Careful judicial discretion exercised in Ansell GCO application

_{< Go back to Class Actions Landscape Australia}

This is a shareholder class action, in which the plaintiff alleges that the defendant engaged in misleading or deceptive conduct, made misleading statements and breached its obligations of continuous disclosure to the market about its future earnings guidance (which it first published on 24 August 2021 and approximately five months later downgraded by around 28%).

The plaintiff applied for a group costs order (GCO) under s 33ZDA of the Supreme Court Act 1986 (Vic) at the rate of 40%. The evidence disclosed that earlier attempts to obtain litigation funding for the proceeding had been unsuccessful, at least on terms that could be considered economic or would result in a better outcome than the proposed GCO rate. Otherwise, as is commonly the case in such applications, much of the evidence (concerning estimated claim value, prospects of success, etc) was confidential and therefore not disclosed in the reasons for judgment.

His Honour accepted the plaintiff’s submissions regarding the well-recognised benefits of a GCO, which have been acknowledged now in numerous cases. The defendant acknowledged its limited interest and role in the application, but nevertheless drew the Court’s attention to the relatively high rate (40%) that was sought, in comparison to rates that have been approved in other cases.

Ultimately, his Honour was satisfied that:

• a “group costs order is appropriate and necessary in this proceeding subject to the determination of a proportionate and reasonable rate at least on a prima facie basis so that justice may be done in the proceeding” (at [50]);

• a rate of 40% was appropriate if the plaintiff and class members are successful in the proceeding and the resolution amount is $50 million or less (at [65]);

• however, for resolution amounts above $50 million, a rate of 40% “exceeds a proportionate or reasonable return on a prima facie basis in the circumstances of this proceeding” and “may have untoward or unexpected consequences depending on the magnitude of the resolution amount” (at [68]-[69]); and

• it was therefore appropriate to make a GCO providing for a rate of 40% on any recoveries up to $50 million, and a rate of 25% for any amounts recovered over and above $50 million (at [70]-[72]).

Warner v Ansell Limited  [2024] VSC 491

Supreme Court of Victoria, Garde J, 22 August 2024
Plaintiff’s Solicitors: Slater & Gordon
Defendant’s Solicitors: Herbert Smith Freehills
Plaintiff’s Funder: N/A

AustLII link

_{< Go back to Class Actions Landscape Australia}