Case Study on Group Cost Orders
4th January 2023
MUMFORD v EML PAYMENTS LIMITED [2022] VSC 750
Class Actions in Victoria have a new and, as of date of this publication, unique component: the Group Costs Order (GCO). The GCO, pursuant to s33ZDA of the Supreme Court Act 1986 (VIC), if approved by the court, calculates legal costs in class actions as a percentage of the amount of any settlement that may be recovered. The Court has ultimate discretion to make and vary the amount under the GCO.
In Mumford v EML Payments the solicitors for the plaintiff filed an application for a GCO. This class action was brought on behalf shareholders of EML Payments. The share price fell by around 45% after concerns were raised about Anti-Money Laundering (AML)/ Counter Terrorism Financing (CTF) risk and control frameworks and governance. The plaintiff solicitors had applied for a GCO of 30%.
Justice Delany allowed the GCO, but the request for costs to be at 30% was rejected. His Honour determined that 24.5% was more appropriate. In arriving at this conclusion, His Honour focused on commerciality and proportionality.
As to commerciality, His Honour compared this case to other similar class actions. For instance, the same solicitors had, in Nelson v Beach Energy [2022] VSC 424, agreed to have the GCO rate fixed at 24.5%. His Honour concluded that there was no reason to increase the percentage where the cases were similar.
With respect to proportionality, His Honour noted that 30% would be grossly disproportionate, keeping in mind alternative funding models. For example, His Honour noted that even a litigation funder, who usually requires higher percentages to account for risk, would likely have charged less than 30%, and, in this case, there was no funder.
Having considered these issues, His Honour determined that a GCO of 24.5% would protect the return to group members and provide a reasonable and realistic amount to the plaintiff solicitors for the risk they would have undertaken in running the case.
GMP Law has recently filed Diesel Emission Class Actions against Hino Motors and Mercedes Benz in the Supreme Court of Victoria. GMP Law intends to apply to the Court for GCOs for each of these class actions.