FEDERAL COURT OF AUSTRALIA Reilly v Australia and New Zealand Banking Group Limited (No 5) [2023] FCA 896 File number(s): VID 133 of 2020 Judgment of: O'BRYAN J Date of judgment: 23 June 2023 Date of publication of reasons: 2 August 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 distributions 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 applicants' solicitors, should be allowed – whether actual and proposed costs of administration of settlement distributions 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 applicants' solicitors for adverse costs insurance should be allowed – whether reimbursement payment to applicants 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, 961J Federal Court of Australia Act 1976 (Cth), Pt IVA, ss 33V, 37AF, 54A National Credit Code, s 143(1) Federal Court Rules 2011 (Cth), r 28.67 Cases cited: Caason Investments Pty Limited v Cao (No 2) [2018] FCA 527 Clark v National Australia Bank Limited (No 2) [2020] FCA 652 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 Haselhurst v Toyota Motor Corporation Australia Ltd t/as Toyota Australia; Whisson v Subaru (Aust) Pty Ltd; Kularathne v Honda Australia Pty Ltd; Brewster v BMW Australia Ltd; Bond v Nissan Motor Co (Australia) Pty Ltd; Coates v Mazda Australia Pty Ltd [2022] NSWSC 1076 Kemp v Westpac Banking Corporation (No 4) [2023] FCA 830 Matthews v Ausnet Electricity Services Pty Ltd [2014] VSC 663 Modtech Engineering Pty Ltd v GPT Management Holdings Limited [2013] FCA 626 Reilly v Australia and New Zealand Banking Group Limited (No 2) [2020] FCA 1502 Seven Network Ltd v News Limited [2007] FCA 2059 Williamson v Sydney Olympic Park Authority [2022] NSWSC 1618 Division: General Division Registry: Victoria National Practice Area: Commercial and Corporations Sub-area: Regulator and Consumer Protection Number of paragraphs: 104 Date of hearing: 16 June 2023 Counsel for the Applicants: Dr O Bigos KC with Ms G Coleman Solicitor for the Applicants: Slater and Gordon Counsel for the First to Third Respondents: Ms J D Williams Solicitor for the First to Third Respondents: Herbert Smith Freehills Counsel for the Fourth Respondent: Mr J R Williams SC Solicitor for the Fourth Respondent: Gilbert + Tobin ORDERS VID 133 of 2020 BETWEEN: TRACEY REILLY First Applicant CATHERINE GALLI Second Applicant AND: AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED (ACN 005 357 522) First Respondent ZURICH AUSTRALIA LIMITED (ABN 92 000 010 195) Second Respondent ONEPATH GENERAL INSURANCE PTY LIMITED (ACN 072 892 365) Third Respondent QBE INSURANCE (AUSTRALIA) LIMITED (ACN 003 191 035) Fourth Respondent order made by: O'BRYAN J DATE OF ORDER: 23 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 Applicants, the Respondents and Slater and Gordon dated 14 November 2022, a copy of which is exhibited as "BH-3" to the affidavit of Benedict Tobin Hardwick affirmed 16 November 2022, as amended by letter dated 15 June 2023, a copy of which is exhibited as "BH-22" to the open affidavit of Benedict Tobin Hardwick affirmed 15 June 2023; (b) the Settlement Deed executed by the Applicants, the Fourth Respondent and Slater and Gordon dated 8 September 2022, a copy of which is exhibited as "BH-2" to the affidavit of Benedict Tobin Hardwick affirmed 16 November 2022, (collectively, the Settlement Deeds); and (c) the Settlement Distribution Scheme (and the annexures thereto), exhibited as "BH-29" to the affidavit of Benedict Tobin Hardwick affirmed 22 June 2023. 2. Pursuant to s 33ZF of the Act, the Court authorises the Applicants, nunc pro tunc for and on behalf of Bound Group Members (being those persons who meet the definition of "Group Member" in the Further Amended Statement of Claim and who did not file an opt out notice in accordance with the orders made on 5 November 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 paragraphs 12 and 13 are the Applicants, 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 5 of the orders made on 6 December 2022 (as varied by paragraph 4 of orders made on 10 March 2023 and paragraph 1 of orders made on 20 April 2023) and clause 5.1 of the Settlement Distribution Scheme, the Group Members identified by the unique IDs AP330888C, AP271103C, AP703806C and AP789750C be registered by the Scheme Administrator and be treated as Registered Group Members for the purposes of the Settlement Distribution Scheme. Applicants' 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 11 of the orders of 6 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 $7,886,441.64 for the Applicants' legal costs and disbursements to 16 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 $2,055,060.33, for the Applicants' estimated legal costs and disbursements from 17 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 by Harbour Underwriting Limited with respect to an adverse costs insurance policy dated 22 December 2021; (d) the amount of $20,000 for each Applicants' 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 Alina Cruz, Kelly Colling, Lindsay Dix, Isabella Fraser, Riccardo Gibilisco, Christy Hochegger, Kylie Hansen, Brenton Sadlier and Andrew Smith, 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 Applicants and/or the Scheme Administrator since 13 June 2023, so that the Court may make a further order as to the amount of any approved Administration Costs and Applicants' 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 are confidential and are not to be published until further order: (a) section A and paragraphs 35 to 36 of the confidential affidavit of Benedict Tobin Hardwick affirmed on 9 June 2023; (b) annexure BH-19 to the confidential affidavit of Benedict Tobin Hardwick affirmed on 9 June 2023, being the confidential opinion of counsel dated 9 June 2023; (c) annexure BH-23 to the confidential Affidavit of Benedict Tobin Hardwick affirmed on 15 June 2023, being the supplementary confidential opinion of counsel dated 15 June 2023; and (d) annexure BH-30 to the confidential affidavit of Benedict Tobin Hardwick affirmed on 22 June 2023, being the supplementary confidential opinion of counsel dated 22 June 2023. 10. Pursuant to s 37AF of the Act, to prevent prejudice to the proper administration of justice, the following paragraphs and annexures are confidential until the end of the appeal period for the proceeding Kristy Fordham v Commonwealth Bank of Australia (VID 387/2020) or further order: (a) confidential annexure BH-10 to the affidavit of Benedict Tobin Hardwick affirmed on 16 November 2023, being Confidential Schedule E: Loss Assessment Formula; (b) paragraphs 48 and 51 to 58 of the confidential affidavit of Benedict Tobin Hardwick affirmed on 9 June 2023; (c) annexure BH-21 to the confidential affidavit of Benedict Tobin Hardwick affirmed on 9 June 2023, being a spreadsheet prepared by Deloitte setting out summaries of net premiums by policy; and (d) paragraphs 8 to 10 of the confidential affidavit of Benedict Tobin Hardwick affirmed on 22 June 2023. Further communication 11. By no later than 10 July 2023, communications substantially in the form Annexure A are to be distributed by the Applicants to the 11,196 Registered Group Members identified in paragraph 21(a) of the open affidavit of Ben Hardwick dated 15 June 2023. Final orders 12. 