The Supreme Court of Victoria has approved a group costs order application by the lead plaintiff in a shareholder class action against IAG over the insurer’s disclosure of potential exposure to covid-related business interruption claims under policies with outdated Quarantine Act wordings.

Justice Lisa Nichols agreed to a 30% group costs order, inclusive of GST, sought by Damian Norris in his application. A group costs order stipulates the legal costs payable to the law firm representing members of a class action, calculated as a percentage of any award or settlement.

“When a group costs order is made, it guarantees that the plaintiff and group members will receive a fixed proportion of any award or settlement that is offered, subject only to variation by court order,” Justice Nichols said in her ruling today.

“By fixing the calculation of costs in this way, it allows a plaintiff and group members to eradicate any risk that their compensation, if recovered, will be eroded by costs whose proportion to that compensation exceeds the specified percentage.”

The ruling says IAG has only a "narrow interest" in the group costs order application. It says IAG neither consented to nor opposed the application.

Law firm Quinn Emanuel Urquhart & Sullivan launched the class action in 2022 and IAG has said it will fight the lawsuit.

The action alleges IAG made misleading and deceptive representations and failed to comply with continuous disclosure obligations, and as a result people paid more for shares than should have been the case, or bought shares they wouldn’t have if information had been released. The class action covers people who bought shares between March 11 and November 20 2020.

Click here for the decision.