In another significant class action decision from the High Court (Wigmans v AMP Limited [2021] HCA 7), a 3:2 majority of the Court has affirmed the ‘comparative, multifactorial’ approach of the Federal Court and the Supreme Court of New South Wales as the appropriate mechanism for managing competing class actions, and has agreed that a consideration of the quantum of expected recovery for group members should form part of that exercise.

In short, where two or more class actions are commenced on the same topic and the Court is called upon to determine which is to be allowed to proceed, the Court should look at a range of factors and simply being the first to file will not be the deciding factor. 

The decision should be regarded as a win for class action claimants on the basis that it should drive greater competition between competing class action firms as to who will provide the better return (if any) to the group and should ensure that returns to funders are more commensurate with the risk they take. 

Background

Ms Wigmans appealed a judgment of the Court of Appeal of the Supreme Court of New South Wales, in which the Court of Appeal had dismissed her appeal of a decision staying her class action against AMP Limited in favour of another proceeding which had been commenced later in time. Ms Wigmans’ primary argument was that the comparative, multifactorial approach to resolving competing class actions which had been applied by both the Supreme Court and the Court of Appeal was incorrect, and that the courts should have applied a rule or presumption that it is vexatious to commence an action when another action is already pending in respect of the same controversy. As a secondary argument, Ms Wigmans took issue with the courts’ consideration of considering the funding proposals, costs estimates, and net hypothetical returns to members across the multiple competing proceedings.

Decision

The majority of the High Court (Justices Gageler, Gordon and Edelman) dismissed the appeal, holding that:

1. applicable law does not prevent the filing of a second representative proceeding against a defendant in relation to a controversy;
2. the Court’s power to grant a stay of competing representative proceedings is not subject to a first-in-time rule or presumption;
3. in exercising its power to stay one or more of the representative proceedings, the Court can consider the likely success or quantum of recovery, and litigation funding arrangements, while not a mandatory consideration, are not irrelevant.

The majority also affirmed the following principles applicable to the resolution of multiplicity disputes:

• there can be no ‘one size fits all’ approach. Although the starting point is that multiplicity of proceedings is not be encouraged, multiplicity issues can be addressed by a variety of means instead of, or in addition to, staying one or more of the proceedings;
• the first-in-time rule or presumption remains a relevant consideration in determining competing class actions, but will be less relevant in cases where competing proceedings are commenced within a short period of time of each other;
• the court’s consideration when granting a stay should not be limited to the time of filing and may extend to facts and matters arising after the filing; and
• the factors that might be relevant to determining the question cannot be exhaustively listed, and will involve considerations of all factors to determine what is in the best interests of group members.

Interestingly, the majority also indicated that it would be appropriate for a court to appoint a special referee to inquire into the litigation funding arrangements, or other particular questions the primary judge may have in respect of a multiplicity dispute.

Key takeaways

The majority decision in Wigmans firmly entrenches the competing class action ‘beauty parade’ in the Australian class action landscape and maintains the status quo in how Courts approach that exercise.

The High Court adopted the comparative, multifactorial approach for considering how to resolve competing class actions which had been previously developed in the Federal Court and Supreme Court of New South Wales.

In doing so, the High Court has allowed courts in Australia large discretion in the factors they consider and the approach to resolving competing class actions, including the preferences of a group member, funding arrangements in the respective proceedings the likely success of a particular proceeding and the potential quantum of recovery.

On the downside, it seems likely that competing class actions will become even more prevalent than they have been given class action lawyers and funders will have the opportunity to compete on costs. More positively, there is now a clearer path for the competitions to be resolved and more incentive for funders to compete on the margin they receive from any settlement or judgement which may help to address some of the super profits that have attracted global funds to the space.
 

Authors: Richard Harris, Rebecca Spigelman & Dominic Eberl