Australia’s largest class action settlement to be assessed despite objections

The class action originally settled in 2021 for $112 million, with the additional $475 million added after Gordon Legal’s successful appeal.

The Commonwealth also agreed to pay an additional $60 million for administration and $13.5 million in legal costs.

In making the order on Monday (27 October) morning, the judge cited public confidence in the administration of justice, particularly in circumstances where it is the largest settlement of its kind in Australia.

“Here we have a very large amount of money being paid by the Commonwealth to the victims of this failure, and I think the public would like to be sure that settlement is fair and reasonable, and not just because the parties say it is, but because someone independent of it looks at it and tells the court that,” Justice Murphy said.

Appearing for Gordon Legal, David Batt KC objected to the contradictor because of the “significant costs” associated with the review.

Further, Batt submitted that the “unusual feature” of the robodebt settlement was that the legal costs and administration have been quarantined from the sum paid to group members, meaning that any contest about commission versus the class actions’ interests “is gone”.

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“We would respectfully contend that the only aspect of which the contradictor would assist the court is the funding commission percentage, but of course that is a fairly straightforward matter,” he said.

“Your Honour would have frequently considered such a matter on a regular basis, and we apprehend our friends for the Commonwealth will make submissions about it so Your Honour would have a contradictor.”

Counsel for the Commonwealth said the costs argument did not hold water, considering the contradictor costs would come out of the $13.5 million that had already been set aside for the firm.

He added there was a “range of matters” that a contradictor may make submissions on, “in terms of assisting the court with its protective function in representative proceedings such as these”.

In coming to his decision, Justice Murphy said the public would be interested to know about the inner workings of the settlement scheme and the way in which group members are being dealt with.

“The public gets something out of it, which is confidence in the system working … it helps the court, and it helps the public,” he said.

In addition to the review of legal costs, Justice Murphy said a contradictor should be appointed to determine whether it was appropriate to keep the scheme administration with Gordon Legal.

In coming to this decision, Justice Murphy acknowledged the raft of experience Gordon Legal’s partner Andrew Grech has in the class action space and his submission that keeping the administration cheap was outweighed by the need for it to be handled with sensitivity.

Gordon Legal has engaged a trauma consulting therapist to provide training to staff to reduce the retraumatisation of victims and has indicated it would partner with community legal centres for assistance in connecting with group members in remote and regional areas.

“I accept care should be taken to avoid retraumatising group members. That probably applies only to a cohort of group members, but it is nevertheless true,” Justice Murphy said in court.

Justice Murphy also noted that having a tender process would impose a significant burden on the court’s time and resources.

“Ordinarily, a tender would be appropriate, but there are a number of factors in this case that would lean away from it.

“In that process, I think what will happen … is Gordon Legal’s thinking about the best way to approach this task will develop. That is, it might actually develop some partnerships rather than trying to, it might get some quotes from accounting firms which are less than, on its own view, what it can do certain tasks for,” Justice Murphy said.