Settlement in the GPT class action - the court's role in approving legal costs

published Aug 26, 2013
Settlement of the class action commenced by Modtech Engineering against GPT Management Holdings Limited was reached in May 2013. The settlement occurred after a four week hearing had concluded and the judge, Justice Gordon, had reserved her decision. As with all class actions, the settlement was subject to court approval. As part of the settlement, Justice Gordon was asked to approve the costs and expenses incurred by Modtech’s lawyers. The role of the court in this regard is protective of the interests of group members to ensure that the lawyers do not act oppressively or unreasonably.

Certain market disclosures by GPT Management Holdings Limited were the subject of a class action commenced by Modtech Engineering in 2011. Settlement of the class action was reached in May 2013 after a four week hearing had concluded and the judge, Justice Gordon, had reserved her decision.

As with all class actions, the settlement was subject to court approval.  The parties asked the court to approve a settlement involving a payment of $75 million by GPT to group members, inclusive of interest and costs.

As part of the settlement, Justice Gordon was asked to approve costs and expenses incurred by Modtech’s lawyers (Slater & Gordon) of $9.338 million. The role of the court in this regard is protective of the interests of group members to ensure that the lawyers do not act oppressively or unreasonably.

Usually when the court is asked to approve costs, the court is assisted by evidence from a costs consultant who has performed a detailed review of the lawyers’ files and the hourly rates, and hours worked, of the lawyers working on the matter.

Slater & Gordon took an unusual approach in this case. The costs consultant did not perform a detailed review of the lawyers’ files but undertook what he described as a “global assessment”. Justice Gordon was not satisfied that the lawyers had provided adequate information to the court to enable the court to approve the lawyers’ costs and referred the costs to a Registrar of the court for assessment.

The court has an important role in protecting the interests of group members in class action settlements, both as to the quantum of the settlement and the amounts of legal and other costs which are payable from any settlement amount.