FEDERAL COURT OF AUSTRALIA Kemp v Westpac Banking Corporation (No 4) [2023] FCA 830 File number(s): VID 134 of 2020 Judgment of: O'BRYAN J Date of judgment: 21 June 2023 Date of publication of reasons: 21 July 2023 Catchwords: REPRESENTATIVE PROCEEDINGS – application for approval of settlement of representative proceeding – s 33V of the Federal Court of Australia Act 1976 (Cth) – principles relevant to settlement approval – whether proposed settlement fair and reasonable – whether proposed settlement distribution scheme just – whether certain deductions from settlement sum should be allowed – where proceeding conducted on a "no win, no fee" basis and without litigation funding – whether deduction for legal costs and disbursements, including "success fee" for applicant's solicitors, should be allowed – whether actual and proposed costs of administration of settlement distribution scheme should be allowed, including "hold back sum" to allow distribution to group members permitted to register to participate in settlement after close of registration – whether costs incurred by applicant's solicitors for adverse costs insurance should be allowed – whether reimbursement payments to applicant and sample group members should be allowed – whether non-publication orders should be made – settlement approved on basis that distribution of settlement sum proposed be adjusted to reflect disallowance of "hold back sum" and allowance of other proposed deductions – limited non-publication orders made Legislation: Australian Securities and Investments Commission Act 2001 (Cth), ss 12CB, 12DA, 12DM Corporations Act 2001 (Cth), ss 961B, 961G Federal Court of Australia Act 1976 (Cth), Pt IVA, ss 33V, 37AF, 37AG(1)(a), 54A, National Credit Code, s 143(1)(b) Federal Court Rules 2011 (Cth), r 28.67 Cases cited: Asirifi-Otchere v Swann Insurance (Aust) Pty Ltd (No 3) [2020] FCA 1885; 385 ALR 625 Asirifi-Otchere v Swann Insurance (Aust) Pty Ltd (No 4) [2021] FCA 459 Bradshaw v BSA Limited (No 2) [2022] FCA 1440 Caason Investments Pty Limited v Cao (No 2) [2018] FCA 527 Clark v National Australia Bank Limited (No 2) [2020] FCA 652 Court v Spotless Group Holdings Limited [2020] FCA 1730 Courtney v Medtel Pty Ltd (No 5) [2004] FCA 1406; 212 ALR 311 Darwalla Milling Co Pty Limited v F Hoffman-La Roche Ltd (No 2) [2006] FCA 1388; 236 ALR 322 Dillon v RBS Group (Australia) Pty Limited (No 2) [2018] FCA 395 Eckardt v Sims Ltd [2022] FCA 1609 Evans v Davantage Group Pty Ltd (No 3) [2021] FCA 70 Fowkes v Boston Scientific Corporation [2023] FCA 230 Kelly v Willmott Forests Ltd (in liquidation) (No 4) [2016] FCA 323; 335 ALR 439 Lifeplan Australia Friendly Society Limited v S&P Global Inc (Formerly McGraw-Hill Financial, Inc) (A Company Incorporated in New York) [2018] FCA 379 Matthews v Ausnet Electricity Services Pty Ltd [2014] VSC 663 Modtech Engineering Pty Ltd v GPT Management Holdings Limited [2013] FCA 626 Prygodicz v Commonwealth of Australia (No 2) [2021] FCA 634; 173 ALD 277 Reilly v Australia and New Zealand Banking Group Limited (No 2) [2020] FCA 1502 Seven Network Ltd v News Limited [2007] FCA 2059 Stanford v DePuy International Ltd (No 6) [2016] FCA 1452 Williams v FAI Home Security Pty Ltd (No 4) [2000] FCA 1925; (2000) 180 ALR 459 Williamson v Sydney Olympic Park Authority [2022] NSWSC 1618 Division: General Division Registry: Victoria National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Number of paragraphs: 106 Date of hearing: 21 June 2023 Counsel for the Applicant: Dr O Bigos SC with Ms G Coleman Solicitor for the Applicant: Slater and Gordon Counsel for the Respondents: Mr D Thomas SC with Mr P Holmes Solicitor for the Respondents: Allens ORDERS VID 134 of 2020 BETWEEN: ROGER KEMP Applicant AND: WESTPAC BANKING CORPORATION ACN 007 457 141 First Respondent WESTPAC GENERAL INSURANCE LIMITED ACN 003 719 319 Second Respondent WESTPAC LIFE INSURANCE SERVICES LIMITED ACN 003 149 157 Third Respondent order made by: O'BRYAN J DATE OF ORDER: 21 JUNE 2023 THE COURT ORDERS THAT: Approval of Settlement 1. Pursuant to s 33V of the Federal Court of Australia Act 1976 (Cth) (Act), settlement of the proceeding be approved on the terms set out in: (a) the Settlement Deed executed by the Applicant, the Respondents and Slater and Gordon dated 19 October 2022, a copy of which is exhibited as "BH-2" to the affidavit of Benedict Tobin Hardwick affirmed 16 November 2022; and (b) the Settlement Distribution Scheme (and the annexures thereto), exhibited as "BH-20" to the affidavit of Benedict Tobin Hardwick affirmed 20 June 2023. 2. Pursuant to s 33ZF of the Act, the Court authorises the Applicant, nunc pro tunc for and on behalf of Bound Group Members (being those persons who meet the definition of "Group Member" in the Second Further Amended Statement of Claim and who did not file an opt out notice in accordance with the orders made on 25 September 2020, as varied on 16 and 27 October 2020) to enter into and give effect to the Settlement Deeds. 3. Pursuant to ss 33ZB and 33ZF of the Act, the persons affected and bound by the settlement of the proceedings in paragraphs 1 and 2 and the dismissal orders in paragraph 11 are the Applicant, the Respondents and all Bound Group Members. 4. Pursuant to s 33ZF of the Act, Slater and Gordon be appointed Scheme Administrator of the Settlement Distribution Scheme, with assistance from Deloitte Financial Advisory Pty Ltd, to act in accordance with the rules of the Settlement Distribution Scheme. Late Registrants 5. Despite paragraph 6 of the orders made on 7 December 2022 (as varied by paragraph 6 of orders made on 8 February 2023) and clause 5.1 of the Settlement Distribution Scheme, the Group Members identified by the unique IDs WBC20960246, WBC31306088, WBC63952382 and WBC22793366 be registered by the Scheme Administrator and be treated as Registered Group Members for the purposes of the Settlement Distribution Scheme. Applicant's Costs and Expenses 6. Pursuant to s 54A of the Federal Court of Australia Act 1976 (Cth) and r 28.67 of the Federal Court Rules 2011 (Cth), the referee report of Catherine Mary Dealehr dated 2 June 2023 (whose appointment to conduct an inquiry and make a report to the Court was made pursuant to paragraph 13 of the orders of 7 December 2022) be adopted except to the extent that it disallows disbursements for counsel fees on the basis of a 25% discount for multiple activities in a single entry. 7. Pursuant to ss 33ZF and 33V of the Act, the following distributions from monies paid under the settlement, be approved: (a) the amount of $6,750,229.06 for the Applicant's legal costs and disbursements to 21 June 2023, on a solicitor and own client basis, incurred in connection with the proceeding including subsequent to the date of the Settlement Deeds and Settlement Distribution Scheme; (b) the amount of $1,507,348.63, for the Applicant's estimated legal costs and disbursements from 22 June 2023, on an indemnity basis, incurred in connection with the proceeding including the administration of the Settlement Distribution Scheme; (c) the amount of $275,000 for the premium charged, or to be charged, by Harbour Underwriting Limited with respect to an adverse costs insurance policy dated 22 December 2021; (d) the amount of $20,000 for the Applicant's reasonable claim for compensation for the time and/or expenses incurred in the interests of prosecuting the proceeding on behalf of Group Members as a whole; and (e) the amounts of $3,000 for each of Bernadette Gigliotti, Gerrard O'Connell, Haidee Rush, Steven Rush, Jessica Melia-Moore, Lilyan Fizaa, Matthew Trevaskis, Megan Hackwood, Sandra Lewis and Suman Gali, as a reasonable claim for compensation for the time and/or expenses incurred in connection with their role as sample group members in the proceeding. 8. Prior to the distribution of the Residual Distribution Sum (as defined in the Settlement Distribution Scheme), as contemplated by clause 8.7 of the Settlement Distribution Scheme, the Scheme Administrator is to send to chambers a confidential affidavit deposing as to costs incurred by the Applicant and/or the Scheme Administrator since 14 June 2023, so that the Court may make a further order as to the amount of any approved Administration Costs and Applicant's Legal Costs over this period. Liberty to apply for this purpose is reserved. Confidentiality 9. Pursuant to s 37AF of the Act, to prevent prejudice to the proper administration of justice, the following paragraphs and annexures of the confidential affidavit of Benedict Tobin Hardwick affirmed on 14 June 2023 are confidential and are not to be published until further order: (a) paragraphs 22 to 26; (b) paragraphs 31(a), 31(h) and 31(j); (c) annexure BH-12 being the confidential opinion of counsel; and (d) annexure BH-13 being information provided by the Respondents pertaining to policies sold on or after 28 February 2014. 