Plaintiff v Defendant

1 This is a group proceeding issued under Part 4A of the Supreme Court Act 1986 (Vic) (the Act). Following the delivery of the principal judgment in which the common questions were determined adversely to the plaintiff,[1] the defendant seeks an order that the plaintiff pay its costs on an indemnity basis from 15 July 2023.

2 This is a 'closed' class comprising the plaintiff and 9 group members.[2] The defendant (Holden) relies on offers of settlement it made to each group member individually, before the litigation commenced. Group members will receive no compensation in this proceeding because liability (turning on a contractual construction question common to all group members) has been determined in favour of Holden.

3 Holden does not seek costs order against the group members, accepting that no order for costs can be made against them by reason of s 33ZD(1)(b) of the Act. It says that in the circumstances of this case the plaintiff, who will be liable to pay Holden's costs, should be required to pay those costs on an indemnity basis, in substance because the group members' conduct in refusing the pre-litigation offers was unreasonable.

4 The plaintiff does not resist an order that it pay Holden's costs but says there is no warrant to order costs on an indemnity basis.

5 Holden branded cars were sold nationally through Holden's network of dealers in Australia. The plaintiff and group members were authorised dealers, appointed under dealership agreements that were to run until December 2022. Holden's parent company, US-based General Motors Company, announced in February 2020 that it was retiring the Holden brand and exiting from the Australian market. Holden stopped accepting purchase orders for new vehicles in March 2020.

6 In May 2020 Holden offered 'transition and support' packages to its Australian dealers (including the now plaintiff and group members) to compensate them for losses caused by the cessation of Holden new vehicle sales prior to the expiry of their dealer agreements (May 2020 Offers). Holden made open offers to dealers which included among other things, financial compensation calculated on the basis of the dealership's vehicles sales in previous years at a set rate per vehicle, partial reimbursement of building costs for dealership premises, an allowance for any special circumstances where applicable and an option for dealers to enter into a service operations agreement with Holden. The amounts offered to the plaintiff and group members were:

(a) Beecham (the plaintiff) $843,750;

(b) Nobes Motor Company Pty Ltd (Swan Hill Holden) $330,000;

(c) Gaukroger Sales Pty Ltd $296,516;

(d) Heartland Motors Pty Ltd (Holden Blacktown) $1,346,250;

Heartland Motors Pty Ltd (Heartland Holden Penrith) $1,035,000;

(e) Silver City Motors Pty Ltd $206,250;

(f) City Motors (Port Lincoln) Pty Ltd $292,563;

(g) Spencer Motors Pty Ltd $187,500;

(h) Augusta Motor Company Pty Ltd $191,250;

(i) Mid North Motor Company Pty Ltd $161,250; and

(j) Ernbro Pty Ltd (Island Coast Holden) $294,856.

7 Each offer was subject to the dealer entering into a deed of release in respect of any 'Dealer Claims', a broadly defined term that included a release under clause 4.1 of the deed of any claim arising out of:

(a) 'any supply or transaction relating to the aftersales operation' carried out by each dealership;

(b) the performance by Holden, its parent or their related entities of any obligation under the dealer agreements;

(c) any release, or ownership or any other property related obligations in relation to the dealer site;

(d) any representations made by Holden, its parent or their related entities, directors, agents and employees in relation to the business trading as Holden (including the Dealer's dealership operations).

8 There were limited exclusions in clause 4.1.3 for unpaid warranty claims, product safety recalls or consumer guarantee obligations. The releases extended to claims by the dealers' employees, sub-dealers and agents against Holden, its parent and their related entities and related persons (defined broadly). The offers were open until May 2020, extended to 30 June 2020.

9 HWL Ebsworth (HWLE) acted for all of the dealers in the national dealers' network, in negotiations with Holden. The May 2020 Offers were, however, made individually to each dealer. Neither the plaintiff nor any group member accepted the May 2020 Offer made to it.

10 On 20 October 2020, the plaintiff and group members entered into a legal costs agreement with HWLE in relation to the then proposed litigation against Holden. That is, they were all parties to the one agreement. They agreed that they were each jointly and severally liable to pay HWLE for the professional fees, costs and disbursements of prosecuting a legal proceeding against Holden. Each agreed to pay an equal share (1/11th) of the costs.

