‘but rather reflect the high cost of objecting compared to the benefit to be obtained, or result from group members being unaware of the settlement, having insufficient information or miscomprehending the settlement notice’.[74] As Finkelstein J noted, ‘it is dangerous to assume that silence equals assent as class members with only a very small stake in the action have little incentive to object’.[75] Even when objections are made, they usually occur without legal advice and ‘almost never result in a settlement being rejected’ often because ‘the objection involves a misunderstanding or is put forward without any evidence, compared to the affidavits on prospects of success, fairness of settlement and reasonableness of fees’.[76] Moreover, despite the court approval requirement, judges may not have sufficient information to adequately assess the quality and fairness of the settlement agreement, as the information provided to the court is almost solely derived from the lawyers acting for the representative plaintiff.[77]Defendants are not required to make submissions or present evidence in relation to settlement so that the approval process ‘takes place without an opposing voice seeking to identify aspects of the settlement that are unfair or unreasonable’.[78]

Degeling and Legg argue that the fiduciary duties of solicitors are necessarily compromised by settlement negotiations in class actions because the ‘solicitor is through settlement negotiating the extinguishment by consent of the claims of those represented’.[79] The settlement not only includes the determination of common issues but also encompasses the non-common issues where group members’ interests are likely to differ and this clearly impacts on actual or potential conflicts of duty and duty.[80] Ultimately, any similar interests among group members in commencing the proceedings, to the extent that they have ‘same, similar or related circumstances’ and ‘a substantial common issue of law or fact’, may not translate into similar interests at settlement.[81] The requirement for court approval of settlement does not discharge the fiduciary duties of solicitors.[82] However, Jeremy Kirk highlights that even if an unsatisfied group member were to seek equitable compensation for breach of fiduciary duty by the lawyers in relation to a settlement, ‘one can readily imagine that the lawyer’s response would emphasise that the settlement had been reviewed and approved by a court’.[83] The potential for conflict is exacerbated by the tendency of courts to approve a positive outcome for the majority or some of the claimants rather than insist a successful outcome should be shared among all claimants and simultaneously risk that no legal redress will be provided to any claimants.[84] As the Federal Court noted, ‘A bird in the hand is worth two in the bush’.[85]

Academics and judges have raised potential solutions to these issues of conflict of interest. Justice Murphy suggested that a second opt out procedure could be applied once all the terms of settlement are known.[86] However, as mentioned above, opt out notices can create difficulties in open class actions where the precise identity of all class members is unknown. Alternatively, Professor Michael Legg asserts that a guardian could be appointed for group members in order to represent the interests of absent members, monitor the parties and assist the Court in comprehending the terms and consequences of settlement.[87] The costs of the guardian would be paid by one or more parties or deducted from the settlement sum.[88] Similarly, Jeremy Kirk advocates for the use of a contradictor to represent the interests of group members ‘in cases where there is some significant potential for conflicts of interest, or where the issues likely to arise on the approval application are not simple’.[89] Although appointing an independent third party to represent the interests of group members may cause increased costs and delays in reaching a settlement agreement, these issues are likely to be minor compared to the benefit of avoiding conflicts by ensuring that the Court is ‘fully apprised of all the issues, and arguments, that arise in relation to determination of the issues at stake’.[90]

The appointment of a contradictor is increasingly being used in practice.[91] For example, in Kelly v Willmott Forests Ltd (in liq), Murphy J appointed a contradictor to represent the interests of non-client class members, provided the contradictor with all necessary information, including confidential information, and directed that the cost of his appointment be shared between the parties.[92] In Botsman v Bolitho, the Victorian Supreme Court of Appeal held that the trial judge should have appointed a contradictor, as this would have avoided many conflicts of interest that arose during settlement.[93] In Kelly v Willmott, it can be inferred that the submissions of the contradictor, a senior counsel, were influential in Murphy J’s decision to decline approval of the settlement and require a revised settlement proposal to be submitted to the Court.[94] Therefore, it appears that a contradictor could be an effective means of managing any conflicts of interest that may arise at settlement.

D Adverse Costs

The representative plaintiff is prima facie liable for any adverse costs order made against the plaintiff.[95] This could create a conflict of interest by discouraging the representative party from continuing to pursue a claim even where the group as a whole may benefit from continuing the claim.[96] This potential for conflict could be alleviated if security for costs in unfunded class actions were provided through contributions from group members. However, Professor Vince Morabito and Naomi Hatcher highlight that this solution would be ineffective to the extent that it ‘is irreconcilable with the access to justice objective of class action regimes’.[97] Moreover, this conflict will still arise where a litigation funder agrees to indemnify the plaintiff against the defendant’s costs, as the funder is more likely to be risk averse when deciding whether to settle or pursue litigation.[98] The potential for conflict is especially great where adverse costs are likely to be significant, for example in the Vioxx Class Action the respondent lawyer’s fees and disbursements were publicly revealed to exceed $10 million.[99]

E Lawyer’s Fees

Degeling and Legg observe that the ‘lawyer’s interest in receiving legal fees places them in conflict or potential conflict with their fiduciary duty, at least to non-client class members’.[100] As Murphy J noted, ‘there is an inherent conflict between the interests of [the lawyers] in being paid legal costs and the interests of client class members in minimizing legal costs, or at least in paying only reasonable costs or only the costs agreed under the Retainer’.[101]Group members are particularly vulnerable due to the information asymmetry in relation to costs.[102]