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 First to Third Respondents is dismissed on the basis that: (a) the dismissal is a defence and absolute bar to any claim or proceeding by the Applicants or any Bound Group Member against the First to Third 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 Applicants and the First to Third Respondents and all previous costs orders in the proceeding between them are vacated. 13. Pursuant to s 33ZF of the Act, the proceeding against the Fourth Respondent be dismissed on the basis that: (a) the dismissal is a defence and absolute bar to any claim (either directly or indirectly) or proceeding by the Applicants or any Bound Group Member against the Fourth Respondent 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 Applicants and the Fourth Respondent and all previous costs orders in the proceeding between them are vacated. 14. 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. Annexure A Dear [first name] We confirm your Class Actions ID is [INSERT] It is unclear from your registration form whether you wish to (a) cancel [your active credit card insurance policy]/[each of your active credit card insurance policies] and make a claim for compensation on the policy, or, (b) retain this insurance policy and continue to pay premiums on it. You cannot do both. What does this mean? This is to make sure you understand that you will not receive any compensation under the settlement for your active ANZ credit card insurance policy unless you elect to cancel that policy by clicking on the below link. What are my active ANZ credit card insurance policies? Records provided to us by ANZ confirm your active credit card insurance [policy/policies] ending in: • [last 4 digits for each policy] • [last 4 digits for each policy] • [last 4 digits for each policy] That's not right; I no longer have one or more of the policies shown above Records provided to us by ANZ show that your policies shown above are active. In order to claim compensation on a policy under the settlement in the ANZ Class Action, you are still required to confirm with us that you wish for that policy to be cancelled by clicking on the link below. I want to cancel my policy. How do I do that now? For each policy that you want to cancel, please follow [this link] and confirm "YES, I AGREE TO CANCEL". A response received will be taken as positive confirmation you wish to cancel that active credit card insurance policy. The online registration portal has now closed, and final cancellation requests can only be submitted by this link: [insert link] I do not want to cancel my policy. What should I do now? If you want to keep a policy, then you do not need to do anything in relation to it. This will be taken as your election to keep that active credit card insurance policy. When do I need to do this by? You need to cancel by 21 July 2023. No further extensions will be made. IF YOU DO NOT select by 21 July 2023, by clicking on the above link that you want to cancel your policy, the policy will remain active (including that you will keep paying premiums on it). This also means you will not receive any compensation in relation to that policy under the settlement of the ANZ CCI Class Action. Kind regards, ANZ CCI Class Action Team REASONS FOR JUDGMENT O'BRYAN J: 1 This is a representative proceeding brought under Pt IVA of the Federal Court of Australia Act 1976 (Cth) (FCA Act) against Australia and New Zealand Banking Corporation Limited (ANZ) and three insurance providers, Zurich Australia Limited (Zurich), OnePath General Insurance Pty Limited (OnePath General) and QBE Insurance (Australia) Limited (QBE) (together, the Insurers), in relation to certain consumer credit insurance policies issued to ANZ's customers between 1 January 2010 and 30 June 2019 (relevant period). 2 The consumer credit insurance policies were: (a) the ANZ Credit Card Insurance policy which related to credit cards provided by ANZ and was issued by OnePath Life Limited (OnePath Life) and OnePath General; and (b) the ANZ Loan Protection policy which related to personal loans advanced by ANZ and was issued by OnePath Life and QBE. 3 The applicants were customers of ANZ, and allege that they acquired one or more of the consumer credit insurance policies issued by ANZ on behalf of each of OnePath Life, OnePath General and QBE. OnePath Life and OnePath General were, during the relevant period, wholly owned by ANZ (although they have since been sold by ANZ). On and from 1 August 2022, the policies and all associated liabilities held by OnePath Life were transferred to Zurich as part of a scheme of arrangement for the transfer of the life insurance business of OnePath Life to Zurich. On 19 August 2022, orders were made substituting Zurich for OnePath Life as the second respondent to this proceeding. 4 Each of the applicants bring the proceeding on their 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 the respondents, and/or at whose expense the respondents were unjustly enriched, as alleged in the statement of claim. The representative proceeding is what is colloquially referred to as an "open" class action. 5 The applicants and group members are ordinary members of the community who, in connection with the acquisition of consumer credit facilities from ANZ, also acquired one or more of the consumer credit insurance policies issued by ANZ on behalf of the Insurers. The value of the individual claims of each of the applicants and group members is very modest, but in aggregate is substantial. 6 The evidence before me on the settlement approval application demonstrates that a very large number of policies were issued by ANZ in the relevant period. The solicitors for the applicants, Slater and Gordon, estimated that there are up to 423,028 group members in this proceeding, being persons who acquired at least one of the consumer credit insurance policies in the relevant period. Approximately 440,000 opt out notices were distributed and approximately 364 potential group members opted out. 7 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 applicants, Slater and Gordon are entitled to charge an uplift 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 applicants receiving an amount of money after payment of all liabilities or a reasonable offer of settlement is made that Slater and Gordon recommend. 