Judge criticises ‘eye-watering’ legal costs in stolen wages class action

The multimillion-dollar legal bill from a national law firm in the Northern Territory stolen wages class action has been criticised by the Federal Court’s Chief Justice for being an “eye-watering sum”.

Editor’s note: This story first appeared on HR Leader’s sister brand, Lawyers Weekly.

As part of the Commonwealth’s $202 million settlement in the historic Northern Territory stolen wages class action, it has agreed to contribute $15 million to Shine Lawyer’s legal costs – but that sum is just under $10 million less than what the major firm will spend.

Appearing in an Alice Springs location for last Thursday’s (7 November) proceedings, counsel William Edwards KC said the costs already incurred and the anticipated future costs of the eligibility registration process would cost the class action an estimated $24.5 million.

Chief Justice Debra Mortimer was taken aback by the figure.

“Those are eye-watering sums, Edwards. There are many agencies working with Aboriginal communities that don’t have that much money on their annual budget,” Chief Justice Mortimer said.

To “accelerate” the payment process for any living group members, of which there are an estimated 800 people, Edwards told the court the first component of the settlement is made up of a $54 million lump sum. This figure would be distributed among at least 3,000 people.

However, the total each claimant will receive will be subject to deductions, including the funder’s commission and legal costs.

If a number much less than 3,000 people register for the lump-sum payment, Chief Justice Mortimer said they were looking at a “quite confronting situation” that would see the funder pocket more of a settlement that should be distributed among group members.

The second component would be distributed “per person”, with a maximum of 10,000 eligible claimants receiving up to $18,000 each.

The eligible claimants will have to show they are an Aboriginal or Torres Strait Islander person, they were at least 10 years old between 1933 and 1971, they worked in the Northern Territory during that same period, and they were paid little or no wages.

Spouses or descendants of eligible claimants who have passed will be entitled to compensation. For deceased eligible claimants with more than one child, the $18,000 figure would be split between them.

Submissions for differentiation of those payments were put before the court to accommodate the different workloads of the claimants.

For example, counsel for the Commonwealth said those who worked for “more than half their life” could receive more.

Chief Justice Mortimer took objection to this submission, given “vast assumptions are being made” that do not account for job changes or the Indigenous people whose lives were cut short.

“These assumptions are entirely hypothetical, and you are proposing that the court approve payments based on completely hypothetical assumptions about what people did or didn’t do, or how long they did or didn’t work, [and] we don’t know any of that,” Chief Justice Mortimer said.

Without the differentiation, a “line is being drawn in the sand” where each claimant receives the same sum despite the industry they worked in and how many hours they worked. Either way, all parties agreed not to consider gender differences in the payments.

Edwards said there was also an “argument” to be made for modest reimbursement payments to fund group members’ travel, who came “very long distances to give their evidence” and assisted lawyers.

All money is to be held by Deloitte in the meantime.

An administrator would also determine the question of minimum payments and would seek court approval before sending any out.