10. Pursuant to s 37AF of the Act, to prevent prejudice to the proper administration of justice, the following are confidential and are not to be published until the end of the appeal period for the proceeding Kristy Fordham v Commonwealth Bank of Australia (VID 387/2020) or further order: (a) from the affidavit of Benedict Tobin Hardwick affirmed on 16 November 2023, annexure BH-08 being Confidential Schedule D: Loss Assessment Formula; (b) from the confidential affidavit of Benedict Tobin Hardwick affirmed on 14 June 2023: (i) paragraph 49; and (ii) annexure BH-14 being a spreadsheet of Deloitte data setting out summary of net premiums by policy, (c) from the Affidavit of Benedict Tobin Hardwick affirmed on 20 June 2020, annexure BH-17 being and Adverse Costs Insurance policy issued by Harbour Underwriting; and (d) from the settlement approval hearing on 21 June 2023, Exhibit B being an excel spreadsheet concerning estimated distributions of settlement funds. Final orders 11. Pursuant to ss 22, 23 or 33ZF of the Act or FCR 1.32 and/or the Court's implied jurisdiction, and with effect from the date on which the final distribution of the Settlement Sum (including the Residual Distribution Sum) occurs under the Settlement Distribution Scheme, the proceeding against the Respondents is dismissed on the basis that: (a) the dismissal is a defence and absolute bar to any claim or proceeding by the Applicant or any Bound Group Member against the Respondents in respect of, or relating to, the subject matter of the proceeding, without prejudice to: (i) the right of any party to the Settlement Deeds to make an application to enforce the Settlement Deeds in a new proceeding; (ii) the right of any Registered Group Member (as defined in the Settlement Distribution Scheme) to make application to the Court in accordance with the terms of the Settlement Distribution Scheme; or (iii) the right of the Scheme Administrator of the Settlement Distribution Scheme to refer any issues relating to the Settlement Distribution Scheme to the Court for direction or determination in accordance with the terms of the Settlement Distribution Scheme; and (b) there be no order as to costs as between the Applicant and Respondents and all previous costs orders in the proceeding between them are vacated. 12. The Scheme Administrator has liberty to apply in relation to any matter arising in relation to the Settlement Distribution Scheme. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT O'BRYAN J: Introduction 1 This is a representative proceeding brought under Pt IVA of the Federal Court of Australia Act 1976 (Cth) (FCA Act) against Westpac Banking Corporation and two other related companies, Westpac General Insurance Limited and Westpac Life Insurance Services Limited (which I will refer to collectively as Westpac) in relation to certain consumer credit insurance policies issued to Westpac's customers between 1 January 2010 and 30 June 2019 (relevant period). The consumer credit insurance policies were: (a) the Westpac Credit Card Repayment Protection policy (Credit Card Protection policy), issued with respect to credit cards issued by Westpac; (b) the Westpac Flexi Loan Repayment Protection policy (Flexi Loan Protection policy), issued with respect to "flexi loans" advanced by Westpac; and (c) the Westpac Personal Loan Protection policy (Personal Loan Protection policy), issued with respect to personal loans advanced by Westpac. 2 The applicant was a customer of Westpac and alleges that he acquired one of the consumer credit insurance policies issued by Westpac. He brings the proceeding on his own behalf and on behalf of all other persons who acquired the policies during the relevant period and have suffered loss or damage by reason of the alleged contravening conduct of Westpac, and/or at whose expense Westpac was unjustly enriched, as alleged in the statement of claim. The representative proceeding is what is colloquially referred to as an "open" class action. 3 The applicant and group members are ordinary members of the community who, in connection with the acquisition of consumer credit facilities from Westpac, also acquired one of the consumer credit insurance policies issued by Westpac. The value of the individual claims of the applicant and each group member are very modest, but in aggregate are substantial. 4 The evidence before me on the settlement approval application demonstrates that a very large number of policies were issued by Westpac in the relevant period. The solicitors for the applicant, Slater and Gordon, estimated that there are up to 318,508 group members, being persons who acquired one of the consumer credit insurance policies in the relevant period. Approximately 368,000 opt out notices were distributed and approximately 334 potential group members opted out. 5 Slater and Gordon have conducted the proceeding on a "no win no fee" basis and there is no litigation funder involved. Under a legal costs agreement entered into with the applicant, Slater and Gordon are entitled to charge a success fee calculated as 25% of their professional fees incurred if the outcome of the proceeding is successful. A successful outcome of the proceeding is defined in the agreement as the applicant receiving an amount of money after payment of all liabilities or a reasonable offer of settlement is made that Slater and Gordon recommend. 6 The initial trial of the proceeding was listed to commence on 28 November 2022, and scheduled to run for four weeks. 7 On 19 October 2022, a few weeks before the trial was scheduled to commence, the applicant entered into a Settlement Deed with Westpac to bring about a settlement of the proceeding. The principal terms of settlement are that, subject to approval of the Court under s 33V of the FCA Act and certain other conditions: (a) Westpac will pay an amount of $29 million in full and final settlement of the proceeding; (b) the payment of the settlement sum by Westpac is without admission of liability; (c) the settlement fund will be paid into a trust account held by Slater and Gordon and distributed in accordance with a Settlement Distribution Scheme (also subject to Court approval); and (d) the applicant and each group member will release Westpac from all claims arising from or connected with or related to the sale or issue of the consumer credit insurance policies and the facts and circumstances the subject of allegations in this proceeding. 8 By amended interlocutory application dated 25 November 2022, the applicant sought preliminary orders: (a) to notify group members of the proposed settlement; (b) stipulating a date by which group members were required to register with Slater and Gordon in order to participate in the settlement; (c) stipulating a date by which group members must lodge with the Court a notice of objection to the proposed settlement; (d) appointing a referee pursuant to s 54A of the FCA Act for the purpose of conducting an inquiry and making a report in writing to the Court with respect to the reasonableness of the applicant's legal costs incurred in relation to the proceeding, up to and including the date of the hearing of the settlement approval application on a solicitor and own client basis, and the reasonableness of the costs proposed to be incurred in connection with settlement administration in the event the proposed settlement is approved; and (e) otherwise setting a timetable for the hearing of an application for approval of the settlement by the Court. 9 On 7 December 2022, I made preliminary orders largely in the form proposed by the parties. 10 These reasons concern the application for approval of the settlement under s 33V of the FCA Act. The application was heard on 21 June 2023. In support of the application, the applicant relied upon: (a) four affidavits made by Benedict Tobin Hardwick, a lawyer employed by Slater and Gordon with responsibility for the conduct of the proceeding on behalf of the applicant, comprising an affidavit dated 16 November 2022, two affidavits dated 14 June 2023 (one marked as confidential) and a further affidavit dated 20 June 2023; (b) an expert costs report of Catherine Mary Dealehr dated 2 June 2023; and (c) written submissions dated 14 June 2023. 11 The respondents also filed written submissions dated 19 June 2023 and appeared at the hearing in support of the settlement. The respondents raised a number of matters for the Court's consideration, which were of assistance to the Court. 12 On 21 June 2023, I made orders approving the settlement. These are my reasons for making those orders. 13 It should be noted that a representative proceeding making similar allegations was brought against National Australia Bank (NAB) in 2018 (proceeding VID 1238 of 2018). An agreement to settle that proceeding was reached in October 2019, prior to the commencement of this proceeding. The settlement was approved by the Court in May 2020: Clark v National Australia Bank Limited (No 2) [2020] FCA 652 (National Australia Bank No 2). 14 Representative proceedings making similar allegations have also been brought against Australia and New Zealand Banking Group Limited (ANZ) (proceeding VID 133 of 2020) and the Commonwealth Bank of Australia (CBA) (proceeding VID 387 of 2020). Like the present proceeding, each of those proceedings was commenced in 2020. Slater and Gordon represent the applicants in each of those proceedings and have also conducted those proceedings on a "no win no fee" basis. The parties to each of those proceedings have also entered into settlement deeds, and applications have been made in each of those proceedings for approval of the settlement under s 33V of the FCA Act. As at the date of making orders in this proceeding, the settlement approval application in the ANZ proceeding was part heard. Prior to the publication of these reasons, I made orders approving the settlement in that proceeding. The settlement approval application in the CBA proceeding is yet to be heard. 15 In support of the settlement reached in the present proceeding, the applicant made submissions with respect to the "parity" of the settlement amounts in each of the Westpac, ANZ and CBA proceedings. I have not placed any weight on those submissions and consider that any attempt at comparing the three settlements would be unsound. Whilst each of the proceedings concerns similar consumer credit insurance policies issued by the three banks and similar allegations are made in each proceeding, the three proceedings are entirely distinct. First, the allegations concern the manner in which, and the circumstances in which, the policies were sold by each of the banks, and therefore depend upon facts peculiar to each bank. For that reason, each of the proceedings was to be tried separately. Second, the number of insurance policies issued and the amount of premiums paid differ as between each of the proceedings, which inevitably affects the parties' assessment of a reasonable compromise of the claims made. Third, at the time of settlement, each of the proceedings was at a different stage of preparation for trial. Relevant principles 16 The settlement of a representative proceeding is governed by s 33V of the FCA Act which provides as follows: 33V Settlement and discontinuance—representative proceeding (1) A representative proceeding may not be settled or discontinued without the approval of the Court. (2) If the Court gives such an approval, it may make such orders as are just with respect to the distribution of any money paid under a settlement or paid into the Court. 