NSW Supreme Court Ends Class Action, Citing Lack of Funding
Over recent months we have seen numerous victories for funded class actions in Australia, with litigation funders earning significant returns on their investments. However, a judgement from one of the state Supreme Courts shows that if funders lose confidence in a case, the prospect of success for group members can quickly disappear. A judgement by the Supreme Court of New South Wales in the case of Australian Retirement Group Pty Ltd v The Commonwealth Bank of Australia Ltd (No 4), approved the settlement and discontinuance of proceedings the class action brought against CBA after the plaintiffs failed to secure litigation funding to continue the litigation. In his decision, Justice Ball explained that ‘it is not realistic to think that the plaintiffs will be able to obtain alternative litigation funding or representation by counsel on a contingency basis.’ He went on to say that as ‘the underlying claim appears to have poor prosects of success’, and he remained unconvinced that the plaintiffs would be able to secure either funding or representation. The class action had previously received litigation funding from JustKapital Limited, with Shine Lawyers paid to represent the plaintiffs. However, JustKapital stopped funding for the case on 29 September 2020. Following the cessation in funding, Hall Partners acted for the plaintiffs starting from 20 May 2021, but ‘neither Hall Partners nor the plaintiffs have been able to arrange alternative funding.’ The class action was first brought in 2016 on behalf of small business customers of Bankwest, now a subsidiary of CBA, ‘who were placed into the Credit Asset Management (CAM) division of Bankwest and were not subsequently “rehabilitated”.’ The litigation focused on allegations that after Bankwest was acquired by CBA, the bank ‘engaged in unconscionable conduct by treating the loans of group members as nonperforming and bringing them to an end in a way that was harsh, unconscionable and in breach of provisions of the Banking Code of Conduct.’ The terms of the proposed settlement for ending the proceedings include CBA receiving a payment of $2.9 million to cover legal costs. This will be paid by AmTrust Europe Limited, ‘which provided an indemnity as security for CBA’s costs.’ In return, CBA will pay £375,000 as a contribution towards the group members’ legal costs. The full judgement can be read here.