DA Lynch v Star Entertainment Group; Drake v Star Entertainment Group; Huang v Star Entertainment Group; Jowene v Star Entertainment Group

[2023] VSC 561

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE
COMMERCIAL COURT

S ECI 2022 01039

DA Lynch Pty Limited	Plaintiff
v
The Star Entertainment Group Ltd	Defendant

S ECI 2022 04492

Travis Donald Drake	Plaintiff
v
The Star Entertainment Group Ltd	Defendant

S ECI 2023 00428

Ramon Huang	Plaintiff
v
The Star Entertainment Group Ltd	Defendant

S ECI 2023 00413

Jowene Pty Ltd	Plaintiff
v
The Star Entertainment Group Ltd	Defendant

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JUDGE:	Nichols J
WHERE HELD:	Melbourne
DATE OF HEARING:	27 and 28 June 2023, further application on the papers and submissions (24 July 2023, 7 August 2023, 8 August 2023 and 10 August 2023)
DATE OF RULING:	19 September 2023
CASE MAY BE CITED AS:	DA Lynch v Star Entertainment Group; Drake v Star Entertainment Group; Huang v Star Entertainment Group; Jowene v Star Entertainment Group
MEDIUM NEUTRAL CITATION:	[2023] VSC 561

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GROUP PROCEEDINGS — PRACTICE AND PROCEDURE — Multiplicity — Four representative proceedings commenced against same defendant in relation to same controversy — Overlap between claims — Plaintiff in each proceeding seeks permanent stay of the other proceedings — Wigmans v AMP Ltd (2021) 270 CLR 623 — Application granted in three proceedings.

GROUP PROCEEDINGS — Costs — Application for a Group Costs Order — Costs to be calculated as a percentage of the amount of any award or settlement recovered — Judicial discretion in open‑textured legislation Supreme Court Act 1986 (Vic) s 33ZDA — Fox v Westpac; Crawford v ANZ [2021] VSC 573 — Application granted in one proceeding.

PRACTICE AND PROCEDURE — Application to re-open to admit fresh evidence — Application refused.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff in the DA Lynch Proceeding	Kathleen Foley SC Raini Zambelli	Slater & Gordon
For the Plaintiff in the Drake Proceeding	William Edwards SC Rebecca Howe	Maurice Blackburn
For the Plaintiff in the Huang Proceeding	Melanie Szydzik SC Tim Chalke Owen Nanlohy	Shine Lawyers
For the Plaintiff in the Jowene Proceeding	Elizabeth Collins SC Alison Martyn	Phi Finney McDonald
For the Defendant	David Thomas SC Jennifer Findlay	King & Wood Mallesons
For the Contradictors	Nicholas De Young KC Kate Burke

HER HONOUR:

Part A: Introduction and background

1. Four plaintiffs, represented by experienced law firms, have issued group proceedings against Star Entertainment Group, a company listed on the Australian Stock Exchange which owns and operates casinos.  The proceedings are brought for investors in Star securities during overlapping periods between 19 March 2015 and mid‑2022 and concern substantially the same factual matrix.  There are differences between the claims alleged in the proceedings, however, they all include alleged failures to disclose material information to the market concerning compliance with anti‑money laundering and counter‑terrorism governance frameworks.  The issue before the Court is how the multiplicity problem is to be solved.

1. Huang is represented by Shine Lawyers, Jowene by Phi Finney McDonald, Drake by Maurice Blackburn and DA Lynch by Slater & Gordon. 

1. Each plaintiff seeks orders staying the other proceeding and granting sole carriage to the successful plaintiff.  No plaintiff seeks consolidation with another. 

1. The defendant, appropriately, made very limited submissions.

1. I appointed Contradictors to assist the Court on this application (Mr Nicholas De Young KC with Ms Kate Burke).  The Contradictors had access to all material submitted by the parties. 

1. The Jowene, Drake and Lynch plaintiffs each seek a Group Costs Order (GCO) pursuant to s 33ZDA of the Supreme Court Act 1986 for the purposes of funding the proceeding. 

1. The issues arising in respect of the multiplicity contest and the applications for GCOs are inter‑related.  Each plaintiff, in their own way, says that his or its funding proposal is better than the other proposals and, taken together with all other relevant factors, his or its proceeding is to be preferred as more likely to advance the interests of group members.  A related submission by those plaintiffs seeking GCOs was that the form of funding has structural advantages when compared to traditional time‑costing which is offered by Huang under its no‑win, no‑fee (NWNF) model.  I have approached the analysis of the issues concerning carriage and whether there is basis to make a GCO (if a party seeking such an order ought be granted carriage), as for the most part raising the same considerations, meaning that the issues relevant to the exercise of power to grant a GCO are, by and large, a sub‑set of the issues relevant to carriage.

1. I agree with the Contradictors’ conclusion that the assessment of the relative merits of the respective proceedings is finely balanced.  Each law‑firm is experienced and capable, has briefed experienced and capable counsel and has devoted considerable thought and effort to the conduct of the proceedings to date.  They have offered funding proposals that, assessed by any reasonable measure, would be regarded as competitive.  Although I have weighed the evidence and arguments for myself, as it happens, I also agree with the Contradictors’ recommendation concerning carriage. 

1. For the reasons set out below:

(a)The Lynch proceeding will continue and the Drake, Huang and Jowene proceedings will be permanently stayed.

(b)I will make a GCO in the form sought by Lynch, namely:

1.The legal costs payable to the solicitors for the plaintiff and group members, Slater and Gordon Limited, be calculated as a percentage of the amount of any award or settlement that may be recovered in the proceeding;

2.Subject to further order, the percentage referred to in order 1 above be 14% inclusive of GST;

3.Liability for payment of the legal costs pursuant to orders 1 and 2 be shared between the plaintiff and all group members equally;

4.The solicitors for the plaintiff and group members, Slater and Gordon Limited, be liable to pay any costs payable to the defendants in the proceeding;

5.The solicitors for the plaintiff and group members, Slater and Gordon Limited, be liable to give any security for the costs of the defendants in the proceeding that the Court may order to be given. 

1. As indicated, some of the parties’ evidence was subject to claims for confidentiality and was filed in redacted form, and was subsequently the subject of orders upholding some claims and rejecting others.[1]  Some parts of these Reasons have been redacted to preserve that confidentiality and provided to the plaintiff parties but not to the defendant.  The need to proceed in this way arises from the nature of the material and the issues in contest, as is apparent from the analysis below.  The essential point is that the parties disclosed material for the purposes of their applications that, if openly described, may reasonably risk affording the defendant an unfair tactical advantage in the litigation.  Despite claims for confidentiality, to sufficiently set out my reasoning it has been necessary to refer to some parts of the confidential evidence in these Reasons. 

   [1]Pursuant to Supreme Court (General Civil Procedure) Rules 2015, r 28A.06.

1. The parties relied upon evidence filed by their respective senior solicitors – Mr Andrew Watson for Drake, who is a Partner of Maurice Blackburn and Head of its National Class Action Practice, Mr Timothy Finney for Jowene, who is a Principal Lawyer and Director of Phi Finney McDonald, Mr Craig Allsopp for Huang who is a Joint Head of Class Actions at Shine Lawyers and Ms Emma Pelka‑Caven for Lynch, who is the Head of Class Actions at Slater & Gordon.

Part B: Governing principles

Multiplicity

1. The principles governing applications of this kind are well settled. 

1. There is no provision in Part 4A of the Supreme Court Act that expressly or impliedly prevents the filing of a second representative proceeding against a defendant in relation to a controversy. A foundational element of the design of Part 4A is that a representative plaintiff has a choice as to whether to bring proceedings on behalf of some or all persons who have claims arising out of the same, similar or related circumstances, and group members may opt‑out of proceedings.[2]  The result is that overlapping representative proceedings may be commenced against the same defendant.[3]  The commencement of a subsequent bona fide class action against the same defendant on overlapping subject matter is not of itself, vexatious, oppressive or an abuse of process.[4]

   [2]Supreme Court Act1986 (Vic) s 33C.

   [3]Perera v GetSwift Ltd (2018) 263 FCR 92, 125–6 [146] (GetSwift); McKay Super Solutions Pty Ltd (Trustee) v Bellamy’s Australia Ltd [2017] FCA 947, [34]–[36].

   [4]Wigmans v AMP Ltd (2021) 270 CLR 623 (Wigmans). 

1. That proposition must be understood in light of an equally foundational principle, which is that a multiplicity of proceedings is not to be encouraged.  Competing representative proceedings may be inimical to the administration of justice.[5]  Accordingly, while multiple representative proceedings against the same defendant on overlapping subject matter do not constitute an abuse of process, they present a “problem for courts to solve”.[6]  As the High Court said in Wigmans, the legislation poses, but does not answer, the multiplicity question.[7]

   [5]Wigmans, 666 [106].

