Class Actions – lawyers costs – the proper approach

In Johnston v Endeavour Energy [2016] NSWSC 1132 Hoeben CJ summarised the proper approach to the task of evaluating the overall reasonableness of a proposed costs deduction from a class action settlement.

The applicable principles have recently been set out by Osborne JA in Matthews. In Courtney v Medtel Pty Limited (No 5) [2004] 212 ALR 311; FCA 1406 at [61] (Medtel) (Sackville J) described his expectation as to the content of the material to be provided to the Court:

“61   It is for the reasons I have given that I suggested to [the applicant] that evidence should be presented from an independent solicitor or costs consultant, directed to the following matters:

(i)    the reasonableness of the terms of the fee and retainer agreements (including the provisions for ancillary services, interest and an uplift factor);

(ii)    whether the fees and disbursements actually charged by the Solicitors have been calculated in accordance with the fee and retainer agreement;

(iii)    confirming that, so far as the solicitor or costs consultant can determine, no significant portion of the fees and disbursements charged by the Solicitors have been inappropriately or unnecessarily incurred in conducting the proceedings on behalf of Mr Courtney and the represented group.

I made it clear that I did not expect the evidence to involve an exhaustive review of the files maintained by the Solicitors. I had in mind an overview that could be undertaken over a period of about two days.”