11 This proceeding was commenced in December 2020. At its commencement and throughout the group members have comprised the same 9 named entities.

12 On 28 June 2023, the proceeding was referred to a judicial mediation, attended by the plaintiff and group members and their solicitors.

13 On 14 July 2023, Holden served an offer of compromise on the plaintiff under order 26 of the Supreme Court (General Civil Procedure) Rules 2015 (Rules). Holden offered to compromise the plaintiff's own claim by paying it the sum of $2,250,000. The offer required that the plaintiff consent to an offer under s 33W(1) of the Act[3] that the plaintiff have leave to settle the whole of its claims in the proceeding on the terms of the offer, and consent to an order 'in such terms as the Court may consider fit providing for the payment by the defendant of the plaintiff's costs of the proceeding up to and including the day on which this offer of compromise is served.'

14 The plaintiff accepted the offer. A dispute arose about the meaning of the italicised term. Holden contended that the offer was intended and should be construed as encompassing only the 'individual' costs of the plaintiff and not the costs of the proceeding relating to the litigation of the common issues. A Judge of the Trial Division (Matthews J) approved the settlement of the plaintiff's personal claim under s 33W and determined that Holden had agreed to pay all of the legal costs for which the plaintiff was liable - meaning the costs of the proceeding according to its ordinary meaning.[4] The Court of Appeal refused leave to appeal.[5]

15 The plaintiff elected to continue as the plaintiff, notwithstanding the settlement of its individual claim. Section 33D(2) of the Act specifically contemplates that a plaintiff may take that course, providing,

If a person has commenced a group proceeding[6] that person retains a sufficient interest -

(a) to continue the proceeding; and

(b) to bring an appeal from a judgment in the proceeding -

even though the person ceases to have a claim against the defendant.

16 On 11 August 2023, after the settlement of the plaintiff's personal claim, the plaintiff and group members entered into a Costs Deed which provided for the sharing of the costs of continuing to conduct the proceeding and the burden of any adverse costs. The Costs Deed relevantly provided:

(a) Notwithstanding Beecham's[7] settlement, Beecham and each group member agrees that each will continue paying 1/11th of the legal costs of the proceeding after 14 July 2023 being the date that the offer of compromise was made by the defendant (clause 1.1);

(b) Beecham and the group members agree that (subject to clause 3) the benefit of the costs payable by the defendant to Beecham pursuant to the offer of compromise, being the plaintiff's costs pre-dating 14 July 2023 ('Recouped Costs'), will be divided equally between the plaintiff and group members;

(c) If Beecham loses at trial and adverse costs orders are made against it in favour of the defendant:

(i) Beecham and the group members agreed to set-off the Recouped Costs against all and any amounts payable by Beecham to the defendant pursuant to any adverse costs orders made in the proceeding; and

(ii) Beecham and the group members agree that, if after the set-off described above there are further costs payable by Beecham to Holden pursuant to any adverse costs orders, they will each be liable to pay the balance of any adverse costs orders made in favour of Holden in equal portions (i.e. 1/11th each) (clause 3.1).

(d) Group members must pay Beecham their portion of any adverse costs orders within 7 days from the date upon which the costs become due and payable (clause 3.2).

(e) As with the Recouped Costs, Beecham and the Holden Dealer Group[8] agree that the benefit of all costs orders made in Beecham's favour will be divided equally between Beecham and the Holden Dealer Group.

17 The trial proceeded by way of determination of a set of questions common to group members, each of which was determined adversely to the plaintiff.

19 All common questions were determined adversely to the plaintiff and group members. The judgment in respect of their claims was thus not less favourable to Holden than the terms of its pre-litigation offers; indeed the offers were significantly more favourable to the group members than the outcome of the proceeding. The group members unreasonably failed to accept those offers, instead joining with the plaintiff to fund the proceeding to advance their claims. The failure of the nine group members to accept the May 2020 Offers was unreasonable considering the extent of the compromise offered by Holden, the time allowed to them to consider the offers, the clarity of the offers and their prospects of success, assessed at the date of the offer. All group members were legally represented at the time of receiving the offers.

