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High Court rules against ‘one size fits all approach’ to multiple class actions
In deciding to allow one class action to move forward and dismissing the remainder, the High Court has set a precedent that there is no “one size fits all” approach – but further reform is needed for clarification’s sake, a leading firm has argued.
Naomi Neilson
In ruling on the Wigmans v AMP Limited class action debate, the High Court granted the NSW Supreme Court the jurisdiction to manage competing class actions by allowing one to proceed and staying the remainder, which should reduce costs. However, Clayton Utz has argued whether further reforms are needed.
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Marion Wigmans commenced a class action in the NSW Supreme Court but was quickly followed by four others in the Federal Court. Eventually, those four were also transferred into the Supreme Court where the trial judge considered costs estimates, extent of book-build, experience of the legal professionals and more.
Giving the most weight to the competing funding proposals, the trial judge stayed Ms Wigmans’ action and three others, allowing only one to go forward. Although she appealed on the basis the court did not have the power to, the High Court disagreed.
“There can be no one size fits all approach,” it ruled. “There is no rule or presumption that the representative proceeding commenced first in time should prevail.
“In matters involving competing class representative proceedings with several firms of solicitors and different funding models, where the interests of the defendant are not differentially affected, it is necessary for the court to determine which proceeding going ahead would be in the best interests of group members.”
The court also put forward possible alternative approaches to the court’s multifactorial assessment, including use of special referees and contradictors or to take “other steps” to address the underlying difficulties and potential conflicts.
Clayton Utz partner Greg Williams said that a clearer way forward would be “good both for ordinary people who need a functioning class system to get redress and defendants who rely on consistency”. He added that the fact the case management issue on class actions had even made it to the High Court is proof “aspects of the system are in need of reform”.
“The High Court’s decision still leaves uncertainty as to the approach which will be taken in particular cases to resolving competing class actions,” Mr Williams said.
One of the issues with the decision is that it is limited to the NSW Supreme Court. Mr Williams said there is still pressure on the federal government to bring in a formal method for the Federal Court to manage competing class actions.
Following on from advice by the joint parliamentary committee inquiring into litigation funding, the Federal Court could be given an express power to resolve competing class actions.
“Such an approach would be consistent with overseas jurisdictions like the US, Canada, UK and certain European systems, which have some form of ‘certification’ requirement that means courts make an early decision as to which actions will (and won’t) proceed,” Mr Williams said.
“If there was ever any doubt about the desirability of such reforms (in both federal and state courts), Wigmans makes it clear that they should occur.”
