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First group costs order a ‘watershed’ moment for class action landscape
In an Australian first, the Victorian Supreme Court awarded a group costs order to Slater & Gordon that will see group members pocket a significantly higher amount from the settlement than they ordinarily would have with a third-party litigation funder.
Naomi Neilson
The group members in a class action against childcare centre operator G8 Education will part with 7.9 per cent of the $46.5 million settlement sum to pay expenses, as opposed to the 24 to 25 per cent commission that third-party litigation funders tend to make.
Head of class actions Emma Pelka-Caven said the judgment was a watershed moment for the class action landscape and confirmed the GCO regime “provides an affordable alternative to more expensive legal fee structures traditionally used by plaintiffs previously”.
“In addition to simplicity and certainty to group members, evidence before the court demonstrated the GCO made in the G8 class action would put a significantly greater proportion of the settlement sum into the pockets of group members than class actions supported by third-party litigation funders had on average in recent years,” she said.
The judgment published on Wednesday (28 August) provided for Slater & Gordon’s legal costs be calculated as 27.5 per cent of any award or settlement reached in the proceeding.
The law firm was first required to meet all expenses in the case and would have been liable if the class action was unsuccessful.
It will mean group members will receive 72 per cent of the settlement sum, less some costs to administratively enable the payments.
Pelka-Caven explained that instead of separate deductions for legal costs and litigation funding commission, the regime has provided for a single percentage deduction when a class action is successful.
“Today’s decision makes clear that the introduction of GCOs in Victoria has made it easier for Australians to access our legal system and seek redress for wrongs they have suffered,” she said.
The class action was launched on behalf of individuals who purchased G8 shares between May 2017 and February 2018 and experienced a financial loss when G8 downgraded its earnings forecast for 2017 “from around $160 million”.
Slater & Gordon alleged G8 engaged in misleading or deceptive conduct and breached its continuous disclosure obligations.
Class actions senior associate Kathryn Browne said the firm was pleased “to have been able to reach this outcome for group members before the matter proceeded to a trial”.
Naomi Neilson
Naomi Neilson is a senior journalist with a focus on court reporting for Lawyers Weekly.
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