Innovative sliding scale group costs order approved in Crown Resorts class action

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The plaintiff in this open class shareholder action applied for a group costs order (GCO) under s 33ZDA of the Supreme Court Act 1986 (Vic) based on a sliding scale as follows:

As is common in such applications, the defendant took an essentially passive role; and the Court in this instance chose not to appoint a contradictor.

Justice Stynes granted the application in the terms sought. In summary, her Honour:

• set out, at [15]-[21], the relevant principles relating to GCO applications, as derived from earlier cases;
• noted that the current funding arrangement for the proceeding involved a simple no-win / no-fee arrangement, together with an indemnity for adverse costs, and without a litigation funder involved (at [22]-[25]);
• noted that the application was supported not only by the plaintiff, but by a majority of a random sample of class members that had been surveyed prior to the application being made, and that the proposed ‘sliding scale’ (as opposed to a flat rate) was put forward at the express request of the plaintiff (at [28]-[29]);
• identified the following as being the key issues to be determined: (i) the certainty to be conferred by the proposed GCO (by fixing costs at a maximum percentage of any resolution sum); (ii) other benefits to be conferred by the proposed GCO (including simplicity and transparency for class members and an alignment of interests in maximising the resolution sum); and (iii) the appropriateness of the proposed percentage rate for the GCO (at [31]);
• then proceeded to address each of those issues (at [33]-[82]), concluding that nothing in s 33ZDA prevented the Court from approving a ‘sliding scale’ of rates, as opposed to a single fixed rate (at [52]-[53]), and that it was appropriate, based on the whole of the evidence (some of which was confidential), to grant the proposed GCO in this case (subject, of course, to the Court’s power under s 33ZDA(3) to review it at a later date). Her Honour concluded (at [83]):

As may be apparent from my analysis set out above, based on the evidence available to me, I am satisfied that a GCO in the proposed form is appropriate to ensure justice is done in the proceeding for the following reasons:

(a) It provides a level of certainty as to the legal costs to be incurred which cannot be achieved through the hourly billing arrangement that is currently in place and that would continue if no GCO is made.

(b) It engenders simplicity and transparency to the costs payable and returns recoverable by the plaintiff and group members.

(c) It will likely serve to protect the group members, where the sum recovered is low, from disproportionately high legal costs.

(d) There is a real and not fanciful possibility that the lower rates of the GCO will be engaged and that group members will obtain a better financial outcome under the GCO.

(e) The proposed rate is appropriate having regard to the risks confronting the claims made, the risks to be assumed by Maurice Blackburn under the GCO and the reward it might reasonably expect in return for the assumption of those risks.

Lieberman v Crown Resorts Ltd [2022] VSC 787

Supreme Court of Victoria, Stynes J,
16 December 2022

Plaintiff’s Solicitors: Maurice Blackburn
Defendant’s Solicitors: Allens
Plaintiff’s Funder: N/A
Austlii Link: Available here

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