17 The central question for the Court in determining whether to approve a settlement under s 33V(1) is whether the proposed settlement is a fair and reasonable compromise of the claims made on behalf of the group members who will be bound by the settlement: Williams v FAI Home Security Pty Ltd (No 4) [2000] FCA 1925; (2000) 180 ALR 459 (Williams No 4) at [19] per Goldberg J. Ordinarily, the Court will take into account the amount offered to each group member, the prospects of success in the proceeding, the likelihood of the group members obtaining judgment for an amount significantly in excess of the settlement offer, the terms of any advice received from counsel and from any independent expert in relation to the issues which arise in the proceeding, the likely duration and cost of the proceeding if continued to judgment, and the attitude of the group members to the settlement: Williams No 4 at [19]. 18 Many decisions of the Court provide guidance with respect to the assessment of whether a proposed settlement is a fair and reasonable. Such guidance includes the following observations: (a) Approval of a settlement should not be approached as if there is a single outcome that may be seen to be fair and reasonable. Reasonableness is a range, and the question is whether the proposed settlement falls within that range having regard to the known facts and circumstances: Darwalla Milling Co Pty Limited v F Hoffman-La Roche Ltd (No 2) [2006] FCA 1388; 236 ALR 322 (Darwalla) at [50] per Jessup J; Kelly v Willmott Forests Ltd (in liquidation) (No 4) [2016] FCA 323; 335 ALR 439 (Kelly v Willmott Forests) at [74] per Murphy J. (b) The Court should be mindful of the fact that the parties and their legal representatives are often in a better position to appreciate the risks associated with the proceeding, and also mindful of the fact that different parties and their lawyers will have different appetites for risk: Darwalla at [50] per Jessup J; Kelly v Willmott Forests at [74] per Murphy J; Stanford v DePuy International Ltd (No 6) [2016] FCA 1452 at [116] per Wigney J. (c) The reasonableness of a settlement should not be evaluated on the assumption that, had the matter proceeded to trial, all (or indeed any) of the applicant's and group members' claims would have been successful: Fowkes v Boston Scientific Corporation [2023] FCA 230 (Fowkes) at [44] per Lee J. 19 As Lee J observed in Fowkes at [45], the discretion is a broad one; its exercise is only limited by the necessity that it be exercised judicially, having regard to the particular facts of the case. 20 Section 33V(2) stipulates that, if the Court approves a settlement, it may make such orders as are just with respect to the distribution of any money paid under the settlement or paid into the Court. Under that provision, the Court is empowered to supervise the distribution of settlement proceeds amongst group members and any amounts that will be paid out of the settlement proceeds by way of legal costs or other costs incurred in conducting the proceeding (such as fees claimed by litigation funders or the costs of insurance associated with the proceeding) or in administering and distributing the settlement sum. 21 The principles established in, and guidance given by, numerous decisions of the Court are reflected in the Class Actions Practice Note of the Court which relevantly states as follows: 15.3 When applying for Court approval of a settlement, the parties will be required to persuade the Court that: (a) the proposed settlement is fair and reasonable having regard to the claims made on behalf of the class members who will be bound by the settlement; and (b) the proposed settlement has been undertaken in the interests of class members, as well as those of the applicant, and not just in the interests of the applicant and the respondent(s). 15.4 Particularly in an open class action, the parties, class members, litigation funders and lawyers may expect that unless a judge indicates to the contrary the Court will, if application is made and if in all the circumstances it is fair, just, equitable and in accordance with principle, make an appropriately framed order to prevent unjust enrichment and equitably and fairly to distribute the burden of reasonable legal costs, fees and other expenses, including reasonable litigation funding charges or commission, amongst all persons who have benefited from the action. The notices provided to class members should bring this to their attention as early in the proceeding as practicable. 15.5 The material filed in support of an application for Court approval of a settlement will usually be required to address at least the following factors: (a) the complexity and likely duration of the litigation; (b) the reaction of the class to the settlement; (c) the stage of the proceedings; (d) the risks of establishing liability; (e) the risks of establishing loss or damage; (f) the risks of maintaining a class action; (g) the ability of the respondent to withstand a greater judgment; (h) the range of reasonableness of the settlement in light of the best recovery; (i) the range of reasonableness of the settlement in light of all the attendant risks of litigation; and (j) the terms of any advice received from counsel and/or from any independent expert in relation to the issues which arise in the proceeding. The nature of the proceedings and the claims made 22 As noted above, the proceeding concerns three types of consumer credit insurance policies issued by Westpac to its customers between 1 January 2010 and 30 June 2019: the Credit Card Protection policy, the Flexi Loan Protection policy and the Personal Loan Protection policy. In broad terms, the policies insured against the risk of being unable to repay credit card and personal loans by reason of the borrower's death, being unable to work on account of sickness, injury or disease, or losing employment because of redundancy, shortage of work or unsatisfactory work performance. 23 The catalyst for the proceeding appears to have been the issue by the Australian Securities and Investments Commission (ASIC) in July 2019 of Report 622 titled "Consumer credit insurance: Poor value products and harmful sales practices". The Report concerned reviews that had been undertaken by lenders, including Westpac, at the requirement of ASIC, of the sale of consumer credit insurance in the period 2011 to 2018. The Report made adverse findings with respect to sales practices and product design of consumer credit insurance policies. ASIC had issued earlier adverse reports with respect to the sale of consumer credit insurance policies, being Report 256 titled "Consumer credit insurance: A review of sales practices by authorised deposit taking institutions" issued in October 2011, and Report 361 titled "Consumer credit insurance policies: Consumers' claims experiences" issued in July 2013. 24 The applicant alleged that in issuing the policies and/or charging the premiums under the policies, Westpac contravened a number of laws including: (a) the prohibition of unconscionable conduct in s 12CB of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act); (b) the prohibition of misleading and deceptive conduct in s 12DA(1) of the ASIC Act; (c) the prohibition against asserting a right to payment for unsolicited financial services in s 12DM of the ASIC Act; (d) the prohibition against representing that a debtor is required to pay the cost of insurance taken out or arranged by the credit provider in s 143(1)(b) of the National Credit Code; (e) the requirement that a provider of financial product advice must act in the best interests of the client in relation to the advice in s 961B of the Corporations Act 2001 (Cth); and (f) the requirement that a provider of financial product advice must only provide advice to the client if it would be reasonable to conclude that the advice is appropriate to the client in s 961G of the Corporations Act 2001 (Cth). 25 The unconscionable conduct claim was based on allegations that: (a) the policies were of no real value or benefit to the customer, and Westpac knew or should have known this; and (b) the policies were sold in ways that failed to ensure that the customer agreed to the policy or understood the terms, including applicable exclusions. 26 The misleading and deceptive conduct claim was based on allegations that, at the time of sale of the policies, the customer was told that they needed to take out the policy in order to obtain their credit card or personal loan, or the customer was not informed (sufficiently or at all) that they were acquiring the policy or that the policy was optional. 27 The applicant also alleged that the policies were liable to be set aside for unilateral mistake on the basis that: (a) the applicant and at least some of the group members acquired the policies and paid the premiums under them under one or more of the following causative mistaken beliefs: (i) that the policy was compulsory, or that they were required to take out the relevant policy in order to obtain the credit card, flexi loan or personal loan; (ii) that they were liable or required to pay for the policy; or (iii) that they would be eligible for the policy cover (in that they were not excluded from one or more of the benefits under the policy), or the relevant policy had material value to them; or (iv) that they had not acquired any policy; and (b) Westpac was aware that circumstances existed which indicated that the applicant and some group members were acquiring their respective policies under one or more of the mistaken beliefs. 