The court has a supervisory power pursuant to s 33ZF(1) of the FCA Act to regulate costs agreements in class action proceedings.[103] The representative party’s lawyers commonly supply the Court with affidavits from independent costs experts who are able to indicate the reasonableness of the costs and disbursements incurred by the lawyers.[104]However, the representative party’s lawyers retain the independent costs expert who ‘may become dependent on the lawyers for repeat work, which is unlikely to continue if legal fees are substantially reduced’.[105] Moreover, Legg points to the possibility of ‘adversarial bias in relation to experts, including selection bias whereby an expert is chosen because their views will support the party’s case’.[106] Justice Lee confirms this possibility, as he noted that ‘I am yet to see a cost assessor retained by a solicitor who has formed the robustly independent view that the fees charged by his retaining solicitor were unreasonable’.[107] In Modtech Engineering Pty Ltd v GPT Management Holdings Ltd, Gordon J highlighted that the costs expert failed to provide sufficient information to determine if the fees were reasonable and why the amount claimed was significantly higher than the amount estimated in the legal costs agreement.[108] Legg notes that there may have been adversarial bias in this case because the same law firm had retained this costs expert in at least four other class actions.[109]

A court-appointed expert could avoid the potential for any conflicts of interest, as the experts would owe their allegiance solely to the court.[110] This would also save time and cost, provide for greater independence of the expert, assist the court’s understanding of the settlement agreement and potentially also increase the credibility of class actions by requiring lawyer’s fees to be subject to independent verification.[111]

V LITIGATION FUNDING EXPLAINED

The Law Council of Australia and the Federal Court of Australia aptly described litigation funding as ‘the lifeblood of much of Australia’s representative proceeding litigation at federaland state level’.[112] Class actions are rarely funded by claimants themselves and few law firms are able to conduct lengthy class actions on a ‘no win, no fee’ basis.[113] Litigation funding involves a third party funder who contracts with one or more potential litigants to pay the costs of the litigation, including the representative party’s legal costs and disbursements and usually also indemnifies the representative party from the risk of paying the defendant’s costs in the event that the claim is unsuccessful.[114] In return, the litigation funder receives a percentage, typically 20-40 per cent, of the recovered funds in the event that the case is successful as well as a reimbursement of their costs.[115] If the case is unsuccessful, the funder recovers nothing and may be required to pay any adverse costs.[116]

VI LITIGATION FUNDING AND FIDUCIARY DUTIES

Solicitors may owe fiduciary duties to litigation funders if they represent the funder as well as the litigant.[117]This would be unusual and against ASIC guidance but it does occur, such as where the litigation funding agreement states that ‘[w]hilst you are acting for your client [the litigant] you have engaged me [the funder] as principal and not as agent for your clients’.[118] Dr Michael Duffy explains that the ‘starting point for any such contract would be a presumption that the lawyer has a fiduciary duty and a duty of care to the funder’.[119]

Similarly, the funder-claimholder relationship does not constitute an established category of fiduciary relationship but it has been suggested that a fiduciary relationship may exist depending on the circumstances.[120] Professor Vicki Waye argues that ‘where control by the funder is substantial many indicia of a fiduciary relationship are present’.[121]Claimholders are required to share confidential information with funders, place a significant degree of trust and confidence in funders to maximize claim value and are also vulnerable to abuse where funders collude with lawyers to increase their profits at the claimholder’s expense.[122] Despite the presence of these indicia of a fiduciary relationship, Waye concedes that funders do not claim to act in the interests of claimholders but act only in their own self-interest.[123]Moreover, funders clearly exert control solely to monitor their own investment, rather than to promote the claimholder’s interest.[124] However, there remains the possibility that fiduciary duties ‘may apply to some aspects of a relationship but not others; or may apply in particular circumstances as a result of the individual expectations of the parties regarding their mutual conduct’.[125] Therefore, if a claimholder reasonably expects that the funder is acting in the claimholder’s interests, the funder might have a fiduciary duty ‘for a particular purpose or within the limit of those reasonable expectations’. [126] For example, the claimholder could reasonably expect that the funder will not use the claimholder’s confidential information for the benefit of the funder’s other business interests.[127]

The role of litigation funders is analogous to insurers such that it may be appropriate for funders and claimholders to be subject to a mutual duty of good faith. As Dr Michael Duffy explains, funders and insurers are similar to the extent that they (a) are third party funders of a litigant; (b) exercise some control over the litigant and proceedings due to their contractual agreements, (c) may provide an indemnity for adverse costs and (d) have a financial interest in the outcome of proceedings.[128] The statutory duty of good faith is imposed on insurers under common law and ss 13-14 of the Insurance Contracts Act 1984 (Cth). Imposing a similar duty on funders would be less onerous than imposing a fiduciary duty, as it would not require funders to prefer claimholders’ interests over their own interests, rather it would only require funders to act in a spirit of co-operation by regarding the legitimate interests of claimholders as well as their own self-interest.[129] Justice Ipp endorsed this approach in Project 28 Pty Ltd v Barr where he implied that the duty of good faith should be applied to funders in the same manner that insurers, who ‘undertake proceedings under statutory or contractual rights of subrogation, are subject to a duty to regard the insured’s interests when conflicts arise between them’.[130] Dr Michael Duffy also advocates that such a duty, ‘like the insurance duty, should be mutual so that it would also require the litigant to fully disclose the relevant facts of the dispute, including any weaknesses in the case’ and also to act with fairness, decency and honesty.[131] Imposing a duty of good faith on funders ‘would also incidentally tend to reduce conflict between a lawyer’s fiduciary duty to the litigant and the lawyer’s obligations, duties or allegiances to a funder’.[132]

VII LITIGATION FUNDING AND CONFLICTS

The potential for conflicts of interest in class actions is further complicated by the involvement of a litigation funder.

