Come fund with me: a common fund order first in Queensland

In a Queensland first, the Supreme Court of Queensland in Kozik v Redland City Council [2025] QSC 124 (Kozik) has approved distribution of a 25% commission to a class action litigation funder pursuant to a common fund order (CFO) made at the commencement of the proceeding.

While the broader proceeding – including appeals to the Court of Appeal^[1] and High Court^[2] – may separately be of interest regarding its implications for the law of restitution in Australia, Justice Treston’s judgment of 4 June 2025 provides useful guidance as to judicial approval of CFO distributions under Queensland’s class action regime (set out in Part 13A of the Civil Proceedings Act 2011 (Qld) (CP Act)).

When read together with the High Court’s decision in BMW Australia Ltd v Brewster (Brewster),^[3] and its recent decision in Kain v R&B Investments Pty Ltd (Blue Sky),^[4] Kozik confirms the availability of CFOs before the Queensland Courts, albeit only at settlement or judgment of class action proceedings.

A Short History of CFOs

A CFO is an order requiring all group members who have not opted out of a class action proceeding to contribute equally to the payment of a litigation funder’s commission out of a “common fund”. Such commissions ordinarily contain a premium for litigation risk and are calculated as a percentage of a settlement or judgment sum.

CFOs became a common feature of funded class actions following the Full Federal Court’s 2016 decision in Money Max Int Pty Ltd v QBE Insurance Group Pty Ltd,^[5] in which it held that s 33ZF of the Federal Court of Australia Act 1976 (Cth) (FCA Act) – and by extension, that section’s equivalents in other jurisdictions – gave the Court sufficient power to make an interlocutory CFO shortly after commencement of a proceeding.

In Brewster, a majority of the High Court rejected this, finding neither s 33ZF nor its NSW equivalent allowed for the making of such a CFO. However, the High Court did not directly consider the position with respect to CFOs made under other provisions, and the Full Federal Court subsequently held in several decisions that ss 33V and 33Z of the FCA Act empowered the Court to make CFOs at the settlement or judgment of a class action.^[6]

The High Court finally provided clarity in Blue Sky, finding that these provisions allowed for the making of settlement or judgment CFOs in favour of a litigation funder, but not in favour of a law firm (see our alert on the judgment here).

The CFO in Kozik

Following the commencement of the class action in October 2018, the plaintiffs’ solicitors filed an application seeking a CFO that would “allow the proceeding to progress with an open class action without needing to sign up individual Group Members to costs agreements and funding agreements”.^[7]

On 28 June 2019, Justice Boddice made the CFO in favour of the litigation funder pursuant to ss 13 and 103ZA of the CP Act (the latter section being the Queensland equivalent to s 33ZF of the FCA Act) in the following terms:

Common Fund

1. Subject to further Order, pursuant to sections 13 and 103ZA of the Civil Proceedings Act 2011 (Qld) (CPA) and upon the undertaking from Augusta Ventures Limited, the Plaintiff and Shine Lawyers to each other and to the Court as set out in Annexure ‘B’ to these Orders, an Order that the Plaintiff and Group Members shall pay from any Resolution Sum (as defined in the Funding Terms being Annexure ‘A’ to these orders) an amount to be determined by the Court and not exceeding the amounts calculated in accordance with clause 6 of the Funding Terms, prior to any distribution to Group Members (Common Fund Order).^[8]

The “Resolution Sum” encompassed any judgment or settlement amounts (including in any subsequent proceedings brought by any Group Member in reliance on the findings in the proceeding), as well as any interest and costs.

By its terms, the CFO required the plaintiffs to seek a determination of the amounts to be paid to the funder from the Resolution Sum prior to any distribution.

On 30 September 2021, Justice Bradley delivered judgment in favour of the plaintiffs, awarding damages of $3,791,536.80 and making other orders as required by Part 13A. His Honour also ordered that the proceeding be adjourned to a date to be fixed to “enable adjudication of interest under Order 4(b) above and any consequential matters and other matters required under Part 13A of the Civil Proceedings Act to be heard and determined”. Prior to that occurring the proceeding saw appeals to the Court of Appeal and High Court.

Approval of the Deductions

When the proceeding eventually returned to the Trial Division, there were five issues for determination and approval under Part 13A of the CP Act:

1. settlement of the Council’s liability to pay interest and costs on the judgment sum;
2. approval of the scheme of distribution;
3. the various deductions to be made from the Resolution Sum;
4. whether to make a fixed costs order in favour of the plaintiffs for the period following delivery of the High Court’s judgment; and
5. whether the Council should pay the costs of administering the distribution scheme.

In relation to the third issue, the funder, Augusta Ventures Limited (Augusta), appeared as an intervener and sought two deductions – a commission of $1,435,134.20 (being 25% of the judgment sum plus agreed interest), and reimbursement for professional fees and disbursements in the amount of $1,192,314.^[9]

Justice Treston noted that under the funding arrangements, the funder was obliged to fund legal costs and disbursements, the costs involved in provision of security for costs, the costs of any adverse costs order and insurance premiums. The CFO then provided that the funder was to receive its costs and commission first, in priority to any other payment from the Resolution Sum.

In concluding that she was satisfied that the commission was fair and reasonable in the circumstances, Justice Treston considered the following matters:

Her Honour also determined that Augusta should be reimbursed for the professional fees and disbursements it had incurred. Reimbursement of these amounts had been contemplated by the funding terms and they had already been recovered by way of costs and outlays.^[10]

Queensland CFOs Post-Brewster and Blue Sky

In a post-Brewster world, the Queensland Supreme Court is no longer empowered under s 103ZA of the CP Act to make CFOs at the commencement of proceedings, as occurred in Kozik (with the CFO, made just over five months prior to the decision in Brewster, remaining valid by virtue of being an order of a superior court).^[11]

However, with the handing down of Blue Sky, Queensland litigators now have certainty with respect to ss 103R and 103V of the CP Act (being the cognate equivalents to ss 33V and 33Z of the FCA Act) empowering the Court to make CFOs in favour of litigation funders at judgment or settlement.

Additionally, Justice Treston’s judgment in Kozik helpfully illustrates the application of established principles with respect to the approval of CFO deductions and judgment sum distributions in a Queensland context. It will almost certainly lay the foundation for future approval determinations as further class action proceedings proceed to judgment or settlement in Queensland.