High Court of Australia confirms first is not always best in competing class actions

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2021-04-23

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On 10 March 2021, in Wigmans v. AMP Limited & ORS the High Court of Australia dismissed an appeal from the NSW Court of Appeal regarding the court’s response to competing plaintiff applications to stay one or more open class representative proceedings commenced under Pt 10 of the Civil Procedure Act 2005 (NSW) (CPA).

Background

In April 2018, shortly after executives of AMP Limited (AMP) gave testimony at the Banking Royal Commission to the effect that AMP charged clients fees for no service and misled ASIC into the bargain, five open class representative proceedings were instigated. Ms Wigmans, as a representative plaintiff, instigated her proceedings first, by just seven hours.

Each of the proceedings were substantially similar and each representative plaintiff was a group member in each other proceedings. In four of the proceedings the representative plaintiff made applications seeking orders that their proceedings be permanently stayed. An application was then made for the remaining proceedings to be consolidated with the other four. AMP supported an outcome in the High Court and the Lower Courts, in which it would face only one set of proceedings.

Primary Decision - Supreme Court of NSW[1]

The primary judge (Ward CJ in Eq) approached the determination of the stay applications by assessing benefits that would flow to group members. She referred to “case management principles” from section 56 of the CPA using a “multi-factorial analysis” as endorsed in Perera v GetSwift Ltd [2018] FCAFC 202; (2018) 263 FCR 92 (GetSwift) and used eight factors taken from GetSwift.

Justice Ward ultimately preferred the proceedings which she considered would produce the best net return to group members, namely, those that:

  1. had a superior proposal with respect to the provision of security for AMP’s costs; and
  2. were funded on a no win no fee basis by the plaintiffs’ solicitors, with a 25% uplift on the fees if the resolution sum exceeded $80 million.

This was over proceedings including the appellants in which the plaintiffs solicitors were backed by a litigation funder which in turn stood to receive up to 20 % of any recovery.

The Appeal - Supreme Court of NSW (Court of Appeal)

The Court of Appeal found no error in the primary judge’s reasons. The "only real point of difference" in reasoning was the Court of Appeal considered - because a stay application ultimately turns on whether justice requires such a remedy - it cannot be said to be dictated by "case management principles”. The Court of Appeal found particular guidance in McHenry v Lewis [1882], which anticipated the solution offered by GetSwift to the problem of modern competing representative proceedings with "remarkabl[e] similar[ity]"

Issues on appeal - The High Court of Australia

The appellant, Ms Wigmans submitted:

  • the order made by the primary judge in accordance with the "multi-factorial analysis" endorsed in GetSwift was not authorised by s 67 or s 183 of the CPA or by the inherent power of the Supreme Court.
  • the Court of Appeal erred in failing to apply a presumption that it is prima facie vexatious and oppressive to commence an action if an action is already pending in respect of the same controversy.
  • that the onus is on the party that commences the action second in time to show that its action is not vexatious and oppressive.
  • where later-in-time proceedings have no discernible juridical advantage over the proceedings first commenced, the later proceedings should be stayed as vexatious in accordance with the settled approach of the courts to the problem of multiple proceedings by the same plaintiffs seeking the same relief against the same defendant.

Findings on appeal

A majority of the High Court majority the appeal and in doing so made the following observations:

  • multiple proceedings should not be encouraged and that competing representative proceedings run by different firms of solicitors, with different funders may be inimical to the administration of justice.
  • often it is a defendant who brings a stay application, and then the Court determines which of the actions is to go on as a test action, and which are to be stayed (as discussed in McHenry which principles are instructive even though these applications were filed by the plaintiffs).
  • where the defendant’s interests are not differentially affected, the court is to determine which proceeding going ahead would be in the best interests of group members.
  • the general law principles concerning multiple suits do not support the first-in-time rule or presumption. Multiple suits were and remain to be resolved by the exercise of discretion informed by all the relevant circumstances.
  • while litigation funding arrangements are not a mandatory consideration relevant to the exercise of the stay power, they are not irrelevant. The primary judge tested the likelihood of achieving particular results by applying the common assumptions to each case. The appellant conducted her case consistently with those assumptions, and there was no error in the primary judge’s approach.
  • The primary judge’s approach was not the only manner in which a court might determine which proceeding going ahead would be in the best interests of group members. The appropriate approach will invariably depend on the nature of the case in hand”.

Conclusion

Apart from saying “first in time is not determinative” - the High Court did not set any hard and fast guidelines, making it difficult for plaintiff firms to determine who will be given the right to proceed.

In turn, perhaps that will either make Plaintiff firms “gun shy” about starting speculative actions, or alternatively will have them thinking objectively about how they can make their action the most “attractive” to a Court. Looks like a smaller cut from any settlement/judgment could be a significant factor.

 

[1] Wigmans v AMP Ltd; Fernbrook (Aust) Investments Pty Ltd v AMP; Wileypark Pty Ltd v AMP Ltd; Georgiou v AMP Ltd; Komlotex Pty Ltd v AMP Ltd [2019] NSWSC 603 (23 May 2019).