A Conflicts Management

Conflicts of interest arising in funded litigation are currently managed under the Corporations Regulations (2001) (Cth).[133] Regulation 7.6.01AB exempts litigation funders from financial services regulation provided that funders have necessary processes in place to manage conflicts of interest. ASIC’s Regulatory Guide 248 requires litigation funders to have written procedures dealing with identifying and evaluating potential conflicts of interest, disclosing conflicts to prospective group members, providing information to assist them to understand the different interests of the funder, solicitor and members, and the specific situations where conflict may arise in that matter.[134]

This regulatory regime has been widely criticized by academics for failing to address the heightened risks of conflict associated with litigation funding. It appears that ‘no direct consequences flow from a failure to comply with the regulations’, as breach will only result in ‘exposure to a greater risk of regulatory action’, such as requiring a funder to acquire an Australian Financial Services Licence (AFSL).[135] It has been argued that regulation would be more effective if all litigation funders were required to obtain an AFSL pursuant to Ch 7 of the Corporations Act 2001 (Cth), which would enable ASIC to supervise the conduct of funders, including their management of conflicts.[136] However, the ALRC pointed out that, following the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, ‘the existing licensing regime has been revealed to have manifest limitations and is likely to be subject to a protracted process of reform’.[137] Therefore, it is more suitable to improve court oversight of third party litigation funders on a case-by-case basis and require class action funders to report annually to ASIC on their compliance with the requirement to implement adequate practices and procedures to manage conflicts of interest.[138]

The ALRC also recommended prohibiting ‘solicitors and law firms from having financial and other interests in a third-party litigation funder that is funding the same matters in which the solicitor or law firm is acting’ in order to prevent solicitors breaching their fiduciary duty not to profit from their position.[139] The Court in the Banksia Securities litigation already adopted this approach, as they restrained a lawyer from representing the lead plaintiff where the lawyer and senior counsel’s wife were major shareholders in the litigation funder.[140] There is also an issue of ‘conflict of interest and duty’ where ‘even if lawyers consciously regard themselves as acting in their client’s best interest when advising to settle a matter or to proceed to trial, unconsciously economic dependence on a funder has the potential to colour their advice to clients’.[141] This has been addressed to an extent in the Practice Notes which require transparency so that parties in class actions must disclose any litigation funding agreements prior to the first case management hearing in order to enhance the due administration of justice.[142]

B Conduct of Litigation

Conflicts may arise in the conduct of litigation when funders seek to control the strategy of the claim. For example, in Project 28 Pty Ltd v Barr, the funder appointed and instructed the solicitors while the claimholder did not have a retainer or any other relationship with the solicitors, nor could the claimholder instruct the solicitor without written consent from the funder.[143] The claimholder was also prohibited from undertaking any action in relation to the proceedings without prior written consent from the funder, who was entitled to withhold consent at its discretion.[144]Justice Ipp observed that this delegation of complete control was not improper so it seems that ‘arrangements sidelining the claimholder to a nominal party only do not negate legal practitioner’s duties to their clients’.[145]

Assuming the claimholder provides informed consent, solicitors will likely not be in breach of their fiduciary obligations if they allow funders to determine the strategies to be employed to maximize claim value.[146] In fact, experienced funders will be able to assist the solicitors and claimholders throughout the course of the litigation, from due diligence or investigations to choice of counsel and experts as well as providing day-to-day instructions to the solicitors and sourcing barristers.[147] Lawyers may also address any conflicting obligations through the terms of their retainers with the claimholders.[148] In Campbells Cash and Carry v Fostif, Mason P held that a contract was valid even though it allowed a litigation funder to maintain day-to-day control of a proceeding where the solicitors continued to consult with the representative on key issues.[149] It should be noted that Mason P suggested that the contract would be contrary to public policy if the solicitors ‘had fully abdicated their obligation to act for the representative party’.[150]

Litigation funders require complete access to all information, including confidential information, held by claimholders which might be relevant to the litigation, and the decision of the funder to finance it.[151] In order to ensure solicitors do not breach their ongoing duty of confidentiality, the litigation funding agreement should clearly provide that the litigant is required to disclose all relevant information and has provided their informed consent to the waiver of any privilege in favour of the funder only.[152]

C Settlement

It has been argued that the interests of litigation funders in ‘maximising the value of the claims, while minimizing the risks of losing the action, are closely aligned with those of the claimants’.[153] Despite this similarity, claimholders’ interests often conflict with the interests of funders, especially at the settlement stage. The primary interest of funders is to recoup their investment at a reasonable cost.[154] However, claimholders may be willing to settle ‘with offers of products or assets, which, while valuable to the claim holder, are of no value to the funder’ or they may wish to withdraw from proceedings due to ill health or a desire to rehabilitate their relationship with the defendant.[155] Both of these circumstances would directly conflict with the funder’s interest to recoup its investment.[156] Moreover, there may be a risk that funders may too readily force settlement upon claimholders to the claimholder’s detriment but to the funder and solicitor’s benefit.[157] This is unlikely to the extent that the funder ultimately wants to maximize the amount they receive and consequently the amount the funded party receives, thereby discouraging low reward settlements.[158]However, Kirby v Centro Properties Pty Ltd demonstrated that there still remains the potential for conflict between the personal interest of funders and solicitors ‘of depriving their competitors of the opportunity to offer a competing class action and their duty to their clients to not make the settlement of the proceedings more costly and difficult’.[159] As previously mentioned, the implementation of a litigation committee, guardian or contradictor could assist in monitoring the conduct of lawyers and litigation funders in order to prevent conflicts of interest.

