15/03/2021·3 mins to read
Australian High Court rejects “race to the courthouse” for competing class actions
The High Court of Australia last week dismissed the proposition that where competing representative proceedings are filed, only the proceeding filed first in time should be allowed to proceed (in the absence of some juridical advantage to a later-in-time proceeding).
Instead, the decision in Wigmans v AMP Limited & Ors, confirmed that the courts retain a wide discretion to determine which claim(s) should go ahead in the best interests of group members, with there being no “one size fits all” approach.
This is the latest in a line of Australian judgments shaping the development of class action law across the Tasman.
What you need to know
- The High Court of Australia confirmed “there is no rule or presumption that the representative proceeding commenced first in time should prevail”.
- This decision will no doubt influence any New Zealand court tasked with deciding this issue, given the absence of relevant precedent here.
- It also highlights the importance of the Law Commission’s current review of the law relating to class actions and litigation funding, and underscores the urgent need for clear statutory provisions that deal with these issues.
The hearing related to five proceedings filed against AMP alleging breaches of continuous disclosure obligations, misleading and deceptive conduct, and unconscionable conduct.
The allegations followed evidence given by AMP executives to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry that it had deliberately charged its customers fees for ongoing financial services that were not provided.
The proceedings were all filed within five weeks of one another (some being filed with a matter of hours of each other on the same day), and were each backed by different lawyers and litigation finders.
Two of the proceedings were eventually consolidated, but there remained a question as to which should be allowed to proceed. AMP took a neutral stance, save that it naturally wanted only one action to be permitted to continue.
The proceeding in the best interest of group members
In a split judgment (with a 3:2 majority), the High Court of Australia confirmed “there is no rule or presumption that the representative proceeding commenced first in time should prevail”. Instead it was necessary for the court to decide which proceeding “would be in the best interest of group members”.
The High Court identified the following considerations as relevant to the exercise of the power to grant a stay in such circumstances:
- The starting point is that multiplicity of proceedings is not to be encouraged. There is no “one size fits all” approach to resolving the issue of multiplicity, which can be addressed by a variety of means (one of which is granting a stay).
- A first-in-time rule or presumption has never been favoured as a way of resolving competing class actions, but the order of filing is still a relevant consideration (although less so where the proceedings are filed within a short time of each other).
- The degree of expedition with which the respective representative plaintiffs and group members have approached the proceeding (including in relation to the timeliness of interlocutory matters) is likely to be relevant.
- Factors that might be relevant cannot be exhaustively listed and will vary from case to case.
- Litigation funding arrangements are not a mandatory consideration, but they are not irrelevant.
- There is no reason to exclude consideration of the likely success in proceedings or quantum of recovery.
This is intended to avoid what the High Court described as an “ugly rush to the court door”, albeit what remains has become known in Australia as a class action “beauty parade”.
How does this affect class actions in New Zealand?
Until we have a clear statutory class action regime in New Zealand, the decision in Wigmans will no doubt influence any New Zealand court tasked with deciding this issue given the absence of relevant precedent here.
However, it highlights the importance of the Law Commission’s current review of the law relating to class actions and litigation funding, and underscores the need for our own clear statutory provisions that deal with these issues (particularly given the Supreme Court’s decision last year to allow opt-out proceedings in New Zealand).
As part of this review, the Law Commission has suggested that requiring class actions to be certified before they can proceed may provide an opportunity for the courts to consider how competing class actions should be managed. Australia does not require certification of class actions in this way.
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