Common Fund Orders | Banking Class Action

What is a 'common fund order'?

As noted in in the ‘track the process of the case’ section, at the Class Issues hearing in April 2022, the plaintiffs will apply for ‘common fund orders’ or CFOs.

A CFO is a court order which provides that, in the event that the plaintiffs achieve a successful outcome (whether it be a settlement or a judgment in their favour) the costs incurred by the plaintiffs (and paid by the litigation funders) (Project Costs), together with the funders’ commission fee, will be deducted from the total sums paid by the defendants before the money is distributed amongst eligible class members.

If CFOs are granted, the plaintiffs are successful, and you are entitled to receive a payment, your share of the plaintiffs’ costs and a percentage of your payment will be deducted and paid to the funders and the balance paid to you, whether or not you have signed up to the funding arrangements. (If the plaintiffs are unsuccessful, or you are not entitled to receive any payment, you will not be required to pay anything.)

CFOs are important because they provide more certainty for class members as to who will contribute to the plaintiffs’ costs and the funders’ commission and its likely extent.

The plaintiffs will be seeking CFOs which confirm that the following commission structure (CFO Services Fee) (or such lower fee as the court considers reasonable on settlement or judgment) applies:

What is a 'common fund order'?

As noted in in the ‘track the process of the case’ section, at the Class Issues hearing in May 2022, the plaintiffs applied for ‘common fund orders’ or CFOs.

In the 29 July 2022 judgment, the High Court held that there is jurisdiction to make CFOs, but declined to make the CFOs sought at this stage of the proceeding. The plaintiffs have applied for leave to appeal this aspect of the High Court’s decision to the Court of Appeal.

If the plaintiffs succeed on their appeal and CFOs are made then there will be certainty that if the Class Action is successful, and you are entitled to receive a payment, your share of the plaintiffs’ costs and a percentage of your payment will be deducted and paid to the funders and the balance paid to you, whether or not you have signed up to the funding arrangements. (If the plaintiffs are unsuccessful, or you are not entitled to receive any payment, you will not be required to pay anything.)

If CFOs are not granted following the Court of Appeal hearing, CFOs or other costs sharing orders may be made at the conclusion of the proceeding (whether by final judgement or settlement).

Obtaining CFOs early in the proceedings is important because it will provide more certainty for the plaintiffs, class members and funders as to who will contribute to the plaintiffs' costs and the funders' commission and its likely extent.

The plaintiffs are seeking CFOs which confirm that the following commission structure (CFO Services Fee) (or such lower fee as the court considers reasonable on settlement or judgment) applies:

If Project Costs are less than $1m and the Resolution Sum is less than $10m

If Project Costs are less than $1m and the Resolution Sum is equal to or greater than $10m but less than $100m

If Project Costs are less than $1m and the Resolution Sum is equal to or greater than $100m

If Project Costs are equal to or greater than $1m and the Resolution Sum is less than $10m

If Project Costs are equal to or greater than $1m and the Resolution Sum is equal to or greater than $10m

If Project Costs are equal to or greater than $1m and the Resolution Sum is equal to or greater than $100m

21% of the Resolution Sum

16% of the Resolution Sum

The aggregate of:

16% of the Resolution Sum on the initial $100m of the Resolution Sum; and
on any amount of the Resolution Sum greater than $100m, 16% less 0.5% for each additional $10m increment of Resolution Sum above $100m, provided that such reduction shall not exceed 6% in aggregate.

23.5% of the Resolution Sum

20% of the Resolution Sum

The aggregate of:

20% of the Resolution Sum on the initial $100m of the Resolution Sum; and
on any amount of the Resolution Sum greater than $100m, 16% less 0.5% for each additional $10m increment of Resolution Sum above $100m, provided that such reduction shall not exceed 6% in aggregate.

Provided, however, that:

the Services Fee shall increase by an amount equivalent to 2.5% of the Resolution Sum in the event that LPF provides the Services in respect of any appeal;
in no event shall the Service Fee payable to LPF exceed 50% of the amount equal to the Resolution Sum less the Project Costs; and
in no event shall the Services Fee payable to LPF exceed the aggregate fee that would be payable to any other litigation funder that actually funds proceedings relating to a claim against the Defendants similar to the Claims in the same period, had the litigation funder provided services to the Plaintiffs that are equivalent to the Services and otherwise on the same terms as set out in the funding agreements.

In the above, the Resolution Sum is the total, gross amount recovered by all class members from a defendant on judgment or settlement. Services has the meaning defined in the funding agreements.

This commission structure is more favourable to class members than that currently set out in Schedule 1 to the Funding Agreements