   [6]Wigmans, 655–6 [77], 666 [106]; Kirby v Centro Properties Ltd (2008) 253 ALR 65, 68 [9]; Fuller v Allianz Australia Insurance Ltd (2021) 65 VR 78, 83 [12].

   [7]Wigmans, 655–6 [77].

1. The Court is not required, come what may, to eliminate all consequences of the fact that multiple proceedings have been issued against the same defendant.  As the Full Court of the Federal Court said in Perera v GetSwift,[8] the object of the legislation is facultative, not restrictive, and in permitting a more efficient dispute resolution through group proceedings, Part IVA “does not insist on the most efficient means of dispute resolution”.[9]  In this case, no party sought anything other than a permanent stay of each other’s proceedings.  It did not appear on the evidence that there was any basis to consider a solution other than staying three of the proceedings. 

   [8]GetSwift. 

   [9]GetSwift, [148] (emphasis in original). Part IVA of the Federal Court Act 1976 (Cth) is in almost identical terms to Part 4A of the Supreme Court Act 1986 (Vic).

1. The Court’s task is to ensure that justice is done in the proceedings, being astute to protect the interests of group members.[10]  It is necessary for the court to determine which arrangement, including which proceeding should go ahead if one is to be stayed, would be in the best interests of group members.[11]

   [10]Wigmans, 667–8 [109], 670 [116]–[117].

   [11]Wigmans, 649 [52].

1. As the New South Wales Court of Appeal said in Wigmans, there is, and should be, an inherent flexibility as to how the vice of multiplicity should be handled.[12]  Each solution may be unsatisfactory in one way or another.  As the Full Court of the Federal Court has observed, there is no one right answer to questions that arise in this context and no “silver bullet” solution to a problem that may require weighing incommensurable and competing considerations, about which judges may take different views.[13]

   [12]Wigmans v AMP Ltd (2019) 103 NSWLR 543 (Wigmans NSWCA), 547 [8]–[9].

   [13]GetSwift, 151–2 [274].

1. The judicial task in this context has been described as applying a multifactorial analysis by reference to all relevant considerations.[14]  Previous cases have identified a number of factors which may be relevant to a greater or lesser extent in resolving a multiplicity problem by comparing sets of competing proceedings, namely:

   [14]Wigmans, 651 [60].

(a)the competing funding proposals, costs estimates and net hypothetical returns to group members;

(b)proposals for security;

(c)the nature and scope of the causes of action advanced (and the relevant case theories);

(d)the size of the respective classes;

(e)the extent of any book‑build;

(f)the experience of legal practitioners (and funders) and the availability of resources;

(g)the state of progress of the proceedings;

(h)the conduct of the representative plaintiffs to date;

(i)the degree of expedition with which the respective parties have approached the proceedings;

(j)the order of filing (although there is no rule or presumption that the proceeding filed first in time should necessarily be preferred, and this consideration is less relevant where the competing proceedings have been commenced within a short time of each other).[15]

[15]Wigmans, 667 [107]. In Wigmans, the carriage contest had been decided by the primary judge (who was upheld by the Court of Appeal) primarily by reference to the competing funding proposals, costs estimates and net hypothetical returns to group members.  It had been assumed, given the position the parties had taken, that there was no real basis to distinguish between the ability and experience of the legal practitioners.  The question before the High Court was whether a subsequently issued representative proceeding was prima facie vexatious and oppressive in circumstances where a representative proceeding was already pending in respect of the same controversy in which the same relief was available. A majority of the Court held that it was not, and that there was no error in applying a multifactorial analysis. In that context, the Court observed that no party had submitted that the factors considered by the primary judge (factors (a)–(i) above) were irrelevant save for the competing funding proposals: at [109]. See also GetSwift.

1. The relevance of these factors in deciding between competing proceedings has long historical precedent.  In a slightly different context, Jessel MR said in McHenry v Lewis (in a passage cited by the High Court in Wigmans):[16]

You might have a hundred actions brought upon the same act or alleged breach of trust, and therefore of course the Court has power to stop all but one of the actions if they are all for exactly the same thing.  But the course of the Court is well settled.  The defendants take out a summons to stay the actions which have been previously transferred of course to the same Judge or Court, and then the Court decides which of the actions is to go on as a test action, and which are to be stayed.  You cannot tell until you have all the plaintiffs before you the right course to be taken.  The first action may be a collusive action, one action may embrace further relief than another, one action may be better framed than another to raise the questions in dispute, one action may be more perfect as to parties than another, in one action the plaintiff may be a solvent person, and able to answer costs, and in the other the plaintiff may be a pauper. 

[16]Wigmans,[101], quoting McHenry v Lewis (1882) 22 Ch D 397, 404.

1. Lists such as this are useful tools for organising concepts and categories of information, provided they do not detract from the essential nature of the exercise for which they are employed.  The exercise is an evaluative one, in which all relevant considerations should be weighed.  As the High Court emphasised in Wigmans, the factors that might be relevant to managing competing group proceedings cannot be exhaustively listed and will vary from case to case.[17]  In some cases, a significant distinguishing feature might, by comparison, render some or all other factors irrelevant or insubstantial.  In other cases, there will be little to distinguish between the proceedings.  The inquiry in each case will be highly fact‑sensitive.  As Lee J said in KlemwebNominees, fastening upon a remedial response to competing class actions involves “an evaluation, and not a calculus”, and it is inevitable that different judges may weigh different considerations differently.[18]

   [17]Wigmans, 667 [109]. See also CJMcG Pty Ltd (as trustee for the CJMcG Superannuation Fund) v Boral Limited (No 2) (2021) 389 ALR 699 (CJMcG), 704 [14].

   [18]Klemweb Nominees Pty Ltd (as trustee for the Klemweb Superannuation Fund) v BHP Group Ltd (2019) 369 ALR 583, 593 [48]–[49].

1. In this case the parties gave significant emphasis to their competing funding proposals.  On that subject, as the High Court said in Wigmans, funding arrangements are neither a mandatory consideration, nor irrelevant.[19]  Importantly, as the High Court also said:[20]

There is nothing foreign to the judicial process for a court to take into account likely success in proceedings or quantum of recovery.  Those considerations, as well as preferences expressed by adult beneficiaries, are well established as potentially relevant matters when a court addresses whether bringing or defending litigation by trustees is proper or can be justified having regard to the best interests of those to whom fiduciary duties are owed.  Similar principles apply to liquidators seeking advice or seeking approval to settle a proceeding or enter a funding agreement.  Those principles also apply to attorneys.  And they are centrally important when a court approves a compromise of a claim made by a person under disability.  Litigation funding arrangements may affect the likely success of representative proceedings … They will directly affect the quantum of recovery.

[19]Wigmans, [111].

[20]Wigmans, [112].

1. The question of uncertainty attending the assessment of prospective financial outcomes was an issue in the appeal from the trial judge to the New South Wales Court of Appeal in Wigmans.  There, the appellant contended that the assessment of comparative hypothetical returns by the trial judge was speculative and therefore erroneous.  The Court of Appeal rejected that contention, accepting that such an assessment was valid, notwithstanding that it was necessarily imperfect and future‑looking.[21]

   [21]Wigmans NSWCA, [27]-[32] ([87], [93]-[95] (Bell P), [108] (Meagher and Payne JJA).

1. Finally, where a proposal to resolve a multiplicity problem affects the defendant differentially, its interests are also relevant.  The interests of funders and law firms acting in representative proceedings are not.[22]

   [22]See, eg, Kirby v Centro Properties Ltd (2008) 253 ALR 65, 68–9 [9]–[12], 72 [28]; Wileypark Pty Ltd v AMP Ltd (2018) 265 FCR 1, 7–8 [14]–[18].

1. The parties emphasised, and I agree, that the particular issues that present as possibly distinguishing between proceedings should be considered wholistically.  Notwithstanding that it is convenient to address the issues raised in the submissions under the subject‑matter headings set out below, I have considered the issues in that way.

Group Costs Orders

1. The principles governing the application of s 33ZDA were not in dispute. I refer to what is said in Fox/Crawford,[23] Allen v G8 Education Ltd[24] and in Bogan v The Estate of Peter John Smedley (Deceased).[25]  For present purposes it is helpful to set out some aspects of those principles.

   [23]Fox v Westpac; Crawford v ANZ [2021] VSC 573 (Fox/Crawford).

   [24][2022] VSC 32, [15]–[31] (Allen). 