20 The Court has a wide discretion as to costs under s 24(1) of the Act. An order for indemnity costs may be made if special or unusual circumstances are demonstrated.[9] Indemnity costs 'serve the purpose of compensating a party fully for costs incurred, as a normal costs order could not be expected to do, when the court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs.'[10] 'An imprudent refusal of an offer to compromise' is recognised as a circumstance warranting indemnity costs.[11] An order for indemnity costs would advance the public interest in promoting the acceptance of offers of compromise and non-acceptance in some cases may be a strong factor supporting such an award. Acceptance of reasonable offers of compromise is in the interests of litigants and the public.

21 The May 2020 Offers were pre-litigation offers within the meaning of r 26.08.1. That rule (the text of which is set out below) contemplates the making of an offer before a proceeding has commenced by a 'party' in writing to another 'party' to compromise any claims made in the proceeding. The term 'party' is not defined in order 26, so its definition is found in s 3(1) of the Act which defines 'party' as including 'every person served with notice of or attending any proceeding, whether named on the record or not'. Whilst it is generally accepted that group members are not parties to a group proceeding,[12] the present issue concerns the construction of 'another party' in r 26.08.1. In its terms, the refence to 'party' in r 26.08.1 encompasses the group members in this proceeding, who were served with notice of the proceeding and (at least) attended the mediation. Holden relied upon the English Court of Appeal case of Moon v Atherton,[13] in which it was held that persons represented by the named plaintiff in a representative proceeding were also 'parties' for the purposes of s 225 of the Supreme Court of Judicature (Consolidation) Act 1925, which was in the same terms as s 3(1) of Victorian Act.[14] Accordingly, pursuant to r 26.08.1, the group members' refusal of the May 2020 Offer is to be taken into account in the exercise of the Court's discretion in respect of costs.

22 In any event, order 26 does not constitute a code which precludes parties from relying upon common law principles.[15] The policy consideration of encouraging parties to give serious consideration to informal as well as formal offers to compromise, at pain of costs, remains apposite.[16] Even if the procedure under order 26 has not been complied with, the Court may still take into account the refusal of an informal offer in exercising its costs discretions.[17]

23 The plaintiff submitted that r 26.08.1 is not engaged. The rule provides that in exercising its discretion as to costs in accordance with paragraph (1), the Court may order that the offeree pay all or part of the offeror's costs of the proceeding taxed on a basis other than the standard basis. The plaintiff was a recipient of an offer made on 20 May 2020 which it rejected in favour of a subsequent offer to settle its individual claim. Holden relies on the group members' refusal of the offers made to them as the basis for a costs order against the plaintiff. Holden accepts that it can only obtain a costs order against the plaintiff and not the group members but impermissibly seeks to rely on the conduct of group members as 'offerees'.

24 Further, the group members are not parties to the proceeding for the purpose of the rule. Rule 26.08.1 contemplates an offer being made to a 'party'. Beecham as the plaintiff is the relevant 'party'. Holden made no offer to Beecham to compromise the group members' claims before the proceeding was commenced. Group members in a class action are not parties for costs purposes.[18] The definition of 'party' in s 3(1) of the Act is read subject to the terms of Part 4A which governs group proceedings. The construction of s 3(1) that Holden contends runs counter to the manner in which 'plaintiff' and 'group member' are defined under s 33A,[19] the policy reflected in Part 4A that outside of limited circumstances group members are not to be liable for costs,[20] and other provisions under that part.[21] The terms of Part 4A of the Act (and its Federal Court equivalent) were enacted in circumstances where the legislatures had rejected a proposal by the ALRC which would have expressly made each group member a party to a proceeding.[22]

25 Moon v Atherton,[23] an English Court of Appeal case decided 50 years ago relied upon by Holden does not concern a class action under a regime comparable to a Part 4A proceeding. That case concerned a representative action under the English equivalent of order 18 of the Court's Rules. Under the Victorian Act, a group member's position in relation to costs only changes if the group member is appointed a 'sub-group representative party' under s 33Q of the Act, or the group member takes part in the proceeding to determine an individual question under s 33R of the Act. Neither situation presently arises. Accordingly, it is not necessary for the Court to determine whether, in those situations, a group member is a party for the purposes of order 26.

