From penalty to payout: Federal Court of Australia's decision to transfer pecuniary penalty to class action plaintiffs

What you need to know

• The Federal Court has, for the first time, made orders under section 1317QF of the Corporations Act, allowing a pecuniary penalty to be used to compensate class action plaintiffs who suffered loss due to the same conduct that led to the penalty.
• This decision highlights the growing intersection between regulatory enforcement proceedings and private class actions, creating new opportunities for class action plaintiffs to access funds from penalties imposed in regulatory proceedings.

Section 1317QF of the Corporations Act–an overview

Section 1317QF was introduced into the Corporations Act 2001 (Cth) by the Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Act 2019 (Cth). It applies to conduct occurring after 13 March 2019.¹

The section applies where a court considers it appropriate to make a pecuniary penalty order or refund order for contravention of a civil penalty provision, or impose a fine for an offence constituted by the same conduct as the conduct constituting that contravention. In those circumstances, the court is required to consider the impact of those orders on the availability of funds to pay compensation or refunds to victims of the conduct.² Courts must give preference to making an appropriate amount available for refunds and compensation, although the section does not prescribe how this preference should be implemented, leaving it to the court’s discretion based on the circumstances of each case.³

The Noumi litigation: ASIC civil penalty proceedings and a parallel class action

The Federal Court's decision in ASIC v Noumi Limited (No. 5) [2025] FCA 1524, the first substantive application of section 1317QF, arose from regulatory proceedings initiated by ASIC in 2023 against Noumi Limited, its former CEO, and its former CFO (the ASIC Proceedings). ASIC alleged various contraventions of the Corporations Act, including contraventions of continuous disclosure obligations where Noumi's accounts had not made provision for large amounts of unsaleable inventory during the period from 29 August 2019 to 25 May 2020 (the ASIC Claim Period).

Noumi (and its auditor) were also facing a class action in the Supreme Court of Victoria, on behalf of shareholders who acquired shares in Noumi between 7 December 2014 and 24 June 2020. The class action plaintiffs also alleged that Noumi had contravened its continuous disclosure obligations by reason of irregularities in its financial accounts, although the class action involved broader allegations, and over a longer period of time, than the ASIC Proceedings.

The class action plaintiffs' section 1317QF application

In July 2024, the class action plaintiffs applied to intervene in the ASIC Proceedings and sought that any pecuniary penalty ordered against Noumi be paid into Court pending the outcome of the class action.⁴

In August 2024, the Federal Court (Justice Jackman) ordered Noumi to pay a $5 million pecuniary penalty for two contraventions of the Corporations Act. Recognising the overlap between the ASIC Proceedings and the class action (which was ongoing), the Court ordered that the penalty be paid into Court, pending the resolution of the class action. This decision was made to ensure that the penalty funds could potentially be made available to compensate class action group members who suffered losses due to the contraventions.

In June 2025, Justice Delany of the Supreme Court of Victoria approved the settlement of the class action.⁵ His Honour also made an order under section 1317HA of the Corporations Act that group members who acquired an interest in Noumi shares during the ASIC Claim Period (the ASIC Period Group Members) were entitled to receive compensation from the $5 million penalty sum that had been ordered in August 2024 to be paid to the Federal Court as a part of the ASIC Proceedings.⁶

Following settlement, the class action plaintiffs sought orders in the Federal Court under section 1317QF to access the $5 million pecuniary penalty paid by Noumi, to compensate the ASIC Period Group Members.

On 2 December 2025, the Federal Court granted the application, ordering that the penalty funds be transferred to the administrator of the class action settlement for distribution to the ASIC Period Group Members.⁷

Takeaways from the Federal Court’s decision

While earlier cases⁸ have provided some commentary on section 1317QF, the Federal Court's decision in ASIC v Noumi (No. 5) represents the first substantive application of the section, where the court was required to interpret the scope of the provision and its practical implications.

The Federal Court identified the following reasons to make the penalty sum available for distribution to the ASIC Period Group Members:

• The admissions of liability and declared contravention in the class action mirrored those in the ASIC Proceedings and concerned the same contravening conduct. That established the entitlement of ASIC Period Group Members to compensation under the compensation order made in the Supreme Court of Victoria.
• The compensation from the ASIC Proceedings was separate and additional to the settlement amount of the class action settlement (the Settlement Sum). Both Justice Delany and Justice Jackman recognised this as a distinct benefit for ASIC Period Group Members, including those who did not register for the class action.
• The class action settled for the Settlement Sum in the particular circumstances of Noumi's constrained financial position, even though the Settlement Sum was materially less than the potential estimated collective losses of group members (assuming they succeeded on both liability and quantum).
• Registered ASIC Period Group Members were estimated to have suffered losses significantly higher than their entitlement to compensation from the Settlement Sum. Unregistered ASIC Period Group Members have no entitlement to recover from the Settlement Sum.
• The Court can have confidence in the fair and reasonable distribution of the penalty, noting that the settlement deed for the class action settlement included a proposed distribution scheme for distribution of the ASIC penalty (were that to be ordered by the Federal Court) on the same principles as distribution of the Settlement Sum which Justice Delany found to be fair and reasonable between group members. The administration costs for distributing the penalty to ASIC Period Group Members will not be deducted from the sum itself but will be covered by the Settlement Sum.

Looking ahead: Overlap of class action and regulatory proceedings

The intersection of class actions and regulatory proceedings is an evolving area of law. There are many examples of companies facing parallel or consecutive regulatory action and class action proceedings for similar conduct, particularly in relation to contraventions of disclosure laws. Where a defendant has limited financial means and faces substantial penalties or fines alongside compensation, the court may need to make orders to ensure that an appropriate amount remains available for compensation.⁹

The ASIC v Noumi (No. 5) decision is likely to encourage further applications under section 1317QF where there is significant overlap between the conduct alleged in regulatory and class action litigation, with flow on considerations for settlement dynamics in class actions, and for negotiations with regulators regarding penalty quantum.

That said, at this stage we do not expect it to be a game changer for overall class action risk. The decision did not involve any further payments in respect of legal costs or litigation funding premium. Moreover, section 1317QF is most likely to operate where a potential respondent is of limited means – which itself may deter a class action. The availability of insurance may remain a key factor in such cases.

For more information or assistance with navigating regulatory and class action proceedings, please contact our team.

_{*Ashurst acted for Noumi in the ASIC Proceedings.}

Authors: Rani John, Partner; Ian Bolster, Partner; Jacqui Turner, Lawyer and Oscar McLoughlin, Lawyer.