   [25][2022] VSC 201, [6]–[14]; [101] (Bogan). 

1. Section 33ZDA provides as follows:

(1)On application by the plaintiff in any group proceeding, the Court, if satisfied that it is appropriate or necessary to ensure that justice is done in the proceeding, may make an order —

(a)that the legal costs payable to the law practice representing the plaintiff and group members be calculated as a percentage of the amount of any award or settlement that may be recovered in the proceeding, being the percentage set out in the order; and

(b)that liability for payment of the legal costs must be shared among the plaintiff and all group members.

(2)If a group costs order is made —

(a)the law practice representing the plaintiff and group members is liable to pay any costs payable to the defendant in the proceeding; and

(b)the law practice representing the plaintiff and group members must give any security for the costs of the defendant in the proceeding that the Court may order the plaintiff to give. 

(3)The Court, by order during the course of the proceeding, may amend a group costs order, including, but not limited to, amendment of any percentage ordered under subsection (1)(a).

(4)This section has effect despite anything to the contrary in the Legal Profession Uniform Law (Victoria).

(5)In this section —

group costs order means an order made under subsection (1);

legal costs has the same meaning as in the Legal Profession Uniform Law (Victoria).

1. The statutory criterion for the exercise of the power — that the court be satisfied that it is appropriate or necessary to make such an order to ensure that justice is done in the proceeding — is open‑textured and provides the Court with a large measure of significantly unguided discretion.[26]  For the reasons discussed in Fox/Crawford, a court should be satisfied, in order to make a GCO, that doing so would be a suitable, fitting or proper way to ensure that justice is done in the proceeding.[27]  For that purpose, a broad, evaluative assessment is required, and the statutory criterion permits a range of meanings and is capable of satisfaction in a myriad of ways.[28]  The evaluative assessment will of course be fact and context specific in each case.

   [26]Allen, [24]; Bogan, [13(a)].

   [27]Fox/Crawford, [31].

   [28]Fox/Crawford, [30], [33]; Allen, [18], [20]; Bogan, [13], [19].

1. As the statutory text makes clear, s 33ZDA facilitates the funding of group proceedings by introducing what might be described as a statutory common fund[29] of three parts: when a GCO is made, the plaintiff’s liability to pay its own legal costs is contingent on recovery of an award or settlement, and the quantum of the costs payable to the legal practice representing the plaintiff and group members is calculated as a percentage of that award or settlement (sub‑s 1(a)).  An order permitting the calculation of fees in this way must also require that liability for payment of legal costs be shared among all group members (sub‑s 1(b)), and, where such an order is made, the statute shifts the plaintiff’s risk of paying adverse costs and any requirement to give security for the defendant’s costs to the law practice (sub‑s (2)).[30]  In that way, the provision addresses and links these things: first, how legal costs may be calculated when a proceeding is funded this way (as a percentage of the award or settlement recovered in the proceeding, as specified in the Court’s order); secondly, where a proceeding succeeds, who shares in the liability for the costs of having brought the proceeding (the plaintiff and all group members); third, who bears the financial risks of bringing a group proceeding (the law practice representing the plaintiff and group members).[31]

   [29]The descriptor is used for convenience, it does not appear in the text.

   [30]Fox/Crawford, [12].

   [31]Fox/Crawford, [13].

1. By incorporating the elements that it does, s 33ZDA implicitly permits the linking of risk and reward in the calculation of a GCO. It follows from the text that the calculation of legal costs in the manner permitted by s 33ZDA may properly take into account not only the value of legal services performed, but the assumption of financial risk by the law practice. A corollary of the statutory model is that it permits the legal practice to benefit from the upside as the damages recovered increase proportionally to the costs incurred.

1. When a Group Costs Order is made it guarantees that the plaintiff and group members will receive a fixed proportion of any award or settlement that is offered, subject only to variation by Court order.  It does so by stipulating that the legal costs payable to the law practice representing the group be calculated as a percentage of the amount of any award or settlement recovered.  A corollary of the statutory model is that it permits the legal practice to benefit from the upside as the damages recovered increase proportionally to the costs incurred.  By fixing the calculation of costs in this way, it allows a plaintiff and group members to eradicate any risk that their compensation, if recovered, will be eroded by costs whose proportion to that compensation exceeds the specified percentage.  In this respect, the GCO statutory funding model may be generally compared with those forms of conditional funding in which the plaintiff and group members will not pay any costs unless they are successful but are otherwise liable to pay their solicitor’s costs, meaning that the funding arrangement permits that moneys recovered for the represented class might still be substantially eroded by legal costs.  It may also be generally compared with a litigation funding arrangement in which a funding commission is fixed as a proportion of moneys recovered (or spent) in addition to recovery by the funder of the legal costs expended.[32]

   [32]Allen, [33].

1. GCOs also offer simplicity and transparency in relation to funding arrangements, designating a simple and readily understandable method for calculating costs by a deduction from the plaintiff’s recovered sum.  In respect of this aspect of GCO’s, it must be recognised that whatever form of funding is employed in a group proceeding, the Court retains control over communications to group members with a view to ensuring that they understand how costs are to be charged. 

Part C – Distinguishing Features – Competing Proceedings

Order of Filing and Conduct of Litigation

1. The order in which proceedings were filed and the progress of the proceedings to date were issues in contest.  They are in some respects related and in others, distinct.  It is convenient to address these points together. 

1. Lynch submitted that because it had filed first and there were significant gaps in time between the commencement of its case and the other proceedings, that was a relevant consideration in favour of Lynch.  Lynch said that the late filing of the other proceedings had caused delay.  The Contradictors and the other parties said that those factors should be regarded as neutral, including because the investigations by all plaintiffs commenced at about the same time, and in each case work was occurring diligently, including to prepare statements of claim and to process significant amounts of information relevant to the potential proceedings published by ongoing public inquiries into Star or available by reason of other legal proceedings against Star. 

1. Lynch also sought to distinguish itself by reference to the extent of the work it had done since commencement.  The other parties and the Contradictor said that that should be regarded as a relevant factor.  Drake, however, said that other parties (particularly Huang and Jowene) had framed their claims “taking inspiration” from the Drake claim, adding causes of action by “jockeying for position” in a carriage contest.  By comparison, it was said that the Drake solicitors could (and did) explain why they had brought certain claims and not others, and were evidently focused on the interests of group members, rather than on winning carriage. 

1. Lynch filed its proceeding on 29 March 2022, Drake on 4 November 2022, Jowene on 3 February 2023 and Huang on 6 February 2023.

1. The chronology of events was as follows.

1. On 14 September 2021, Star Pty Ltd (a wholly owned subsidiary of Star) announced to the market that Adam Bell SC would conduct its next licence review (the Bell Review) required by the New South Wales Independent Liquor and Gaming Authority (ILGA). 

1. On 8 October 2021, Star’s shares closed at $4.28 per share.  On 10 October 2021, allegations were made in The Age and The Sydney Morning Herald and broadcast that evening on 60 Minutes, that Star had failed to have proper anti‑money laundering controls, and that criminal activity had taken place at or via Star’s casinos.  The next day, 11 October 2023, Star shares opened at $3.61 and closed at $3.30, a decline of approximately 23 per cent from Friday’s closing price of $4.28.  Around this time, each of the plaintiff firms commenced investigating a securities class action against Star.

1. On 19 October 2021, Star announced to the market that the Bell Review would incorporate public hearings, commencing in March 2022.  Public hearings in the Bell Review took place between 17 March 2022 and 24 June 2022.

1. On 29 March 2022, Slater & Gordon filed the Lynch proceeding in this Court.

1. On 30 June 2022, the Queensland Attorney‑General announced terms of reference for an external review of the Queensland operations of Star, to be conducted by the Honourable Robert Gotterson AO (the Gotterson Review).  The Gotterson Review held public hearings between 14 July 2022 and 29 August 2022.

1. On 31 August 2022, Commissioner Bell provided his findings (the Bell Report) to the IGLA.  The Bell Report was publicly released on 13 September 2022.

1. On 30 September 2022, the Gotterson Review published its findings (the Gotterson Report), which made similar findings to those made by the Bell Review, albeit concerning the operations of the Queensland casinos.

1. On 17 October 2022, Star announced to the ASX that the ILGA would suspend Star Pty Ltd’s licence indefinitely from 21 October 2022, and that a manager would be appointed for The Star Sydney.

1. On 25 October 2022, Star announced to the ASX that the Queensland Attorney‑General had determined that the Star entities that operated casinos in Queensland were not a suitable person for the purposes of holding a license to operate the Queensland casinos.