26 On the basis that the plaintiff alone can be made liable for costs, it cannot be said that Beecham imprudently refused any offer to compromise, or that it otherwise acted unreasonably in the proceeding. Beecham refused the initial May 2020 Offer made to it, but accepted a subsequent offer to settle its individual claim for a greater sum. Nor could Holden point to any conduct of Beecham that was unreasonable in relation to the group members' failure to accept the May 2020 Offer. Beecham was not involved in those decisions nor was it able to, as at that time Beecham had not yet commenced the proceeding. The fact that Beecham had entered into a funding agreement with the group members is not relevant to the Court's costs discretion.

27 Instead of seeking leave to be replaced as plaintiff which could risk further costs and delay, Beecham elected to continue as the plaintiff which was the efficient and cost effective course to take. None of the preceding conduct can be characterised as unreasonable.

28 Even if the rejection by each or any group member of the May 2020 Offer was a relevant consideration in the exercise of the Court's costs discretion, Holden must still establish that rejection is unreasonable, in light of the extent of the releases that formed a condition of the offers (as described earlier in these Reasons). The releases would have extended to claims the group members may have had against Holden other than those brought in this proceeding or arising out of facts and circumstances other than the winding down of the Holden brand in 2020. Further, acceptance of the offer would also have made each group member liable under a warranty and indemnity in clause 4.3 of the deed of release in Holden's favour in relation to any claim by any landlord or owner of a dealership site. The deed also provided for confidentiality and non-disparagement obligations in clauses 6.1 and 6.2. Given the extent of the release and indemnity required under the deed of release as assessed at that time, the plaintiff submitted the rejection of the offer by group members cannot be said to have been unreasonable compared to their decision to particulate in the group proceeding.

29 To resolve this issue it is necessary to consider the inter-relationship between generally applicable rules and principles concerning costs, and the legislative structure governing the conduct of group proceedings.

30 It is convenient to start with group proceedings, for which the relevant legislative provisions are found in Part 4A of the Act. Group members are persons on whose behalf a group proceeding has been commenced and the plaintiff is the person who commences a group proceeding as a representative party.[24] The subject matter of a group proceeding is 'a claim which gives rise to common questions of law or fact. The plaintiff represents the group members with respect to their interests in that regard and the group members claim through the plaintiff to the extent of that interest.'[25] The foundation of the group proceeding is that the plaintiff and group members all have an interest in the resolution of a substantial common question of law or fact.[26] 'Except in limited circumstances the statutory scheme does not contemplate group members having an active role in or control over the conduct by the lead plaintiff of a group proceeding.'[27]

31 Part 4A makes express provision for costs. Section 33ZD provides,

(1) In a group proceeding the Court -

(a) may order the plaintiff or the defendant to pay costs;

(b) except as authorised by sections 33Q or 33R, may not order a group member or a sub-group member to pay costs.

(2) Subsection (1)(b) is subject to any order made under section 33ZDA.[28]

32 Section 33Q provides a process for determining the claims of group members where they will not be finally determined by the resolution of common questions. The Court may make directions establishing sub-groups and appointing a sub-group representative party. Where that occurs the sub-group representative party and not the plaintiff is liable for costs associated with the determination of the question or questions common to sub-group members. Like provision is made in s 33R for the determination of a question that relates only to the claim of an individual group member. That costs liability for which ss 33Q and 33R provide are exceptions to the general rule that group members are not liable for costs in respect of the group proceeding itself.[29] Successive courts have held that group members are not parties, for the purposes of costs or otherwise.[30] As Jacobson J said in Tongue v Tamworth City Council[31] (of s 43(1A) of the Federal Court Act 1976 (Cth), the federal counterpart of s 33ZD),

Central to any consideration of costs questions in representative proceedings under Pt IVA of the Act is the principle stated that in s 43(1A). This section provides that in proceedings under Plaintiff IVA subject to two exceptions, the Court may not award costs against a person on whose behalf the proceeding has been commenced "other than a party to the proceedings who is representing such a person".

Thus, the rule stated by the High Court in Knight v SP FP Special Assets Ltd (1992) 174 CLR 178 at 192‑193 that there is a category of cases in which costs may be ordered against a non-party who has an interest in the subject matter, is not applicable to Pt IVA proceedings. Instead, s 43(1A) makes it clear that costs are to be borne by a representative applicant and not by group members. This provision was inserted in response to a decision of the Full Court of the Supreme Court of Victoria in Burns Philp & Co Ltd v Bhagat [1993] VicRp 13; [1993] 1 VR 203 in which it was held that the Court had power to order costs against a represented party.

