The fate of class action Common Fund Orders: the policy, procedural and constitutional issues of a legislative revival

Common fund orders (‘CFOs’) have had a significant effect on Australian third-party- funded class actions by requiring all class members to make a contribution to the third-party litigation funder’s fee in the event of a successful outcome. This altered past practice whereby only class members who had contracted with the litigation funder would be liable for such a contribution. However, in a 5:2 decision in BMW Australia Ltd v Brewster (2019) 94 ALJR 51 (‘Brewster’), the High Court cast doubt on CFOs, determining that neither s 33ZF of the Federal Court of Australia Act 1976 (Cth) nor s 183 of Civil Procedure Act 2005 (NSW) provided a legal basis for making CFOs at the outset of proceedings so as to secure litigation funding support. In late 2020, the Commonwealth Parliamentary Joint Committee on Corporations and Financial Services recommended that legislation be enacted to ‘address uncertainty’ arising from Brewster in a manner that would enable CFOs to be made at settlement or judgment. In this article, the authors canvass normative arguments as to the merits of CFOs and compare the alternative practice of making funding equalisation orders. They also consider the related issue of courts setting overall funding commissions.