D Funder’s Fees

Professor Michael Legg argues that litigation funders have ‘a preference for their own financial interest [and] The presence of a litigation funder may improve efficiency but does not necessarily address conflicts of interest’.[160] This is true to the extent that there is an inherent conflict between the interests of funded and unfunded class members where only funded members are required to pay a percentage of any recovery to the funder but the unfunded members can obtain the benefit of the proceedings without attributing to costs. This conflict has been addressed by the imposition of a ‘funding equalization’ mechanism, which deducts from non-funded group members’ entitlements an amount equal to the commission payable to the funder by the funded members and this sum is then redistributed across all members.[161]Alternatively, the courts may make ‘common fund’ orders whereby the funding commission is deducted from the entitlements of unfunded members and paid to the funder rather than being redistributed to all members of the represented group.[162] Therefore, litigation funders would not be required to ‘book build’ and, as Wayne Attrill points out, ‘One can only imagine the impact that will have on the commercial decision faced by funders when considering whether to commence a class action’.[163]

However, funders still need to ensure there are sufficient prospects of success before pursuing a class action and they are only permitted fair and reasonable funding commissions.[164] In Botsman v Bolitho, a single Settlement Deed was reached in relation to two separate proceedings and only one of these proceedings was funded yet the funders sought to attain the benefit of the other proceedings, which it was not funding.[165] The Victorian Court of Appeal approved the settlement but remitted the issue of the funder’s commission to a judge in the trial division.[166] The Court held that the trial judge erred in reaching the conclusion that the funding commission was fair and reasonable, as the judge failed to consider the extent to which the settlement sum payable under the deed was referable to the unfunded proceedings.[167]Therefore, the courts can effectively manage any conflict of interest relating to funder’s fees without disrupting the underlying settlement agreement.

VIII CONCLUSION

Fiduciary duties and issues of conflict of interest heavily impact on class actions and litigation funding, by limiting the ability of lawyers and funders to act in their own self-interest. The fiduciary duties of solicitors require them to act in the interests of the entire class. There is also some academic support for the proposition that litigation funders owe fiduciary duties but the imposition of these duties may be too onerous for funders and a statutory duty of good faith, analogous to the duty imposed on insurers, may be more suitable. Despite the prevalence of conflicts of interest in class actions, the courts have demonstrated their ability to effectively manage such conflicts on a case-by-case basis. However, the court may require assistance from third parties such as independent court-appointed costs assessors, contradictors, guardians or even a litigation committee in order to limit conflicts and ensure that there are no breaches of fiduciary duties.

