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Wigmans v AMP – The Final Word On Competing Class Action Beauty Parades?

On 10 March 2021, the High Court of Australia delivered judgment in Wigmans v AMP Limited [2021] HCA 7, upholding by 3-2 majority, the judgments of the primary judge Justice Ward and the Court of Appeal in the Supreme Court of New South Wales.

The judgment was keenly anticipated by the profession and litigation funders. It was hoped to provide clear guidance on how Australian Courts should respond to competing class actions seeking preferred status, in particular by applying to stay other open class representative proceedings relating to the same controversy.

The case directly concerns proceedings commenced under Pt 10 of the Civil Procedure Act 2005 (NSW), but in practice has equal application to the similar representative proceeding regimes in the Federal Court of Australia and other state Supreme Courts, given also similar general civil procedure principles.


Key take-outs

  • Class action beauty parades will continue. Long debated US style class certification processes are unlikely any time soon.
  • Going forward, greater priority will be given to the funding model and positioning rather than to filing first.
  • However, filing first may still be significant. Assuming proper care in commencing, and other factors being equal, it could still be determinative.
  • Multi factorial analysis” is OK, but there is no “one-size- fits-all” approach. A complex discretionary evaluative exercise is involved, requiring consideration of all relevant circumstances. Concerns raised in the minority judgment are likely to continue to be aired.
  • Additional court procedures involving special referees and/or contradictors are likely to be considered to address conflict issues as between lawyers, funders and group members.
  • No surprises here, but of course focus must remain on the best interests of group members.

Background

In April 2018, executives of AMP gave public testimony to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry suggesting that AMP had deliberately charged some of its clients fees for no service, and had misled ASIC as to the extent of that conduct. There was a sharp fall in the price at which AMP shares traded on the ASX. Five open class representative proceedings were commenced in May and June 2018 on behalf of AMP shareholders. Although not identical, each proceeding sought compensation for a similar class, for loss caused by AMP’s alleged breach of the continuous disclosure obligations imposed on it by the Corporations Act 2001 (Cth) and ASX Listing Rules, and/or misleading or deceptive or unconscionable conduct.

The appellant in the High Court, Ms Wigmans, was the first to commence proceedings on 9 May 2018 in the Supreme Court of New South Wales. Several Federal Court proceedings were commenced shortly afterwards, each brought by a different lead  plaintiff  or  applicant  because different arrangements were made for the sponsorship of the proceedings by litigation funders and solicitors acting. The Federal Court proceedings were transferred to the Supreme Court, with two of them consolidated (the Komlotex proceedings).

Ms Wigmans and the other three remaining representative plaintiffs/applicants applied to the Supreme Court for a stay of the proceedings in which the others were plaintiffs. AMP was neutral as to which of the competing representative proceedings should advance, but understandably wanted to face only one set of proceedings.


Supreme Court Judgments

In Wigmans v AMP Ltd [2019] NSWSC 603 , the primary judge evaluated the competing proposals using a “multi-factorial analysis” involving the following relevant factors endorsed by the primary judge and Full Federal Court in  Perera v Getswift Ltd (2018) 263 FCR 92; [2018] FCAFC 202:

  • the competing funding proposals, costs estimates and net hypothetical return to group members;
  • the proposals for security for AMP’s costs;
  • the nature and scope of the causes of action advanced;
  • the size of the respective classes;
  • the extent of any bookbuild;
  • the experience of the legal practitioners (and funders) and availability of resources;
  • the state of progress of the proceedings; and
  • the conduct of the representative plaintiffs to date.

The primary judge found that the consolidated Komlotex proceedings should continue and the other proceedings should be permanently stayed, primarily because Komlotex’s funding model was likely to provide the best return for group members. The Wigmans and Komlotex proceedings were preferred to the other proceedings because of their superior proposals for the provision of security for AMP’s costs. A comparison of competing funding proposals, costs estimates and net hypothetical return to members was then central to her Honour’s final decision, given that other factors did not materially differentiate the remaining competing proceedings.

Perhaps, unsurprisingly, the consolidated Komlotex proceedings conducted by Maurice Blackburn was then preferred over Ms Wigram’s proceeding, given that they were acting on a “no-win no-fee” basis with 25% fee uplift only if the resolution sum exceeded $80m, without a third-party funder.  Ms Wigmans’ proceeding was being conducted by Quinn Emmanuel, funded by a commercial litigation funder that stood to earn up to 20% of any recovery which needed also to meet the solicitors’ costs.

Ms Wigmans appealed on the basis that the consolidated Komlotex proceedings were vexatious and an abuse of process duplicating her earlier filed proceeding, and that her first filed proceeding should not be stayed unless “clearly inappropriate” under the test in Voth v Manildra Flour Mills Pty Ltd (1991) 171 CLR 538.

