12 March 2021

May the best class action win: High Court dismisses Wigmans appeal

This article was written by Alexander Morris, Moira Saville and Nicholas Andrews.

Introduction

In Wigmans v AMP Limited & Ors [2021] HCA 7, the High Court of Australia (by a 3:2 majority) dismissed an appeal against the decision of the New South Wales Court of Appeal.[i]  In doing so, the High Court:

  1. confirmed the validity of the current “multi-factorial approach” used by the Courts to determine which of any competing class actions should be stayed;
  2. gave some guidance as to how courts may approach the task of determining which proceeding going ahead would be in the best interests of group members; and
  3. dismissed the argument that there is a presumption that the filing of a second, overlapping class action is an abuse of process (with the onus then being on the later plaintiff to overcome that presumption by demonstrating a “juridical advantage”).

The judgment confirms that the courts enjoy a broad discretion when determining whether one or more competing class actions should proceed and that one class action will gain little advantage over its competitors by being the first in time to file.  As such, any concerns among defendants that the decision of the High Court might encourage a “race to the courthouse steps” have been allayed.

Background – Supreme Court and the Court of Appeal

In 2018, five class actions dealing with overlapping matters were filed against AMP alleging it breached its continuous disclosure requirements during the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

Ward CJ in Eq, at first instance in the Supreme Court of New South Wales,[ii] employed a multi-factorial analysis, endorsed by the Full Federal Court in Perera v Getswift Ltd,[iii] in considering whether to grant a stay of all but one of the proceedings.  The relevant factors to be taken into account were (as summarised by the Court of Appeal):[iv]

  1. the competing funding proposals, costs estimates and net hypothetical return to group members;
  2. the proposals for security for costs;
  3. the nature and scope of the causes of action advanced;
  4. the size of the respective classes;
  5. the extent of any bookbuild;
  6. the experience of the legal practitioners and availability of legal resources;
  7. the state of progress of the proceedings; and
  8. the conduct of the representative plaintiffs to date.

In considering these elements, her Honour placed particular weight on the successful proceeding’s “no win/no fee” model which in her Honour’s view was likely to provide the best return for group members,[v] and ordered that three of the class actions (including the appellant’s proceeding) be permanently stayed and that the remaining two be consolidated.[vi]

Ms Wigmans appealed against Her Honour’s decision.  The Court of Appeal dismissed her appeal.  For further detail in relation to the decisions in the Supreme Court and the Court of Appeal, see KWM’s Review: Class Actions in Australia 2019/2020.  The Respondents in the appeal were the plaintiffs in the consolidated proceedings and AMP, who was neutral in the appeal.

On appeal to the High Court of Australia, the Court addressed three key matters.

1. Is the subsequent filing of a similar class action vexatious and oppressive?

The respondents submitted that a presumption that the proceeding filed first-in-time should continue and subsequent proceedings be stayed would encourage a “race to the courthouse”.  The majority of the Court (Gageler, Gordon and Edelman JJ) held, however, that there is no first-in-time rule or presumption that “it is prima facie vexatious and oppressive to commence a second class action if an earlier class action is already pending in respect of the same controversy.”[vii]  Thus, there is no presumption that filing a second, overlapping class action is an abuse of process. 

The Court reiterated, however, as the intermediary courts often have: [viii]

that multiplicity of proceedings is not to be encouraged and that competing representative proceedings run by different firms of solicitors, with different funders, may in principle be inimical to the administration of justice.

In a dissenting judgment, Kiefel CJ and Keane J reached the opposite conclusion to the majority on this point, finding that such a presumption did exist.  The minority thus held that the appellant’s proceedings ought to have continued and the respondents’ proceedings ought to have been stayed, since the respondents could not establish any juridical advantage, for example, that the respondents’ later actions in comparison to the appellant’s earlier action sought additional relief, or were better framed to raise the questions in dispute, or involved a plaintiff capable of meeting adverse costs.[ix] 

2. Is the “multi-factorial analysis” permitted?

Yes.  The majority of the Court found that it was appropriate for the primary judge to have employed a multi-factorial analysis when determining which proceedings to stay permanently.  In exercising the discretion whether to grant a stay, the Court also identified five broad considerations:

  1. there is no "one size fits all" solution for multiple class actions and options other than a stay include: consolidation, de-classing, joint trials, and closing the class in all but one proceeding (among other options);[x]
  2. although the first-in-time rule is not favoured as a means of resolving multiplicity, it is a relevant consideration;
  3. the progress of the proceedings is relevant, including how advanced any interlocutory matters may be;
  4. the relevant factors vary from case to case and the court must determine which proceeding should continue according to which proceeding would be in the best interests of group members; and
  5. litigation funding arrangements are not an irrelevant consideration.