28 The primary relief sought in the proceeding is repayment of premiums paid under the policies plus interest and orders setting aside the policies. 29 Westpac denies the allegations and its settlement of the proceeding is without admission of liability. 30 A significant issue in the proceeding is the application of statutory limitation periods. The proceeding was commenced on 28 February 2020, but seeks recovery in respect of premiums paid on policies in the period 1 January 2010 to 30 June 2019. The period 1 January 2010 to 28 February 2014 is more than 6 years prior to the commencement of the proceeding. In an interlocutory judgment in the related ANZ proceeding (referred to earlier), I ruled that, in respect of the misleading conduct claims and the unconscionable conduct claims, the applicants cannot at law recover loss or damage incurred earlier than 6 years prior to the commencement of the proceeding: Reilly v Australia and New Zealand Banking Group Limited (No 2) [2020] FCA 1502. The related claims for loss and damage in this proceeding were amended to conform with that ruling. However, the question of the application of limitation periods also hangs over the other claims for relief in the proceeding. The terms of the Settlement Deed and the Settlement Distribution Scheme Settlement Deed 31 The parties to the Settlement Deed are the applicant, each of the Westpac respondents and Slater and Gordon. The terms of settlement were summarised earlier and are in reasonably standard form. Their operation is subject to the Court's approval of the settlement. 32 By cl 3.1, Westpac agrees to pay an amount of $29 million in full and final settlement of the proceeding. 33 By cl 3.2, the parties agree that the payment of the settlement sum by Westpac is without admission of liability. 34 By cll 4 and 6, the settlement sum must be paid into a trust account held by Slater and Gordon (referred to as the settlement fund) and distributed in accordance with a Settlement Distribution Scheme (also subject to Court approval). The settlement fund must be administered by the Administrator, who is to be Slater and Gordon or such other entity as appointed by the Court. 35 By cl 9, the applicant and each group member will release Westpac and its related entities from all claims arising from or connected with or related to: (a) the sale or issue by Westpac of the consumer credit insurance policies to any group member; (b) any matter which is or ever has been the subject of the proceeding; (c) the circumstances or allegations giving rise to or referred to, or which have been referred to in the proceeding; (d) losses allegedly suffered by the applicant or any group member arising or resulting from or connected with the circumstances or allegations giving rise to, or referred to in, or which were at any time the subject of, the proceeding; (e) any other claim which is or could reasonably be known to a party which arises from or is connected with or related to the proceeding; and (f) the applicant's and/or any group member's costs of, or incidental to, the proceeding. 36 By cl 10.1, the applicant and each group member covenants not to bring or pursue or procure a claim against Westpac and its related entities in respect of any matter that is the subject of the releases in cl 9. 37 By cl 10.2, Slater and Gordon covenants not to bring or pursue or solicit any interest of any party to commence a claim against Westpac and its related entities in respect of any matter that is the subject of cl 9. Notification and registration 38 On 24 November 2022, I made orders by consent requiring Westpac to provide Slater and Gordon with the following information in respect of group members: (a) a unique customer number; and (b) for each policy taken out by a group member: the type of policy; the policy number; the sales channel; the amount of premiums, refunds, remediation and claims paid under that policy; the date on which a premium was first paid under the policy; and whether the policy is continuing and, if not, the date on which the policy terminated. 39 On 7 December 2022, I made orders providing for group members to be notified of the settlement and the requirement to register in order to be eligible to receive compensation through the settlement. More than 330,000 persons were sent those notifications. Some 62,000 people registered to receive compensation through the settlement. Of those, more than 57,000 people have been identified as being eligible to receive compensation. 40 The applicant filed comprehensive evidence concerning the work involved in the notification and registration processes, including responding to enquiries from large numbers of potential group members and verifying information. It is unnecessary to set out that evidence, but the work was extensive. Settlement Distribution Scheme 41 The Settlement Distribution Scheme is to be administered and applied by the Scheme Administrator with the assistance of the Administrator Staff and Deloitte Financial Advisory Pty Ltd (Deloitte). The Scheme Administrator will, subject to and in accordance with the Settlement Distribution Scheme, hold the settlement fund on trust for the applicant, registered group members and the parties to whom distribution is to be made under the Scheme. 42 The Scheme contains provisions with respect to the registration process for group members and the process for verifying information in relation to each group member. 43 The Scheme provides that, prior to distribution from the settlement fund to registered group members, the following payments are to made in the following order of priority: (a) an amount to Slater and Gordon for the applicant's legal costs and estimated administration costs, which includes costs payable by the Scheme Administrator to Deloitte for services to administer the Settlement Distribution Scheme; (b) an amount to Slater and Gordon for the premium charged by an insurer, Harbour Underwriting Limited, with respect to an adverse costs insurance policy; (c) an amount to the applicant for the applicant's reimbursement payment; and (d) an amount to each sample group member for the sample group member's reimbursement payment. 44 The balance of the settlement fund is to be distributed to the registered group members. Under the Scheme, the amount to be distributed to each registered group member is to be determined by the following steps. (a) First, the Scheme Administrator will calculate, for each registered group member, the total amount of premiums and interest paid in respect of policies held by them and deduct any amount refunded or paid for any claims on the policies (which amount is referred to as the registered group member's individual unweighted premium amount). If that amount is less than $10.00, the registered group member will not be entitled to compensation and the following steps will not apply. This is because the costs of administering and distributing such small amounts would exceed the compensation payable. (b) Second, the Scheme Administrator will then apply to each registered group member's individual unweighted premium amount the weightings set out in the "Loss Assessment Formula" (to arrive at an individual weighted premium amount). The weightings are as follows: (i) if the relevant policy was acquired prior to 28 February 2014 (that is, outside the usual statutory limitation period) (policies affected by limitation periods), a discount of 85% is to be applied to the unweighted premium amount; (ii) if the relevant policy was acquired within the statutory limitation period and through the online sales channel (policies sold online), a discount of 45% is to be applied to the unweighted premium amount; and (iii) if the relevant policy was acquired within the statutory limitation period and through any sales channel other than the online sales channel (policies not sold online), no discount is to be applied to the unweighted premium amount. (c) Third, the balance of the settlement fund will be distributed rateably between registered group members calculated by reference to each registered group member's weighted premium amount as a proportion of the sum of all registered group member's weighted premium amount. 45 The Scheme provides that the Scheme Administrator may refer any issues relating to this Settlement Distribution Scheme to the Court for direction or determination. 46 The Scheme proposed by the applicant also contained provision for a "hold back sum" of $50,000. That sum was to be deducted from the settlement fund and retained by the Scheme Administrator for a period of one year for the purpose of making distributions to approved late registrants. The Scheme made provision for potential group members to apply to register to participate in the settlement during the period of one year after settlement approval, and for the Scheme Administrator to make a distribution from the hold back sum if satisfied on the basis of a statutory declaration that the person is a potential group member and that they did not register their claim during the registration period due to no fault of their own. At the hearing, the Court invited submissions with respect to the appropriateness of the proposed hold back arrangements as part of the Scheme. Ultimately, the orders that have been made exclude the hold back arrangements. The reasons for not approving the hold back arrangements are set out below. 47 The Scheme contemplates that there will likely be an initial distribution from the settlement fund followed by a residual distribution. This is because an amount will be retained from the initial distribution to cover administration costs (as referred to above), but those costs can only be estimated at this time. If the administration costs are lower than estimated, the residual of the settlement fund will be distributed in the same manner as the initial distribution. Estimated distributions from the settlement fund 48 At the hearing, the Court was provided with estimates of the amounts that would be distributed to group members pursuant to the Settlement Distribution Scheme, after payment of the costs of the litigation and the administration of the settlement fund and its distribution. 