On 10 March 2021, the High Court handed down its highly anticipated decision in the matter of Wigmans v AMP Limited & Ors.[1] (Wigmans Case). In dismissing the appellant’s case, the High Court has endorsed a common sense approach to determining procedural issues for dealing with competing class actions and affirmed the power of lower courts to progress a single action.

 

Competing Class Actions

‘Competing class actions’ occur when more than one case is commenced against the same defendant and the action concerns the same subject matter.

As recently discussed in our article ‘Permanent relaxation of continuous disclosure laws signals change to shareholder class action landscape’, the Parliamentary Joint Committee on Corporations and Financial Services (PJC) handed down its report in the inquiry into ‘Litigation Funding and the Regulation of the Class Action Industry’ (Report) on 23 December 2020.

One of the issues examined in the Report was competing class actions, with the PJC noting that separate and concurrent class action proceedings relating to the same defendant and same subject matter are common in Australia. The PJC also observed that completing class actions “undermine the objectives of the class action regime, which is for a single decision to resolve many claims that are the same or similar.”

The PJC recommended granting the Federal Court an express power to resolve competing and multiple class actions. However, before the recommendation could even be properly considered, let alone implemented, it appears the High Court has beaten the government to the punch with its decision in the Wigmans Case.

Wigmans Case

Ms Wigmans was the lead plaintiff in one of five class actions launched against AMP Limited. The five separate NSW Supreme Court proceedings covered similar, although not identical grounds. The group members of all five class actions were all shareholders who held shares in AMP Limited during periods of time in which AMP Limited allegedly failed to disclose to the market information about the company that had emerged during the Royal Commission. The plaintiffs seek compensation for loss allegedly arising from AMP Limited’s conduct.

Of the five proceedings, two ended up being consolidated (the Komlotex proceeding) and all plaintiffs in that proceeding sought orders that each other proceeding be permanently stayed.

The trial judge relied on the multifactorial test,[2] and determined that the Komlotex proceeding, which was being undertaken pursuant to a “no win no fee” funding model, was the most likely to provide the best return for group members. Therefore, the trial judge ruled that the Komlotex proceeding should remain open and the other matters be stayed.

Wigmans appealed to the NSW Court of Appeal, on grounds that allowing only the consolidated Komlotex proceeding to continue amounted to an abuse of process. The Court of Appeal dismissed the appeal on the basis that the continuation of the consolidated Komlotex proceeding was not an abuse of process as against Wigmans, because Komlotex was not a party to the Wigmans proceeding.

Wigmans appealed to the High Court.

The High Court decision

In dismissing Wigmans’ appeal, the High Court held that there could be no “one size fits all” approach. In its 3:2 decision, the High Court affirmed the jurisdiction of the NSW Supreme Court to regulate competing class actions by examining their merits and progressing the one in the best interests of the group members.

The High Court offered alternative approaches to the multifactorial assessment, namely the use of special referees (used to inquire into the litigation funding arrangements) and contradictors (costs experts); or to devise other steps in addressing the difficulties and potential conflicts of interest between lawyers, funders and group members.

Implications for the insurance industry

There are many wide-ranging implications of the High Court’s decision, but notably the decision will likely help alleviate the stress felt by businesses and insurers in Australia of having to defend multiple class actions. The High Court has affirmed the power of a lower court to progress a single action.

This decision shows that the High Court endorses a common sense approach to addressing procedural issues with representative actions and that the ultimate goal must be to uphold the best interests of group members, which is an encouraging development in this challenging landscape.

[1] [2021] HCA 7.

[2] [2021] HCA 7 at 23 [60].