Federal Court repeats invitation to facilitate contingency fees in class actions
16 October 2023
16 October 2023
There has been ongoing debate about the introduction of contingency fees for class actions since the ALRC's recommendation that they be allowed, and their introduction in Victoria in 2020 through the group costs order regime.
Other jurisdictions have not yet allowed them, and they maintain prohibitions on contingency fee arrangements in costs agreement.
In a judgment on a carriage motion in the Jaguar Land Rover class action, Justice Lee has repeated his views contingency fees could be ordered as part of a common fund order because:
This follows comments to similar effect by Justice Lee in a 2019 Full Court decision, as well as a first instance decision earlier in 2023 ((Klemweb Nominees Pty Ltd (as trustee for the Klemweb Superannuation Fund) v BHP Group  FCAFC 107 and R&B Investments v Blue Sky Alternative Investments Limited (Carriage Application No 2)  FCA 142).
Justice Lee's decision in Jaguar Land Rover indicated his Honour considered the decisions of Middleton and Beach JJ in Kleweb to suggest they also considered that if the court had power to make a CFO then it could make a solicitors' CFO.
It is also worth noting that:
In characterising what might be considered just, in Jaguar Land Rover Lee J considered it relevant that a CFO is consistent with the notion that a person who benefits from another's efforts in producing a fund is obliged to provide appropriate value in return. His Honour considered the underlying principle to be that it would be inequitable for a person who has created a valuable asset not to have the costs and expenses of doing so paid out of the fund.
A key question may be whether those solicitor's costs and expenses should just be paid in the ordinary way – ie hourly rates, without a contingency fee.
Greentree v Jaguar Land Rover Australia (Carriage Application)  FCA 1209
Authors: Ian Bolster, Partner; John Pavlakis, Partner; Sally-Anne Stewart, Senior Associate; and Andrew Westcott, Expertise Counsel.