1. On 4 November 2022, Maurice Blackburn filed the Drake proceeding in this Court.

1. On 30 November 2022, the Australian Transaction Reports and Analysis Centre (AUSTRAC) filed proceedings in the Federal Court of Australia against subsidiary companies of Star, alleging that Star’s licence holders of casinos in New South Wales and Queensland (which had been subject to the Bell Review and the Gotterson Review) contravened the Anti‑Money Laundering and Counter‑Terrorism Financing Act 2006 (Cth) (AML/CTF Act) and associated Rules.

1. On 9 December 2022, Star announced to the ASX that the Queensland Attorney‑General had suspended its licences to operate the Queensland casinos for 90 days commencing on 1 December 2023, and that a special manager would be appointed.

1. On 12 December 2022, the Australian Securities and Investments Commission (ASIC) commenced proceedings in the Federal Court of Australia against 11 current and former directors and officers of Star for alleged breaches of directors’ duties in connection with the matters the subject of the Bell Review, the Gotterson Review, and the AUSTRAC proceedings.

1. On 17 January 2023, Slater & Gordon filed an Amended Statement of Claim (ASOC) in the Lynch proceeding.

1. On 3 February 2023, Phi Finney McDonald filed the Jowene proceeding in this Court.

1. On 6 February 2023, Shine filed the Huang proceeding in this Court.

DA Lynch’s submissions

1. In Wigmans the High Court said that:

…while a first‑in‑time rule or presumption has never been favoured as a means of resolving which of the competing proceedings should proceed at all, the order of filing has been and remains a relevant consideration, although less relevant in cases like this where the competing proceedings have been commenced within a short time of each other.[33]

[33]Wigmans, 667 [107].

1. Here, competing proceedings were not filed within a short time of one another.  All firms commenced their investigations in October 2021.  Lynch filed in late March 2022.  Drake filed seven months later and about a year after his legal representatives commenced their investigations.  Jowene and Huang each filed about 10 months after Lynch commenced, and about 16 months after their solicitors had commenced investigations.  Lynch filed an amended statement of claim in mid‑January 2023. 

1. Lynch submitted that the filing of substantially similar and competing proceedings – particularly in the cases of Jowene and Huang – months after filing by two others – is relevant because it has delayed the progression of the proceedings and undermined the facilitation of just, efficient, timely and cost‑effective resolution in accordance with the parties’ obligations under the Civil Procedure Act 2010 (Vic). Lynch said that the Jowene and Huang proceedings could have been filed around the same time as the Drake proceeding and the release of the Bell and Gotterson Reports should not be accepted as an adequate explanation for delay.

1. Lynch directed this criticism to all other plaintiff parties but primarily towards the Jowene and Huang proceedings.  There is a significant gap between the commencement of the Jowene and Huang investigations, the release of the Bell and Gotterson Reports, and their filing dates. 

1. Lynch said that if there had not been such a significant delay in the filing of competing proceedings the multiplicity dispute may have been resolved sooner, other significant procedural steps could have been taken and the proceeding would be “off and running”.  Ms Pelka‑Caven’s evidence was that she would have sought that a multiplicity application be timetabled swiftly in the event that a competing class action had commenced within two to three months of the Lynch proceeding and that, if granted carriage (or had Lynch been the only proceeding), she would have [redacted].  She referred to her experience in another case in that respect.

1. Lynch said that by issuing the proceeding when it did, it triggered the suspension of the limitation period pursuant to s 33ZE. This had a tangible effect for group members. The Drake, Jowene and Huang proceedings enjoy the extended claim period and greater protection for group members afforded by the suspension of the limitation period.

1. Lynch submitted that multiplicity should not be encouraged and this was an opportunity for the Court to “give a closer indication of how late is too late to file an overlapping proceeding as a deterrent to particularly late‑coming plaintiffs”.

1. Lynch filed an amended statement of claim on 23 January 2023.  The amendments included claims that had not been previously advanced.  The other plaintiff parties submitted that in light of the fact that Lynch filed an amended statement of claim in January 2023, Lynch’s delay points were immaterial.  Ms Pelka‑Caven explained the reasons for the amendments to Lynch’s claim in confidential evidence that I need not set out here. 

1. Slater & Gordon became aware that Maurice Blackburn were investigating a potential oppression claim in about October to November 2021.  Ms Pelka‑Caven described communications between the Lynch and Drake camps in relation to consolidation prospects.  In anticipation of the commencement of the Drake proceeding, Slater & Gordon was open to working with Maurice Blackburn in a consolidated proceedings.  Ms Pelka‑Caven was of the view that the two firms could work cooperatively based on her experience in other class actions.  She made contact with a solicitor at Maurice Blackburn and opened up the dialogue on 8 May 2022 upon learning that the firm was contemplating filing a competing class action.  On 13 May 2022, Ms Pelka‑Caven had another call with another solicitor from Maurice Blackburn in relation to the anticipated multiplicity dispute.  It was her evidence that Maurice Blackburn were amenable to discussions regarding consolidation of their two proceedings.

1. Apart from the delay point, Lynch submitted that its legal representatives had, comparatively, conducted the proceedings in the best interest of the group members and the Court should favour the Lynch proceeding on that basis.  The evidence (which need not be set out here) supports the conclusion that detailed and extensive work was done in the six months before filing. 

Drake’s submissions

1. Mr Watson gave evidence in relation to the investigatory and preparatory work undertaken by solicitors at Maurice Blackburn which I need not set out here but which I accept was detailed and extensive.  He said that Maurice Blackburn commenced investigations in early October 2021 following media reports of Star’s non‑compliance with its anti‑money laundering obligations.

1. Mr Watson explained that he understood that the filing of the Lynch proceeding in March 2022 had the effect of suspending the limitation period for all group members under s 33ZE of the Supreme Court Act.  Accordingly, it was his view that it was appropriate to defer the Drake proceeding in order to gather information that flowed from the Bell and Gotterson inquiries and the published reports.  Mr Watson’s judgment was that it was more advantageous to wait until the release of the material from those public investigations to draft the statement of claim rather than filing and inevitably needing to amend and re‑file at a later stage.  From previous experience, Mr Watson understood that the public hearings in each inquiry would yield facts and documents that would normally not be available to a plaintiff firm in the course of their preliminary investigations of a potential class action.  Mr Watson said that another reason for delay was to avoid filing “becoming potentially confounding information” that may hinder Drake’s later arguments for damages.

1. Further work has been done since the filing of the Drake proceeding, including retaining expert witnesses, collecting trade and holding data from registered group members, and preparing class‑wide loss assessments.

1. It was Drake’s submission that the status of preparation of each proceeding was not a material factor in the determination of carriage, but that Maurice Blackburn had nonetheless advanced the Drake proceeding considerably.  The firm has undertaken extensive investigative and preliminary work and has retained expert witnesses.  Maurice Blackburn had decided to defer filing of the Drake proceeding until after the release of the Bell Report given that time had been suspended by the Lynch claim.  This was also a strategic decision to not “muddy the waters” as to damages arguments that it expected to run at trial.

1. Drake warned the Court against encouraging a “race to the palace” by taking a first‑in‑time approach.  It was submitted that it was always contemplated that Lynch would need to amend its pleadings following the release of the Bell Report and that the Lynch proceeding is now in the same position as the other cases.  Lynch did not file its amended claim until January 2023 and it is fantasy to suggest that a defence would have been filed by this stage.

1. Separately, Drake submitted that the Jowene and Huang proceedings were commenced “very late” and “quite obviously took inspiration” from the Drake and Lynch pleadings.  It was put that the Drake legal team had conducted a careful investigation with due care and attention paid to the nature of the claims brought against Star on behalf of group members.  It can explain why certain strategic decisions were made in relation to the bringing of claims and the claim period.  In contrast, the other plaintiff parties had been unable to provide adequate explanation for the amendment or calibration of their cases.  Drake said that it was a case of the other parties “jockeying for position” in a carriage contest.  The other plaintiff parties have not been group member‑focused in their approach.  Drake submitted that practitioners should be able to explain the purposes behind putting on their case in such a way and how it is in the best interest of group members. 

1. Drake referred to Wigmans,[34] where it was remarked:

A first‑in‑time approach of the kind for which Ms Wigmans contended would also be unworkable.  To adopt and adapt what Lord Templeman said in The Abidin Daver, a concern with avoiding or limiting a multiplicity of representative proceedings ought not be replaced by a presumption – a first‑in‑time criterion – that leads to an “ugly rush” to the court door, including but not limited to the framing of causes of action and claims for relief as broadly as possible to gain so‑called “juridical advantages”.[35]

It was Drake’s contention that this is in fact what had occurred here.  It was the only plaintiff party that could explain the assessment behind the case put forward in its statement of claim. 

