This is a consolidated shareholder class action against Noumi Ltd (Noumi) and its auditor, Deloitte Touche Tohmatsu (Deloitte). The plaintiffs (Mr Gehrke and Mr Buch) allege that Noumi misrepresented its true financial position to the market as a result of accounting errors which overstated its performance, and Deloitte engaged in misleading conduct by certifying as correct, incorrect accounts. In November 2021, Nichols J made orders consolidating separate class actions commenced by Mr Gehrke and Mr Buch, appointing them as joint plaintiffs, and granting leave to their solicitors (Slater and Gordon (SG) and Phi Finney McDonald (PFM)) to act as joint solicitors on the record.
In this judgment, her Honour approved a group costs order (GCO) of 22% sought by the plaintiffs, pursuant to s 33ZDA of the Supreme Court Act 1986 (Vic) (SCA).
In doing so, her Honour reiterated comments she had earlier made in Allen v G8 Education Ltd  VSC 32 at - (Allen v G8) regarding the inherent structural benefits of a GCO. Her Honour accepted, as set out in earlier decisions, that making a GCO would provide the plaintiffs and class members with certainty, simplicity and transparency about funding and legal costs from the time at which the GCO was made. Her Honour said that, in this case, class members would have the certainty that they will receive no less than 78% of any amount recovered on settlement or judgment, subject only to further order of the Court. Her Honour said “[t]his is a real and substantive benefit that is specifically sought by the plaintiffs in this proceeding and is protective of group members’ interests” (at ).
Her Honour was also satisfied that in neither case was the plaintiff the beneficiary of a more beneficial contractual arrangement than the proposed GCO, and that there was a real prospect that class members would achieve a better financial outcome under a GCO fixed at the rate of 22% than would be achieved should the plaintiffs obtain third party-funding, which the evidence established was the likely alternative means of funding should a GCO have been refused. However, her Honour observed that, as has been discussed in earlier decisions, whether or not a GCO is more beneficial to class members than an alternative funding model is not a necessary condition and is not a proxy for the statutory test under s 33ZDA of the SCA; namely that the court be satisfied that it is appropriate or necessary to ensure that justice is done in the proceeding to make such an order. Her Honour said that s 33ZDA requires an “evaluative inquiry” under which the effects of making a GCO should be “considered wholistically” (at ). For example, the certainty, simplicity and transparency provided by a GCO must be borne in mind. Her Honour also cautioned that predictive modelling about the likely recovery to class members under a GCO versus alternative funding models is “only as good as its inputs” and involves “numerous layered and intersecting assumptions” (at ). Nevertheless, her Honour said that a price comparison between a proposed GCO and alternative funding models “remains a relevant consideration” (at ) and, in this case, the evidence suggested that the proposed GCO would be more favourable for class members than third party funding.
Her Honour found that there was sufficient evidence that the proposed rate of 22% was prima facie appropriate, notwithstanding the limits of that evidence at a relatively early stage of the proceeding. Her Honour observed that “[t]he plaintiffs properly accepted that, depending on the ultimate result, it was possible that costs calculated at that rate could produce a disproportionate outcome and that a later adjustment under s 33ZDA(3) might be required” (at ).
Her Honour was also satisfied on the evidence that each of SG and PFM (through its funder Omni Bridgeway) sufficiently demonstrated its ability to marshal the financial resources required to meet the commitments it must assume by virtue of the GCO (i.e. paying security for costs and meeting any adverse costs order).
In addition to the above, some noteworthy aspects of her Honour’s decision included the following:
Supreme Court of Victoria, Nichols J,
8 November 2022
First Plaintiff’s Solicitors: Slater and Gordon
Second Plaintiff’s Solicitors: Phi Finney McDonald
First Defendant’s Solicitors: Arnold Bloch Leibler
Second Defendant’s Solicitors: Corrs Chambers Westgarth
First Plaintiff’s Funder: N/A
Second Plaintiff’s Funder: Omni Bridgeway
Austlii Link: Available here
We're Australia's leading class action practice, and we've obtained more than $4.2 billion in settlements for our clients.
We have lawyers who specialise in a range of legal claims who travel to Australian Capital Territory. If you need a lawyer in Canberra or elsewhere in Australian Capital Territory, please call us on 1800 675 346.
We have lawyers who specialise in a range of legal claims who travel to Tasmania. If you need a lawyer in Hobart, Launceston or elsewhere in Tasmania, please call us on 1800 675 346.