8 The initial trial of the proceeding was listed to commence on 20 March 2023 and scheduled to run for four weeks. 9 On 8 September 2022, the applicants entered into a settlement deed with QBE to bring about a settlement of the applicants' claims against QBE in the proceeding (QBE Settlement Deed). On 14 November 2022, the applicants entered into a settlement deed with ANZ, Zurich and OnePath General to bring about a settlement of the applicants' claims against those parties (ANZ Settlement Deed). The principal terms of the settlements are that, subject to the approval of the Court under s 33V of the FCA Act: (a) ANZ and the Insurers will pay an aggregate amount of $47 million in full and final settlement of the claims made against them; (b) the payment of the settlement sums is made by ANZ and the Insurers without admission of liability; (c) the settlement sums 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 applicants and each group member will release ANZ and the Insurers 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. 10 By amended interlocutory application 25 November 2022, the applicants sought orders to facilitate the settlement of the proceeding. On 6 December 2022, I made orders that included: (a) an order requiring notice of the proposed settlements to be given to group members in a prescribed form, which notices included information concerning the requirement to register in order to receive compensation under the settlement and the right to object to the settlement; (b) an order specifying a date by which group members were required to register to participate in the settlement and a date by which group members were required to lodge any notice of objection to the settlement; (c) an order 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 applicants' 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 (d) otherwise setting a timetable for the hearing of an application for approval of the settlement by the Court. 11 These reasons concern the application for approval of the settlement under s 33V of the FCA Act. The application was heard on 16 June 2023. At that hearing, the applicants relied upon: (a) five affidavits affirmed by Benedict Tobin Hardwick, a lawyer employed by Slater and Gordon with responsibility for the conduct of the proceeding on behalf of the applicants, comprising an affidavit dated 16 November 2022, two affidavits dated 9 June 2023 (one of which was marked confidential) and two affidavits dated 15 June 2023 (one of which was marked as confidential); and (b) an expert costs report of Catherine Mary Dealehr dated 2 June 2023; and (c) a written outline of submissions dated 9 June 2023. 12 The respondents did not file any material in the settlement approval application. At the hearing, the respondents indicated that they supported the application and made limited oral submissions in relation to several discrete issues. 13 I heard the settlement approval application on 16 June 2023. Following the hearing, the applicants filed two further affidavits dated 22 June 2023 (one of which was marked as confidential) to address certain issues which I indicated had not been sufficiently addressed. Having received and considered that material, I made orders approving the settlement. These are my reasons for making those orders. 14 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). 15 Representative proceedings making similar allegations have also been brought against Westpac Banking Corporation (Westpac) (proceeding VID 134 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, orders have been made approving the settlement in the Westpac proceeding, and reasons were subsequently published in Kemp v Westpac Banking Corporation (No 4) [2023] FCA 830 (Kemp v Westpac (No 4)). The settlement approval application in the CBA proceeding is yet to be heard. 16 In support of the settlement reached in the present proceeding, the applicants made submissions with respect to the "parity" of the settlement amounts in each of the Westpac, ANZ and CBA proceedings. Consistently with the approach adopted in Kemp v Westpac (No 4), 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 17 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. 18 I recently summarised the principles governing the assessment required to be made by s 33V of the FCA Act in Kemp v Westpac (No 4) at [17]-[21]. Those principles are well-established. The nature of the proceedings and the claims made 19 As noted above, the proceeding concerns two types of consumer credit insurance policies issued by ANZ to its customers on behalf of the Insurers between 1 January 2010 and 30 June 2019: the Credit Card Insurance policy and the 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, disease or disability, and losing employment through no choice or fault of the borrower. A limited number of other benefits were also available under the Credit Card Insurance policy. 20 The catalyst for this proceeding (similarly to the Westpac proceeding: Kemp v Westpac (No 4) at [23]) 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 ANZ, 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. 21 The applicants alleged that in arranging the issue of the policies and/or charging the premiums under the policies, the respondents contravened a number of laws, including: (a) the prohibition of misleading and deceptive conduct in s 12DA(1) of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act); (b) the prohibition of unconscionable conduct in s 12CB 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) (Corporations Act); (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; and (g) the requirement that a provider of financial product advice must give priority to the interests of the client when giving advice in s 961J of the Corporations Act. 22 The alleged contraventions were variously asserted against all of the respondents or, in some instances, a sub-set of them. 23 The claims made for misleading and deceptive conduct and breach of the National Credit Code were 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. 24 The unconscionable conduct claim was based on allegations that: (a) the policies were of no real value or benefit to the customer, and the respondents 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. 25 The claims made regarding the provision of inappropriate personal financial advice were based on allegations that ANZ representatives provided an oral recommendation or statement of opinion that the customer should purchase the policies, or would benefit from the policies, in circumstances where the recommendation or statement could reasonably be regarded as being intended to influence the customer in making a decision in relation to the policies, and where a reasonable person might expect the relevant ANZ representative to have considered their objectives, financial situation and needs. 