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Gehrke v Noumi Ltd

Gehrke v Noumi Ltd

Case [2022] VSC 672 8 November 2022

Costs

Class Actions

Judicial Discretion

Civil Litigation & Procedure

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

GROUP PROCEEDINGS LIST

S ECI 2020 04505

Nicholas John Gehrke	First Plaintiff
Lester Buch	Second Plaintiff
v
Noumi Limited (formerly Freedom Foods Group Limited (ACN 002 814 235))	First Defendant
Deloitte Touche Tohmatsu (A Firm) (ABN 74 490 121 060)	Second Defendant

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JUDGE:	Nichols J
WHERE HELD:	Melbourne
DATE OF HEARING:	26 October 2022
DATE OF RULING:	8 November 2022
CASE MAY BE CITED AS:	Gehrke v Noumi Ltd
MEDIUM NEUTRAL CITATION:	[2022] VSC 672

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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 —Whether proper evidentiary basis to make the proposed GCO — Judicial discretion in open-textured legislation — Principles to be applied — Supreme Court Act 1986 (Vic) s 33ZDA — Allen v G8 Education Ltd [2022] VSC 32, Fox v Westpac; Crawford v ANZ [2021] VSC 573, Boganv The Estate of Peter John Smedley (Deceased) [2022] VSC 201 — Application granted.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr A Pound SC	Slater and Gordon Lawyers Phi Finney McDonald
Ms E Levine
For the First Defendant	Ms JA Findlay	Arnold Bloch Leibler
For the Second Defendant	Ms WA Harris KC	Corrs Chambers Westgarth
Mr A Roe

TABLE OF CONTENTS

Introduction........................................................................................................................................ 1

Governing principles — Group Costs Orders.............................................................................. 3

The parties’ submissions.................................................................................................................. 3

Contractual arrangements governing costs and funding........................................................... 5

Gehrke and Slater and Gordon................................................................................................... 5
Mr Buch and Phi Finney McDonald........................................................................................... 8
Conclusion — existing costs arrangements............................................................................. 13

Structural benefits of a Group Costs Order................................................................................ 14

Comparison with alternative forms of funding......................................................................... 18

The proposed Percentage Rate — reasonableness and proportionality................................ 22

Plaintiffs’ Lawyers’ ability to fund the proceedings................................................................ 29

Conclusion......................................................................................................................................... 30

HER HONOUR:

Introduction

This is a group proceeding issued under Part 4A of the Supreme Court Act 1986 (Vic). The plaintiffs seek damages on behalf of group members who were shareholders in the first defendant, Noumi Limited, an ASX-listed company, on the ground that it misrepresented its true financial position to the market as a result of accounting errors which overstated its performance. The second defendant, Deloitte Touche Tohmatsu, was Noumi’s auditor, and is alleged to have engaged in misleading conduct by certifying as correct, incorrect accounts. The alleged breaches are said to have affected the value of Noumi’s shares, and to have caused loss to the group-member investors.

The plaintiffs now seek a Group Costs Order pursuant to s 33ZDA of the Act, which is the subject of this judgment.

The proceeding took its present form as a consequence of orders I made in November 2021, consolidating separate group proceedings issued by each of the plaintiffs. Mr Gehrke and Mr Buch were appointed joint plaintiffs, and their solicitors (Slater and Gordon Lawyers and Phi Finney McDonald (PFM)) were granted leave to be jointly named as solicitors on the record in the consolidated proceeding.

Leave for…

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 Gehrke v Noumi Ltd

Details

AGLC: Gehrke v Noumi Ltd [2022] VSC 672
Case: [2022] VSC 672
Decision Date: 8 November 2022

CaseChat Overview and Summary

Gehrke v Noumi Ltd is a case that concerns the issue of costs in group proceedings under the Supreme Court Act 1986 (Vic). The plaintiff, Gehrke, sought to obtain a Group Costs Order (GCO) to recover costs as a percentage of any award or settlement recovered. The defendant, Noumi Ltd, opposed the application, arguing that there was no proper evidentiary basis for the proposed GCO. The case was heard in the Supreme Court of Victoria.

The primary legal issue the court had to decide was whether there was a sufficient evidentiary basis to make the proposed GCO. The court had to consider the principles established in previous cases such as Allen v G8 Education Ltd, Fox v Westpac, Crawford v ANZ, and Bogan v The Estate of Peter John Smedley (Deceased). The court also had to exercise its judicial discretion under the open-textured legislation of the Supreme Court Act 1986 (Vic) s 33ZDA.

The court found that there was a proper evidentiary basis to make the proposed GCO. The court noted that the principles established in previous cases required the plaintiff to demonstrate that the proposed GCO was necessary and proportionate to the size and complexity of the proceedings. The court found that Gehrke had demonstrated that the proposed GCO was necessary and proportionate, and therefore exercised its discretion in favour of granting the application. The court also noted that the principles established in previous cases required the court to consider the interests of all parties and the public interest in efficient and effective resolution of group proceedings.

The final orders of the court granted Gehrke's application for a GCO, with costs to be calculated as a percentage of the amount of any award or settlement recovered. The court also noted that the principles established in previous cases required the court to consider the proportionality of the proposed GCO, and that the court had exercised its discretion in light of all relevant factors. The court did not make any orders as to the amount of costs to be recovered, as this would be determined in any future proceedings.

Orders