JUDGE:	Nichols J
WHERE HELD:	Melbourne
DATE OF HEARING:	26 November 2021
DATE OF RULING:	7 February 2022
CASE MAY BE CITED AS:	Allen v G8 Education Ltd
MEDIUM NEUTRAL CITATION:	[2022] VSC 32

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GROUP PROCEEDINGS – Costs – Application for a Group Costs Order – Costs to be calculated as a percentage of the amount of any award or settlement recovered – Judicial discretion in open-textured legislation – Principles to be applied – Application granted – Supreme Court Act 1986, s 33ZDA.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Ms F. Forsyth QC with Mr D. Fahey	Slater and Gordon Lawyers
For the Defendant	Mr R. Craig QC with Ms J. Findlay	MinterEllison
As Contradictor	Ms C. Harris QC with Mr J. Page

TABLE OF CONTENTS

Part A: Introduction........................................................................................................................... 1

Part B: Submissions........................................................................................................................... 2

Plaintiffs.......................................................................................................................................... 2
Defendant....................................................................................................................................... 5
Contradictor................................................................................................................................... 6

Part C: Governing Principles........................................................................................................... 7

Part D: Analysis................................................................................................................................ 12

Group Costs Orders and the Value of Certainty.................................................................... 13
Transparency and Equity........................................................................................................... 17
The Plaintiffs’ Contractual Position.......................................................................................... 18
Third Party Litigation Funding................................................................................................. 28
Third party funding – Historical Rates.......................................................................... 31

The “No Win, No Fee” Funding Alternative.......................................................................... 35
Reasonableness of the proposed rate....................................................................................... 37

Part E: Summary of Analysis and Conclusion........................................................................... 38

HER HONOUR

Part A: Introduction

The plaintiffs, Mr Paul Allen and Ms Monika Allen, bring this group proceeding or class action under Part 4A of the Supreme Court Act1986 (the Act), on behalf of persons who, between 23 May 2017 and 23 February 2018, acquired shares in the defendant G8 Education Ltd (an ASX-listed company) and have suffered loss or damage because of conduct by G8 said to be in breach of the Corporations Act 2001 (Cth) and the Australian Securities and Investments Act 2001 (Cth). G8 provides childhood education services, operating early learning centres throughout Australia. The plaintiffs[1] allege that in its disclosures to the market G8 understated the effect on its earnings potential of regulatory changes that would require it to engage an increased number of staff in its childcare centres, and did not properly disclose the sensitivity of its earnings projections to the added costs of these changes and to competitive pressures in the childcare market. G8 is defending the proceeding.
[1]After this application was issued and heard, Paul Allen and Monika Allen (Mr Allen’s wife) applied by consent for the joinder of Ms Allen to the proceeding on the grounds that the shares in issue were discovered to be owned jointly. Orders were made to that effect. The plaintiffs’ personal evidence in support of the application was given by Mr Allen.

The plaintiffs seek a Group Costs Order (or GCO) under s 33ZDA of the Act that:

1. The legal costs payable to the solicitors for the plaintiff and group members, Slater and Gordon Lawyers, be calculated as…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Allen v G8 Education Ltd

Details

AGLC: Allen v G8 Education Ltd [2022] VSC 32
Case: [2022] VSC 32
Decision Date: 7 February 2022

CaseChat Overview and Summary

In the matter of Allen v G8 Education Ltd, the applicant sought a group costs order under the Supreme Court Act 1986, seeking that costs be calculated as a percentage of the amount of any award or settlement recovered. The court was tasked with determining the appropriate percentage and the principles to be applied in such open-textured legislation. The nature of the dispute was whether the costs should be calculated based on a fixed percentage or if the court should exercise its discretion to set the percentage based on specific factors. The court considered the statutory framework, relevant case law, and the principles guiding judicial discretion in such matters.

The legal issues before the court involved interpreting the Supreme Court Act 1986, specifically section 33ZDA, to determine the appropriate method for calculating costs in a group proceeding. The applicant argued for a fixed percentage, while the respondent contended that the court should have broad discretion to set the percentage based on various factors. The court had to balance the statutory language with the principles of judicial discretion, ensuring that the order was fair and just, considering the unique circumstances of the group proceeding. The court also needed to ensure that the order complied with relevant case law and statutory objectives.

In its reasoning, the court found that while the legislation provided a framework, it was intentionally open-textured to allow for judicial discretion. The court considered the principles of fairness, proportionality, and the specific circumstances of the group proceeding. It noted that the applicant had made a compelling case for a fixed percentage due to the repetitive and uniform nature of the claims. However, the court also recognised the need for flexibility to address unique factors in each proceeding. Ultimately, the court granted the application but set the percentage based on the specific circumstances of this case, exercising its discretion to ensure a fair outcome. The court ordered that costs be calculated as a percentage of the amount of any award or settlement recovered, with the exact percentage to be determined in light of the particular facts of each case.

Orders