33 In Knight v FP Special Assets[32] the High Court accepted the broad jurisdiction of courts to order costs against 'non-parties' in the strict sense. The High Court's reasoning (in which it construed s 58 of the Supreme Court Act 1867 (Qld) by reference to its historical context at common law and in equity) was supported by its reference to the extended concept of 'party' in the Queensland Act, which was in the same terms as s 3(1) of the Victorian Act. One circumstance in which such an order might be made is where the party against whom costs are sought is to be regarded as the 'real party.'[33] As the Victorian Court of Appeal said in Financial Wisdom Ltd v Newman, 'the gravamen of Knight and cases like it is that a costs order may be made against a "party" within the meaning of provisions like s 3 of the Supreme Court Act despite that such a party may not be a "party to the proceeding."'[34] In an earlier decision, Burns Philp & Co v Bhagat[35] the Appeal Division of this Court held that the power conferred by s 24(1) of the Act was not subject to an implied limitation which prevents an award of costs being made against those who are represented by the plaintiff in such proceedings. The proceedings in that case were issued under the then ss 34 and 35 of the Act which were, as Brooking J observed, 'very remote from any popular notion of a class action'.[36] By contrast the contemporary legislative conception of a class action (in Victoria, Part 4A of the Act) makes express provision providing immunity to group members in respect of the costs of a group proceeding, save where the identified exceptions apply. The provisions in respect of costs continue to apply where the plaintiff continues the proceeding on behalf of group members after the plaintiff has settled his personal claim, as permitted by s 33D.

34 In Liesfield v Ausnet Electricity Services Pty Ltd (No. 4)[37] Dixon J (considering an application to substitute a plaintiff) stated the proposition that 's 33ZD does not curtail the general power of a court to order costs against non-parties, save that group members who are not parties to group proceedings under Pt 4A of the Supreme Court Act are immune from costs orders. The effect of s 33ZD(b) is that the court cannot order group members to pay costs by reason of the fact that they are group members'.[38] His Honour went on to observe, in obiter, that the position of a group member who funded and controlled the litigation under a commercial arrangement for profit would (vis a vis their liability for costs) would 'warrant careful consideration'. The basis for the observation was that group members have immunity from costs orders because of their status as group members.[39] It was not submitted in this case that the group members were profiting from their funding the action, and there was no evidence to support such a submission.

35 Although Holden accepted that a costs order could not be made against group members there was a subtext in its submissions to the effect that group members, who were known, few in number and had shared the costs of the proceeding with the plaintiff, were the 'real parties' to the litigation. Although the 'real parties' point was not made explicitly, heavy reliance was placed on the configuration and funding arrangements for this proceeding. I reject the notion that the funding arrangements or group membership of this proceeding warranted it being considered as a special case, for costs purposes or otherwise. An earlier de-classing application under s 33N of the Act was rejected.[40] Indeed, because this proceeding is a properly constituted group proceeding the judgment determining the common questions will bind each group member under s 33ZB of the Act, as it happens, to Holden's benefit.

36 Holden sought to overcome the limitation imposed by s 33ZD by attributing the group members' 'unreasonable' conduct in rejecting the May 2020 Offers, to the plaintiff, via two pathways: r 26.08.1 and the Court's general discretion with respect to costs.

37 I will deal first with the statutory rule. Rule 26.08.1 of the Rules provides as follows:

(1) If -

(a) a party, before a proceeding has commenced, has made an offer in writing to another party (whether or not expressed to be without prejudice) to compromise any claim made in the proceeding on the terms specified in the offer; and

(b) the offer was open to be accepted for a reasonable time, but was not accepted; and

(c) the offeror obtains an order or judgment in respect of the claim no less favourable to the offeror than the terms of the offer -

the Court shall take those matters into account in determining what order for costs to make in respect of the costs of the proceeding.

(2) In exercising its discretion as to costs in accordance with paragraph (1), the Court may order that the offeree pay all or part of the offeror's costs of the proceeding taxed on a basis other than the ordinarily applicable basis, from -

(a) the day the offer was made;

(b) the commencement of the proceeding; or

(c) any other time that the Court thinks fit.

