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Mumford v EML Payments Ltd

Mumford v EML Payments Ltd

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Case Copied 6 December 2022 49 min read

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
GROUP PROCEEDINGS LIST

S ECI 2021 04738

BETWEEN:

PAUL LEIGHTON MUMFORD

GAYLE MUMFORD

First Plaintiff

Second Plaintiff

EML PAYMENTS LIMITED

Defendant

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JUDGE:	DELANY J
WHERE HELD:	Melbourne
DATE OF HEARING:	3 November 2022, further submissions 16 November 2022
DATE OF RULING:	6 December 2022
CASE MAY BE CITED AS:	Mumford v EML Payments Limited
MEDIUM NEUTRAL CITATION:	[2022] VSC 750

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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 proposed percentage appropriate or necessary – Retainer providing for solicitors to continue to conduct the proceeding if a GCO made – GCO made at a lesser percentage than specified in the application – Principles to be applied – Supreme Court Act 1986 (Vic), s 33ZDA – Civil Procedure Act 2010 (Vic), s 24 – Legal Profession Uniform Law Application Act 2014 (Vic), ss 172, 181 and 182 of Schedule 1 – Gehrke v Noumi Ltd [2022] VSC 672, applied – Allen v G8 Education Ltd [2022] VSC 32, Nelson v Beach Energy; Sanders v Beach Energy [2022] VSC 424, Fox v Westpac [2021] VSC 573, considered – Bogan v The Estate of Peter John Smedley (Deceased) [2022] VSC 201, distinguished.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	W Edwards SC with O Nanlohy	Shine Lawyers
For the Defendant	K Raghavan	Herbert Smith Freehills

TABLE OF CONTENTS

Relevant legislation........................................................................................................................... 2

Applicable principles........................................................................................................................ 5

The evidence....................................................................................................................................... 7

The Proceeding................................................................................................................................... 8

The plaintiffs’ anticipated legal costs............................................................................................ 9

Alternatives to a GCO: No Win No Fee (NWNF) funding...................................................... 11

A litigation funder........................................................................................................................... 13

Internal Rates of Return: The Mullins report............................................................................. 15

Percentages allowed in other GCO applications....................................................................... 17

Should a GCO be made?................................................................................................................ 19

Is 30% an appropriate or necessary percentage?........................................................................ 23

HIS HONOUR:

Paul Leighton Mumford and Gayle Mumford are the lead plaintiffs in a group proceeding under Part 4A of the Supreme Court Act 1986 (Vic) (‘Act’), a shareholder class action, brought on behalf of persons who acquired an interest in the ordinary shares of EML Payments Ltd (‘EML’) between 19 December 2020 and 18 May 2021 (‘the relevant period’).

EML is listed on the Australian Stock Exchange. It provides a payment solutions platform worldwide. On or about 31 March 2020, EML completed its acquisition of Prepaid Financial Services (Ireland) Limited (‘PFS’). From 19 December 2020, PFS’s European business primarily operated through PFS Card Services (Ireland) Limited (‘PCSIL’). On 17 May 2021, EML securities were placed into a trading halt. On 19 May 2021, EML announced to the market that PCSIL had received correspondence from the Central Bank of Ireland raising significant regulatory concerns in respect of PCSIL’s Anti-Money Laundering/Counter Terrorism Financing (‘AML/CTF’) risk and control frameworks and governance. Immediately following the announcement, EML’s share price fell from $5.15 to $2.80 - a 45% reduction.

The Statement of Claim alleges…

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.

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Details

Case: [2022] VSC 750
Decision Date: 6 December 2022

CaseChat Overview and Summary

Mumford v EML Payments Ltd involved the applicant seeking a group costs order under the Supreme Court Act 1986 (Vic) for a group proceeding. The primary issue was the appropriate percentage of costs to be awarded as part of any recovery from the respondent, EML Payments Ltd. The application sought a percentage based on the amount recovered, and the court was tasked with determining whether this percentage was suitable and necessary under the Civil Procedure Act 2010 (Vic) and the Legal Profession Uniform Law Application Act 2014 (Vic).

The court examined the relevant statutes and case law to determine the principles governing the imposition of group costs orders. It referenced Gehrke v Noumi Ltd, which highlighted the need for proportionality and fairness in the costs awarded. The court also considered Allen v G8 Education Ltd, Nelson v Beach Energy, Sanders v Beach Energy, and Fox v Westpac, all of which emphasised the importance of a fair and reasonable costs order that reflects the work undertaken and the risk involved. The decision in Bogan v The Estate of Peter John Smedley (Deceased) was distinguished as it involved different circumstances and was not directly applicable.

The court concluded that the proposed percentage in the application was excessive and not necessary. It issued a group costs order at a lesser percentage, taking into account the principles of fairness and proportionality. The order ensured that the solicitors' retainer was protected, allowing them to continue with the proceeding if the group costs order was made.

The final order specified the percentage of costs to be awarded, ensuring that it was fair and reasonable, reflecting the work done and the risk assumed by the solicitors. The court's decision balanced the need for solicitors to be adequately compensated with the necessity to avoid excessive costs for the group.

Orders