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Judge criticises class action lawyers for taking $2.5m from group members

A Federal Court judge criticised the legal practitioners behind a settlement approval application for taking six days away from the busy court and costing group members more than $2.5 million.

user iconNaomi Neilson 06 May 2024 Big Law
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In fighting against whether litigation funder Galactic should be paid more than $24 million out of the 7-Eleven class action settlement, the parties on both sides and a contradictor spent six hearing days, 49 affidavits and $2.54 million in arguing each of their cases.

The appeal judgment was awarded in favour of Galactic, but not without a caution from Justice Michael Lee that solicitors and counsel acting “must be astute to ensure that unnecessary costs are not incurred consistently with their duties … to assist their client”.

“The court should impress upon those appearing on settlement approval applications that opinions should not canvass well-established authority and, to the extent the opinion canvasses prospects … this can usually be done in a way that is short and to the point,” Justice Lee noted at the end of the judgment.

 
 

“Rarely, in my view, will there be a need to file extensive affidavits.”

In orders made in early May last year, the contradictor’s costs were approved in the amount of $294,030, and the costs of the solicitors for the applicants were approved for $2.25 million.

The Federal Court said it also expected solicitors for the applicant also “incurred substantial costs which were not recoverable”.

“Putting to one side the impost on a busy court, in a case such as this, the approval application should not have been permitted to cost the group members $2.54 million,” the judgment read.

In addition to 49 affidavits – 40 of which were filed by the applicants – the court heard expert evidence from Galactic and the contradictor.

Justice Lee said there was “no doubt” the primary judge found the considerable amount of material to be “unnecessary”.

“I have lost count of the number of times on settlement approval applications I have received lengthy submissions telling me things I either already know or have no interest in knowing,” he said.

“Sometimes, of course, it will be necessary for there to be close investigation and articulation of a bespoke legal or factual complication.

“But, at least in my experience, this is relatively rare.”

Justice Lee made it clear that settlement approval applications were “rarely unsuccessful”, but there are often lengthy affidavits filed.

Additionally, the applications are so commonplace that the legal principles applied to them over decades have “become trite”.

“Except in rare cases where a novel issue arises, there is no reason why approval applications should not be determined with alacrity,” Justice Lee said.