Background
The representative proceeding consolidated two class actions filed in 2019 concerning fees charged to, and returns obtained for, members of certain AMP superannuation funds. The claims alleged breaches by the fund trustees relating to cash and term-deposit options, MySuper products, and fees for other products, together with accessorial liability by related AMP entities.
A liability trial took place in 2025, after which the parties reached an in-principle settlement at mediation. The respondents agreed, without admitting liability, to pay $120 million. The applicants sought approval under s 33V of the Federal Court of Australia Act 1976 (Cth), together with approval of approximately $62.2 million in proposed deductions, including about $43.7 million in legal fees and disbursements, ATE insurance costs, funding commissions, reimbursement payments, and administration expenses. Some 128 group members lodged objections, including objections that the deductions were disproportionately high.
The Court’s Holding
Justice Moshinsky approved the $120 million settlement and the proposed allocation among categories of group members. Although describing the result as “very disappointing” for group members, the Court held that the settlement was fair, reasonable, and in their interests because of issues affecting the recoverability of any judgment. The distribution scheme was also fair and reasonable as between group members.
The Court refused to approve all requested deductions. It allowed $39,803,986 for professional fees, counsel’s fees, and disbursements, rather than the requested $43,673,064.44, and approved $3,622,500 for ATE insurance. It approved funding commissions of $7,250,643.58 for each funder but declined to increase them merely because the reduction in other deductions enlarged the net settlement pool. Reimbursement payments were reduced from $40,000 to $20,000 for each applicant and from $20,000 to $10,000 for each sample group member; the proposed $198,000 administration expense was approved.
Key Takeaways
- A class-action settlement may be approved despite producing a disappointing recovery where litigation and recoverability risks make the compromise reasonable.
- Settlement approval does not establish that the accompanying legal costs, commissions, and reimbursement payments are fair; each deduction requires independent scrutiny.
- Reducing legal costs does not automatically entitle litigation funders to larger commissions calculated from the resulting increase in net proceeds.
Why It Matters
The decision illustrates the Federal Court’s protective role in settlement approval, particularly where professional costs and funding charges would consume close to half of a substantial settlement. Even after extensive preparation and a liability trial, the Court required the deductions to remain proportionate to the result obtained for group members.
For class-action practitioners and funders, the ruling underscores the need to justify legal costs, insurance expenses, commissions, and applicant payments separately rather than treating them as an agreed package. It also shows that recoverability—not only prospects of establishing liability—can be decisive when assessing whether a settlement serves group members’ interests.