High Court of Australia Adopts Broad Discretionary Approach to Carriage Motions

In Wigmans v AMP Limited, [2021] HCA 7, the High Court of Australia in a 3-2 decision adopted a broad discretionary approach to what is commonly called a “carriage motion”[1] in class representative proceedings. This decision brings Australia more in line with the American and Canadian experience, and affirms the over-arching concern that the court act in the best interests of group members when awarding control of the class representative proceeding to one representative plaintiff over another.

Background

In 2018, executives of a financial services company in Australia, AMP Limited (“AMP”), revealed it had deliberately charged some of its clients fees for no service, and that it had misled the Australian Securities and Investments Commission as to the extent of this conduct. Following the revelation, the price of shares in AMP dropped.

Five separate class representative proceedings were commenced on behalf of AMP shareholders. Each of these class representative proceedings sought compensation for loss caused by AMP’s alleged breach of its statutory disclosure obligations and the stock exchange listing rules.

Two of the class representative proceedings consolidated by consent, leaving four competing proceedings. Each applied to have the others stayed, so that only one would proceed. The defendant, AMP, was neutral as to which class representative proceeding would continue, but it supported an outcome in which it would face only one set of proceedings.

Issue

The issue before the High Court was the test to be employed when deciding a carriage motion, under the New South Wales’ Civil Procedure Act 2005  (the “CPA”) (which contains general rules of civil procedure and authorizes the commencement of class representative proceedings) and the inherent power of the court.

Summary of Decision

The Appellant argued that the CPA and previous case law concerning stay of proceedings mandated a “first-to-file” presumption, in that the first filed class representative proceeding would presumptively be given carriage, absent any “legitimate juridical advantage” offered by a subsequently filed proceeding.[2]

The High Court rejected these arguments, finding it was not supported by the authorities or legislation. Instead, the High Court adopted a broad discretionary approach, in which the court can consider any factor it considers relevant in order to make a determination in the best interests of the group members. 

Analysis

The High Court began its analysis with a discussion of the CPA and the Supreme Court’s power to stay a proceeding. The majority held that s. 67 of the CPA “confers a broad power on the Supreme Court to stay proceedings”[3], and that there were no “particular criteria” for exercising that power, beyond that the court “must seek to act in accordance with the dictates of justice” with regard to “the overriding purpose of the CPA and rules of court, being to facilitate just, quick and cheap resolution of the real issues in the proceedings” and “the objects of case management, including the just determination of the proceedings and the timely disposal of the proceedings… at a cost affordable by the respective parties”.[4] This broad discretionary power was inconsistent with the first to file presumption the Appellant advocated.

Nor did the High Court find the Appellant’s case law persuasive. The law and principles concerning multiple suits did not, as the Appellant suggested, mandate a first to file approach. Instead, the case law demonstrated the courts were always alive to the unique factors of each case and exercised discretion based on those factors, rather than imposing a first to file presumption. The High Court held that adopting a broad discretionary approach was also consistent with case law concerning “test cases” (where a defendant faces multiple individual proceedings about the same event, and only one is allowed to proceed in order to resolve the common questions), and approval of settlement of class representative proceedings.

Ultimately, the High Court held that the overarching concern on a carriage motion is for the court to determine “which proceeding going ahead would be in the best interests of group members”.[5] A non-exhaustive list of factors include:

  • the timing of filing of the various class proceedings;
  • the litigation funding arrangements;
  • the identity of the solicitors and their relative experience;
  • the estimated legal costs for the conduct of the respective proceedings; and
  • the likely return to group members.

This case was unique in that it proceeded on certain assumptions about the skill of the various solicitors and the litigation funding arrangements in place. The High Court noted that in other cases where such assumptions do not exist, the Court may either:

a) Appoint a special referee to inquire into the various litigation funding arrangements, and report to the court with her findings. This practice is frequently used in the context of court approval of settlement of a class representative proceeding.

or

b) Require the parties to engage and fund a contradictor, which is an individual who is a common group member of each proceeding and who represents the interests of other common group members. The contradictor would make necessary inquiries and then make submissions to the court recommending a particular course of action.

The court’s discretion in procedure is broad, and the High Court noted that there may be other investigative steps or procedure to assist the court in its main task, which is to act in the best interests of the group members.

Conclusion

It remains to be seen whether the lower courts embrace the High Court’s suggestion of an investigative process to inform the outcome of a carriage motion. What is clear is that the court has broad discretion to consider any factors it determines relevant, with a view to acting in the best interests of the group members. This brings Australian carriage motions in line with the general practice in the United States and Canada (save Quebec, which often employs a first-to-file presumption).

Case Information

Wigmans v AMP Limited, [2021] HCA 7

Case: S67/2020

Date of Decision: March 10, 2021

_______________________________

[1] In a carriage motion, there are competing class proceedings based on the same controversy, and the Court is asked to stay one or more proceedings so that only one class proceeding is allowed to proceed. Essentially, a carriage motion is about what set of lawyers and which representative plaintiff will be allowed to control the litigation.

[2] Para. 6

[3] Para. 73

[4] Para. 74

[5] Para. 52

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