[1] Piambino v Bailey 757 F 2d 1112, 1139 (11th Cir, 1985) cited in Vince Morabito, ‘Judicial Responses To Class Action Settlements That Provide No Benefits To Some Class Members’ (2006) 32(1) Monash University Law Review 75, 75. [2] Australian Law Reform Commission, Integrity, Fairness and Efficiency – An Inquiry into Class Action Proceedings and Third-Party Litigation Funders, Report No 134 (2018) 217. [3] Ibid 33. [4] Ibid 33. [5] Ibid 217. [6] Ibid 221. [7] Simone Degeling and Michael Legg, ‘Fiduciary Obligations of Lawyers in Australian Class Actions: Conflicts Between Duties’ (2014) 37(3) University of New South Wales Law Journal 914, 918. [8] Federal Court of Australia Act 1976 (Cth) s 33C(2); Cash Converters International Limited v Gray [2014] FCAFC 111 (1 September 2014) [13], [22], [28]; Ibid 919. [9] Degeling and Legg, above n 7, 919. [10] Ibid. [11] Ibid 920. [12] Federal Court of Australia Act 1976 (Cth) ss 33A, 33H. [13] Ibid ss 33E, 33J, 33X(1)(a). [14] Ibid s 33Y. [15] Ibid s 33ZB. [16] Ibid s 33N; Degeling and Legg, above n 7, 920. [17] Degeling and Legg, above n 7, 920. [18] Nocton v Lord Ashburton [1914] AC 932; Boardman v Phipps [1967] 2 AC 46; Carindale Country Club Estate Pty Ltd v Astill (1993) 42 FCR 307. [19] Pilmer v Duke Group Ltd (in liq) (2001) 207 CLR 165, 199; see also Degeling and Legg, above n 7, 915-16; Philippa Ryan, ‘Examining breaches of fiduciary duty by solicitors in commercial arrangements’ (2016) 31 Australian Journal of Corporate Law 209, 211-212. [20] Regal (Hastings) Ltd v Gulliver [1942] 1 All ER 378; Vicki Waye, ‘Conflicts of Interest Between Claimholders, Lawyers and Litigation Entrepeneurs’ (2008) 19(1) Bond Law Review 225, 233. [21] Beach Petroleum NL v Abbott Tout Russell Jennedy (1999) 48 NSWLR 1, 45. [22] Simone Degeling and Michael Legg, ‘Class Action Settlements Opt-Out and Class Closure: Fiduciary Conflicts’ (2017) 11 Journal of Equity 319, 331; Kelly v Willmott Forests Ltd (in liquidation) (No 4) [2016] FCA 323 (5 April 2016) [220] and [309] (Murphy J); Michael Legg, ‘Class Action Settlements in Australia - The Need for Greater Scrutiny’ (2014) 38 Melbourne University Law Review 590, 596; Maguire v Makaronis (1997) 188 CLR 449, 463 (Brennan CJ, Gaudron, McHugh and Gummow JJ). [23] Degeling and Legg, above n 7, 925. [24] Ibid 922. [25] See for example Williams v FAI Home Security Pty Ltd (No 4) (2000) 180 ALR 459; Kelly v Willmott Forests Ltd (in liquidation) (No 4) [2016] FCA 323 (5 April 2016) [220] and [309] (Murphy J); McMullin v ICI Australia Operations Pty Ltd [No 6] (Unreported, Federal Court of Australia, Wilcox J, 27 November 1997) 3; King v AG Australia Holdings Ltd (2002) 121 FCR 480, 488 [24] (Moore J); Courtney v Medtel Pty Ltd (2002) 122 FCR 168, 184–5 [57] (Sackville J); Bray v F Hoffman-La Roche Ltd [2003] FCA 1505 (19 December 2003) [15] (Merkel J); Dora- jay Pty Ltd v Aristocrat Leisure Ltd [2009] FCA 19 (21 January 2009) [8] (Stone J) cited in Michael Legg, ‘Class Action Settlements in Australia- The Need for Greater Scrutiny’ (2014) 38 Melbourne University Law Review 590, 596. [26] Legg, above n 25; Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41, 142 (Dawson J). [27] Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41, 69 (Gibbs CJ); J D Heydon, M J Leeming, P G Turner, Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies (LexisNexis Butterworths, 5th ed, 2015) 142. [28] Degeling and Legg, above n 7, 923. [29] (1999) 48 NSWLR 1, 45-6. [30] Degeling and Legg, above n 7, 923. [31] Ibid. [32] Ibid 924; Degeling and Legg, above n 22, 332. [33] Ibid. [34] Degeling and Legg, above n 22, 335. [35] Australian Law Reform Commission, above n 2, 220. [36] Degeling and Legg, above n 7, 930. [37] Ibid 926-7. [38] Ibid. [39] Ibid. [40] Degeling and Legg, above n 22, 342. [41] Ibid; see also Vince Morabito, ‘Judicial Review of the Fairness and Reasonableness, as between Class Members, of Federal Class Actions Settlements’ (2018) 92 Australian Law Journal 976, 986. [42] Degeling and Legg, above n 22, 342. [43] Ibid 344-5. [44] Australian Law Reform Commission, above n 2, 220. [45] Ibid 223. [46] Ibid 229. [47] Degeling and Legg, above n 7, 928. [48] Degeling and Legg, above n 22, 340-1. [49] Ibid 341; Maguire v Makaronis (1997) 188 CLR 449, 466 (Brennan CJ, Gaudron, McHugh and Gummow JJ). [50] Australian Law Reform Commission, above n 2, 231; Degeling and Legg, above n 7, 924. [51] Degeling and Legg, above n 7, 930. [52] Margaret Beazley, ‘The Rise and Fall of Litigation Funding and Class Actions and the Duties Owed by Legal Practitioners’ (Speech delivered at the CLE Seminar Series, The University of New South Wales, 23 February 2017) 13 <http://www.supremecourt.justice.nsw.gov.au/Documents/Publications/Speeches/2017%20Speeches/Beazley_230217.pdf>. [53] Australian Law Reform Commission, above n 2, 220. [54] See also Civil Procedure Act 2005 (NSW) s 166(1)(d). [55] Beazley, above n 52, 19. [56] (1995) 182 CLR 398, 421; Degeling and Legg, above n 7, 931. [57] Ibid. [58] Ibid. [59] Degeling and Legg, above n 7, 931-2. [60] Ibid. [61] Ibid. [62] Ibid 925. [63] Kirby v Centro Properties Ltd (2008) 253 ALR 65, 73-4. [64] Ibid; Michael Legg, ‘Entrepreneurs and Figureheads – Addressing Multiple Class Actions and Conflicts of Interest’ (2009) 32(3) University of New South Wales Law Journal 909, 919. [65] Piambino v Bailey, 757 F.2d 1112, 1145 (11th Cir, 1985) fn 88; see also Mandujano v Basic Vegetable Products Inc, 541 F.2d 832, 835–836 (9th Cir, 1976); Re General Motors Corp Pick-up Truck Fuel Tank Products Liability Litigation, 55 F.3d 768, 801 (3rd Cir, 1995); Reynolds v Beneficial National Bank, 288 F.3d 277, 282 (7th Cir, 2002) cited in Morabito, above n 41, 983. [66] Legg, above n 64, 912. [67] Ibid 921. [68] Ibid 924. [69] Federal Court of Australia, Class Actions Practice Note (GPN-CA), 25 October 2016 [14.3]. [70] (2000) 