Kozik v Redlands City Council

The plaintiffs successfully brought a representative proceeding against the defendant and were awarded $3,791,536.80 in damages. That decision was undisturbed on appeal to the Court of Appeal and later the High Court. The plaintiffs brought an application seeking various orders as to the administration and finalisation of the proceeding. Her Honour ordered, broadly in favour of the plaintiffs, that a distribution scheme for the payment of the judgment sum plus interests and costs be approved and paid for by the defendant, a deduction be made from the judgment sum in favour of a litigation funder, and that costs incurred by the plaintiffs following the High Court judgment be paid for by the defendant in a fixed sum.

Treston J

4 June 2025

Background

Each plaintiff owned properties within the Redland City Local Government area. [16]. By resolutions passed by the defendant each year from 2011 to 2016, rates notices were issued to the relevant taxpayers which included “Special Charges” to fund services relating to canal or lakefront reserves. [16]. Some of the funds flowing from the Special Charges was spent before the defendant became aware that the authorising resolutions were invalid. [16].

The plaintiffs brought a class action proceeding on behalf of 1,620 land-owning Group Members who paid the Special Charges. [1]–[2]. A common fund order (“CFO”) was made on 28 June 2019. [20]. Justice Bradley (as his Honour then was) awarded judgment in the plaintiffs’ favour of $3,791,536.80 on 30 September 2021. [17]–[18]. Appeals of that judgment to the Court of Appeal and to the High Court of Australia failed. [3]. The purpose of this application was to bring finality to the class action proceeding by obtaining orders for the distribution of monies to the Group Members. [5].

The legislation

Justice Treston canvassed Part 13A Civil Proceedings Act 2011 (“CP Act”) at length, finding that the combined effect of relevant provisions and the orders of Justice Bradley on 30 September 2021 was such that further orders were necessary to attend to the distribution of monies following judgment. [27]–[37]. The Court has broad discretion in determining that distribution (BMW Australia Ltd v Brewster (2019) 269 CLR 574). [38].

Her Honour distilled the application into five issues.

Issue 1 – settlement of interest and costs

Her Honour accepted the parties’ agreement to payment of interest and costs flowing from the primary award. [41]–[44].

Issues 2 and 5 – distribution scheme

The second issue involved her Honour’s consideration of the distribution scheme proposed by the solicitors for the plaintiffs. [45]–[47]. Noting that the Court’s task was to determine whether the distribution scheme was fair and reasonable in the circumstances, [49]–[50], her Honour approved the scheme on the bases that it: fairly balanced the parties’ interests; provided a sufficient mechanism for ensuring that each Group Member received their proper entitlement; and was competent to bring finality to the distribution of the funds. [51].

The fifth issue related to the costs of the distribution scheme. [117]. Her Honour ordered that those costs ought to be borne by the defendant because “[t]he plaintiffs were put to the time, trouble and expense of bringing proceedings against [the defendant], which proceedings were entirely successful. [129].

Issue 3 – deductions

The Court is empowered to make deductions from an award of damages under s 103V CP Act. [53]–[55]. Though some minor disbursements were allowed by her Honour, [75]–[79], the primary deduction related to commission payable to the Intervener. [57]. Having acted as a litigation funder for the proceedings, the intervener sought payment of 25 per cent of the judgment sum ($1,435.134.20). [57].

In determining whether the commission sought by the intervener was reasonable, her Honour started from the proposition that litigation funders are entitled, in success, to reimbursement of their fees, return of any security for costs, and a reasonable commission. [58]. Whether a commission is “reasonable” depends on the risks of the litigation financed, the legal costs advanced by the funder and its total cost exposure, and the quantum of the judgment awarded (among other things). [62]. It was acknowledged by her Honour that commissions should provide an appropriate reward for the risk undertaken by the litigation funder. [63].

Justice Treston considered that the litigation risk assumed by the funder was substantial: the proceeding had “uncertain prospects of success” at its commencement, [65], the funder was unable to obtain insurance for the full amount of the adverse cost risk after February 2021, exposing it to a sum of $730,000, [67], and the proceeding was finely balanced in both the Court of Appeal and the High Court. [69]. It was also relevant that:

• the intervener was the only funder willing to fund the litigation; [70];
• the award followed litigation that proceeded to judgment rather than mere settlement; [72];
• the intervener is entitled to claim more than it is pursuant to the funding agreement; [74]; and
• the Group Members broadly accepted the commission. [74].

Accordingly, her Honour was satisfied that the claim for commission was fair and reasonable. [75].

Issue 4 – costs following 14 March 2024

The High Court delivered judgment on 14 March 2024. [80]. The plaintiff sought an order for its costs from that date onwards in a fixed amount. [13]. The defendant submitted that those costs ought not to be payable because they did not fall within the “costs of the proceeding” as defined in r 679 Uniform Civil Procedure Rules 1999. [81]–[83]. Justice Treston rejected that submission, reasoning that several matters remained to be dealt with in accordance with the order of Bradley J following delivery of judgment in the High Court. [85]. Accordingly, the work was “so closely connected to the proceeding that it is properly covered by the term ‘the proceeding’ as it appears in the UCPR”. [96]. Justice Treston further held that those costs ought to be fixed given the protracted length of the proceedings, the importance of reaching finality in the proceedings, the expense and delay associated with a costs assessment, and the benefit of avoiding a lengthy costs dispute. [100]–[106]

Having regard to evidence given by a costs consultant, her Honour fixed costs at $300,000. [116].

N Powys