49 Mr Hardwick deposed (in his affidavit dated 20 June 2023) that, if the settlement is approved (in the revised form without a hold back sum), the distribution of the settlement sum of $29 million is expected to be as follows: (a) at least $20.3 million (being approximately 70%) of the total settlement sum will be transferred to registered group members; (b) approximately $6.7 million (being approximately 23.3%) of the total settlement sum will be applied to meet the legal costs and disbursements of the applicant to date; (c) approximately $1.6 million (being approximately 5.5%) of the total settlement sum will be withheld to meet the potential future costs of the administration of the settlement; (d) $275,000 (being approximately 0.9%) of the total settlement sum will be paid in reimbursement of the costs of holding adverse costs insurance in the proceeding; (e) $20,000 (being approximately 0.06%) of the total settlement sum will be paid as the applicant's reimbursement payment; and (f) $30,000 (being approximately 0.1%) of the total settlement sum will be paid as the sample group members' reimbursement payment. 50 As at the date of the hearing, the key financial metrics with respect to the compensation expected to be payable to registered group members was as follows: (a) the total number of potential group members who have registered to participate in the settlement is 62,066; (b) the total number of polices held by registered group members is 88,699; (c) the total net premiums paid in respect of those policies (less refunds, remediation or claims paid) was approximately $130.6 million; (d) as noted above, at least $20.3 million in compensation is expected to be paid to registered group members; (e) in respect of policies affected by limitation periods, the total number of such policies held by registered group members is 54,589 and the compensation expected to be paid to those registered group members is approximately $4.46 million which represents about 5% of the net premiums paid by them; (f) in respect of policies sold online, the total number of such policies held by registered group members is 8,659 and the compensation expected to be paid to those registered group members is approximately $2.3 million which represents about 20% of the net premiums paid by them; and (g) in respect of policies not sold online, the total number of such policies held by registered group members was 25,451 and the compensation expected to be paid to those registered group members is approximately $12.87 million which represents about 36% of the net premiums paid by them. Is the settlement fair and reasonable? 51 The first question that arises is whether the proposed settlement between the applicant and Westpac is fair and reasonable. I am satisfied that it is. In reaching that view, I have taken account of the following matters. 52 First and foremost, I have had regard to the confidential opinion of counsel for the applicant. The opinion was detailed, comprehensive and, in my view, balanced in its assessment of the prospects of success of each of the causes of action. The opinion addressed the nature of the claims and defences, the risks of establishing liability, the risks of establishing loss and damage, the reasonableness of the settlement in light of the best recovery and the risks of the litigation. As the settlement was reached shortly before the commencement of trial, counsel were able to make an informed assessment of the prospects of the proceeding. 53 Second, I have had regard to the key financial metrics relating to the compensation likely to be paid to group members set out above. In my view, the amounts payable are fair and reasonable having regard to the matters discussed in the confidential opinion of counsel for the applicant. 54 Third, I take account of the fact that, despite the very large number of potential group members and the large number of registered group members, there were very few objections to the settlement. In that regard, I note the following objections that were made: (a) On 7 March 2023, Ms Moirod filed a notice of objection to the settlement. The basis of the objection was that the proposed settlement does not compensate Ms Moirod for the total amount of insurance premiums paid by her to Westpac. Ms Moirod did not appear at the hearing. (b) On 21 April 2023, Ms Sultana filed a notice of objection to the settlement. The basis of the objection was that the proposed settlement did not compensate Ms Sultana in circumstances where she was unaware of the insurance policy and therefore did not make a claim under the policy in a period in which a claim may have been available to her. Ms Sultana did not appear at the hearing (although Mr Hardwick gave evidence of a conversation which had occurred between Ms Sultana and a solicitor from Slater and Gordon on 19 June 2023, two days before the hearing). (c) On 9 June 2023, Ms Ricardo filed a notice of objection to the settlement. The basis of the objection was that the proposed settlement was unsatisfactory and failed to take account of adverse personal consequences she suffered when a claim she made on the policy was refused by Westpac. Ms Ricardo did not appear at the hearing. (d) On 14 June 2023, Mr Hossam filed a notice of objection. In the notice, Mr Hossam indicated that a problem had arisen with respect to the registration of his claim in this proceeding with Slater and Gordon. Mr Hossam appeared at the hearing. The Court was subsequently informed by Slater and Gordon that the difficulty being experienced by Mr Hossam had been resolved. 55 I have taken the above objections into account. Ms Moirod's objection relates to the quantum of the settlement. I am satisfied, on the basis of the confidential opinion of counsel for the applicant, that the quantum represents a fair and reasonable compromise of the claims. The objections of Ms Sultana and Ms Ricardo raise different issues that are not within the ambit of this proceeding (concerning Ms Sultana's failure to make a claim under a policy held by her in circumstances where she was unaware of the policy and concerning the denial of a claim made by Ms Ricardo under a policy held by her). Mr Hossam's objection was subsequently addressed by Slater and Gordon. Is the proposed Settlement Distribution Scheme just? 56 The second question that arises is whether the proposed Settlement Distribution Scheme, and particularly the differential distribution of the settlement fund in accordance with the "Loss Assessment Formula" in the Settlement Distribution Scheme, is just within the meaning of s 33V(2). I am satisfied that it is just for the following reasons. 57 The proceeding encompassed a wide range of claims involving diverse legal and factual elements and issues including that: (a) claims were brought in respect of three types of consumer credit insurance policies issued by Westpac (the Credit Card Protection policy, the Flexi Loan Protection policy and the Personal Loan Protection policy); (b) the claims covered policies issued between 1 January 2010 and 30 June 2019 and in circumstances where claims in respect of policies issued prior to 28 February 2014 were potentially subject to limitation periods; (c) the claims covered policies issued online as well as policies issued through other channels (such as in branch or by telephone) where the circumstances of the sales process differed according to sales channel; and (d) the claims involved different causes of action each of which raised discrete factual and legal issues. 58 The statutory requirement that orders for the distribution of settlement monies be just dictates that, in determining the amounts to be paid out of the settlement funds to registered group members who have claims falling within different combinations of the categories summarised above, consideration must be given to the different prospects of success of the claims in those different combinations. Equally, the statutory requirement allows recognition of the fact that any assessment of the prospects of different combinations of claim types may become increasingly speculative. Further, in cases which involve a very large number of claims and claimants and where each individual claim is for a relatively modest sum of money, differences in the assessment of prospects across different combinations of claim types may become relatively minor and counterbalanced by the margin for error in the assessment. 59 As outlined above, the Settlement Distribution Scheme requires the differential distribution of the settlement fund to registered group members in accordance with the "Loss Assessment Formula". The "Loss Assessment Formula" divides the claims of registered group members into three broad categories, and applies a discount (of different amounts) to the claims in two of the categories. The confidential opinion of counsel addresses the reasons for determining the "Loss Assessment Formula" based on an assessment of the differing prospects of success of claims falling within those categories. Overall, I am satisfied that the categories selected for differentiating between group member claims, and the discounts applied, represent a just approach to the distribution of the settlement fund as between registered group members. 60 Two other matter require mention. 