180 ALR 459; Beazley, above n 52, 14; Morabito, above n 41, 982. [71] Ibid. [72] Ibid [9], [22], [23]. [73] (2002) 211 CLR 1; Beazley, above n 52, 16. [74] Legg, above n 25, 598-9. [75] P Dawson Nominees Pty Ltd v Brookfield Multiplex Ltd (No 4) [2010] FCA 1029 (21 September 2010) [23]; Jeremy Kirk, ‘The Case for Contradictors in Approving Class Action Settlements’ (2018) 92 Australian Law Journal 716, 718. [76] Legg, above n 25, 599-600. [77] Degeling and Legg, above n 7, 933-4. [78] Ibid. [79] Ibid. [80] Ibid. [81] Ibid; Australian Securities and Investments Commission v Richards [2013] FCAFC 89 (12 August 2013). [82] Degeling and Legg, above n 7, 933-4. [83] Kirk, above n 75, 718. [84] Richards v Macquarie Bank Ltd (No 4) [2013] FCA 438 (3 May 2013) [21] (Logan J). See also P Dawson Nominees Pty Ltd v BrookfieldMultiplex Ltd (No 4) [2010] FCA 1029 (21 September 2010) [24] (Finkelstein J) cited in Morabito, above n 41, 984. [85] Ibid. [86] Kelly v Willmott Forests Ltd (in liquidation) (No 4) [2016] FCA 323 (5 April 2016) [136]-[140]. [87] Legg, above n 25, 611. [88] Ibid 613. [89] Kirk, above n 75, 719. [90] Ibid 720. [91] Morabito, above n 41, 988. [92] Kelly v Willmott Forests Ltd (in liq) (No 4) (2016) 335 ALR 439 [4]; Kirk, above n 75, 721. [93] Botsman v Bolitho [2018] VSCA 278 (1 November 2018) [323]-[336]. [94] Kelly v Willmott Forests Ltd (in liq) (No 4) (2016) 335 ALR 439 [6]-[12]; Kirk, above n 75, 721. [95] Beazley, above n 52, 12. [96] Ibid. [97] Vince Morabito and Naomi Hatcher, ‘Security for Costs in Unfunded Federal Class Actions: Back to the Future’ (2018) 92 Australian Law Journal 105, 126. [98] Michael Legg et al, ‘Litigation Funding in Australia’ [2010] University of New South Wales Law Research Series 12, 24. [99] Morabito, above n 41, 979. [100] Degeling and Legg, above n 22, 339; Legg, above n 22, 600. [101] Kelly v Willmott Forests Ltd (in liquidation) (No 4) [2016] FCA 323 [333]; Degeling and Legg, above n 22, 339. [102] Ibid. [103] Legg, above n 22, 600; Legg, above n 20, 921. [104] Legg, above n 22, 601. [105] Ibid. [106] Ibid 601-2. [107] Lifeplan Australia Friendly Society Ltd v S&P Global Inc [2018] FCA 379, [41]; Kirk, above n 75, 723. [108] [2013] FCA 626 (21 June 2013) [38]–[52]; Legg, above n 22, 602. [109] Legg, above n 22, 602. [110] Ibid. [111] Ibid 609-10. [112] See Wayne Attrill, ‘Funding Justice: The Role of Litigation Funders in Class Actions’ (2015) 129 Precedent 38, 39. [113] Ibid 39-40. [114] United States Chamber Institute for Legal Reform, Third Party Litigation Financing in Australia: Class Actions, Conflicts and Controversy(Publication, October 2013) 3 <http://www.instituteforlegal reform.com/uploads/sites/1/TPLF_in_Australia_page_web.pdf>; Degeling and Legg, above n 7, 934. [115] Degeling and Legg, above n 7, 934. [116] Attrill, above n 112, 39. [117] Waye, above n 20, 237. [118] Campbells Cash and Carry Pty Limited v Fostif Pty Ltd (2006) 229 CLR 386, 478 [243] (Gleeson CJ); Michael Duffy, ‘Two’s Company, Three’s a Crowd? Regulating Third-Party Litigation Funding, Claimant Protection in the Tripartite Contract, and the Lens Theory’ (2016) 39(1) University of New South Wales Law Journal 165, 191. [119] Duffy, above n 118. [120] Simone Degeling and Michael Legg, ‘Fiduciaries and Funders: Litigation Funders in Australian Class Actions’ (2017) 36 Civil Justice Quarterly 244. [121] Waye, above n 20, 255. [122] Ibid. [123] Ibid. [124] Ibid. [125] Ibid 256. [126] Ibid. [127] Ibid. [128] Michael Duffy, Submission to Australian Law Reform Commission, Inquiry into Class Action Proceedings and Third-Party Litigation Funders, 30 July 2018, 8. [129] Waye, above n 20, 257; Ibid 9. [130] [2005] NSWCA 240 [70]; Waye, above n 20, 257. [131] Duffy, above n 128, 9. [132] Duffy, above n 128, 7. [133] Corporations Regulation 2001 (Cth) as amended by Corporations Amendment Regulation 2012 (No. 6) (Cth). [134] Australian Securities and Investment Commission, Litigation Schemes and Proof of Debt Schemes: Managing Conflicts of Interest, Regulatory Guide 248 (April 2013); see also for example Federal Court of Australia, Class Actions Practice Note (GPN-CA), 25 October 2016 cl 5.9. [135] United States Chamber Institute for Legal Reform, above n 114, 18. [136] Legg et al, above n 98, 34. [137] Australian Law Reform Commission, above n 2, 162. [138] Ibid 181. [139] Ibid 225. [140] Bolitho v Banksia Securities Limited (No 4) [2014] VSC 582 (26 November 2014). [141] Waye, above n 20, 239. [142] Federal Court of Australia, Class Actions Practice Note (GPN-CA), 25 October 2016. [143] [2005] NSWCA 240; Waye, above n 20, 242. [144] Ibid. [145] Waye, above n 20, 243. [146] Ibid. [147] Attrill, above n 112, 39-40. [148] Beazely, above n 52, 29. [149] Fostif v Campbells Cash & Carry Pty Ltd (2005) 63 NSWLR 203 [85]; Ibid. [150] Ibid. [151] Legg et al, above n 98, 33. [152] Ibid. [153] Attrill, above n 112, 39-40. [154] Waye, above n 20, 238. [155] Ibid. [156] Ibid. [157] Beazley, above n 52, 29. [158] Waye, above n 20, 260-1; Ibid, 30. [159] Kirby v Centro Properties Ltd (2008) 253 ALR 65, 69-71; Michael Legg, ‘Entrepreneurs and Figureheads – Addressing Multiple Class Actions and Conflicts of Interest’ (2009) 32(3) University of New South Wales Law Journal 909, 913. [160] Legg, above n 159, 918. [161] Morabito, above n 41, 989; Legg, above n 22, 604. [162] Morabito, above n 41, 989; Money Max Int Pty Ltd v QBE Insurance Group Ltd (2016) 245 FCR 191; Kirk, above n 75, 723. [163] McInnes et al, ‘The rise (and fall?) of litigation funding and entrepreneurial class actions’ (2015) 129 Precedent 44, 46. [164] Michael Legg, ‘Ramifications of the Recognition of a Common Fund in Australian Class Actions: An Early Appraisal’ (2017) 91 Australian Law Journal 655, 663. [165] Botsman v Bolitho [2018] VSCA 278 (1 November 2018) [308]. [166] Ibid [401]. [167] Ibid [311]-[312].

