Federal Court of Australia Orders Respondent in Shareholder Class Action to Hand Over Insurance Information

Federal Court of Australia Orders Respondent in Shareholder Class Action to Hand Over Insurance Information

The following piece was contributed by Anne Freeman of Australian law firm, Piper Alderman.

Virgin Australia, which has been sued by investors who purchased unsecured notes in the airline based on statements in a 2019 prospectus for a capital raising, has been ordered to advise the lead applicant in the class action whether its has made a claim against its insurer for its costs and any liability in the class action, and whether its insurer has agreed to grant indemnity.  It has also been ordered to produce copies of any insurance policies which might respond to the claims made in the class action[i]. The orders made are in contrast to a 2020 decision of the Court[ii], which found that the case management powers of the Court did not empower it to order the disclosure of the respondent’s insurance policies in class actions.  In that case, very similar orders were sought, namely for production of policies and for communications regarding the insurer’s position on the grant of indemnity.  The applicant in that case relied upon a 2019 Federal Court authority, Simpson v Thorn Australia Pty Ltd trading as Radio Rentals[iii] , which had resulted in orders for the production of insurance information, to argue that the documents were relevant to inform the applicant whether further prosecution of the proceedings was commercially viable and whether mediation was appropriate and, if so, what the appropriate quantum of settlement might be.  The applicant also argued that the documents were relevant to the approval of the settlement and to determine whether action against the insurer may be needed to obtain a declaration of indemnity.  The judge disagreed, taking the conventional position that insurance information is not relevant to the proof of a cause of action in the proceedings and is therefore not discoverable, and noting that the case management powers of the Court were not designed to “confer an asymmetric commercial advantage in favour of one party at the expense of another” in mediations.  Beach J also rejected the suggestion that the documents were needed for any settlement approval, and distinguished the position in Simpson where leave had been granted to bring a claim against the insurer. The orders are also in contrast to a decision of another Federal Court judge, who declined an application by a shareholder to access insurance policies under a discretionary power which may allow shareholders access to the books and records of the company, if the application is made in good faith and for a proper purpose[iv].  That decision was based upon a finding by the judge that the claims made by the class members did not arise from their rights and entitlements as shareholders but rather as potential investors, and that therefore the application was not brought for a proper purpose. The orders in Virgin Australia were made in the context of a Deed of Company Arrangement and the need to consider which claims against the company were covered by insurance.  That made the insurance position relevant, and distinguishes it from the decision in Evans.  However, the decision does show that accessing insurance information is a matter to be considered carefully in the circumstances of the individual case.  There are mechanisms available to obtain insurance information, which is obviously valuable in considering the recoverability of any funded claim.  Early consideration should be given in each class action as to potential means to obtain this information. [i] Matheson Property Group Australia Pty Ltd as Trustee for The MPG Trust v Virgin Australia Holdings Limited NSD346/2022, order of Lee J, 28 June 2022 [ii] Evans v Davantage [2020] FCA 473 [iii] [2019] FCA 1229 [iv] Ingram as trustee for the Ingram Superannuation Fund v Ardent Leisure Limited [2020] FCA 1302  
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‘Forensic Independence’ from Funders at Forefront of Pogust Goodheads’ Brazil Claim

By John Freund |

Pogust Goodhead has emphatically denied that it is controlled by litigation funders, insisting it retains full “forensic independence” in the high‑profile claim over the 2015 Mariana dam collapse.

As LFJ recently reported, the class action firm, representing hundreds of thousands of victims in a potential £36 billion lawsuit against mining giant BHP, is under scrutiny following the recent ousting of its co‑founder and chief executive, Tom Goodhead, at the behest of its primary financier, Gramercy Funds Management.

An article in The Law Society Gazette reports that Pogust Goodhead maintains it enjoys “forensic independence” from its principal backer. Opponents—including BHP and its counsel, Slaughter and May—have raised serious concerns about governance, questioning whether Gramercy now exerts undue influence over strategic decisions—an arrangement that could run foul of English and Welsh rules reserving case control for qualified lawyers.

In response, Pogust Goodhead reiterated that it remains “fully independent, with complete control over the strategy and direction of every case” and that its renewed governance structures strengthen its capacity to act in its clients’ best interests. Gramercy, for its part, denied any ownership or management control of the firm.

Looking ahead, this unfolding governance dispute raises critical questions for the future of litigation funding: How will courts view funder-linked control over claimant law firms? Could the outcome limit or reshape access-to-justice models reliant on third-party financing? As this case nears a key ruling, the legal funding industry may be on the cusp of a regulatory watershed.

BHP Presses Gramercy–Pogust on Control of £36bn Claim

By John Freund |

A high-stakes governance fight is spilling into the UK’s largest group action. BHP has demanded clarity over hedge fund Gramercy Funds Management’s role at Pogust Goodhead, the claimant firm fronting a £36 billion suit tied to Brazil’s 2015 Mariana dam disaster. The miner’s counsel at Slaughter and May points to recent leadership turmoil at the firm and questions whether a non-lawyer financier can exert de facto control over litigation strategy—an issue that cuts to the heart of legal ethics and England & Wales’ restrictions on who can direct claims.

Financial Times reports that Gramercy, which finances Pogust, has just extended $65 million more to the firm after the removal of CEO-cofounder Tom Goodhead. BHP wants answers on independence and management oversight as the case nears a pivotal High Court ruling. For its part, Pogust says it remains independent and committed to its clients, while Gramercy rejects any suggestion it owns or manages the firm. The backdrop is familiar to funders: courts’ increasing scrutiny of who calls the shots when capital underwrites complex, bet-the-company litigation. Prior settlement overtures from BHP and Vale—reported at $1.4 billion—were rebuffed as insufficient relative to the claim’s scale and alleged harm.

Beyond this case, the episode underscores a larger question: how far can financing arrangements go before they collide with the long-standing principle that lawyers—and only lawyers—control litigation? The answer matters well beyond Mariana. If courts or legislators tighten the definition of control, expect deal terms, governance covenants, and disclosure norms in UK funding to evolve quickly. For cross-border mass-harm claims, the line between support and steer is narrowing—and being tested in real time.

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By John Freund |

A new opt-out competition claim aims squarely at Amazon, alleging price-parity tactics inflated costs for more than 45 million UK consumers. The Association of Consumer Support Organisations has filed for certification in the Competition Appeal Tribunal, instructing Stephenson Harwood with counsel from Monckton Chambers. The claim asserts Amazon’s marketplace policies restricted third-party sellers from offering better prices elsewhere—costs that, ACSO says, consumers ultimately bore.

The Global Legal Post notes a third-party litigation funder—confirmed as a member of the Association of Litigation Funders—is bankrolling the action, with identity to be revealed at certification. That disclosure posture aligns with the CAT’s funder-transparency expectations post-PACCAR while preserving competitive sensitivity during the early phase. On the defense side, Amazon labeled the case “without merit,” and emphasized consumer benefits and seller support on its platform. For claimant-side practitioners, the case illustrates how funders continue to underwrite large opt-out competition claims notwithstanding shifting case law on damages-based LFAs; structures are adjusting, not retreating.

If certified, the case will test funder appetite for big-ticket consumer competition matters amid the UK government’s newly announced review of the collective actions regime. It could also influence how funders structure returns (percentage vs. multiple, hybrids) to thread the needle between tribunal oversight and commercial viability. Watch for whether the CAT’s scrutiny of fees and “just and reasonable” outcomes further standardizes funding terms across UK opt-out claims.