61 First, the Settlement Distribution Scheme contemplates that Slater and Gordon, with the assistance of Deloitte, be appointed to administer the Scheme. The applicant submitted, and I accept, that it is appropriate for Slater and Gordon to be the Scheme Administrator given that the proposed role of the administrator in this case involves a degree of complexity in carrying out individual assessments of group member claims: see Dillon v RBS Group (Australia) Pty Limited (No 2) [2018] FCA 395 at [20] per Lee J. 62 Second, and as noted above, the Scheme proposed by the applicant also contained provision for a "hold back sum" of $50,000. This was to make provision for potential group members to apply to register to participate in the settlement during the period of one year after settlement approval, and for the Scheme Administrator to make a distribution from the hold back sum if satisfied that the person did not register their claim during the registration period due to no fault of their own. 63 Mr Hardwick deposed that Slater and Gordon had proposed the hold back sum as a result of its experience in the equivalent proceeding against NAB. In that proceeding, Slater and Gordon received enquiries from potential group members in relation to participation in the settlement after the expiry of the registration date and after settlement approval. Some of those persons had received notices inviting them to register their claims but had been unable to do so within the required timeframe for legitimate reasons such as serious illness or being in prison. Slater and Gordon had received feedback from a consumer advocacy body that the body had received a number of complaints from purported group members in the NAB proceeding that the timeframe for registration was too short and did not take into account the diverse circumstances in which consumers found themselves, which meant that they did not receive notification of the settlement. 64 The proposed hold back sum was opposed by Westpac for two principal reasons. First, Westpac submitted that the proposed hold back arrangement is contrary to the Court's previous orders. The date by which group members were required to register to participate in the settlement was fixed by order 6 of the Orders dated 7 December 2022, as varied by orders made on 8 February 2023. Further, the notices given to group members pursuant to those orders informed group members that the only claims that would be permitted to participate in the settlement were those registered by the specified date. It follows that approving the hold back arrangements involves a variation to the orders previously made, and would be inconsistent with the information given to group members with respect to the settlement. Second, Westpac submitted that the proposed hold back arrangements are contrary to the key purposes of the settlement approval regime in Pt IVA of the Act, referring to the observations of Lee J in Asirifi-Otchere v Swann Insurance (Aust) Pty Ltd (No 4) [2021] FCA 459 at [16] that: The class action system works because finality can be provided and because it has an unstated premise that notification by the Court of the right to opt out and the notice provisions generally are regarded as being adequate in bringing matters to the attention of group members before their rights are affected. The class action regime must work not only for the benefit of the applicant and group members, but also for the respondent. It is necessary through the settlement process that respondents obtain certainty. Such certainty also promotes the resolution of these often unwieldy and large matters with a considerable saving of court time and private and public cost. 65 Westpac submitted that the hold back arrangements are contrary to the interests of registered group members because the hold back sum would otherwise form part of the distribution sum to be divided between them and because the amount available for distribution to registered group members will be reduced by the incremental costs of administering the hold back arrangements. Westpac further submitted that the hold back arrangements are also contrary to the interests of the respondents because those arrangements will delay the ultimate dismissal of the proceeding. 66 After Westpac filed its submissions opposing the hold back sum, Mr Hardwick undertook an investigation of the costs of administering the hold back sum. In his affidavit dated 20 June 2023, Mr Hardwick deposed that the future legal costs and disbursements allowed by Ms Dealehr in her report included an amount of $90,000 for the cost and maintenance of the hold-back sum. Mr Hardwick expressed the opinion that it was difficult to estimate the likely cost (because it depended upon the number of applications received), but he considered that the administrative cost was likely to exceed the hold back sum. As counsel for the applicant submitted, the costs of administering the hold back sum are relatively high because each application would involve a subjective assessment by the Scheme Administrator. 67 I concluded that the Settlement Distribution Scheme should exclude the hold back arrangements. I have little doubt that the Court has the power to authorise a hold back sum, and if necessary to vary earlier orders with respect to the registration of claims, in an appropriate case. However, a significant discretionary factor weighing against hold back arrangements is the effect of delay on the finalisation of the proceeding (which necessarily includes the distribution of agreed compensation). Another significant discretionary factor, which looms large in this case, is whether the benefits of the arrangements outweigh the likely costs. In the present case, the proposed hold back arrangements are uneconomic. While the Court is sympathetic to the position of group members who have been unable to register for the settlement for reasons beyond their control, the benefit of making provision for that category of group members is outweighed by the costs of doing so. For every dollar returned to that category of group member, it is estimated that more than one dollar will be expended in costs. Further, both the hold back sum, and an allowance in respect of the costs of administering the hold back sum, would be deducted from the settlement amount otherwise available for distribution to those group members who registered in accordance with the Court's orders. In those circumstances, I concluded that the hold back arrangements should not be approved by the Court. Is the allowance for litigation and administration costs appropriate? 68 The third question that arises, also under s 33V(2), is whether the allowance proposed to be made out of the settlement fund for litigation and administration costs is appropriate. 69 As set out earlier, there are four categories of litigation and administrative costs that are proposed to be paid out of the settlement sum comprising: (a) approximately $6.7 million to meet the legal costs (including the success fee) and disbursements of the applicant to date; (b) approximately $1.6 million to meet the potential future costs of the administration of the settlement; (c) $275,000 in reimbursement of the costs of holding adverse costs insurance in the proceeding; and (d) $20,000 as the applicant's reimbursement payment and $30,000 as the sample group members' reimbursement payment. 70 Each of those categories of costs is considered in turn. Legal costs and disbursements of the applicant to date and in respect of future administration of the settlement 71 The Court will approve the payment of the applicant's legal costs and disbursements out of the settlement sum in so far as the costs and disbursements are: (a) in accordance with the terms of the relevant costs agreements: Courtney v Medtel Pty Ltd (No 5) [2004] FCA 1406; 212 ALR 311 at [61] per Sackville J; (b) fair and reasonable having regard to the work undertaken: Williams No 4 at [47] per Goldberg J; and (c) proportionate in the sense that, at the time the work was to be performed and the costs expended, the costs were proportionate to the value of the benefit expected to be gained from the work: Prygodicz v Commonwealth of Australia (No 2) [2021] FCA 634; 173 ALD 277 at [330] per Murphy J. 72 In order to obtain an independent assessment of legal costs and disbursements incurred, it is now commonplace for the Court to appoint a referee to review the costs and disbursements (following decisions such as Caason Investments Pty Limited v Cao (No 2) [2018] FCA 527 (Caason No 2) at [111]-[124] per Murphy J and Lifeplan Australia Friendly Society Limited v S&P Global Inc (Formerly McGraw-Hill Financial, Inc) (A Company Incorporated in New York) [2018] FCA 379 at [41] per Lee J). That practice is also now reflected in the Court's Class Action Practice Note which states, at [16.3]: Although individual judges may approach the question of considering the reasonableness of legal costs differently depending upon the circumstances of the case, in class action settlements of significant size, the legal representatives of the applicant should be aware that that a referee may be appointed to inquire into and report upon the reasonableness of the legal costs proposed to be deducted. If such a referee is appointed, it is necessary for the lawyers for the applicant to assist the referee in the performance of the referee's task of inquiry and report. 73 By orders made on 7 December 2022, I appointed Ms Cate Dealehr as a referee for the purpose of conducting an inquiry and making a report in writing to the Court stating, with reasons, the her opinion on: (a) the reasonableness of the applicant's legal costs incurred in relation to the proceeding, up to and including the date of the hearing of the settlement approval application (including costs anticipated and yet to be incurred as at the date of the report) on a solicitor and own client basis; and (b) the reasonableness of the costs proposed to be incurred in connection with settlement administration, in the event the proposed settlement is approved. 74 In accordance with that appointment, Ms Dealehr provided a report to the Court dated 2 June 2023. 75 Ms Dealehr's report disclosed her substantial expertise and experience as an Australian costs lawyer developed over 35 years. 