Federal Court unlocks civil penalties for class action members - ASIC v Noumi sets a new course

For the first time, the Federal Court of Australia has ordered that an ASIC civil penalty, be diverted away from the Commonwealth for the benefit of group members in a parallel class action, with the intention that it be made available to those group members in addition to the Class Action settlement sum of A$43 million.

In ASIC v Noumi Limited (No 5) [2025] FCA 1524, Justice Jackman ordered that the A$5 million pecuniary penalty previously ordered against Noumi be paid to the administrator appointed in the Victorian class action so it could be distributed to group members. This is the first time that the Court has relied substantively on section 1317QF of the Corporations Act 2001 (Cth) to make an order applying the penalty for the benefit of class members, which in the circumstances of Noumi's case would better serve the twin statutory aims of deterrence and compensation, avoided any prospect of double recovery, and promoted the efficient resolution of overlapping regulatory and private enforcement.

The road to the penalty transfer

Parallel proceedings and settlement architecture

A class action was commenced in the Supreme Court of Victoria (Gehrke & Anor v Noumi Limited & Anor, section ECI 2020 04505) by investors who bought shares in Noumi between 2015 and 2020 arising from alleged misrepresentations by Noumi as to its financial position.

In parallel, Noumi (formerly Freedom Foods), its former CEO and former CFO were sued by ASIC in early 2023 for alleged continuous disclosure and directors’ duties breaches arising from the same allegations raised in the class action, albeit for a more narrow time period. Noumi and the former CFO admitted to contraventions of the Corporations Act and reached settlements with ASIC at the early stages of the proceeding.

In August 2024, the Federal Court (Justice Jackman) approved an agreed civil penalty of A$5 million against Noumi. At the time of approving the agreed civil penalty, ASIC, Noumi and the group members agreed and the Court ordered that the penalty be paid into Court so that it could be preserved for potential compensation. As part of this order, the Court expressly considered section 1317QF(2).

The class action settled in June 2025, with Justice Delany approving a scheme of distribution that contemplated a possible contribution from the ASIC penalty – but only if the Federal Court later exercised its discretion under section 1317QF to release the funds. The settlement structure, among other things, contemplated an “ASIC Penalty Settlement Distribution Scheme” that could accept any transferred penalty and allocate it pro rata among eligible group members.

The statutory mechanism – section 1317QF

Section 1317QF was introduced in 2019 as part of broader amendments made to financial services legislation to strengthen penalties for corporates and in the financial sector. The provision allows the Court, “on application by ASIC or a person granted leave”, to order that a pecuniary penalty recovered under section 1317G be applied for the benefit of “a specified person or persons who have suffered loss or damage as a result of the contravention”. Section 1317QF contemplates that:

• The Court's discretion can be exercised at any time after the penalty is imposed;

• The Court must be “satisfied that it is appropriate to do so” having regard to any amount already recovered as compensation and any other matter the Court considers relevant.

• Funds can be paid directly out of Court or via a trustee or administrator approved by the Court.

Until Noumi, the power had been invoked only in a handful of matters, and never in the context of a class action. The decision provides the first detailed judicial roadmap for how section 1317QF can operate alongside class action settlements.

How the Court approached its discretion

Justice Jackman accepted the Class Action Plaintiffs' application that the ASIC penalty be diverted to group members for the following five key reasons:

1. Alignment of contraventions and loss - Because both cases were founded on the same misstatements and continuous disclosure failures, there was a clear causal nexus between the wrongdoing punished by the penalty and the investors’ losses to be compensated. The Court treated that overlap as a powerful factor in favour of transfer.

2. The penalty distribution would be an additional benefit, not a diminution of the settlement sum available to group members.

3. Noumi's strained finances had already limited the $43 million settlement.

4. Group member losses outstripped settlement proceeds by a wide margin.

5. The class action's existing settlement distribution scheme could administer the extra funds at no extra cost.