By Stuart Eustice Partner and Lidia Martinez Chavez Lawyer

Background

In 2018, General Motors Holden (GM Holden ) signed five-year dealership agreements with various dealers, including Beecham, to sell and service Holden vehicles in Australia. In February 2020, GMH’s parent company General Motors (GM) announced it would retire the Holden brand and end sales by 2021. GM Holden offered compensation for early termination, but Beecham rejected the offer and commenced a class action alleging breach of contract and statutory obligations by GM Holden.

Procedural History

As the representative plaintiff in the group proceeding, Beecham litigated the matter against GM Holden. On 14 July 2023, GM Holden made an offer of compromise to settle Beecham’s claims. Beecham accepted this offer, which included a provision for the payment of “plaintiff’s costs of the proceeding.” A dispute later arose regarding the interpretation of this term, with GM Holden arguing that it should cover only Beecham’s individual legal costs, while Beecham contended that it should also include the legal costs associated with the common questions raised in the group proceeding.

Issue

The central issue on appeal was whether GM Holden’s liability for Beecham’s legal costs extended beyond Beecham’s individual costs to include the costs incurred in relation to the common questions in the group proceeding.

Primary Judgement

At first instance, Matthews J, ruled in favour of Beecham, holding that the term “plaintiff’s costs of the proceeding” should be interpreted broadly to include all legal costs, including those related to common questions in the group proceeding. Matthews J emphasised that the context of the group proceeding warranted this broader interpretation, as costs associated with common questions are an integral part of the plaintiff’s costs.

Appeal

GM Holden sought leave to appeal, arguing that the term “plaintiff’s costs of the proceeding” in the settlement offer should only cover Beecham’s individual legal costs, not the broader common question costs associated with the group proceeding. GM Holden contended that unless expressly stated, costs for common questions should not be included.

Beecham argued that as the representative plaintiff, its costs naturally included those for common questions shared by all group members, and that these costs were part of the overall litigation covered by the settlement.

Decision

The Court of Appeal refused leave to appeal, affirming the primary judge’s decision that in the context of a group proceeding, the term “plaintiff’s costs of the proceeding” should be interpreted broadly to include all costs, including those related to common questions that affect the entire group of plaintiffs. The Court found that GM Holden, by not expressly limiting the scope of the settlement offer to exclude common question costs, had effectively agreed to pay all costs incurred by Beecham up to the date of the settlement, not just Beecham’s individual costs.

Significance:

This ruling emphasises the need for clear and precise drafting in settlement offers to avoid unintended consequences, particularly in circumstances when dealing with the scope of costs in complex litigation involving multiple parties.