Thus the High Court’s decision confirms that judges enjoy broad discretion when resolving competing class actions and may consider a wide variety of factors.  It would be unsurprising, however, if the Courts continue the trend of placing considerable weight on the funding arrangements adopted by different class actions when determining which class action(s) should proceed.

This factor – unlike, for example, the comparative skill of the plaintiff law firms – is capable of objective comparison with it having a clear, direct impact on the interests of group members.  That said, the weight placed on this range of considerations will continue to vary from judge to judge, making it difficult to predict precisely what resolution might be adopted in a particular case.

In contrast to the majority, the minority judgment of the High Court was adamant that the Supreme Court of New South Wales’ power to stay proceedings under sections 67 (specific stay power) and 183 (the “gap-filling” class actions power) of the Civil Procedure Act 2005 (NSW) did not permit the Court to conduct the multi-factorial analysis as had been undertaken at first instance (including the comparison of the various funding arrangements and their impact on potential returns to group members).  As a result, the minority judgment was clear that courts had no basis to assume responsibility for ‘choosing between competing would-be sponsors [of class actions] in terms of their likely efficiency and efficacy’.

3. How should courts approach the task of dealing with competing litigation funding arrangements?

The appellant submitted that if the competing litigation funding arrangements were relevant then the Court at first instance erred by adopting certain assumptions when comparing those arrangements, including that: each of the plaintiffs’ legal teams would produce the same gross return (i.e. before costs) to group members; the solicitors engaged were of equal experience and ability; the litigation funders were equal and that each funding model provided incentives and disincentives to achieving the best outcome for group members.

The majority of the Court rejected the appellant’s submission and held that there was no error in how the Court at first instance analysed the competing litigation funding arrangements given how the appellant had put her case at first instance (she had argued that there was no basis for distinguishing between the competence or experience of the parties’ legal teams and their funders; and the availability of resources was a neutral factor), although the Court’s approach was not the only one that could have been adopted.

Again this finding will help preserve a wide discretion for judges when comparing competing class actions, including what (if any) weight they place on particular differences between those competing actions. 

Special referees and contradictors

To assist in that analysis, the majority suggested that the court may appoint a special referee to prepare a report on the various factors including the litigation funding arrangements and the more particular questions relating to the plaintiff law firms.  Upon receipt, the Court may adopt, vary or reject the referee’s report.  Alternatively, the court could require the parties to engage and fund a contradictor, who would prepare evidence and make submissions to the court as to whether it should take a particular course, in order to assist the court in determining any stay application.

Conclusion – beauty parades to continue

The High Court’s decision means that where competing class actions are commenced, courts can continue to exercise their discretion by applying a multi-factorial analysis (colloquially referred to as a “beauty parade”) of the competing proceedings, their legal representatives and funders. 

The majority’s decision also makes clear that there is no one-size fits all approach and judges will retain a wide discretion to resolve competing class actions on a case by case basis.

 

[i] Wigmans v AMP Ltd (2019) 373 ALR 323; [2019] NSWCA 243 (“Wigmans NSWCA”).

[ii] 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 (“Wigmans NSWSC”).

[iii] (2018) 263 FCR 92; [2018] FCAFC 202.

[iv] Wigmans NSWCA [18].

[v] Wigmans NSWSC [216].

[vi] The Wigmans (2018/00145792), Wileypark (2018/310082) and Georgiou (2018/310103) proceedings were commenced in May 2018 and the Fernbrook (2018/309329) and Komlotex (2018/310118) proceedings were commenced in June 2018.

[vii] Wigmans v AMP Limited & Ors [2021] HCA 7 (“Wigmans HCA”) [89].

[viii] Wigmans HCA [106].

[ix] Wigmans HCA [43] and [39] quoting McHenry v Lewis (1882) 22 Ch D 397 at 404 (Jessel MR).

[x] Wigmans HCA [106], footnote 146.

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