Background
From 1985 to 2021, Scott North Pty Ltd (SNPL) and its sole director, Arthur North, operated as an independent financial advisory practice under AMP Financial Planning Pty Ltd (AMPFP). Their arrangement gave SNPL authority to provide financial services and receive commissions, while AMPFP retained institutional ownership of the client book. Central to the relationship was AMPFP’s “Buyer of Last Resort” (BOLR) policy, which allowed departing authorised representatives to require AMPFP to buy out their client register rights — valued, before August 2019, at a 4x multiplier applied to ongoing revenue. On 8 August 2019, AMPFP unilaterally reduced the multiplier to 2.5x. That change became the subject of a Federal Court class action, Equity Financial Planners Pty Ltd v AMP Financial Planning Pty Ltd (VID 498/2020), brought on behalf of all authorised representatives who held BOLR rights and had not yet exercised them as at that date. The class action settled in March 2024 for $100 million, with McElwaine J making orders under ss 33V and 33ZB of the Federal Court of Australia Act 1976 (Cth) binding group members to the Settlement Deed.
In October 2021, before the class action settled, SNPL and Mr North entered a Buyback Deed with AMPFP, surrendering client register rights for consideration in excess of $1 million (of which $840,108 was paid), and accepting restraints on competition, client solicitation, and information sharing. Days after completion, Mr North joined a rival firm and began accepting former clients. Charter Financial Planning Ltd — which had purchased the client register from AMPFP on the same day as settlement — and AMPFP commenced these proceedings in 2023 alleging breaches of the Buyback Deed. Charter sought damages for misleading or deceptive conduct; AMPFP sought to enforce the restraints.
SNPL and Mr North did not dispute the restraint breaches, but filed a cross-claim asserting that AMPFP had procured the releases and restraints in the Buyback Deed through unconscionable conduct, and seeking declarations that those provisions were void. AMPFP responded that the cross-claim was barred by the Settlement Deed from the class action. The court ordered that two threshold questions be determined separately: (a) whether SNPL and Mr North were group members of the class action; and (b) if so, whether clauses 2.5(a), 2.6 and 2.7 of the Settlement Deed barred the cross-claim.
The Court’s Holding
On the first question, Pike J held that SNPL was a group member of the class action but Mr North personally was not. Group membership required that, as at 8 August 2019, the person was a party to an Authorised Representative Agreement (ARA) with AMPFP naming them as the “Practice.” Although no signed ARA between SNPL and AMPFP could be located, the court held that contract formation is not confined to the act of signing. Drawing on SNPL’s continuous listing on ASIC’s register of authorised representatives from January 2004, the framework established by the Financial Services Reform Act 2001 (Cth) requiring formal authorisation for financial services, and industry evidence about the rollout and updating of ARAs through The Advisers Association, the court was satisfied that SNPL entered into an ARA in or around 2004 and remained a party to it on 8 August 2019. Mr North’s own recollection was simply that he could not recall signing — he did not affirmatively deny it. Because the ARA named the corporate practice (SNPL) rather than Mr North individually, Mr North was not himself a group member.
On the second question, the court held that even though SNPL was a group member, the Settlement Deed did not bar the cross-claim. The court drew a critical distinction between claims that were properly common questions in the class action — specifically, the damages claim calculated by reference to the difference between the 4x and 2.5x multipliers — and claims arising from SNPL’s individual circumstances, namely whether AMPFP engaged in unconscionable conduct specifically in procuring SNPL’s releases and restraints under the Buyback Deed. The representative applicant’s authority to bind group members in the class action settlement extended only to the former category. Individual claims that were not, and could not properly have been, common questions in the representative proceedings were outside the scope of the releases effected by the Settlement Deed.
The court also rejected Anshun estoppel arguments, finding that the individual unconscionable conduct claim arising from SNPL’s specific Buyback Deed circumstances was not a matter that SNPL could or should have been required to raise in the class action opt-out process. Bringing the individual claim in the present proceedings was not an abuse of process. The damages component of the cross-claim, to the extent it was calculated by reference to the multiplier differential, was acknowledged by the defendants themselves to be unavailable as a result of group membership, but the declaratory relief seeking to void the Buyback Deed’s releases and restraints remained open.
Key Takeaways
- A corporate authorised representative can be a class action group member even where no signed agreement is located, if contract formation is established from surrounding circumstances, regulatory registration, and subsequent conduct.
- An individual director of a corporate practice is not automatically a group member merely because the corporation is one — the ARA must name that individual as the “Practice.”
- A class action settlement deed, approved under s 33ZB of the Federal Court of Australia Act 1976 (Cth), binds group members only with respect to claims that were properly within the scope of the representative applicant’s authority — it does not extinguish individual claims that could not have been raised as common questions.
- Where unconscionable conduct is alleged to have been directed at a specific group member in connection with a particular buyback transaction, those claims are individual rather than common and survive a class action settlement release.
- Damages calculated by reference to the class action’s core subject matter (the BOLR multiplier reduction) are barred for group members, even if individual equitable claims arising from the same transaction are not.
Why It Matters
This decision provides important guidance on the reach of class action settlement releases in Australian representative proceedings, a question of practical significance for financial services disputes and beyond. Courts and practitioners have long grappled with the boundary between “common” and “individual” claims in the class action context: this judgment confirms that a representative applicant’s authority to bind group members is limited to claims that could properly form common questions, and that individual equitable claims — particularly those turning on the specific circumstances in which a party entered a transaction — remain available even after a settlement is approved and s 33ZB orders made.
For AMPFP and the broader financial planning industry, the decision also affirms that the absence of a signed authorised representative agreement is not necessarily fatal to establishing group membership or contractual liability: the totality of the parties’ course of dealing, regulatory records, and the commercial framework they operated within can collectively prove contract formation. Financial services licensees and their networks should take note that informal or incompletely documented authorisation arrangements may nonetheless give rise to contractual obligations — and class action exposure — across their adviser populations.