[34]Wigmans, [86].

[35]Citations omitted and emphasis added.

1. Drake also focused on the oppression claims made in the Lynch and Jowene proceedings under Part 2F.1 of the Corporations Act 2001 (Cth), the claim period, and the inclusion of “equity swap” group members.

1. In brief, Slater & Gordon amended its pleading in January 2023 to extend its claim period, add an oppression claim to and amend its group member definition to include equity swap holders.  Drake submitted that Lynch failed to adequately explain the expansion of its claim and had amended its pleading after seeing the Drake statement of claim.  It was submitted that the inclusion of both equity swap holders and oppression claims was done without appreciating that derivative holders are not members of a company and do not have standing to bring claims of oppression, demonstrating “basic conceptual errors” that subsequently “inspired Jowene” in the drafting of its own pleading.  It was Drake’s submission that this was the problematic result when practitioners “copy” the work of others without undertaking proper due diligence and investigatory work themselves, with “an eye to the competition”.  It showed [redacted].  This practice should not be encouraged.

1. Drake explained that the only alteration made to its own proposal for carriage was to its proposed GCO rate, which it did in order provide “additional protections” [redacted].

Jowene’s submissions

1. Mr Finney’s evidence on that issue of commencement and conduct of the proceedings was brief, and was as follows.  Phi Finney McDonald commenced its investigation and secured third‑party litigation funding and experienced senior counsel within a month of Star’s non‑compliance becoming public.  Phi Finney McDonald did not retain its lead plaintiff, Jowene, until 29 October 2022.  It entered a funding agreement with Woodsford Litigation Funding 8 LLP (Woodsford Funding) which is a wholly owned subsidiary of Woodsford Group Limited (WGL; together, Woodsford) in early February 2023.  It issued the proceeding following the Bell and Gotterson inquiries, and the commencement of the AUSTRAC and ASIC proceedings in the Federal Court of Australia.  After filing Phi Finney McDonald has made inquiries of prospective experts. 

1. Jowene cited the principle in Wigmans that there was no rule or presumption that the representative proceeding commenced first in time should prevail. 

1. As to the state of preparation of each proceeding, Jowene submitted that no proceeding was more materially advanced than another.  No defence had been filed.  No discovery has been made.  Phi Finney McDonald has taken steps to progress the Jowene proceeding as far as possible before the determination of its carriage application.  The firm commenced its investigations “post‑haste” in October 2021. 

1. Lynch made substantial amendments to its pleaded allegations against Star, filing the ASOC only two weeks prior to Jowene commencing its case.  In circumstances where there were ongoing public hearings and investigations, it was appropriate to wait for the conclusion of those inquiries.  It was not necessary to commence sooner because the Lynch proceeding had effectively suspended the limitation period.  It was explained that Phi Finney McDonald commenced the Jowene proceeding once it had the benefit of the findings of the Bell Review and that those findings were crucial to the approach of each claim as demonstrated by the filing of a substantially amended statement of claim by Lynch in January 2023.  All four plaintiff parties rely on the outcome of those investigations. 

1. In response to Drake’s submission that Jowene’s statement of claim was affected by technical inaccuracies, it was submitted that the pleadings were drafted in light of the material available to Jowene’s legal representatives at the time.  Critical documents are not yet available from the Bell inquiry.  The pleadings, of all plaintiffs, are based on summaries of the underlying business records of Star.  Jowene expects that a further refinement of the plaintiff’s statement of claim, no matter which plaintiff is awarded carriage, is inevitable. 

Huang’ submissions

1. Mr Allsopp in his evidence explained that despite commencing investigations into a proceeding against Star in October 2022, he did not reach a view until sometime later, after further investigation, that there was a reasonable basis to commence a proceeding.  Mr Allsopp gave an account of the work that was undertaken at the time which I need not set out here.  Mr Allsopp was of the view that material that had become publicly available through the ASIC and AUSTRAC proceedings, included information that was not available from the Bell and Gotterson Reviews.  Consideration of that material led to the need to refine Huang’s case theory which delayed the issue of proceedings.  Huang’s evidence set out that while it took a reasonable amount of time to file the proceeding because of the ongoing nature of the regulatory investigations into Star, Huang had wasted no time in commencing its investigations in October 2021 following public reports about Star’s anti‑money laundering controls.  Huang submitted that the appropriateness of its course of action was exemplified by Slater & Gordon later substantially amending its statement of claim based on the Bell Report.  Moreover, Lynch did not take any substantial steps in its proceeding prior to the commencement of the other proceedings.

1. Like Drake, Huang took the benefit of the s 33ZE suspension afforded by Lynch filing when it did. That meant that there was no genuine urgency for Huang to file sooner. Huang submitted that Lynch should not be rewarded carriage for simply suspending the operation of the limitation period under s 33ZE.

1. In response to Drake’s “copycat” claim, Huang submitted that its claims were not calibrated for the purposes of winning carriage of the proceeding.  Its statement of claim was formulated based on information made publicly available through the regulatory reviews conducted in 2022.  It was said that it is clear that Huang did not draw inspiration from the Drake proceeding because it initially did not make a claim for oppressive conduct on behalf of the group members.  Huang explained that it now seeks to pursue the oppression claim so group members may have the benefit of the suite of claims identified in all proceedings. 

Contradictors’ submissions

1. The Contradictors took a neutral position on this point, submitting that each proceeding was at the same stage of preparation and it was not suggested that any plaintiff or law firm had neglected to advance their cases where appropriate.  It was noted that Lynch did not make the case that group members would be prejudiced if another firm is chosen for carriage.  This was not a case in which procedural steps would have to be repeated if one firm rather than another, was granted carriage. 

1. The Contradictors submitted that once the limitation period was suspended by the filing of the Lynch proceeding, there was no utility in the Drake, Jowene and Huang parties filing before the publication of the Bell and Gotterson Reports.  The proceedings could not have been meaningfully progressed before the release of the findings of those public inquiries.  The progress of the Lynch proceeding itself was dependent on the publication of the reports as demonstrated by the filing of an ASOC on 17 January 2023, nearly 10 months after filing its indorsed writ.

1. The Contradictors did not give credence to Lynch’s argument that the other plaintiff parties were “reaping the benefit” of the extended claim period due to the suspension of the limitation period effected by the filing of the Lynch proceeding.  There was no evidence that group members would be prejudiced by awarding carriage to one firm or the other, and the consideration was immaterial.  The High Court in Wigmans accepted that “the greater the gap in time between commencement of the sets of representative proceedings perhaps the stronger the case for a stay of the subsequent set of proceedings, all other matters being equal”.[36]  The Contradictors did not consider that all other matters were equal so as to bring this consideration into prominence.

Consideration

[36]Wigmans, [107] (emphasis added).

1. On the basis of issues and evidence set out above, I draw the following conclusions:

(a)        The legal teams for each plaintiff party demonstrated that they had undertaken substantial work on the proceedings before issuing a claim.

(b)       I cannot discount the possibility that the other plaintiffs were influenced by work done by Drake in articulating its claims, including the substantial amendments effected by Lynch’s amended statement of claim.  Nevertheless, I do not consider that the evidence demonstrates that Drake’s attitude to the advancing of the group member’s interests is in a class completely apart from the attitude of the other practitioners.  Where a later issued claim is influenced by an earlier issued claim, the facts may demonstrate an unthinking “copying” by the later parties, or the prioritisation of breadth of coverage merely in order to win carriage and a lack of sufficient basis for the inclusion of claims.  That was not this case, having regard to the evidence of the practitioners.

(c)        I agree with the Contradictors that there was no evidence of a particular law firm neglecting to advance their cases where appropriate and that this was not a case in which procedural steps would have to be repeated if one firm, rather than another, was granted carriage. 

(d)       Lynch was right to draw attention to significant gaps in time between the issuing of the four sets of proceedings.  This is not, however, a good case in which to pursue the broad point pressed by Lynch.  That is because the ongoing publication of material and findings in public inquiries into Star is a particular feature of this case.  I accept that, in deciding when to issue proceedings, the practitioners acting for Drake, Jowene and Huang made judgment calls about the significance of the material and findings from public inquires and other legal proceedings, which material would undoubtedly be relevant to the issues to be raised in proceedings. 