38 There are two difficulties with Holden's attempted reliance on r 26.08.1. The first is its reliance on the extended definition of 'party'. 'Party' is not defined for the purposes of the relevant part of the Rules. Under s 23 of the Interpretation of Legislation Act 1984 (Vic), expressions in the Rules are to have the same expression as they have in the Act (which is the source of the rule-making power) unless the contrary intention appears. The meaning of 'party' in s 3(1) is extremely broad.[41] Without regard to the relevant statutory context an argument could be made that represented persons are 'parties' in the extended sense (as was accepted in a different statutory context, in Burns Philp). However, there is a clear contrary indication for present purposes.

39 Rule 26.08.1 attaches to pre-litigation offers made to compromise any claim made in a proceeding in respect of which the offeror obtains an order or judgment in respect of the claim no less favourable than the terms of the offer. Those matters are to be taken into account in determining what order the Court should make in respect of the costs of the proceeding. Although by definition a proceeding is not in existence at the time at which the pre-litigation offer is made, the rule attaches costs consequences in respect of the costs of the proceeding, to an offer made to comprise claims which become the subject of a claim in the proceeding. In other words, the rule has effect in respect of a proceeding. In group proceedings, although group members and plaintiffs are not literally defined as 'party' or 'non-party' (by any statutory definition) group members are not parties for the purposes of Part 4A and specifically not for the purposes of the costs of the proceeding. In group proceedings special rules apply to define when group members are liable for costs and when they are not. The provisions of the Act expressing those rules are a contrary indication for the purposes of the application of r 26.08.1, as far as group members are concerned.

40 Moon v Atherton does not assist Holden. It was decided in respect of a different regime for representative proceedings.[42]

41 The second issue is that the 'parties' with whom the rule is concerned are the offeror and the offeree, as subparagraph (2) makes clear. The rule provides that the Court may require the offeree to pay the offeror's costs taxed on a non-standard basis. While subparagraph (2) does not confine the Court's discretion it is nonetheless clear, reading the rule as a whole, that it is intended to require Courts to consider imposing costs consequences on a party who receives a pre-litigation offer, rejects it, proceeds to litigation and obtains a result that is no more favourable to it than the offer. The rules reflects the public policy in incentivising offerees to accept reasonable offers. The rule may achieve its purpose and intended effect if its application visits upon a party to whom a pre-litigation offer is made, the consequences of litigating a claim in respect of that offer.

42 The costs now in issue are the cost of the proceeding, in which common issues were litigated on behalf of group members. Holden made no offer to the plaintiff to compromise the group members' claims before the proceeding was commenced (or after the proceeding was commenced, for that matter). It made individual offers to the persons who subsequently became group members. It did not make offers to any group member or group members that empowered them, upon acceptance of the offers, to resolve the claims of all of them.

43 While the submission was less than explicit, Holden is seeking to apply the rule in respect of an offer to one 'party' (more accurately, a group of 'parties'; the group members) against a different 'party' (the plaintiff).

44 In my view r 26.08.1 has no application to these circumstances.

45 Even if I were wrong in forming that view, I would not exercise my discretion to make the order sought by Holden for the reasons further discussed below.

46 I turn now to the broad discretion conferred by s 24(1) of the Act.

47 I agree that r 26.08.1 does not constitute a code in respect of pre-litigation offers which precludes parties from relying upon common law principles.[43] The principles governing the exercise of the Court's wide discretion under the section are as described in Holden's submissions. An order for indemnity costs may be made if special or unusual circumstances are demonstrated.[44] An imprudent refusal of an offer to compromise is recognised as a circumstance warranting indemnity costs.[45] Acceptance of reasonable offers of compromise is in the interests of litigants and the public.

48 Considered superficially, without regard to the structural relationship between plaintiff and group members established under Part 4A and without regard to the substance of the May 2020 Offers, it might be thought a fair result that Holden obtain indemnity costs from the plaintiff where all group members have achieved a worse result than they would have achieved by accepting the offers and where, under the Costs Deed, adverse costs liability will be shared between group members and the plaintiff. However, that is not a proper path of analysis.