26 The applicants also alleged that the policies were liable to be set aside for unilateral mistake on the basis that: (a) the applicants 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 or personal loan; (ii) that they were liable or required to pay for the policy; (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) the respondents were aware that circumstances existed which indicated that the applicants and some group members were acquiring their respective policies under one or more of the mistaken beliefs. 27 The primary relief sought in the proceeding is repayment of premiums paid under the policies plus interest and orders setting aside the policies. 28 Each of the respondents denies the allegations and their settlement of the proceeding is without admission of liability. 29 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 this proceeding, 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 claims for loss and damage made 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 Deeds 30 As noted above, two Settlement Deeds were entered into between the parties to this proceeding: the QBE Settlement Deed, to which the applicants, QBE and Slater and Gordon were parties, and the ANZ Settlement Deed, to which the applicants, all four of the respondents and Slater and Gordon were parties. The terms of the settlements reached were summarised earlier and are in reasonably standard form. Their operation is subject to the Court's approval of the settlements. As will become apparent, the terms of the earlier QBE Settlement Deed were partly (but not wholly) incorporated into the later ANZ Settlement Deed. 31 The key terms of the Settlement Deeds are as follows. (a) QBE agrees to pay the sum of $5 million in settlement of the claims made against it in the proceeding: QBE Settlement Deed, cl 2.7. ANZ, Zurich and OnePath General agree to pay the sum of $42 million to settle the claims made against them: ANZ Settlement Deed, cl 2(c)-(e). (b) The respondents' entry into, and performance of, their respective Settlement Deeds is undertaken without admission of liability: QBE Settlement Deed, Recital D; ANZ Settlement Deed, cl 11. (c) Payment of the settlement sums is to be made into a trust account held by Slater and Gordon (referred to in the ANZ Settlement Deed as the settlement fund) and distributed in accordance with a Settlement Distribution Scheme, which is also subject to Court approval. The settlement fund must be administered by an administrator, who is to be Slater and Gordon or such other entity as appointed by the Court: QBE Settlement Deed, cll 2.4, 2.7, 3.2; ANZ Settlement Deed, cll 2(f), 5. (d) The applicants and group members agree to release QBE and its related entities from all claims made against it in the proceeding as pleaded, and all claims which could have been made by the applicants or group members against QBE in the proceeding in respect of the subject matter of the proceeding: QBE Settlement Deed, cl 2.8. The applicants and group members also agree to release ANZ, Zurich, the former second respondent (OnePath Life), OnePath General and their related persons from the claims made against those parties in the proceeding as pleaded, as well as any claim that the applicants and group members have or may have arising out of or in respect of matters which were the subject of, part of, or raised in the proceeding (ANZ Settlement Deed, cl 7(a)). Further, QBE, and each of ANZ, Zurich, OnePath Life and OnePath General agree to release each other and their related persons from any claims arising as between them. (e) The applicants and group members agree that they will not bring or pursue, or procure a third party to bring or pursue, any claim, cause of action or demand against ANZ, Zurich, OnePath Life, OnePath General, or their related persons in respect of any matter that is the subject of the releases: ANZ Settlement Deed, cl 7(b). (f) The applicants agree to use their best endeavours to ensure that any group member that registers and is eligible to participate in the settlement, and who holds a continuing Credit Card Insurance policy, seeks the cancellation of that policy as a condition of their participation in the settlement: ANZ Settlement Deed, cl 9. (g) Slater and Gordon covenant not to assist, encourage, advise, or act for any persons in relation to any matter the subject of, or part of, the claims made against ANZ, OnePath Life, Zurich, OnePath General or their related persons in the proceeding, or in relation to any objection to the application for Court approval of the ANZ/OnePath Settlement: ANZ Settlement Deed, cl 10. 32 On 16 June 2023, by way of correspondence (part of which was put before the Court during the hearing), the applicants, ANZ, Zurich and OnePath General agreed to a minor variation of the ANZ Settlement Deed, relating to the time at which the applicants were required to provide certain information to those parties regarding active Credit Card Insurance policies held by group members. Notification and registration 33 On 14 October 2022, following the signing of the QBE Settlement Deed by the applicants and QBE, I made orders requiring QBE to provide Slater and Gordon with the following information in respect of all customers (including former customers) who were issued with an ANZ Loan Protection policy in the relevant period: (a) their last known address and email address; (b) the relevant policy or policies that they took out; and (c) for each policy taken out, the date and amount of each payment of premium under the policy, and any refunds (whether by way of remediation, response to complaints or otherwise). 34 On 23 November 2022, following the signing of the ANZ Settlement Deed by the applicants, ANZ and the Insurers, I made orders requiring ANZ, Zurich and OnePath General to provide Slater and Gordon with the following information in respect of all customers (including former customers) who were issued with an ANZ Credit Card Insurance policy in the relevant period: (a) their unique customer reference number; (b) their name, last known address, email address and mobile phone number; (c) for each policy taken out, the name of the policy, the policy number, whether the policy was continuing or, alternatively, whether the policy was cancelled, and any premiums, refunds or claims paid under that policy. 35 On 6 December 2022, I made orders providing for group members to be notified of the proposed settlement of the proceeding (on the terms set out in the QBE Settlement Deed and the ANZ Settlement Deed), and the requirement to register in order to be eligible to receive compensation through the settlement. More than 423,000 people were sent those notifications. More than 62,000 group members have registered for the purposes of the settlement. Of those, more than 55,000 group members have been identified as being eligible to receive compensation (being compensation in an amount greater than $10.00). 