Case Study on Group Cost Orders
6th January 2023
NELSON v BEACH ENERGY; SANDERS V BEACH ENERGY  VSC 424
Nelson v Beach Energy is a class action filed in Victoria on behalf of shareholders of Beach Energy Ltd after concerns were raised about the company over alleged breaches of continuous disclosure obligations of price-sensitive matters.
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.
At the outset, Justice Nichols noted that certainty is amongst the most prominent benefits of implementing a GCO. In the context of the present case, if a GCO were to be approved at 24.5%, the plaintiffs and the group members would be entitled to 75.5% of the settlement in return. Should a GCO not be made, under alternative funding models, the returns that the plaintiffs and the group members would be entitled would be variable and uncertain.
Her Honour determined that a GCO percentage of 24.5% is appropriate for this Class Action. This case involved competing claims for GCO percentages from two plaintiff solicitors among which, one of the solicitors had proposed a GCO of 28%. Her Honour noted that in the absence of a GCO, a third-party funder would have charged a commission in the range of 24%-28%. For this reason, Her Honour concluded that a 24.5% GCO would provide the plaintiffs and group members with much better outcomes.
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.