VIC Supreme GCO again the way to go for group members

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This judgment related to an application for a group costs order (GCO) under s 33ZDA of the Supreme Court Act 1986 (Vic) (SCA) in a group proceeding brought by 5 Boroughs NY Pty Ltd (5 Boroughs). The proceeding is brought on behalf of retail businesses that are alleged to have suffered economic loss as a consequence of (allegedly negligent) COVID-19 transmission events at two hotel quarantine sites and consequent restrictions on the supply of goods and services from premises located in Victoria.

The GCO sought was as follows: (1) the legal costs payable to the solicitors representing the plaintiff and class members, Quinn Emanuel, be calculated as a percentage of the amount of any award or settlement that may be recovered in the proceeding, that percentage being 30% (inclusive of GST); and (2) liability for payment of the legal costs pursuant to the above be shared among the plaintiff and all class members.

His Honour was ultimately persuaded that a GCO of 30% was appropriate to ensure that justice is done in the proceeding, having regard to the principles set out by the Honourable Justice Nichols in Fox v Westpac; Crawford v ANZ [2021] VSC 573 and Allen v G8 Education Ltd [2022] VSC 32, and the following factors:

1. that the lead plaintiff, having been fully apprised of all relevant information (and having obtained independent legal advice on three separate occasions), fully supported the GCO sought and had provided cogent reasons for his view that the GCO is in the best interests of class members;

2. the material risk that if a GCO was not made the proceeding would not continue because of an inability to obtain alternative funding or the unlikely prospect that Quinn Emanuel would agree to represent the plaintiff on a conditional basis with recovery of legal costs calculated on an hourly rate (and consequently, the risk that the plaintiff and class members would lose the opportunity to vindicate their rights);

3. the real likelihood that if alternate funding could be arranged the outcome for class members would be less favourable. His Honour accepted this having regard to two reasons: first, that third-party funding would not provide the simplicity, transparency, and certainty of a GCO (which the lead applicant had deposed were desirable outcomes) and, secondly, the very real prospect that class members would achieve a poorer financial outcome if an alternate funding arrangement to a GCO was put in place;

4. that the proceeding is novel, complex, difficult, and attended with significant risk, and had been vigorously defended to date. His Honour further noted that the uncertainty faced by Quinn Emanuel and Regency may be contrasted with the considerable benefit of the certainty that would be achieved for class members by the proposed GCO. In particular, his Honour indicated that the risk/reward consideration was very relevant to the determination of this application;

5. the claim raises for consideration important issues concerning the public health response by government to the COVID-19 pandemic, the duties and obligations that might arise in that context, and the corresponding rights of and protections provided to different sections of the community;

6. while each application under s 33ZDA of the SCA must be determined on its own facts, his Honour’s review of other applications had fortified the conclusion that the GCO application should be allowed. His Honour expressly noted that the GCO rate of 30% was the second highest GCO rate ordered to date, however, concluded that outcome was justified having regard to the abovementioned complexity and risk attaching to the claim; and

7. the benefit of certainty provided by the GCO was supported by the plaintiff's undertaking that it will not apply to increase the GCO percentage at any stage of the proceeding.

5 Boroughs NY Pty Ltd v State of Victoria (No 5) [2023] VSC 682 

Supreme Court of Victoria, Keogh J,
23 November 2023

Plaintiff’s Solicitors: Quinn Emanuel Urquhart and Sullivan LLP
Defendants’ Solicitors: Minter Ellison; Herbert Smith Freehills
Litigation Funder: Regency V Funding Pty Ltd

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