36 The applicants filed comprehensive evidence concerning the work involved in the notification and registration processes, including responding to enquiries from a large number of potential group members and verifying information. It is unnecessary to set out that evidence more generally, but the work was extensive. 37 As noted above, the ANZ Settlement Deed provides that as, a condition of their participation in the settlement, any group member with a continuing Credit Card Insurance policy must agree to the cancellation of that policy. In his affidavit of 9 June 2023, Mr Hardwick deposes that those group members with active Credit Card Insurance policies were notified of the requirement to cancel those policies prior to registration, and they were notified whether they held such policies during registration. The online registration form also required registrants to indicate the type of policy that they held, including whether they held an active Credit Card Insurance policy. If a registrant indicated that they held an active Credit Card Insurance policy, they were prompted by the registration form to indicate their agreement to cancelling that policy. If a registrant did not indicate their agreement to cancellation, their estimated compensation for the relevant policy was assessed to be nil. The evidence disclosed that a number of registrants with active Credit Card Insurance policies completed the registration process in circumstances where, due to what appears to be a technical error, the cancellation confirmation prompt did not appear. There are, therefore, a number of registrants who did not record a response to the question of whether they wished to cancel their active Credit Card Insurance policies and who were subsequently informed that they would receive no compensation in relation to those policies. Mr Hardwick deposed to his belief that these registrants may wish to participate in the settlement and may agree to cancel the relevant policies for that purpose. In his open affidavit of 15 June 2023, Mr Hardwick estimated that there are 11,196 registrants who hold at least one active Credit Card Insurance policy affected by this issue, and 21,000 such policies, of which more than half are affected by limitation periods. The applicants sought an order allowing the applicants' solicitors to send a further, standard-form communication to the affected registered group members notifying them of this issue, and seeking confirmation as to whether they wish to cancel their active Credit Card Insurance policy or policies and thereby participate in the settlement in respect of those policies. For those registrants that wish to participate and agree to cancel their active Credit Card Insurance policy or policies, Slater and Gordon will take the necessary steps to re-assess the distribution amount to which the registrant is entitled in respect of those policies. The impact of this issue on the proposed settlement, and the further steps proposed by the applicants to address it, are addressed further below. Settlement Distribution Scheme 38 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 applicants, registered group members and parties to whom distribution is to be made under the Scheme. 39 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. 40 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 applicants' 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 each applicant for the applicant's reimbursement payments; and (d) an amount to each sample group member for the sample group member's reimbursement payment. 41 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 sale 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. 42 The Scheme provides that the Scheme Administrator may refer any issues relating to this Settlement Distribution Scheme to the Court for direction or determination. 43 The Scheme proposed by the applicants 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. 44 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 45 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. 46 Mr Hardwick deposed (in his open affidavit of 22 June 2023) that, if settlement is approved (in the revised form without a hold back sum), the distribution of the settlement sum of $47 million is expected to be as follows: (a) approximately $37 million (being approximately 78%) of the total settlement sum will be transferred to registered group members; (b) approximately $7.9 million (being approximately 16.8%) of the total settlement sum will be applied to meet the legal costs and disbursements of the applicants to date; (c) approximately $2 million (being approximately 4.3%) of the total settlement sum will be applied to meet the potential future costs of the administration; (d) $275,000 (being approximately 0.58%) of the total settlement sum will be paid in reimbursement of the costs of holding adverse costs insurance in the proceeding; (e) $40,000 (being approximately 0.08%) of the total settlement sum will be paid to the applicants as the applicants' reimbursement payment; and (f) $27,000 (being approximately 0.06%) of the total settlement sum will be paid as the sample group members' reimbursement payment. 47 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 group members who have registered to participate in the settlement is 62,692, with some 55,064 registrants being eligible to receive compensation; (b) the total number of policies held by registered group members eligible to receive compensation is 104,647 (excluding any active Credit Card Insurance policies held by registered group members, to which I refer below); (c) the total net premiums paid in respect of those policies (less refunds, remediation or claims paid) was approximately $123 million; (d) as noted above, at least $37.1 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 57,180 and the compensation expected to be paid to those registered group members is approximately $4.8 million which represents about 7.7% of the net premiums paid by them; (f) in respect of policies sold online that are not affected by limitation periods, the total number of such policies held by registered group members is 3,161 and the compensation expected to be paid to those registered group members is approximately $0.65 million which represents about 29.5% of the net premiums paid by them; and (g) in respect of policies not sold online that are not affected by limitation periods, the total number of such policies held by registered group members is 44,306 and the compensation expected to be paid to those registered group members is approximately $30.5 million which