Allen v G8 Education Limited, S ECI 2020 04339
The first ‘group costs order’ (GCO) has been made in the Supreme Court of Victoria, one year and five months after the regime came into effect. It was granted by the Honourable Justice Nichols in the shareholder class action case of Allen v G8 Education Limited and set at 27.5% (incl. GST).
The GCO regime allows law firms acting for plaintiff(s) (and group members) in representative proceedings to recover its legal costs as a percentage of the amount of any award or settlement in the proceeding.
The regime serves as an exception to the nationwide prohibition on solicitors charging contingency fees, and is only currently available in Victoria.
The first GCO was conditional on the plaintiff providing an undertaking that the percentage would be a “ceiling” and that he would not seek to increase the percentage in the future.
Justice Nichols has not yet published reasons for granting the GCO in Allen v G8 Education Limited. Nevertheless, we have discerned the following key practice points from the submissions and her Honour’s oral judgment.
In seeking a GCO, plaintiffs are not constrained to outcomes-based analyses. Each case will be assessed on a case-by-case basis, and the Court may be guided by:
The inherent features of a GCO include:
Although the Court may order a GCO early in the proceeding, the appropriate time for the Court to assess whether the percentage set by the GCO is proportionate may be at the end of the proceeding.
To obtain a GCO, plaintiffs might be required to provide undertakings to the Court that constrain either seeking to increase the GCO’s percentage at a later date, to give effect to the percentage sought being a “ceiling”.
The Allen v G8 Education Limited proceeding has been brought on behalf of certain investors who purchased shares in G8 Education Limited, and alleges that G8 Education Limited contravened its continuous disclosure obligations and engaged in misleading or deceptive conduct.
The matter had been run on a ‘no win, no fee’ basis since commencement, however in May 2021, the plaintiff sought a GCO pursuant to section 33ZDA of the Supreme Court Act 1986 (Vic), set at 27.5% inclusive of GST. The application was listed for hearing in November 2021, and the Court appointed a contradictor to make submissions on behalf of group members.
The application was the second of its kind. The first brought by the plaintiffs in the Fox and Crawford class actions (Fox/Crawford), was unsuccessful.
The plaintiff’s submissions included that the circumstances were distinguishable from Fox/Crawford and that a GCO was appropriate and necessary to ensure that justice is done in the proceeding.
The plaintiff submitted that:
The Court appointed contradictor opposed the plaintiff’s application. The contradictor’s submissions included that the existing ‘no win, no fee’ costs arrangement was not “necessarily interim”. Therefore, if the Court accepted that it was appropriate to consider whether a GCO would provide a better return to group members than alternative funding arrangements, the alternative funding model to be considered is the existing ‘no win, no fee’ arrangement (rather than third party litigation funding).
The parties also made oral submissions that the appropriate time for the Court to assess the proportionality of any return to a law firm pursuant to a GCO might be at the end of the proceeding. They also suggested that an appropriate mechanism for ensuring that the percentage set by the Court in making an initial GCO was a “ceiling” might include the plaintiff providing an undertaking that neither he would later apply to increase the GCO’s percentage.
Justice Nichols delivered her judgment orally with written reasons to follow. Her Honour granted the GCO at 27.5% (incl. GST), the rate sought by the plaintiff. Her Honour emphasised that the plaintiff relied on submissions, and his personal view, that a GCO is attractive because:
Her Honour noted that these matters were relevant not only because they were the plaintiff’s position, but also because her Honour considered them relevant factors. In addition, her Honour stated that the GCO was ordered on the basis that undertakings were accepted that the plantif would not seek to increase the percentage in future.
Once her Honour’s written reasons are published, there will be further clarity on the factors that the Court considered in determining to order the GCO, which will provide further guidance for plaintiffs and law firms in representative proceedings.
The GCO regime is an attractive funding model for plaintiffs and plaintiff law firms that is now closer in reach. It provides plaintiffs and group members with inherent benefits such as certainty and transparency, and also rewards law firms for taking on significant risks in prosecution complex and lengthy class action proceedings without receiving payment for legal costs if, and until, any successful outcome.
Plaintiffs seeking a GCO might draw analogy with the plaintiff’s case in Allen v G8 Education Limited, such as by providing evidence and submissions of how the inherent benefits might be appropriate or necessary to achieve justice in the case, addressing the benefits of a GCO for both outcome and process, and being prepared to offer an undertaking that the percentage sought will be a “ceiling”.
 Provided that the Court is satisfied a GCO is “appropriate or necessary to ensure that justice is done in the proceeding”: Supreme Court Act 1986 (Vic) s 33ZDA(1).
 S ECI 2020 04339.
 Consistent with the Court’s practice note which requires that any application by a plaintiff pursuant to section 33ZDA be filed at the earliest practicable time after the close of pleadings and subject to the direction of the Case Management Judge: Practice Note SC Gen 10: Conduct of Group Proceedings (Class Actions) at [14.1].
 Fox v Westpac Banking Corporation & Ors, S ECI 2020 2946.
 Crawford v Australia and New Zealand Banking Group Limited & Ors, S ECI 2020 3365.
 Fox v Westpac; Crawford v ANZ  VSC 573.
 See “Guidance on group costs orders for Victorian class actions”.
 At the beginning of the GCO hearing, Justice Nichols granted leave for the plaintiff’s wife to be joined as a plaintiff to the proceeding. However, for simplicity and consistency with the parties’ submissions, this article only refers to the “plaintiff”.
 Fox v Westpac; Crawford v ANZ  VSC 573 at .
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