(e)        That said, I consider that, having determined to pursue claims against Star, Huang and Jowene could, and should, have issued sooner, albeit in circumstances where it would have been anticipated that it would be necessary to amend their pleadings – as Lynch has done.  A somewhat earlier filing, around the time that Drake issued (after the publication of the Bell and Gotterson Reports) would have meant that the multiplicity issue could have been resolved sooner.  Although I accept that both sets of practitioners were processing information from public sources, there was no real justification for waiting to issue for a further few months.  In the final analysis though, this is only a minor point of differentiation because it has not been demonstrated that the delay in filing has caused any real prejudice to group members.  I accept that, as Jowene submitted, no proceeding is presently more materially advanced than another.  No defence had been filed, no discovery has been made.  In cases of this complexity, refinements to pleadings can be expected.

(f)        Properly understood, Lynch’s submission that it should be favoured because it obtained for group members the benefit of the suspension of limitation periods, is a submission that it should be favoured because it issued first.  In the circumstances described (in particular the ongoing public inquiries) issuing first was a neutral consideration in my assessment.

Practitioners and Resources

1. The Contradictors, Lynch and Huang submitted that the experience and expertise of the respective legal teams was not material in the determination of the carriage and that this factor should be considered neutral.

1. Drake and Jowene each argued that their legal teams had superior experience and expertise, including with class action litigation under the AML/CTF Act.

1. Drake submitted that Maurice Blackburn was the pre‑eminent class action law firm with a significant settlement success rate based on the number of settlements achieved and the aggregate amount of those settlements. Maurice Blackburn has particular experience in bringing claims for oppressive conduct under Part 2F.1 of the Corporations Act.

Drake’s submissions

1. Drake submitted that his proceeding was the preferred vehicle for carriage based on the experience of Maurice Blackburn in prosecuting securities class actions within the AML/CTF arena, and the demonstration of that experience in the firm’s approach to this carriage application.

1. Maurice Blackburn was the “market leader in securities class action litigation in Australia”.  The firm has particular experience with AML/CTF class actions.  Maurice Blackburn had demonstrated “sophistication and expertise” in the bringing of the Drake claim.

1. Drake relied on evidence of Maurice Blackburn’s “pre‑eminent” track record as deposed to in the affidavit of Mr Watson. Drake submitted that the firm’s past successes were relevant to the determination of what was in the best interest of group members. Maurice Blackburn has obtained 26 successful settlements in shareholder class actions for the aggregate amount of the gross settlement sum of $1.6 billion since 2003. It has particular experience in prosecuting two securities class actions under the AML/CTF Act against another casino, Crown Resorts.

1. Drake submitted that Maurice Blackburn had taken steps in the course of this application that demonstrated a level of unparalleled care and attention.  The firm had taken care to estimate the losses of group members, including engaging an expert to estimate the total number of shares acquired during the relevant period.  Mr Watson had a demonstrated understanding behind the mathematics of the loss calculation and took a realistic approach to it.  It was submitted that, conversely, an unrealistic approach would devolve into strategic errors in the planning and resourcing of the proceeding.  Separately, Maurice Blackburn had paid careful attention to the costing of the class action.  Mr Watson made an assessment of the estimated legal costs by analysing the specific features of the claim.

Jowene’s submissions

1. Jowene similarly submitted that Phi Finney McDonald had notable securities class action experience, particularly concerning the AML/CTF Act and the unique and complex issues it raises. The issues were described in the evidence of Mr Finney, but need not be set out here. Phi Finney McDonald’s legal practitioners had gained first‑hand experience of those issues through its work on class actions brought against the Commonwealth Bank of Australia and Westpac Bank, which concerned breaches of the banks obligations under the AML/CTF Act.

1. Jowene submitted that it had appropriate resources to take on carriage of the class action.  Phi Finney McDonald has five legal practitioners dedicated to the Star proceeding.  The firm has an in‑house client engagement team and a subsidiary discovery service.  It was submitted that the in‑house client services would result in greater efficiencies and cost reduction for group members.

1. In response to Drake’s submission that Maurice Blackburn has the pre‑eminent settlement record, Jowene said that Drake’s evidence did not provide for a helpful comparison.  It did not take into account the fact that Maurice Blackburn’s asserted settlement record was based on aggregate settlements.  It did not reflect the comparably longer period of time over which those settlements were achieved, noting that Phi Finney McDonald was established much more recently, but still with very experienced practitioners and significant results. 

DA Lynch’s submissions

1. Lynch took the position that there was no significant disparity in experience or expertise between the law firms involved in this application.  Nevertheless, Lynch put on evidence as to the qualifications of its legal practitioners at Slater & Gordon.  It was submitted that Slater & Gordon has a longstanding record of success in securities class action, obtaining $750 million in class action settlements.  Lynch submitted that Slater & Gordon had a proven record for keeping its legal costs proportionate.  The team is led by Emma Pelka‑Caven, a solicitor with extensive experience.  The rest of the instructing and counsel team have demonstrated experience in class action litigation.  Junior counsel has particular experience with class actions in the AML/CTF arena.  Slater & Gordon is appropriately resourced.  The firm has available a dedicated client engagement team, litigation technology team and an outsourced agreement with a discovery provider.

1. In responding to the submissions of Drake and Jowene, Lynch submitted that any particular experience with class actions concerning the AML/CTF Act is not a distinguishing factor in circumstances where all plaintiff parties were represented by legal practitioners who had relevant experience. Lynch said that the quality of practitioner could be determined with regard for the nature and scope of the claims and the state of preparation of each proceeding. On those issues, Lynch submitted that it should be the preferred vehicle for carriage.

Huang’s submissions

1. Huang submitted that this issue was a neutral factor and was not material to the determination of carriage.  It was not the case that the legal teams are starkly different in experience or expertise.

1. As to the shared contention between Drake and Jowene that AML/CTF experience is a defining factor, Huang submitted that the chosen proceeding will nevertheless need to establish contraventions of the AML/CTF Act based on the evidence adduced. Each law firm had the benefit of plentiful material publicly available through public hearings during the Bell Review, and the AUSTRAC and ASIC proceedings against Star. No firm would be starting blind. Huang submitted that Maurice Blackburn’s experience with the Crown class actions was neutralised by that fact.

1. Huang submitted that outcomes for group members was the relevant touchstone in this application.  It did not follow that Maurice Blackburn would be in the best position to achieve the best outcome due to its record of class action settlements; headline resolution sums in other cases should not have a bearing on the consideration of which plaintiff should proceed with carriage. 

1. In response to Jowene’s claim that it was in a better position to carry the proceeding because of Phi Finney McDonald’s experience with the CBA and Westpac class actions, Huang said that those cases concerned banks and not casinos, and each institution faces different money laundering and counter terrorism risks.  Further, Huang submitted that some of the issues that Mr Finney noted as being unique to AML/CTF matters were in fact common place to securities class actions.

Contradictors’ submissions

1. The Contradictors submitted that it was difficult to conclude that there is any material difference between the law firms behind the plaintiff parties. There is no material difference between the qualifications, experience or resources available to each firm. The factor should be considered neutral. In response to the submissions regarding experience with litigation under the AML/CTF Act, the Contradictors submitted that it could not be accepted that any particular experience with this type of litigation would deliver “greater efficiencies” to group members. The Court should assume that each firm has the requisite skills to carry on AML/CTF litigation. This is demonstrated by the drafting of comprehensive pleadings in each proceeding. Drake’s submission that Maurice Blackburn had greater experience with oppression claims is similarly uncompelling. They submitted that skills of analysis are readily transferrable.

Consideration

1. I accept that, measured globally, Maurice Blackburn has achieved the greatest number of settlements and the greatest aggregate sum of damages in securities class actions.  Whilst that point might carry sway in some comparisons, I am not persuaded that aggregate results are particularly telling in this case, given the experience of the other firms.

1. I also accept, as I have said, that Mr Watson in particular, gave the most helpful, considered evidence about the quantification of damages.  I have addressed the criticisms made by Drake of the other practitioners in the context of the pleadings issues and as I have said, I ultimately could not conclude on all of the evidence that the advancing of the interests of group members in this proceeding to date by Drake’s legal team, is in a class completely apart from the other practitioners.

1. I also accept that Phi Finney McDonald and Maurice Blackburne (and their respective Counsel) have particular experience in AML/CTF cases.

1. This case is somewhat unusual (although I doubt it is unique) in that each firm has the benefit of significant material published or produced by or in the course of public inquiries and other proceedings.  All firms have applied their undoubted expertise to the analysis of that material in the preparation of their cases to date.  As discussed in the context of the pleadings issues, there was no sufficient basis on this application to draw sound conclusions about the criticisms levelled by one firm against another in respect of the composition and articulation of the claims.  As the Contradictors submitted, there was no evidence of a particular law firm neglecting to advance their cases where appropriate.  All have evidently devoted considerable and thoughtful effort to the preparation of their cases to date. 