76 As to methodology, Ms Dealehr relied on the gross sum costs method of calculating and assessing the reasonable legal fees. In applying that method, Ms Dealehr explained that: It is my experience that the Courts will accept a methodology that estimates costs on a lump sum by relying on legal practice's management software to prove their legal fees, provided such information was sufficient to explain the time and task undertaken, by whom and for what purpose. Therefore, I see my role includes determining whether the records relied on are sufficient and also whether they are derived from probative source records of the law practice. 77 Ms Dealehr further explained that, in undertaken the inquiry, she had had regard to the following questions formulated by Gordon J in Modtech Engineering Pty Ltd v GPT Management Holdings Limited [2013] FCA 626 at [37]: (a) whether the work in a particular area, or in relation to a particular issue, was undertaken efficiently and appropriately; (b) whether the work was undertaken by a person of appropriate level of seniority; (c) whether the charge out rate was appropriate having regard to the level of seniority of that practitioner and the nature of the work undertaken; (d) whether the task (and associated charge) was appropriate, having regard to the nature of the work and the time taken to complete the task; and (e) whether the ratio of work and interrelation of work undertaken by the solicitors and the counsel retained was reasonable. 78 Ms Dealehr's report set out the terms of the legal costs agreement entered into between the applicant and Slater and Gordon on 23 February 2020. The agreement provided that the solicitors' fees would be based on specified hourly rates for different categories of legal practitioners and paralegal staff. The agreed rates were not increased during the course of the proceeding. Ms Dealehr concluded that the rates were reasonable save in respect of the most junior category of legal practitioner, and Ms Dealehr made a downward adjustment in the agreed rate. 79 Ms Dealehr's report contained a detailed examination of the applicant's legal costs incurred in relation to the proceeding up to and including the date of the hearing, and of the costs proposed to be incurred in connection with settlement administration. After conducting the examination and making a number of adjustments to the legal costs and disbursements charged by Slater and Gordon, Ms Dealehr expressed the opinion that: (a) the applicant's reasonable legal costs (professional costs and disbursements) calculated on a solicitor and own client basis up to settlement approval were a total amount of $6,735,564.68 comprising: (i) solicitors fees (excluding the 25% success fee) of $4,106,302.28; (ii) 25% success fee of $1,026,575.57; and (iii) disbursements of $1,602,686.83 (of which counsel fees were $759,013.75 and expert's fees were $586,592.74); (b) the estimated reasonable legal costs of Slater and Gordon (professional costs and disbursements) calculated on a solicitor and own client basis in relation to the future settlement administration totalled $1,597,348.63 comprising: (i) solicitors fees of $574,580.63; and (ii) disbursements of $1,022,768 (being the estimated costs of Deloitte). 80 In relation to the issue of proportionality, Ms Dealehr expressed the following opinions (footnotes omitted): S+G's Costs Agreement is subject to the provisions of the Uniform Law. The Uniform Law requires legal costs to be proportionally incurred and proportionate in amount as well as reasonably incurred and reasonable in amount. Factors including level of skill, specialisation, complexity, novelty, difficulty, labour, urgency, commercial sensitivity, and responsibility are relevant to the question of proportionality as well as the question of whether the fees are fair and reasonable. The question arises whether S+G's costs are proportional is properly a question to be considered at the time the work is being performed and not left to the conclusion of the matter with the benefit of hindsight. I do not consider that the fees as allowed to be disproportionate for the work done taking into account the complexity and importance of the dispute, as well as the amount in dispute. In coming to the above opinion, I draw on my experience in what legal costs have been allowed in class actions in which I have been directly involved and which have been approved by the Courts. 81 The applicant sought an order pursuant to s 54A of the FCA Act and r 28.67 of the Federal Court Rules 2011 (Cth) that the report of Ms Dealehr be adopted save in one respect referred to below. The applicant submitted that the legal costs and disbursements endorsed in Ms Dealehr's report are proportionate to the nature of the proceeding, the litigation involved and the benefit of it. The applicant submitted that: the proceedings were complex and hard-fought; the value of group members' claims was potentially very substantial; and the fact that significant legal fees were incurred is unsurprising. The applicant further submitted that the settlement administration costs are reasonable and proportionate given: (a) the complexities involved with the number of different categories of group members; (b) the number of persons who received the first settlement notice (over 423,000 persons) and the number of persons who registered to participate in settlement (over 62,000); (c) the disbursements associated with the work of Deloitte, including development of a secure registration portal and assessment of the data provided through that portal; and (d) Slater and Gordon's experience in acting in the role. 82 I accept those submissions. 83 The applicant sought a variation to Ms Dealehr's report in one respect. In conducting her examination of solicitors' and counsel's charges, Ms Dealehr coded the lawyers' time recording system into different categories of work. This was to enable the legal fees to be presented to the Court in a manner that provided a better understanding of the nature of the work undertaken by the lawyers, and to provide the necessary information to explain the time and task undertaken, by whom and for what purpose. Ms Dealehr's report summarised the value of the legal work by coding each time recording entry by reference to categories which are later grouped together into various phases of the litigation. Each time recording was also coded to identify the form of the work done, which Ms Dealehr labelled as activities. Where a lawyers' time entry recorded multiple activities in a single entry, Ms Dealehr coded that time as "multiple activities". Ms Dealehr then applied a discount (of 25%) in respect of time that was coded as "multiple activities". In respect of solicitors' time that was coded as "multiple activies", Ms Dealehr explained that: I have concluded that a reduction should occur relying on the Seven Network Case [Seven Network Ltd v News Limited [2007] FCA 2059] in which Justice Sackville identified the difficulties experienced in translating the lawyer's time recording into a form acceptable for taxation purposes. This also accords with my experience at taxations where the Costs Court or Taxing Officer typically would reduce the claims where there are multiple activities. S+G have detailed written protocols provided to operators regarding the recording of time entries, including instructions not to record multiple activities where possible in a single entry. The quantum of this claim is very small compared to other class actions where I have been involved. I have applied a 25% discount however to these entries which I believe reflects the likely reduction on a solicitor-client taxation. 84 The applicant did not seek any variation to the "multiple activities" discount applied by Ms Dealehr in respect of solicitors' charges. However, Ms Dealehr applied the same discount in respect of counsel charges and the applicant seeks a variation to erase that discount. The discount totalled a little less than $15,000. 85 In support of the variation, Mr Hardwick deposed that, in his professional experience, it is common practice for many counsel to "bundle up" entries as a single narration in their fee slips and that, particularly in large, complex group proceedings such as the present proceeding, that form of narration is often an accurate reflection of the fact counsel's work requires undertaking several tasks simultaneously. The applicant also submitted that the reasoning in Seven Network Ltd v News Limited [2007] FCA 2059 does not support this form of discount being applied to counsel's fees. 86 I accept the submissions advanced by the applicant in support of the variation. On that basis, I made an order that the report of Ms Dealehr be adopted except to the extent that it disallows disbursements for counsel fees on the basis of a 25% discount for multiple activities in a single entry. The costs of holding adverse costs insurance 87 The applicant sought reimbursement out of the settlement sum for the costs of holding insurance against the risk of an adverse costs order in the proceeding (often referred to as "after the event" or "ATE" insurance). 88 The legal costs agreement entered into between Slater and Gordon and the applicant stated that Slater and Gordon had, by letter dated 19 February 2020, provided the applicant with an indemnity against an adverse costs order in the proceeding. The legal costs agreement also made provision for Slater and Gordon to acquire insurance against the risk of an adverse costs order in the proceeding. Clauses 8.4 and 8.5 of the legal costs agreement stated as follows: 8.4 In pursuing this class action it may be necessary to take out an insurance policy to provide protection for the lead plaintiff and/or any other claimants with specific roles in the litigation, in respect of any costs orders that they might be required to pay if the class action is unsuccessful (since the lead plaintiff does face a costs risk if the claim is unsuccessful). Such a policy will involve the payment of a premium to the insurer at the conclusion of the litigation, if the claim is successful, as well as potentially involving other expenses beforehand. Depending on the duration of the litigation and the legal costs involved, this premium could be substantial – in some cases, potentially above $1million. 