The Court of Appeal dismissed the appeal in Wigmans v AMP Ltd [2019] NSWCA 243, holding that:

  • the test in Voth is inapposite and it should be distinguished;
  • although the order of filing of proceedings is a relevant consideration in any application to stay proceedings, a “first filed” rule should not resolve which of the competing proceedings should proceed;
  • the sequence of filing of competing proceedings is a less relevant consideration in an application to stay proceedings where the proceedings have been commenced within a short time of each other;
  • ·neither Ms Wigmans nor Komlotex were parties to the other’s proceedings, and the subsequently commenced proceedings did not constitute an abuse of process;
  • the primary judge exercised the discretion vested in her by the Civil Procedure Act by reference to a range of relevant considerations and in a manner that was open to her and undertaken without error;
  • the interests of justice to be considered are those of group members rather than litigation funders or legal representatives.

High Court Judgments and implications

A bare majority of the High Court (the joint judgment of Gageler, Gordon and Edelman JJ at [51]-[124]) held that there was no error in the primary judge’s (or Court of Appeal’s) approach. The Supreme Court’s power to grant a stay of competing representative proceedings was not confined by a rule or presumption that the proceeding filed first-in-time is to be preferred. However, given the plurality’s other observations, regard should also be had to the strong dissenting minority judgment (the joint judgment of Kiefel CJ and Keane J at [1]-[50]).

The majority confirmed (in particular at [75]-[76]) that the Court’s power and relevant mandatory and discretionary considerations are not confined by a first-in-time rule or presumption. However, at the same time they confirmed that order of filing is relevant, particularly where there is delay, and that there is no “one-size-fits- all” approach (in particular at [51], & [106]-[107]).

The ratio of the majority’s decision is that there was no demonstrated error in the exercise of the primary judge’s discretion, that each case is different and can be approached in different ways (at [118]), and is “to be resolved by the exercise of discretion informed by all the relevant circumstances” (at [94]).

The decision accordingly provides helpful guidance in confirming that “first to file” considerations are not paramount, but will not be straightforward to apply for lawyers and funders modelling and preparing their proposed future actions. For example, the “relevant circumstances” were ultimately straightforward in Wigrams. All the proceedings were commenced promptly. With other factors neutral, security for costs considerations filtered the competitive proposals to two, which were then clearly differentiated by funding model and predicted implications for group member returns. Where there is delay and competing commission models, different considerations will arise.

That said, the majority judgment is also useful in considering and seeking to address (at [118]-[123]) the conflict issues that arise in the process, in particular that:

  • the competition between funders is pursued in the name of the representative plaintiff, but the interests of funders are not identical to the interests of group members;
  • the inquiry into litigation funding arrangements is necessarily predictive based on the material before the Court, but that material is chosen by the funders and the firms of solicitors they have retained, not the group members.

The majority judgment makes the following observations on procedures to facilitate determination of future beauty parades.

  • Generally, the Court should not act as inquisitor investigating how choosing a proceeding will affect group members, but should use existing procedures on an adversarial basis.
  • The Court could appoint a special referee to inquire into the litigation funding arrangements and other particular questions. The Court could then adopt, vary or reject the report, as has been used to ensure that group members’ interests are best protected at the settlement approval stage of representative proceedings.
  • Alternatively, the court could require the parties making the applications to engage and fund a contradictor by appointing a person who is a common group member of each proceeding to represent the interests of other common group members. The representative would be appointed for the limited purpose of assisting in the determination of the stay applications, and could make submissions to the court recommending a particular course of action.
  • Whatever procedure is adopted, notice is likely to be required to be given to affected group members.
  • The court’s task is not to conduct an “auction process“. It is analogous to considering the position of trustees, liquidators, attorneys or persons under disability, and would allow for conflicts of interest and the best interests of the group members to be neutrally and squarely addressed.

Given the relevance of order of filing and delay and complex discretionary analysis involved, regard should also be had moving forward to the strong dissenting judgment defending the significance and application of the first-in-time principle from the Chief Justice, and the former Chief Justice of the Federal Court.

Their Honours were troubled (in particular at [36] and [47]) by focus on the unseemliness of a “race to the courthouse”, when the first commenced proceeding “did not exhibit any juridical deficiency or disadvantage in comparison with the competing proceedings”. They could not reconcile the overriding objective of “just, quick and cheap” resolution of proceedings between the parties, with the Court choosing between plaintiffs in terms of their likely efficiency and efficacy and then preferring the later commenced proceeding.

The content of this article is intended to provide a general guide to the subject matter. Specific advice should be sought about your specific circumstances.

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