Background
Andreas Sklavos brought representative proceedings on behalf of students who enrolled in the University of Newcastle’s Bachelor of Medical Engineering (Honours) between 1 November 2017 and 31 July 2019. The claim alleged misleading or deceptive conduct, negligence and breach of contract arising from representations that the course was accredited by Engineers Australia and under the Washington Accord, and that graduates could obtain engineering employment in Australia and overseas without further qualification.
The University accepted that some promotional material described the course as accredited when it was not, while other material stated that accreditation was being sought. It disputed liability, including whether the conduct occurred in trade or commerce, and denied that the students suffered compensable loss. The parties agreed at an early stage of the litigation to settle for $7.55 million, inclusive of costs and deductions, together with an apology and assistance for group members seeking a Stage 1 Competency Assessment.
Approximately 164 group members were eligible to participate. Four objected, principally to the proposed equal distribution method and certain deductions, but none appeared at the approval hearing.
The Court’s Holding
Pike J approved the settlement under s 173 of the Civil Procedure Act 2005 (NSW), subject to modifications. The Court found it fair and reasonable both between the parties and among group members, taking into account the substantial risks concerning causation and damages, the early resolution and resulting cost savings, the non-monetary relief, and the low objection rate.
The Court approved equal distribution among eligible registrants, while excluding students who withdrew before 31 December 2018 because they left before the accreditation issue became known. Although individualized assessments might have produced greater precision, their cost would have substantially depleted the settlement fund. Eligible registrants were expected to receive approximately $30,000 each, depending on participation and final deductions.
The Court approved legal costs, capped future administration costs, and reimbursement payments, but reduced the litigation funder’s commission from the requested 23% to 22%, or $1.661 million. It declined to permit a separate deduction for after-the-event insurance costs, reasoning that paying both a commission rewarding the assumption of risk and separate insurance costs could involve double recovery for that risk.
Key Takeaways
- A representative-proceeding settlement must be fair and reasonable both between the parties and among group members considered as a whole.
- A simple equal-distribution scheme may be approved where individualized loss assessments would consume a disproportionate share of the settlement fund.
- Courts scrutinize the funder’s aggregate return and may reduce a commission or reject separate insurance-cost reimbursement to avoid overcompensating the same risk.
Why It Matters
The decision illustrates how Australian courts balance possible recovery against litigation risk, delay and administration expense when supervising class-action settlements. A factual concession about inaccurate advertising did not resolve legal liability: the University continued to contest whether the statutory prohibition applied, whether the alleged representations caused loss, and whether group members had suffered compensable damage.
It also highlights close judicial oversight of litigation-funding deductions. Even where third-party funding was necessary to bring the case, the Court independently assessed the funder’s compensation and protected the settlement pool from deductions it considered duplicative.