GCO provides high returns to group members in consolidated Medibank shareholder action

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This is a consolidated shareholder class action which arises out of the much publicised data breach by the defendant (Medibank) in 2022. The proceeding is being jointly conducted by two firms of solicitors, being Phi Finney McDonald and Quinn Emanuel Urquhart & Sullivan. In short, it is alleged that Medibank engaged in misleading or deceptive conduct and breached its continuous disclosure obligations by not disclosing deficiencies in its cyber security systems, and that shareholders suffered loss when Medibank’s share price fell following the occurrence of the data breach.

The joint plaintiffs in the proceeding applied for a group costs order (GCO) at the rate of 27.5%, to be split equally between PFM and QEU&S. Medibank did not oppose the application, but did identify certain matters upon which the Court may wish to hear from a contradictor.

Justice Attiwill briefly set out, at [11]-[12], the now familiar principles relating to the award of a GCO. His Honour held that it was unnecessary to appoint a contradictor, as proposed by Medibank, because “the submissions and the evidence filed on this application enable the Court to understand and make an assessment of the relevant issues” (at [24]).

His Honour concluded that it was appropriate to make the proposed GCO, for reasons which included:

• the simplicity and certainty which a GCO provides for class members;
• the fact that a GCO will avoid delay in the proceeding which would occur if other funding arrangements need to be put in place;
• the alignment of interests between the plaintiffs, the class members and the solicitors which a GCO creates;
• the fact that a GCO will be cheaper for class members than the most likely alternative, namely, third party litigation funding (and the possibility that the proceeding may not proceed at all if third party litigation funding could not be secured); and
• the proposed rate of 27.5% was prima facie reasonable and proportionate having regard to the complexity of, and risks involved in conducting, the proceeding.

Lastly, his Honour also determined that he would not require PFM and QEU&S to give an undertaking not to subsequently seek a higher rate as a condition of granting the GCO, and that such a condition was not a requirement of the statute. 

Kilah v Medibank Private Ltd [2024] VSC 152

Supreme Court of Victoria, Attiwill J, 28 March 2024
Plaintiffs’ Solicitors: Phi Finney McDonald / Quinn Emanuel Urquhart & Sullivan (QEU&S) Defendant’s Solicitors: King & Wood Mallesons
Plaintiffs’ Funder: Regency VI Funding Pty Ltd (QEU&S)

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