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ARTICLE · 24 SEPTEMBER 2013

Class Action Settlement Overturned On Appeal For First Time In Australia

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The Full Federal Court in Australian Securities and Investments Commission v Richards [2013] FCAFC 89 has overturned a 35 percent uplift in recovery for group members who self-financed the cost of prosecuting their class action, over those who did not.

United StatesLitigation, Mediation & Arbitration
Michael Legg
Michael Legg
John Emmerig
John Emmerig
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The Full Federal Court in Australian Securities and Investments Commission v Richards [2013] FCAFC 89 has overturned a 35 percent uplift in recovery for group members who self-financed the cost of prosecuting their class action ("funder's premium"), over those who did not. The uplift was designed to reward the self-financiers in a manner akin to the return an external funder would have taken had one been involved.

The Full Federal Court decision emphasises the important protective role that the courts should play in relation to class action settlements, especially with regard to group members who do not have legal representation. The settlement was overturned as the funder's premium meant the settlement was not "fair and reasonable having regard to the claims made by group members who will be bound by it".

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