REFERENCE LIST

A Articles/Books/Reports

Attrill, Wayne, ‘Funding Justice: The Role of Litigation Funders in Class Actions’ (2015) 129 Precedent 38

Australian Law Reform Commission, Integrity, Fairness and Efficiency – An Inquiry into Class Action Proceedings and Third-Party Litigation Funders, Report No 134 (2018)

Basten, John, ‘A Paper on Representative Actions in the Supreme Court’ (Speech delivered to the Judges of the Court, 19 July 2011) <http://www.supremecourt.justice.nsw.gov.au/Documents/Publications/Speeches/Pre-2015%20Speeches/Basten/basten_2011.07.19.pdf>

Beazley, Margaret, ‘The Rise and Fall of Litigation Funding and Class Actions and the Duties Owed by Legal Practitioners’ (Speech delivered at the CLE Seminar Series, The University of New South Wales, 23 February 2017) <http://www.supremecourt.justice.nsw.gov.au/Documents/Publications/Speeches/2017%20Speeches/Beazley_230217.pdf>

Degeling, Simone and Michael Legg, ‘Class Action Settlements Opt-Out and Class Closure: Fiduciary Conflicts’ (2017) 11 Journal of Equity 319

Degeling, Simone and Michael Legg, ‘Fiduciaries and Funders: Litigation Funders in Australian Class Actions’ (2017) 36 Civil Justice Quarterly 244

Degeling, Simone and Michael Legg, ‘Fiduciary Obligations of Lawyers in Australian Class Actions: Conflicts Between Duties’ (2014) 37(3) University of New South Wales Law Journal 914

Duffy, Michael, Submission to Australian Law Reform Commission, Inquiry into Class Action Proceedings and Third-Party Litigation Funders, 30 July 2018

Duffy, Michael, ‘Two’s Company, Three’s a Crowd? Regulating Third-Party Litigation Funding, Claimant Protection in the Tripartite Contract, and the Lens Theory’ (2016) 39(1) University of New South Wales Law Journal 165

Heydon, J D, M J Leeming and P G Turner, Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies (LexisNexis Butterworths, 5th ed, 2015)

Kirk, Jeremy, ‘The Case for Contradictors in Approving Class Action Settlements’ (2018) 92 Australian Law Journal 716

Legg, Michael, ‘Class Action Settlements in Australia- The Need for Greater Scrutiny’ (2014) 38 Melbourne University Law Review 590

Legg, Michael, ‘Entrepreneurs and Figureheads – Addressing Multiple Class Actions and Conflicts of Interest’ (2009) 32(3) University of New South Wales Law Journal 909

Legg, Michael, Louisa Travers, Edmond Park and Nicholas Turner, ‘Litigation Funding in Australia’ [2010] University of New South Wales Law Research Series 12

Legg, Michael, ‘Ramifications of the Recognition of a Common Fund in Australian Class Actions: An Early Appraisal’ (2017) 91 Australian Law Journal 655

Lipp, Barry, ‘Mass Tort Class Actions under the Federal Court of Australia Act: Justice for All or Justice Denied?’ (2002) 28(2) Monash University Law Review 361

McInnes, Ross, Alexandra Kennedy-Breit and Magali Manon, ‘The rise (and fall?) of litigation funding and entrepreneurial class actions’ (2015) 129 Precedent 44