1. As I said in Beach, I do not think that a comparison between the capabilities of legal teams must be disregarded as irrelevant to the multifactorial assessment of all relevant factors when evaluating competing proceedings.  It remains the case, however, that the appropriate weight to be given to such a comparison will depend upon the extent of disparity between each legal teams’ respective experience.  Where the apparent differences are slight, it may be difficult to identify rational and objective criteria and the criteria for assessing their weight and their application will become problematic.[37]

   [37]Nelson v Beach Energy; Sanders v Beach Energy [2022] VSC 424 (Beach Energy), [195].

1. In each case the firms are undoubtedly well resourced and experienced and although there are differences between them, the differences are not pronounced, in this case. 

Causes of Action advanced in the competing proceedings

1. On the question of causes of action and claim periods:

(a)        Although there are differences in the claim periods and in some causes of action advanced, all parties accepted that the claims pleaded arise out of substantially the same factual substratum.

(b)       Drake submitted that its proceeding was the only stable and consistent case, demonstrating that it had put forward claims upon considered reflection and not to win carriage.  Drake made numerous criticisms of the pleadings of the other parties which were said to reflect poorly on those parties as preferred plaintiff. 

(c)        Lynch submitted that the longer claim period shared by it and Jowene was advantageous for group members, as was its inclusion of claims for “equity swap” group members.  It was submitted other proceedings that omitted claims or adopted a shorter claim period, would lead to a “tail‑risk” [redacted].  Lynch also launched criticisms of Huang’s pleading in particular.

(d)       Lynch and Huang submitted that Jowene’s pleading was lacking in detail and comparatively superficial.

(e)        The practitioners whose pleadings and decisions about the inclusion of causes of action or length of claim periods were criticised, responded in defence of their claims, and critiqued their opponents in reply.

(f)        Jowene and Huang submitted that these issues ought regarded as neutral, drawing attention to criticism that might be made of the other parties’ claims in order to illustrate that at this stage of proceedings, criticisms of that kind were not a reliable indicator of which proceeding should go forward. 

(g)       The Contradictors submitted that the issue should be regarded as neutral. 

1. The analyses by the plaintiff parties of their competitors’ pleadings was detailed.  I have considered those submissions but describe the issues here only in broad terms.  All plaintiffs accepted that it was not in the interests of group members to expose to the defendant asserted problems that it might later pursue. 

1. There are three key points of difference between the statements of claim.

1. First, claim periods.  The period for all claims starts on 29 March 2015.  The Lynch and Jowene claims end on 13 June 2022.  The Huang period ends on 25 May 2022 and Drake, on 16 March 2022. 

1. Second, claims brought on behalf of equity swap investors, who did not acquire ordinary shares in Star but entered into financial contracts (equity swaps) to acquire derivative exposure to share movements.  Drake does not bring a claim on behalf of equity swap holders.  Lynch did not originally, but now does.  Jowene’s claim includes equity swap investors.  Huang’s does not, but Huang intends to seek leave to amend the proceeding if granted carriage.

1. Third, claims brought under Part 2F.1 of the Corporations Act for oppressive conduct of company affairs. Drake, Lynch and Jowene all bring oppression claims. Huang submitted that he intends to seek leave to file an amended statement of claim including claims under s 232.

Drake’s submissions

1. Drake submitted that his claim is the only “stable and consistent case” put forward. 

1. Drake submitted that Lynch included equity swap holders without explanation and [redacted].  Drake set out specific reasons for its criticisms in this regard.

1. Drake submitted that the making of claims in respect of [redacted], demonstrated that other plaintiff parties have attempted to prepare their cases for the purposes of winning a carriage dispute and [redacted].  Drake contended that Lynch had failed to explain [redacted].  In responsive evidence for Jowene, Mr Finney said that [redacted].

DA Lynch’s submissions

1. Lynch submitted that its extended claim period should be preferred over Drake and Huang.  Lynch initially claimed for a shorter period between 29 March 2015 and 16 March 2022.  Reasons were given in Ms Pelka‑Caven’s evidence for extending the claim period.  It was submitted that it is significant that two experienced class action firms (Phi Finney McDonald and Slater & Gordon) have concluded that there is a proper basis for the extended claim period. 

1. The “tail‑risk” point was that the Drake and Huang proceedings would be incapable of recovering for investors that fall outside of their limited claim periods.  Lynch accepted that the question whether those group members who had acquired shares between 16 March and 13 June 2022 had suffered loss and damage was a matter for trial.  Lynch has submitted that a “tail‑risk” arises for proceedings with a more narrowly defined group membership.  This relates to both the issue of shorter claim periods and the omission of equity swap holders.

1. The Huang and Drake proceedings, as they currently stand, expose the defendant to “tail‑risk” if permitted to continue.  Ms Pelka‑Caven gave evidence in her experience as [redacted] Lynch submitted that the risk as foreshadowed is not mere speculation, noting that the defendant has identified it as a relevant matter.

1. Lynch brings claims for equity swap investors.  It was submitted that its approach to include these types of investors was not unusual in securities class actions.  Huang has instructed its legal representatives to seek leave to file an amended statement of claim to include equity swap holders in the event that he is awarded carriage.  Drake [redacted].  Lynch submitted that in circumstances where all plaintiffs have had the benefit of material disclosed during the course of public hearings and inquiries, these inconclusive positions are not satisfactory.  [Redacted].

1. Both Lynch and Drake submitted that there were deficiencies in the pleadings of Huang and Jowene that rose above simple matters of judgment and were real defects that weakened the claim of group members.  It was said that the claims were marred by forensic issues and in the case of Huang, Lynch submitted that the claim would have to be significantly re‑cast and almost entirely re‑written.  The criticisms were re‑buffed.  Jowene and Huang said that those issues did not amount to a material factor for the Court’s consideration in determining carriage, and that they are the result of different legal approaches by experienced and competent class action specialists.  The Contradictors similarly submitted that this was a neutral point.

Jowene’s submissions

1. Jowene’s primary submission was that whichever plaintiff is awarded carriage will almost certainly amend its pleading in a substantial way.  Many of the criticisms pertaining to the key differences will likely fall away once the evidence is in and the law firms continue to investigate and review the points of contention.

1. In respect of the claim period difference, Jowene submitted that a longer claim period is more advantageous as it would eliminate tail‑risk for the defendant.  Jowene says that it is a significant consideration because [redacted].

1. As to the oppression claim, Jowene submitted that this factor should be considered neutral.  Drake, Jowene and Lynch bring a claim for oppression and Huang has indicated that he will seek leave to amend his statement of claim to include such a claim. 

1. Drake criticised Jowene for [redacted].  In response to the criticisms, Jowene submitted that [redacted].

Huang’s submissions

1. Huang submitted that the differences between the case theories are not material and ought be characterised as neutral in the carriage contest.  There may be legitimate and reasonable differences in approaches taken by experienced class action practitioners that has led to the development of differences in pleadings.

1. Huang claims for the period between 29 March 2015 and 25 May 2022.  It was submitted that the Court has been invited to partake in a speculative exercise, making an inquiry into a hypothetical matter of whether a certain proceeding should be preferred based on the claim period.  That is not a relevant inquiry for the determination of carriage.  There is no evidence before the Court of what Star or its insurers will do in settlement negotiations.  Huang’s evidence and submissions addressed the choices that his legal practitioners had made in respect of the claims and periods of time addressed in Huang’s claim. 

1. As to the criticisms of his pleading, Huang submitted that Drake had made conclusory assertions that ought not to be accepted.

1. Huang said that leave would be sought to amend his claim to include equity swap holders.  It was said that [redacted]. Shine Lawyers have instructions to seek leave to file an amended statement of claim to pursue an oppression claim under s 232 of the Corporations Act, if Huang is granted carriage.  Huang therefore submits that this difference in the current pleadings should be considered neutral.

Defendant’s submissions

1. The defendant submitted that, all other things being equal, it is in the interests of justice and efficiency for the claims of all persons in relation to the subject matter of the proceedings to be brought within the one proceeding.  If only a sub‑set of potential group members are represented in the proceeding, a “tail‑risk” is created for the defendant that separate proceedings will be commenced on behalf of persons not represented in the case that proceeds. 

Contradictors’ submissions

1. The Contradictors said that this issue ought be regarded as neutral.  The case theories of each plaintiff are substantially similar and the causes of action are broadly the same.  In that respect, a comparison between pleadings is of limited use in determining carriage.  The legal practitioners in each proceeding are of similar competence and experience.

1. In relation to claim periods, the Contradictors submitted that the Court must assess each pleaded case rather than having regard to exogenous factors such as the effect of settlement negotiations and that it is mere speculation that claimants that fall outside of the scope of a particular claim period may bring litigation in the future. 

