By a 3:2 majority, the High Court of Australia has dismissed the appeal in Wigmans v AMP Limited  HCA 7 (Wigmans).
The appellant had contended that, when confronted with competing open class actions, the Court should not select one proceeding over the other(s) by conducting a selection hearing or ‘beauty parade’. Rather, the first-filed case should be able to proceed, and the second (and any subsequent) claim should be stayed, unless they had a legitimate juridical advantage over the first.
The dismissal of the appeal represents an endorsement of the status quo, meaning ‘beauty parades’ will continue to be held. However, the majority made some observations which could affect how courts decide between competing proceedings in future.
What are competing class actions?
Competing class actions arise where more than one ‘open class’ representative proceeding is commenced against the same defendant, relating to the same controversy, and on behalf of the same class of person as the first-filed proceeding. This is sometimes called a situation of ‘multiplicity’.
Typically, multiplicity arises because more than one law firm and/or litigation funder wishes to benefit from running an open class proceeding against the defendant.
How have courts dealt with competing class actions?
Allowing competing class actions to proceed independently of each other would lead to duplication of costs and court resources, with no consequential benefit for group members. As such, the courts have devised various methods to deal with multiplicity.
The possible methods include:
- permanently staying all but one of the proceedings;
- ‘de-classing’ all but one proceeding, under Section 33N of the Federal Court Act;
- closing the class in all but one proceeding;
- consolidating the competing proceedings; or
- ordering a joint trial of all proceedings (the ‘wait-and-see’ approach).
Development of the ‘beauty parade’
Unless a court adopts the consolidation or ‘wait-and-see’ approach, it must find a way of deciding which of the competing proceedings will go forward as an open class.
In recent years, some courts have made this choice after conducting what is known colloquially as a ‘beauty parade’.
Where a ’beauty parade’ is conducted, the court has performed a multifactorial analysis to attempt to identify which class action is likely to result in the best return to group members. Relevant factors have included:
- the capabilities of the lawyers in the competing claims;
- the scope and feasibility of the claims which are advanced in each proceeding;
- each representative’s ability to fund the litigation and discharge any adverse costs orders;
- likely prosecution costs;
- likely adverse costs;
- any funding costs or commissions; and
- returns to group members in the event of hypothetical judgments or settlements.
In practice, the funding costs and commissions in each proceeding have tended to be the most influential factor.
What happened in Wigmans?
Wigmans was a case in which five competing class actions were commenced against AMP Limited, following evidence given at the Financial Services Royal Commission in April 2018.
The primary judge determined that it was appropriate to stay all but one of the proceedings, and conducted a ‘beauty parade’ to determine which proceeding that would be.
On the basis of a multifactorial analysis, her Honour selected a proceeding, the Komlotex proceeding (once consolidated with another proceeding, the Fernbrook proceeding), which had the cheapest funding model.
An assumption in her Honour’s analysis was that the cheapest funding model would result in the greatest return to group members, because each of the competing proceedings would yield a judgment or settlement of the same amount.
On appeal to the NSW Court of Appeal, the appellant argued that:
- Courts should not conduct ‘beauty parades'. Instead, the proper approach is to proceed on the basis of a rebuttable presumption that the second (and any subsequent) proceeding is vexatious and oppressive and ought to be stayed. The onus should be on the party commencing the second action to show that it is not vexatious and oppressive. This would ordinarily involve establishing that the second action offers some legitimate juridical advantage over the first (e.g. the second action might be broader in scope than the first, or the representative in the second action be more capable of giving security for costs than the representative in the first).
- If argument 1 fails, and courts are able to resolve multiplicity issues by conducting a ‘beauty parade’, they need to conduct them differently. They should not make a forward-looking assessment as to which of the proceedings is likely to result in the highest net return to group members, and permanently stay one or more of the other proceedings on that basis.
- Alternatively, if the Court does makes a forward-looking assessment as to returns, the Court should not assume that each proceeding will achieve the same settlement or judgment sum, in the absence of evidence supporting such an assumption.
A five member bench was assembled to hear these arguments. Unanimously, it refused leave to appeal on grounds 2 and 3, and granted leave but dismissed the appeal on ground 1. Ms Wigmans appealed to the High Court.
What did the High Court decide?
By a 3:2 majority, the High Court dismissed the appeal.
Kiefel CJ and Keane J, in the minority, found that “[n]either the [Civil Procedure Act 2005 (NSW)] nor the Supreme Court's inherent power to prevent abuse of its processes authorises the Supreme Court to make a selection of the sponsor of representative proceedings.”
As Komlotex and Fernbrook were unable to establish that their consolidated proceeding offered any legitimate juridical advantage over the earlier-in-time Wigmans proceeding, the minority would have ordered that their proceeding be stayed.
Gageler, Gordon and Edelman JJ, in the majority, rejected all of Ms Wigmans’ arguments. They held that the Court was entitled to conduct a multifactorial analysis before staying all but the successful proceeding, under section 67 of the Civil Procedure Act. They held, consistently with the existing jurisprudence, that the factors relevant to the analysis will vary from case to case, and that funding arrangements are not a mandatory consideration, but are not irrelevant.
As for Ms Wigmans’ contention that the Court was wrong to assume that each proceeding would, funding arrangements aside, produce the same result for group members, the majority observed that this was the result of the way Ms Wigmans ran her case. That is, she had submitted to the primary judge that there was no basis for distinguishing between the competence and experience of the legal teams in each proceeding.
Takeaways from the High Court’s judgment
The result in Wigmans is an endorsement of the status quo. ‘Beauty parades’ will continue to be conducted, and will continue to be influenced by an assessment of the likely returns to group members.
However the majority did make two observations of interest.
First, their Honours suggested that courts deciding between competing class actions could “appoint a special referee to inquire into the litigation funding arrangements and the more particular questions the primary judge dealt with on the basis of assumptions”.
Although their Honours did not spell it out, the appointment of a referee would have the advantage of sparing the Court the unedifying task of forming a view on the relative competence of the competing legal teams. It could also lead to the development of expertise in a handful of regular referees, and add a greater degree of predictability to the selection process.
Secondly, the majority suggested that the Court could require a contradictor to be appointed, to represent the interests of group members where issues of multiplicity are being resolved. The contradictor, like the special referee, could make necessary inquiries and make recommendations to the court regarding a particular course of action.
Their Honours also suggested that notice may need to be given to affected group members, presumably in advance of the selection process.
These suggestions are well calculated to ensure the interests of group members are spoken for, in what can essentially turn into a contest between rival litigation funders.
However, they may also have the effect of slowing down and increasing the cost of what is already a costly and often lengthy distraction from the resolution of the claims against the defendant. That would be an adverse outcome for group members and defendants alike.
 See McKay Super Solutions Pty Ltd (Trustee) v Bellamy’s Australia Ltd  FCA 947 at .
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