represents about 52% of the net premiums paid by them. 48 These metrics do not include the distribution of any amounts to those registered group members with active Credit Card Insurance policies who were affected by the error in the registration process to which I refer above. Mr Hardwick deposes in his open affidavits of 15 June 2023 and 22 June 2023 that there is unlikely to be any overall negative impact on the expected distribution amounts set out above, even if all of the registered group members with active Credit Card Insurance policies elect to cancel those policies and received additional compensation amounts in respect of them. This is because that cohort of group members accounts for a relatively small portion of registrants, both by number and value. Moreover, the estimated additional costs of communicating with this cohort, and of calculating and distributing any further amount which they become eligible to receive, can be accommodated in the amount for future legal costs and disbursements allowed by the independent costs consultant engaged by the applicants, Ms Dealehr. That amount included a sum for the cost and maintenance of the hold back sum, which I have refused to allow as a deduction from the settlement fund. In effect, the applicants intend to redirect that amount to cover the costs arising in relation to the registered group members with active Credit Card Insurance policies. Is the settlement fair and reasonable? 49 The first question that arises is whether the proposed settlement of the proceeding between the applicants and the respondents is fair and reasonable. I am satisfied that it is. In reaching that view, I have taken account of the following matters. 50 First and foremost, I have had regard to the confidential opinions of counsel for the applicants, which comprised a principal opinion and two further supplementary opinions that corrected certain numeric errors in the principal opinion. The principal 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. By the time of mediation (9 September 2022, shortly prior to which the QBE Settlement Deed, and following which the ANZ Settlement Deed, was entered into), the applicants had filed and served a substantial body of evidence in chief in respect of the initial trial, together with a list of the documents that they intended to tender at the initial trial. I am therefore satisfied that counsel were able to make an informed assessment of the prospects of the proceeding. 51 Second, I have had regard to the key financial metrics relating to the compensation likely to be paid to group members, which are 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 applicants. There is some uncertainty with respect to the amounts payable to those registered group members with active Credit Card Insurance policies who were affected by the cancellation prompt error during registration, and the impact of those amounts on the compensation likely to be paid to group members as a whole. However, having regard to the evidence before me, I am satisfied that the likely impact will be small, and that it will not substantially alter the amounts that the applicants expect to be paid to group members. 52 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 were made: (a) On 2 February 2023, Ms Kreutzer filed a notice of objection to the settlement. Ms Kreutzer stated that she had held an ANZ Credit Card Insurance policy, and attached bank statements identifying the premium payments made by her in relation to the policy. Ms Kreutzer did not, however, state the basis on which she objected to the settlement, and further stated in correspondence to the Court that she provided the notice of objection as "confirmation" that she was eligible to receive compensation. (b) On 9 March 2023, Ms Tiwari filed a notice of objection to the settlement. Ms Tiwari stated that she held a "life insurance policy" with "OnePath" and that she could provide bank statements showing premium payments made by her in relation to the policy. Ms Tiwari did not, however, state the basis on which she objected to the settlement. 53 In his open affidavit of 9 June 2023, Mr Hardwick deposed that, after receiving the above notices, Slater and Gordon contacted both Ms Kreutzer and Ms Tiwari and that their objections were resolved. In respect of Ms Kreutzer, Slater and Gordon identified that she had received a notice of the proposed settlement which incorrectly stated the net premium paid by her in respect of the Credit Card Insurance policy previously held by her. Ms Kreutzer was provided with an updated version of the notice with a corrected net premium amount, following which Ms Kreutzer successfully completed the registration process and received a further notice identifying her estimated distribution amount. In respect of Ms Tiwari, Slater and Gordon informed her that the life insurance policy held by her was not a policy the subject of the proceeding or the settlement. Ms Tiwari subsequently completed the registration process in respect of Credit Card Insurance policies held by her and received a further notice identifying her estimated distribution amount. 54 Having regard to the contents of the notices of objection and the evidence given by Mr Hardwick in relation to those notices, I am satisfied that the objections of Ms Kreutzer and Ms Tiwari did not relate to the fairness or reasonableness of the proposed settlement, as distinct from those individuals' eligibility in their particular circumstances to receive a distribution from the settlement. I am also satisfied that the issues experienced by Ms Kreutzer and Ms Tiwari have been satisfactorily resolved. Is the proposed Settlement Distribution Scheme just? 55 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. 56 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 two types of consumer credit insurance policies issued by ANZ on behalf of the Insurers (the Credit Card Insurance policy and the 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. 57 As I observed in Kemp v Westpac (No 4) at [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. 58 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 principal 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. 59 Two other matters require mention. 60 First, the Settlement Distribution Scheme contemplates that Slater and Gordon, with the assistance of Deloitte, be appointed to administer the Scheme. The applicants 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. 61 Second, and as noted above, the Scheme initially proposed by the applicants 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. 