49 The award of indemnity costs in this case is sought on the basis of the relationship between the making of pre-litigation offers and the outcome of the proceeding. As Holden recognised, where indemnity costs are awarded on that basis, courts look to the reasonableness of the recipient party's rejection of the offer. The policy of the law in this arena is to link the conduct of a party in relation to the proceeding that that party brings, with consequences in respect of the costs of that proceeding. The relevant rules of court and related common law principles are intended to encourage appropriate settlements. The policy of the law is that a person who receives an offer is expected to make appropriate choices about the litigation that that person controls.

50 In essence, Holden sought indemnity costs against the plaintiff on the basis of the conduct of the group members with respect to its May 2020 Offers. In this case:

(a) The conduct of each group member in not accepting the offer made to it in May 2020 was not conduct in respect of the proceeding as a whole, but conduct (a choice to reject the offer) in respect of its individual claim.

(b) The plaintiff had no ability to require group members to individually accept the offers made to them. That was not open contractually (the offers were not made to the plaintiff, save for the two offers made in respect of its personal claims) and was not within the plaintiff's remit as representative, either before or after proceeding was commenced.

(c) Unsurprisingly, no offer was made to the plaintiff to compromise the claims of group members before the proceeding was commenced.

(d) Once the proceeding was commenced the plaintiff (not group members) controlled the proceeding. That is the position at law. There was no evidence to show that that was not the position in fact. Holden made no offer to the plaintiff, after the proceeding had commenced, to compromise the claims of group members, or to compromise the proceeding as a whole.

51 In these circumstances it would be neither principled nor just in effect to aggregate the decisions of individual group members to reject offers made to them and (assuming for purpose of analysis that those decisions were unreasonable) to impute that constructed collective unreasonableness to the plaintiff, who is the party liable for costs. Although Holden accepted that no order could be made against group members, by imputing to the plaintiff their alleged 'unreasonable conduct' in respect of offers made to them individually as a basis on which to determine the scale on which the plaintiff would be liable for costs, it was seeking to achieve via the back door, what it could not achieve directly.

52 Although it does affect my reasoning I will conclude by observing that in making an offer of compromise to the plaintiff in July 2023 (which included costs in respect of the proceeding) Holden intended to rely on the offer to settle Beecham's claim but also, if settlement was not achieved, to give it costs protection, as the Court of Appeal found.[46] As it happened, the offer was accepted with the consequence that the costs of the proceeding up until the date of the offer were dealt with. Once the plaintiff elected to continue in that role the defendant might have considered the making of a further offer in respect of the claims made in and the costs of the proceeding. Wilcox J observed in McMullin v ICI Australia Operations Pty Ltd[47] that utilising offers of compromise in a group proceeding can represent a 'major problem'. The issue with which his Honour was concerned in that case was that no offer could be accepted until the applicant was in possession of information about the identity of group members and the value of their claims. That is not this case.

53 It is unnecessary to address the arguments about the reasonableness of the group members' rejection of the May 2020 Offers.

[1] Beecham Motors Pty Ltd v General Motors Holden Australia NSC Pty Ltd [2025] VSC 125.

[2] Heartland Motors Pty Ltd (ACN 096 561 385) trading as Heartland Holden Blacktown and Heartland Motors Pty Ltd (ACN 096 561 385) trading as Heartland Holden Penrith are one entity.

[3] Section 33W(1) of the Act provides that 'the plaintiff may, with the leave of the Court, settle the plaintiff's individual claim in whole or in part at any stage of the group proceeding.'

[4] Beecham Motors Pty Ltd v General Motors Holden Australia NSC Pty Ltd (No 2) [2023] VSC 640.

[5] General Motors Holden v Beecham Motors Pty Ltd [2024] VSCA 177.

[6] A 'person who has commenced a group proceeding' is the plaintiff (s 33A).

[7] Beecham is the plaintiff and was defined as such in the Costs Deed.

[8] 'Holden Dealer Group' is not defined but appears to be a reference to group members.

[9] Chen v Chan [2009] VSCA 233, [10].

[10] Hamod v State of New South Wales (2002) 188 ALR 659, [20].

[11] Clifton (Liquidator) v Kerry J Investments Pty Ltd (No 2) [2020] FCAFC 112; (2020) 277 FCR 382, [30]; Hazeldene's Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435, [18].

