Low registration prompts judge to issue post-settlement approval notice to all eligible class members

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This was a class action on behalf of persons who purchased life insurance policies issued by Westpac Banking Corporation and Westpac Life Insurance Services Ltd (together, Westpac) after February 2011. The applicants alleged that class members paid more for their policies as a result of receiving advice from Westpac advisers than they would have paid had they received advice from independent financial advisers.

In April 2021, the parties agreed to settle the proceeding. The key terms were that Westpac would pay a maximum of $30 million, comprised of: (i) $9 million for legal and administration costs; and (ii) 50% of the value of class members’ claims who register to participate in the settlement, capped at $21 million. However, in the event that not enough class members come forward to reach the $21 million cap, Westpac would receive a reversion payment. 

In this decision, Lee J approved the settlement of the proceeding, including the following deductions from the settlement sum:

• ~$5.05 million for legal fees, after an agreed reduction of ~$780,000 from Shine Lawyers’ (Shine) costs. Reductions were applied to amounts claimed for the following categories of costs: uplift fee; costs disclosure; travel; the process by which items were divided, allocated and recorded; multiple personnel being used for various attendances; and a ‘grab-all’ amount described as “pleadings and filing”. Ultimately, the total reduction was lower than the ~$850,000 proposed by the Court-appointed costs referee (Mr Roland Matters) as a result of his Honour accepting evidence filed by Shine in relation to the reductions;

• ~$3.72 million for disbursements, after an agreed reduction of ~$70,000 in respect of counsel fees;

• ~$3.05 million for the costs of obtaining adverse costs insurance;

• ~$0.51 million for settlement approval costs and disbursements;

• $42,500 for the applicants’ reimbursement payments, comprised of $20,000 for the first applicant and $7,500 for each of the second, third and fourth applicants; and

• $32,895 for “other costs”.

His Honour also made orders: (i) approving the distribution of post-settlement approval notices to potential class members inviting them to register to participate in the settlement; and (ii) requiring Westpac to provide Shine (in its capacity as scheme administrator) with lists of the contact details of potential class members, in order to facilitate the distribution of the post-settlement approval notices (subject to Shine executing an undertaking to only use the lists for the purpose of administering the scheme, and file an affidavit confirming the destruction of the lists together with the concluding settlement administration report). 

In making those orders, which were opposed by Westpac, his Honour held that the Court clearly has power to order the issuance of post-settlement approval notices to class members under ss 33V(1) or 33X(5) of the Federal Court of Australia Act 1976 (Cth), even without recourse to s 33ZF. His Honour was persuaded to order the issuance of post-settlement approval notices because he had concerns as to whether the notice of proposed settlement (that had been sent to class members prior to the settlement approval hearing) had effectively communicated information regarding registration. The primary source of his Honour’s concern was that only ~13,000 of up to ~88,000 potential class members had registered to participate in the settlement, when it was objectively in their commercial interests to do so. His Honour observed that while the pre-approval notices were “deliberately formulated in terms as clear as possible” (at [46]), it was “fair to say, that at over seven and a half pages, it [was] a lengthy and somewhat complex document” (at [37]). His Honour said it was “appropriate for the Court to take a conservative approach that reflects its protective role”, which in the circumstances required it “to be assured that group members have made an informed decision after having the relevant information communicated to them in the simplest possible way” (at [48]). Ultimately, the post-settlement approval notices approved by his Honour were very simple; being a short email of less than one page and a one sentence SMS message.

Lenthall v Westpac Banking Corporation (No 3) [2021] FCA 1004 

Federal Court of Australia, Lee J, 9 August 2021

Applicants’ Solicitors: Shine Lawyers;
Respondents’ Solicitors: Roberts & Partners Lawyers;
Applicants’ Funder: N/A (formerly JustKapital Litigation Pty Ltd)

Austlii Link: Accessible here

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