62 A hold back sum arrangement was also sought by the applicant in the Westpac proceeding in identical terms. The reasons for which the arrangement was sought in that proceeding, which are detailed in Kemp v Westpac (No 4) at [63], are the same as those proffered in this proceeding. In short, Slater and Gordon sought to address a perceived shortcoming in its administration of the settlement reached in the equivalent NAB proceeding, having regard to the feedback received by it from a consumer advocacy body in connection with the settlement of that proceeding. 63 At the hearing of the settlement approval application in this proceeding, none of the respondents made substantive submissions in relation to the hold back sum arrangement sought by the applicants. I subsequently received the benefit of submissions filed by Westpac in opposition to the order for a hold back sum sought in the Westpac proceeding in the settlement approval application in that proceeding. The submissions made by Westpac are recorded in Kemp v Westpac (No 4) at [64]-[65]. Stated briefly, Westpac articulated four concerns: first, that the proposed hold back arrangement was contrary to the Court's previous orders providing for a deadline by which group members were required to register to participate in the settlement, and was therefore inconsistent with information given to group members with respect to the settlement; secondly, the proposed hold back arrangement would undermine key objectives of the settlement approval regime in Part IVA of the FCA Act, being finality and certainty for respondents; thirdly, the proposed hold back arrangement was contrary to the interests of registered group members because the hold back sum would otherwise form part of the distribution sum and the amount available for distribution would be reduced by the costs of administering the hold back arrangements; and fourthly, the hold back arrangement was contrary to the respondents' interests insofar as it would delay the ultimate dismissal of the proceeding. 64 In response to Westpac's submissions, the applicant's solicitors in the Westpac proceeding filed further evidence regarding the costs of administering the hold back sum. That evidence, which is summarised in Kemp v Westpac (No 4) at [66], indicated that the administrative costs were likely to exceed the hold back sum. 65 Having regard to that material, I concluded in the Westpac proceeding that the Settlement Distribution Scheme should exclude the hold back arrangements: see Kemp v Westpac (No 4) at [67]. I made orders to that effect in that proceeding on 21 June 2023. On 22 June 2023, the applicants filed in this proceeding a further open affidavit of Mr Hardwick of the same date. By that affidavit, Mr Hardwick indicated that, following the hearing of the Westpac proceeding on 21 June 2023, the applicants in this proceeding no longer sought orders for a hold back sum and its administration as part of the Settlement Distribution Scheme. Accordingly, I did not make orders providing for any hold back arrangement in this proceeding. Is the allowance for litigation and administration costs appropriate? 66 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. 67 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 $7.9 million to meet the legal costs (including a success fee) and disbursements of the applicants to date; (b) approximately $2 million to meet the potential future costs of the administration; (c) approximately $275,000 in reimbursement of the costs of holding adverse costs insurance in the proceeding; (d) $40,000 as the applicants' reimbursement payment; and (e) $27,000 as the sample group members' reimbursement payment. 68 Each of these categories of costs in considered in turn. Legal costs and disbursements of the applicants to date and in respect of future administration of the settlement 69 I summarised the principles governing the Court's discretion to approve payment of legal costs and disbursements incurred by an applicant in a representative proceeding out of the settlement sum in Kemp v Westpac (No 4). Briefly stated: the legal costs and disbursements must be in accordance with the terms of the relevant costs agreements; they must be fair and reasonable having regard to the work undertaken; and they must be 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. It is now established practice for the Court to appoint a referee to review the costs and disbursements claimed: Kemp v Westpac (No 4) at [71]-[72] and the authorities cited therein. 70 By orders made on 6 December 2022, I appointed Ms Dealehr as a referee for the purpose of conducting an inquiry and making a report in writing to the Court stating, with reasons, her opinion on: (a) the reasonableness of the applicants' 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. 71 In accordance with that appointment, Ms Dealehr provided a report to the Court dated 2 June 2023. 72 Ms Dealehr's report disclosed her substantial expertise and experience as an Australian costs lawyer over 35 years. 73 As to methodology, Ms Dealehr relied on the gross sum costs method of calculating and assessing reasonable legal fees. 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. 74 Ms Dealehr further explained that, in undertaking 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. 75 Ms Dealehr's report sets out the terms of the legal costs agreements entered into between each of the applicants and Slater and Gordon on 19 February 2020 and 24 February 2020 respectively. The terms of the two agreements were identical. The agreements 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. 76 Ms Dealehr's report contained a detailed examination of the applicants' 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 applicants' reasonable legal costs (professional costs and disbursements) calculated on a solicitor and own client basis up to settlement approval were a total amount of $7,861,581.45, comprising: (i) solicitors' fees (excluding the 25% success fee) of $5,193,337.10; (ii) a 25% success fee of $1,298,566.58; (iii) disbursements of $1,369,910.08 (of which counsel's fees were $659,739.59 and experts' fees were $516,241.03); (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 $2,055,060.33, comprising: (i) solicitors' fees of $520,738.33; and (ii) disbursements of $1,534,322.00 (being the estimated costs of Deloitte). 77 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. 78 The applicants 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 applicants 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 applicants 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 applicants 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 persons); (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. 79 I accept those submissions. 80 The applicants sought 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 activities", 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. 