8.5 We will arrange for such an insurance policy to be in place on the best terms we can obtain, if we determine that it is necessary in order to pursue the litigation. You agree that the expenses involved in this process, and in particular the premium to be paid to the insurer, will form part of the group costs in the litigation. 89 Mr Hardwick deposed that, in December 2021, Slater and Gordon procured an ATE insurance policy on behalf of the applicants, insured by Harbour Underwriting Limited. The premium payable under the policy is $275,000 including stamp duty. Mr Hardwick gave evidence to the effect that acquiring the insurance was necessary and appropriate in circumstances where Slater and Gordon conducted the proceeding on a "no win no fee" basis and the adverse costs risk was born by the applicant and Slater and Gordon. 90 The question whether it is reasonable to reimburse the costs of ATE insurance out of settlement proceeds has been considered in a number of cases. In some cases that involved litigation funding, the Court has refused to allow a separate reimbursement to the funder of the costs of ATE insurance acquired by the funder on the basis that the funding fees claimed were in an amount that would be expected to cover all of the funder's costs incurred in respect of the risks of an adverse costs order: see for example Court v Spotless Group Holdings Limited [2020] FCA 1730 at [96] per Murphy J; Asirifi-Otchere v Swann Insurance (Aust) Pty Ltd (No 3) [2020] FCA 1885; 385 ALR 625 at [32] per Lee J; Evans v Davantage Group Pty Ltd (No 3) [2021] FCA 70 at [84] per Beach J; Bradshaw v BSA Limited (No 2) [2022] FCA 1440 (Bradshaw) at [161] per Bromberg J. In Williamson v Sydney Olympic Park Authority [2022] NSWSC 1618, Black J expressed the view (at [83]) that the appropriate question to be asked is whether the combined sum of the funder's fees and the ATE insurance premiums are unreasonably high. In Eckardt v Sims Ltd [2022] FCA 1609, Wigney J approved the reimbursement out of the settlement fund of both the funder's fee and the cost of ATE insurance premiums that had been paid (at [43]). 91 In my view, analogous considerations arise in the context of a class action that is conducted by solicitors on a "no win no fee" basis, but where the solicitors are entitled to a "success fee". An adverse costs order is a material risk faced by the representative applicant and the applicant's solicitors. The acquisition of ATE insurance to mitigate that risk is a reasonable step to be taken by the applicant and the applicant's solicitors. The solicitors ought to be permitted to recover the costs of an ATE insurance policy if the Court is satisfied that the costs are reasonable and that the costs are not otherwise being recovered through the solicitors' success fee. The costs would be assessed as reasonable if the terms of the policy are appropriate in the context of the proceeding and the premium charged for the policy has been determined in a competitive market setting. The costs of ATE insurance may not be reasonable if a proceeding is brought in a "no costs" jurisdiction: see for example Bradshaw at [148] per Bromberg J. 92 In the circumstances of the present case, I am satisfied that it is just for the costs of the ATE insurance (premiums and applicable stamp duty) to be reimbursed out of the settlement fund. I consider it reasonable that Slater and Gordon acquired such insurance having regard to the nature of the proceeding and the risks faced. There was a real prospect that all of the claims made might fail. The amount insured under the ATE policy was reasonable in the circumstances, and the evidence showed that the policy had been acquired through the insurance brokers Marsh Pty Ltd in the United Kingdom market for insurance of this kind. Having regard to the terms of the legal costs agreement, I am satisfied that there could be no expectation that the risks of an adverse cost order had been factored into, and were effectively absorbed by, Slater and Gordon's success fee. The potential need for insurance against an adverse costs order, and the additional costs involved in taking out such insurance, were disclosed in the legal costs agreement. Reimbursement payments 93 The applicant sought reimbursement out of the settlement sum for: (a) an amount of $20,000 to be paid to the applicant for his work in prosecuting the proceeding as the representative applicant; and (b) an amount of $3,000 to be paid to each of the ten sample group members for their work in prosecuting the proceedings on behalf of group members. 94 I accept the submission of the applicant that payments of these kinds and in similar amounts has been recognised as appropriate in class actions "given the time, stress, burden, and personal inconvenience likely to arise as a result of a representative plaintiff's involvement in the proceedings": see for example Darwalla [74]-[93]; Matthews v Ausnet Electricity Services Pty Ltd [2014] VSC 663 at [423]-[424]; Caason No 2 at [176]-[177] per Murphy J; National Australia Bank Ltd (No 2) at [20] per Lee J. 95 Mr Hardwick deposed to the work undertaken by the applicant and each of the sample group members in respect of the proceeding. On the basis of that evidence, I am satisfied that the amounts of the proposed reimbursements are reasonable and should be paid out of the settlement fund. Late registrations 96 In his affidavit dated 14 June 2023, Mr Hardwick deposed that two potential group members had contacted Deloitte or Slater and Gordon on the last day for registration (21 April 2023) for assistance to participate in the settlement but were unable to reach an operator due to the close of call centres at 5:00 pm on that day. 97 The applicant sought an order to extend the registration deadline for the two potential group members. Mr Hardwick deposed that he considered that it was appropriate for the registration deadline to be extended in circumstances where the individuals concerned had made attempts to register prior to the registration deadline but had encountered difficulties. 98 In the circumstances, I considered it appropriate to make the order sought by the applicant. Confidentiality 99 The applicant sought confidentiality orders under ss 37AF and 37AG(1)(a) of the FCA Act in respect of certain of the confidential material filed in connection with the settlement approval, on the basis that the orders were necessary to prevent prejudice to the proper administration of justice. 100 In the course of hearing the application, the scope and duration of the proposed orders was narrowed. I made two categories of orders. 101 The first is unlimited as to time and applies to: (a) confidential data belonging to Westpac which was disclosed during the mediation and which is not material to the Court's assessment of the settlement; (b) Slater and Gordon's confidential comparative assessment of the prospects of the claims in each of the three proceedings against Westpac, ANZ and CBA in the course of mediation; and (c) the confidential opinion of counsel as to the applicant's prospects in this proceeding. 102 The first category concerns confidential information taken into account during mediation, and the second and third categories both relate to the applicant's confidential assessment of prospects. I was satisfied that a confidentiality order in respect of those limited categories of information was necessary to prevent prejudice to the proper administration of justice. 103 The second order only continues until the end of the appeal period for the CBA proceeding and applies to: (a) the "Loss Assessment Formula" (which affects the relative distribution of the settlement fund between three categories of group members) and other data that is based on the application of the "Loss Assessment Formula"; and (b) the ATE insurance policy issued by Harbour Underwriting Limited. 104 I was satisfied that the above categories of information may provide CBA with an unfair forensic advantage if the CBA proceeding did not settle and continued until trial. The information concerning the "Loss Assessment Formula" reveals, to some extent, Slater and Gordon's assessment of the prospects of different categories of claims. The ATE insurance policy reveals information concerning the insurance acquired by Slater and Gordon in respect of the proceeding, including the costs incurred, which again may provide CBA with an unfair forensic advantage. While a settlement agreement has been entered into in that proceeding, the settlement is yet to be approved by the Court. Accordingly, I was satisfied that a confidentiality order in respect of those limited categories of information until the end of the appeal period for the CBA proceeding was necessary to prevent prejudice to the proper administration of justice. 105 The effect of the second confidentiality order is that certain paragraphs of these reasons will be redacted and not published until the end of the appeal period for the CBA proceeding. At that time, an unredacted version of these reasons will be published by the Court in the usual way. Conclusion 106 For the reasons set out above, I consider that the settlement is fair and reasonable in the interests of group members, the distribution of the settlement fund as between group members is just, and the allowance proposed to be made out of the settlement fund for litigation and administration costs is appropriate. I commend the parties on resolving this proceeding by agreement. I certify that the preceding one hundred and six (106) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice O'Bryan. Associate: Dated: 21 July 2023