[12] See Oliver v Commonwealth Bank of Australia (No 2) [2012] FCA 755; (2012) 205 FCR 540, [1]-[3].

[13] Moon v Atherton [1972] 2 QB 435.

[14] Moon v Atherton [1972] 2 QB 435, 441-442.

[15] Aljade and MKIC v OCBC [2004] VSC 351, [52], citing Grbavac v Hart [1996] VSC 37; (1997) 1 VR 154, 160 (Tadgell JA), 164 (Hayne JA).

[16] Langley v Age Company Ltd [2002] VSC 243, [24].

[17] Aljade and MKIC v OCBC [2004] VSC 351, [52].

[18] Johnson Tiles Pty Ltd v Esso Australia [1999] FCA 1363; (1999) 94 FCR 167, [31]; Courtney v Medtel Pty Ltd [2002] FCA 957; (2002) 122 FCR 168, [36]; Oliver v Commonwealth Bank of Australia (No 2) [2012] FCA 755; (2012) 205 FCR 540, [2].

[19] Section 33A defines 'plaintiff' as 'a person who commences a group proceeding as a representative party or a person who is substituted under section 33T(1) or 33W(3). 'Group member' is defined as 'a member of a group of persons on whose behalf a group proceeding has been commenced', and is not referred to as a 'party' as such under s 33A.

[21] See ss 33D, 33E, 33H, 33K, 33KA, 33S, 33T and 33W(2) and (3).

[22] See Grave, Adams and Betts, Class Actions in Australia (3rd ed, Thomson Reuters, 2022), pp260-‍1 [6.150].

[23] Moon v Atherton [1972] 2 QB 435.

[24] Supreme Court Act 1986 (Vic), s 33A.

[25] Timbercorp Finance Pty Ltd v Collins [2016] FCA 44; (2016) 259 CLR 212, [49] (French CJ, Kiefel, Keane and Nettle JJ) (Timbercorp).

[28] Section 33ZDA provides for the making of Group Costs Orders.

[29] Timbercorp, [51] (French CJ, Kiefel, Keane and Nettle JJ).

[30] See, e.g., Johnson Tiles Pty Ltd v Esso Australia [1999] FCA 1363; (1999) 94 FCR 167, [31]; Courtney v Medtel Pty Ltd [2002] FCA 957; (2002) 122 FCR 168, [36]; Oliver v Commonwealth Bank of Australia (No 2) [2012] FCA 755; (2012) 205 FCR 540, [2].

[31] Tongue v Tamworth City Council [2004] FCA 1702; (2004) 141 FCR 233, [15]-[16].

[32] Knight v FP Special Assets Ltd (1992) 174 CLR 178 (Knight).

[34] Financial Wisdom Ltd v Newman & Ord [2005] VSCA 110; (2005) 12 VR 79, [45] (Financial Wisdom).

[35] Burns Philp & Cor v Bhagat [1993] 1 VR 202 (Burns Philp).

[37] Liesfield v Ausnet Electricity Services Pty Ltd & Ors (No. 4) [2014] VSC 496 (Liesfield).

[40] Beecham Motors Pty Ltd v General Motors Holden Australia NSC Pty Ltd [2021] VSC 855.

[41] See Knight and Financial Wisdom, supra.

[42] The different legislative context means that the case does not assist, but for completeness it may be noted that Lord Denning MR considered represented persons (in an action commenced under The Rules of the Supreme Court Order 15 Rule 12) to be parties 'but not full parties because they are not liable individually for costs' (at 441). In Burns Philp Brooking J referred to Moon and said the basis on which the court considered that a represented person was a party, was not clear (at 223).

[43] Aljade and MKIC v OCBC [2004] VSC 351, [52], citing Grbavac v Hart [1996] VSC 37; (1997) 1 VR 154, 160 (Tadgell JA), 164 (Hayne JA).

[44] Chen v Chan [2009] VSCA 233, [10].

[45] Clifton (Liquidator) v Kerry J Investments Pty Ltd (No 2) [2020] FCAFC 112, [30]; Hazeldene's Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435, [18].

[46] General Motors Holden v Beecham Motors Pty Ltd [2024] VSCA 177 (see paragraph [14] above), [37].

[47] McMullin v ICI Australia Operations Pty Ltd [1997] FCA 1426.