Australian High Court Rejects "First to File" Approach to Choosing Between Competing Class Actions
There is no "one size fits all" approach to competing class actions.
Five competing and overlapping shareholder class actions were commenced in two separate Australian courts against AMP Limited. All actions were transferred to the NSW Supreme Court and all plaintiffs sought to stay all of the other class actions, except their own.
The judge at first instance applied a multifactorial analysis to determine which action should progress. Her Honour ultimately chose to stay all actions except one and placed most weight on the funding proposal that minimised the cost to class members.
The first plaintiff to file a class action against AMP appealed, arguing that there is a rule or presumption that it is prima facie vexatious and oppressive to commence an action if an action is already pending in respect of the same controversy.
In Wigmans v AMP Limited [2021] HCA 7, a 3:2 majority of Australia's High Court rejected that rule or presumption and rejected the appeal, finding no error in the judge's approach. The majority considered that a multiplicity of suits should be avoided, and that the factors relevant to choosing between class actions cannot be exhaustively listed and will vary from case to case. In other words, there is no "one size fits all" approach to competing class actions. However, there should be a focus on what is in the best interests of class members. Litigating funding arrangements and the likely quantum to be recovered are one relevant consideration.
The minority held that the stay applications ought to have been determined not by the "multifactorial analysis" but by reference to the principle that it is prima facie vexatious to commence an action if an action is already pending in respect of the same controversy.
The majority judgment provides some certainty for plaintiffs and defendants about the handling of competing class actions in the NSW Supreme Court, but―as it endorses the approach taken to date―is unlikely to have any material impact on competing class action filings.
