Contradictor Peter Jopling QC, who was given free rein in September to conduct an investigation into the legal team and funder behind the class action, which settled for $64 million two years ago, said there was a question as to whether a $2.65 million legal bill from barrister Norman O’Bryan SC and 200 days of work billed by junior barrister Michael Symons were genuine.

The barristers, who were the original counsel for lead applicant Laurence Bolitho, filed their bills in November 2017, almost five years after the class action was launched.

“These matters are important in the present context because we’ve seen no evidence, your Honour, of the significant bills that were produced by Mr O’Bryan and Symons,” Jopling told Justice John Dixon of the Supreme Court of Victoria on Monday.

Jopling said there was a question of whether the bills were accurate or whether they had been “invited” by solicitor Mark Elliott, who owned 75 per cent of Australian Funding Partners Limited, the funder behind the case, and who died in a vehicle accident in February this year.

Elliott’s firm Melbourne City Investments was the lead applicant in two separate class actions against Treasury Wine Estates that were stayed after the Supreme Court found Elliott had created MCI for the purpose of generating revenue from class action proceedings.

Jopling is seeking 11 categories of documents in relation to the O’Bryan and Symons’ bills, including information on how they were calculated.

Justice Dixon postponed the discovery request until Friday after O’Bryan’s barrister Mark Costello told the court his client needed “a fair opportunity” to respond to the application.

The tortuous road to settlement approval

The class action was filed by Portfolio Law in December 2012 on behalf of investors in Banksia, a debenture issuer, which collapsed in October that year owing $660 million. The case was brought against the finance group’s directors, auditors and legal advisors, and the debenture holder trustee, Perpetual subsidiary The Trust Company.

In March 2014, debenture holder and lead plaintiff Bolitho entered into a funding agreement with AFPL, then called BSL Litigation Partners. A partial settlement was reached in the case in April 2016, under which Banksia’s directors, auditors and advisors agreed to pay $13.25 million. The further settlement of $64 million was reached with the firm’s auditors and The Trust Company in December 2017.

Debenture holder Wendy Botsman filed an objection to the second settlement on January 24, 2018. Six days later, Justice Clyde Croft approved the deal, which included the $12.8 million commission to AFPL and $4.75 million in legal costs.

In March 2018, Botsman sought leave to appeal the judge’s approval, which AFPL opposed by arguing the objection to the settlement breached the litigation funding agreement she signed. The contract stipulated that funded group members must not “reject any settlement offer made by any defendant”.

Botsman alleged AFPL was in breach of the funding agreement, which required it to disclose the terms of the settlement to group members before executing the settlement deed. She also contended that the funder had waived its right to assert any contractual obligation on her part by issuing a court-approved notice that invited group members to make objections and by raising no arguments at the approval hearing against Botsman’s objection.

In rejecting the funder’s application to enjoin Botsman from filing the objection, Justice Ross Robson agreed that the funder had waived its right to enforce the funding agreement when it made a strategic decision to remain silent in the face of Botsman’s challenge at the approval hearing.

In November 2018, the Court of Appeal for the Supreme Court of Victoria approved the $64 million settlement, which also settled proceedings by the special purpose liquidators of Banskia, but sent the matter back to the trial division for reconsideration of the commission and fees.

The Court of Appeal found approval of the settlement and of the funder’s cut and legal fees to be disbursed from it were “distinct applications” under the settlement deed, and that, either way, the court was empowered under the Supreme Court Act to approve one and not the other.

AFPL sought special leave to the High Court to review the appeals court’s decision, but the High Court in May dismissed the application.

Contradictor appointed

On being remitted to the trial court, Justice Dixon appointed a contradictor, whose list of issues relevant to assessing whether the legal costs and commission should be approved included allegations against the funder and the lawyers of “disentitling conduct” that could see the court cut some or reject all of the fees and commission.

The misconduct included alleged breaches of fiduciary duty, breaches of professional conduct rules, contravention of obligations under the Civil Procedure Act and breaches of the funding agreement signed by Bolitho.

Allegations by the contradictor included the legal team providing misleading information to an expert witness, filing misleading opinions in the first settlement approval application and double counting settlement distribution scheme costs. It was also alleged that the special purpose liquidators did the vast bulk of the work to achieve the settlement. According to the contradictor’s evidence, Bolitho’s legal team filed one 12-page expert report and the SPRs filed a total of 26 expert reports, witness outlines and witness statements.

Further matters identified on a revised list of issues included inconsistent dates on counsels’ fee invoices; unpaid invoices stamped as paid or said to have been paid, in circumstances where AFPL’s funding agreement required invoices to be paid in order for it to recoup its costs; the creation of after-the-fact fee agreements; and time charged for work by senior counsel that lined up with dates counsel worked on other matters.

O’Bryan, Symons and Portfolio Law principal Anthony Zita had asked the court to limit the contradictor’s role, arguing that the allegations went beyond the scope of the remitter from the Court of Appeal and should be struck out.

In refusing the applications, Justice Dixon said the contradictor’s enquiries into the alleged misconduct were not beyond the scope of the issues properly arising on the remitter by the appeals court.

“It is not untenable for the contradictor to allege that there have been, in the circumstances, either breaches of fiduciary duty or conduct that could give rise to disciplinary sanction if clearly and distinctly addressed, not to the private or regulatory remedy that might ordinarily follow, but to demonstrating a normative standard by reference to which the court is invited, acting judicially, to exercise its discretion to approve payments to be deducted from a settlement sum as fair and reasonable,” he said.

The missing BlackBerry

The court also heard Monday that Elliott’s Blackberry, which was found in March, was still being mined for potential evidence relating to the class action proceedings, with Justice Dixon giving the forensic IT experts until May 1 to produce their results.

A pre-trial hearing may also be needed to deal with objections to tendered documents, the court heard, with Jopling saying such disputes should be resolved “sooner rather than later”. Justice Dixon will determine whether such a hearing is necessary after the contradictor files the courtbook and the various parties put on their objections.

The judge also reserved judgment on whether a separate mediation would be held regarding the live issues in the case, after AFPL barrister Samuel Horgan QC suggested “mature discussion” could reduce further costs in the case.

Bolitho is represented by Simone Jacobson, instructed by Crow Legal. Australian Funding Partners Limited is represented by Samuel Horgan QC, instructed by Arnold Bloch Leibler. Lindholm and McCluskey are represented by Jonathon Redwood, instructed by Maddocks. The contradictors were Peter Jopling QC and Jennifer Collins, instructed by Corrs Chambers Westgarth. O’Bryan was represented by Mark Costello, instructed by MinterEllison. Symons was represented by Robert Craig SC, instructed by King & Collins. Portfolio Law & Zita are represented by Christian Juebner, instructed by Colin Biggers & Paisley.

The class action is Laurence John Bolitho v Banksia Securities Limited (receivers and managers appointed) (in liquidation) & Ors.