Morabito, Vince, ‘Judicial Responses To Class Action Settlements That Provide No Benefits To Some Class Members’ (2006) 32(1) Monash University Law Review 75

Morabito, Vince, ‘Judicial Review of the Fairness and Reasonableness, as between Class Members, of Federal Class Actions Settlements’ (2018) 92 Australian Law Journal 976

Morabito, Vince and Naomi Hatcher, ‘Security for Costs in Unfunded Federal Class Actions: Back to the Future’ (2018) 92 Australian Law Journal 105

Ryan, Philippa, ‘Examining breaches of fiduciary duty by solicitors in commercial arrangements’ (2016) 31 Australian Journal of Corporate Law 209

United States Chamber Institute for Legal Reform, Third Party Litigation Financing in Australia: Class Actions, Conflicts and Controversy (Publication, October 2013) <http://www.instituteforlegalreform.com/uploads/sites/1/TPLF_in_Australia_page_web.pdf>

Waye, Vicki, ‘Conflicts of Interest Between Claimholders, Lawyers and Litigation Entrepeneurs’ (2008) 19(1) Bond Law Review 225

B Cases

Australian Securities and Investments Commission v Richards [2013] FCAFC 89 (12 August 2013)

Beach Petroleum NL v Abbott Tout Russell Jennedy (1999) 48 NSWLR 1

Blythe v Northwood (2005) 63 NSWLR 531

Boardman v Phipps [1967] 2 AC 46

Bolitho v Banksia Securities Limited (No 4) [2014] VSC 582 (26 November 2014)

Botsman v Bolitho [2018] VSCA 278 (1 November 2018)

Bray v F Hoffman-La Roche Ltd [2003] FCA 1505 (19 December 2003)

Bristol & West Building Society v Mothew [1998] Ch 1

Campbells Cash and Carry Pty Limited v Fostif Pty Ltd (2006) 229 CLR 386

Carindale Country Club Estate Pty Ltd v Astill (1993) 42 FCR 307

Carnie v Esanda Finance Corporation Ltd (1995) 182 CLR 398

Cash Converters International Limited v Gray [2014] FCAFC 111 (1 September 2014)

Clarke Boyce v Mouat [1994] 1 AC 428

Courtney v Medtel Pty Ltd (2002) 122 FCR 168

Dora- jay Pty Ltd v Aristocrat Leisure Ltd [2009] FCA 19 (21 January 2009)

Farrington v Rowe McBride & Partners [1985] 1 NZLR 83

Fostif v Campbells Cash & Carry Pty Ltd (2005) 63 NSWLR 203

Hilton v Barker Booth & Eastwood [2005] 1 WLR 567

Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41

Howard v Commissioner of Taxation (2014) 309 ALR 1

Kelly v Willmott Forests Ltd (in liquidation) (No 4) [2016] FCA 323 (5 April 2016)

King v AG Australia Holdings Ltd (2002) 121 FCR 480

Kirby v Centro Properties Ltd (2008) 253 ALR 65

Kirby v Centro Properties Limited [2009] FCA 695

Law Society of NSW v Harvey [1976] 2 NSWLR 154

Lifeplan Australia Friendly Society Ltd v S&P Global Inc [2018] FCA 379

Maguire v Makaronis (1997) 188 CLR 449

Mallesons Stephen Jacques v KPMG Peat Marwick (1991) 4 WAR 357

McMullin v ICI Australia Operations Pty Ltd [No 6] (Unreported, Federal Court of Australia, Wilcox J, 27 November 1997)

Mobil Oil Australia Pty Ltd v Victoria (2002) 211 CLR 1

Modtech Engineering Pty Ltd v GPT Management Holdings Ltd [2013] FCA 626 (21 June 2013)

Money Max Int Pty Ltd v QBE Insurance Group Ltd (2016) 245 FCR 191

Moody v Cox & Hyatt [1917] 2 Ch 71

Nocton v Lord Ashburton [1914] AC 932

P Dawson Nominees Pty Ltd v Brookfield Multiplex Ltd (No 4) [2010] FCA 1029 (21 September 2010)

PhotoCure ASA v Queen’s University at Kingston (2002) 56 IPR 86

Piambino v Bailey 757 F 2d 1112, 1139 (11th Cir, 1985)

Pilmer v Duke Group Ltd (in liq) (2001) 207 CLR 165

Prince Jefri Bolkiah v KPMG [1999] 2 WLR 215

Project 28 Pty Ltd v Barr [2005] NSWCA 240

Regal (Hastings) Ltd v Gulliver [1942] 1 All ER 378

Richards v Macquarie Bank Ltd (No 4) [2013] FCA 438 (3 May 2013)

Rigg v Sheridan [2008] NSWCA 79

Spector v Ageda [1973] Ch 30

Spincode Pty Ltd v Look Software Pty Ltd (2001) 4 VR 501

Stewart v Layton (1992) 111 ALR 687

Williams v FAI Home Security Pty Ltd (No 4) (2000) 180 ALR 459

C Legislation

Civil Procedure Act 2005 (NSW)

Corporations Amendment Regulation 2012 (No. 6) (Cth)

Corporations Regulation 2001 (Cth)

Federal Court of Australia Act 1976 (Cth)

D Other

Australian Securities and Investment Commission, Litigation Schemes and Proof of Debt Schemes: Managing Conflicts of Interest, Regulatory Guide 248 (April 2013)

Federal Court of Australia, Class Actions Practice Note (GPN-CA), 25 October 2016