81 The applicants 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's charges and the applicants seek a variation to erase that discount. The discount totalled approximately $24,860.19. 82 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 applicants 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. 83 I accept the submissions advanced by the applicants 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 84 The applicants sought reimbursement out of the settlement sum for the costs of holding insurance against the risk of an adverse costs order in the proceeding (typically referred to as "after the event" or "ATE" insurance). 85 The legal costs agreements entered into between Slater and Gordon and each of the applicants stated that, Slater and Gordon had, by letter dated 19 February 2020, provided the applicants with an indemnity against an adverse costs order in the proceeding. The legal costs agreements 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. 86 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 applicants and Slater and Gordon. 87 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, to which I referred in Kemp v Westpac (No 4). 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 Kemp v Westpac (No 4) at [90] and the cases referred to therein. 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]). 88 As I explained in Kemp v Westpac (No 4), 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. 89 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 agreements, 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 90 The applicants sought reimbursement of the settlement sum for: (a) an amount of $20,000 to be paid to each applicant for their work in prosecuting the proceeding as the representative applicants (being $40,000 in total); and (b) an amount of $3,000 to be paid to each of the nine sample group members for their work in prosecuting the proceeding on behalf of group members (being $27,000 in total). 91 I accept the submission of the applicants 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 Milling Co Pty Limited v F Hoffman-La Roche Ltd (No 2) [2006] FCA 1388; 236 ALR 322 at [74]-[93] per Jessup J; Matthews v Ausnet Electricity Services Pty Ltd [2014] VSC 663 at [423]-[424]; Caason Investments Pty Limited v Cao (No 2) [2018] FCA 527 at [176]-[177] per Murphy J; National Australia Bank Ltd (No 2) at [20] per Lee J; Haselhurst v Toyota Motor Corporation Australia Ltd t/as Toyota Australia; Whisson v Subaru (Aust) Pty Ltd; Kularathne v Honda Australia Pty Ltd; Brewster v BMW Australia Ltd; Bond v Nissan Motor Co (Australia) Pty Ltd; Coates v Mazda Australia Pty Ltd [2022] NSWSC 1076 at [60] (Rees J). 92 Mr Hardwick deposed to the work undertaken by the applicants 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 93 In his open affidavit dated 9 June 2023, Mr Hardwick deposed that four potential group members had contacted Deloitte or Slater and Gordon either by post or telephone on or prior to the last day for registration (21 April 2023) for assistance with registering to participate in the settlement in this proceeding but were unable to reach an operator due to postal delays and/or the close of call centres at 5:00 pm on that day. 94 The applicants sought an order to extend the registration deadline for those four 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. 95 In the circumstances, I considered it appropriate to make the order sought by the applicants. Further communications in relation to active Credit Card Insurance policies 96 As explained above, there is a substantial cohort of group members who hold active Credit Card Insurance policies and who, due to an error in the online registration process, were unable to indicate whether they agreed to cancel those policies in order to participate in the settlement and were subsequently assessed as having no entitlement to compensation in respect of those policies. The applicants sought an order to send a further, standard-form communication to those affected registrants informing them of the error and inviting them to confirm whether they wished to cancel their active Credit Card Insurance policies and to participate in the settlement. Subject to receiving that confirmation, Slater and Gordon as Scheme Administrator would take steps to assess each registrant's entitlement to compensation in respect of the relevant policies. 97 I have had regard to the evidence of Mr Hardwick, in which he indicates that the impact of the proposed steps in relation to this cohort of registrants is likely to be limited, both in terms of the expected return to group members from the settlement fund and the costs of administering these further steps. Moreover, it is apparent that this issue arose through no fault of the affected registrants, and that the interests of fairness require the proposed further steps to be taken to enable these individuals to participate in the settlement. For these reasons, I was satisfied that it was appropriate to make the order proposed by the applicants. Confidentiality 98 The applicants sought confidentiality orders under s 37AF 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. 99 In the course of and subsequent to the hearing, the scope and duration of the proposed orders was narrowed. I made two categories of orders. 100 The first is unlimited as to time and applies to: (a) information regarding Slater and Gordon's broader litigation strategy, including its strategy in relation to mediation; and (b) the confidential opinions of counsel as to the applicants' prospects of success in the proceeding and the fairness and reasonableness of the proposed settlement. 101 I was satisfied that a confidentiality order in respect of that material was necessary to prevent prejudice to the proper administration of justice. 102 The second order only continues until the end of the appeal period for the CBA proceeding and applies to the "Loss Assessment Formula" (which affects the relative distribution of the settlement fund between three categories of group members) and other material that refers to, or is derived from, the application of the "Loss Assessment Formula". Consistently with the view that I expressed in Kemp v Westpac (No 4), where I made substantially similar confidentiality orders in respect of similar material, I was satisfied that this category 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 claim. 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 that limited category of information until the end of the appeal period for the CBA proceeding was necessary to prevent prejudice to the proper administration of justice. 103 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 104 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 four (104) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice O'Bryan. Associate: Dated: 2 August 2023