Gr8 Education on the treatment of GCO application costs

Allen v G8 Education Ltd (No 3) [2022] VSC 302

On 6 June 2022, Nichols J, who ordered the first ever group costs order (GCO) in the Allen v G8 Education  class action, held that the plaintiffs should bear their own costs of and incidental to their GCO application, including those of the contradictor.   In making that finding, Her Honour reasoned that the costs should follow the event of the GCO application, rather than the “event” of the broader proceeding. 

Her Honour’s ruling provides good guidance about the likely treatment of GCO application costs, which is new ground for most class action players given the first GCO was ordered in only November 2021 and that applying well-established principles of costs is not a straightforward exercise in the novel context presented by GCO applications which do not necessarily involve a win or loss paradigm.

Parties’ positions

The plaintiffs sought that the parties’ costs of the GCO application be treated as costs in the proceeding, with the effect being that the party ultimately successful in the action will be awarded its costs of the application.  The crux of that submission was that the application for a GCO ought to be regarded as an inherent part of the proceeding.

On the other hand, the defendant sought that the plaintiffs bear their own costs of the application and those of the Court-appointed contradictor, and that the defendant’s costs be reserved. The defendant contended that, in circumstances where it only made very brief submissions which were not in opposition of the application and did not cause the plaintiffs to incur significant additional costs, it would not be just to order it to pay the plaintiffs’ costs.   

Ruling

The plaintiffs were required to bear their own costs of and incidental to their GCO application, including the costs of the contradictor. The defendant’s costs were reserved. Applying the ordinary principles governing the award of costs,[1] her Honour’s determination turned on findings that:

• whilst the application for a GCO was undoubtedly connected with the proceeding, the costs expended in order to obtain the GCO were not expended in a contest with the defendant;[2]
• an application for a GCO is wholly connected with the organisation of the plaintiffs’ and group members’ affairs and their liability to pay the law practice representing them;[3] and
• the better definition of the “event” for the purposes of costs was not the proceeding itself, but the GCO application itself.[4]

Guidance for future contested GCO applications

Should a defendant seek to oppose a GCO application, perhaps with a view to stymying the proceeding, such a circumstance might give rise to a substantive inter-partes dispute.[5]  In line with the costs principles recognised by Nichols J, a contested GCO application may bring about quite different results when it comes to which party will be footing the bill.