1. The Contradictors submitted that the Court should be satisfied that each plaintiff has given serious consideration to how they have defined their particular claim period.  It is not necessary, for the purposes of this application to determine the merits of each of their decisions.  Moreover, the Contradictors noted that, particularly in light of Drake undertaking further investigations in respect of the claim period, it was reasonable to expect that the plaintiff awarded carriage would embrace (and amend if necessary) extending its claim period if there are good reasons for doing so. 

1. The Contradictors accepted Drake’s submission that [redacted].  Nevertheless, it was submitted that it is difficult for the Court to reach a conclusion on the merits of this issue, particularly in circumstances where no party suggests that [redacted]. 

1. All plaintiffs have brought, or intend to bring, oppression claims.  Accordingly, the matter ought be regarded as neutral.

1. The Contradictors said that the submission was speculative and that the issue of competing claim periods should not be assessed by reference to exogenous factors.

Consideration

1. My view about the pleadings points can be shortly stated, despite the copious quantities of ink devoted to this issue in some of the submissions and evidence.

1. First, despite the criticism levelled by one party against the other, it was not established that any of the pleadings was manifestly deficient.  The submissions advanced, in particular by Lynch against Huang and to a lesser extent against Jowene, were not capable of establishing that conclusion. 

1. As other courts have said, it is a reasonable assumption that each legal team has made thoughtful forensic decisions with consideration for the interest of group members in the bringing of each of their claims, absent a real disparity in the quality of legal representation.[38]  In this case, the decision making process of the practitioners was sufficiently exposed.  As Lee J remarked in Klemweb, “leaving aside manifest deficiencies in a way a case is pleaded or conducted, often it will be difficult to tell whether a particular decision was sound until the end of the litigation”. 

   [38]CJMcG, [31].

1. As was observed in Nelson v Beach Energy, a comparison between pleadings has its limits, particularly where the case is at an early stage and competing claims traverse the same factual substratum and assert the same causes of action.  I would add that unless a deficiency is manifest, it will often be unsatisfactory in the course of a carriage contest, where the issue is not being determined on an inter‑partes basis between plaintiff and defendant, to soundly conclude that one form of pleading is to be preferred to the other.  

1. I agree with Jowene’s submission that, at this point in the proceedings it is reasonable to assume that whoever is awarded carriage, pleading amendments will almost certainly follow in a course of the proceeding and many of the criticisms pertaining to the key differences will likely fall away with continued investigation.

1. As to the Jowene pleading, I do not accept the criticism that its brevity evidenced superficiality.  As the submissions by Jowene’s Senior Counsel made pellucid, Jowene’s pleading is the product of serious reflection and forensic judgment. 

1. I have addressed the question of conduct of practitioners in respect of changes to pleadings earlier in these Reasons.

1. As to the defendant’s point about tail‑risk, it might be that if the proceeding that goes forward does not adopt the broadest of the group member definitions, separate proceedings might be commenced on behalf of persons not represented in that case.  Three things may be said about that submission.  First, the prospect that a further proceeding might be commenced is speculative.  Second, as set out earlier, as a matter of principle the objective of the present exercise is not to eradicate multiplicity in all its manifestations.  The corollary is that the Court’s task is not focussed on guaranteeing to the defendant that all of its risk may be addressed in the one proceeding.  Third, at this stage of proceedings, on this application, it is impossible in a case of this complexity, for the Court to form a view about the respective merits of the claim periods chosen by the different plaintiffs.  In that context there is a danger in my view in adopting a “broadest case is better” approach, in the encouragement of the formulation of claims designed to win carriage.[39]  Finally, in answer to Lynch’s point on this subject, the extent to which the defendant’s approach to the litigation might be affected by its assessment of tail‑risk, is largely speculative. 

Financial outcomes

[39]Wigmans, [86].

Introduction

1. The plaintiffs proposed these costs arrangements:

(a) Lynch sought a GCO under s 33ZDA of the Supreme Court Act at the rate of 14%.

(b)       Jowene sought a GCO at the rate of 17%

(c)        Drake sought a GCO incorporating an “upwards rachet” mechanism being 10% on that portion of any resolution sum up to $50 million; 20% on that portion of any resolution sum which exceeds $50 million and up to $100 million; and 25% on that portion of any resolution sum which exceeds $100 million. 

(d)       Huang proposed that his solicitors act on a no‑win no‑fee (NWNF) basis, charging for fees at its standard hourly rates with a 25% uplift on its total professional fees, and for disbursements in the usual way. 

1. To allow the Court to sensibly compare the range of reasonably likely returns to group members under the various funding proposals the plaintiffs each modelled the potential net returns based on the estimated range of recovery sums (damages) and the point at which the proceedings may resolve, being early, late and trial settlement scenarios.  The assumptions underpinning the modelling were largely standardised. 

1. The modelling was informed by two principal inputs, namely:

(a)        The proposed GCO rates and in the case of Huang, estimates of Shine’s expected total legal costs.  Although Shine was the only party who intended to calculate its costs on an hourly rate basis (the other parties seeking a percentage return via GCO), the quantum of the likely legal costs that would be incurred and therefore charged to group members under the Shine NWNF proposal (in short hand, the budget point), was in issue. 

(b)       Estimated resolution sums.

1. The modelling was directed to three hypothetical resolution scenarios – an early settlement (following a mediation held after review of discovery); a late settlement (after exchange of expert evidence by immediately prior to trial preparation); and a “trial settlement” (resolution after the conclusion of trial).  The third input (trial settlement) only impacted the Huang modelled outcomes.  The costs to be charged under the GCO funding proposals did not change as a function of the point in the litigation at which the proceedings might resolve.  The total costs incurred under the Huang NWNF proposal would vary, however, depending upon the proportion of the projected costs budget that would be expended in prosecuting the proceeding to conclusion, at whatever juncture in the litigation that might occur. 

1. The parties accepted, as do I, that the question when a proceeding will be resolved or determined in the real world cannot be identified with any precision and that the broad demarcations between early, late and trial resolutions are analytical tools to allow comparisons between the plaintiffs’ funding proposals. 

Part E: Group Costs Order – DA Lynch Proceeding

1. Much of what is relevant to the exercise of the power to grant a GCO has been addressed in the consideration of the carriage dispute.  It will suffice to enumerate my conclusions:

(a)        The Lynch proceeding represents as an appropriate vehicle and, for the reasons given, the best vehicle for the progression of group members’ interests in respect of the proceedings against Star.

(b)       There are no established concerns that Slater & Gordon is not in a position to fund its obligations and properly resource the proceeding.

(c)        In that proceeding, in which Slater & Gordon proposes to fund the proceeding by a GOC fixed at 14% of the recovered sum, the plaintiff is not the beneficiary of a contractual arrangement that would place it in a better position. 

(d)       The GCO rate is, prima facie, reasonable.  It is in fact, by some measure, the lowest GCO rate that this Court has ordered to date and compares favourably to historical rates for third party funding. 

(e)        Evidence about the returns to the solicitors was given on a confidential basis.  Aspects of that evidence are described above.  At a later stage (at least, on any settlement approval application), further evidence about the returns to the solicitors will be required to ensure that the approved rate does not deliver a disproportionate return to the solicitors.  The evidence to date does not suggest that there is a real likelihood of that occurring.

1. I consider that it is appropriate, in order to ensure that justice is done in the proceeding, to make the GCO sought by Lynch. 

Part F: Huang’s Re-Opening Application

1. Huang sought leave to reopen his case to adduce additional evidence that he said had emerged since the hearing of the multiplicity application and is relevant to the costs which may be reasonably expected to be incurred in the Huang Proceeding.  In the event that Huang is granted leave to adduce this evidence, Huang relies on it to support the proposition that the costs he might incur in prosecuting this proceeding are unlikely to exceed the Further Amended Shine Budget, and if they do, are unlikely to do so in an amount that materially reduces the prospect that Huang’s NWNF funding proposal will provide the greatest return to group members for resolution sums in the range of likely outcomes.

1. The proposed new evidence concerns the AUSTRAC proceeding.  The evidence itself consists of statements made by Star’s Senior Counsel[64] at a case management hearing in that matter on 14 July 2023 (as recorded in transcript), orders of the Federal Court of Australia in that matter dated 13 February 2023, summary of the allegations in the AUSTRAC proceeding prepared by Shine which are said to be similar to allegations made in the class action and Mr Allsopp’s opinion as to the consequences for the Huang class action if certain events transpire.

   [64]Different counsel are briefed for Star in this case and the AUSTRAC proceeding.

1. In the proposed new evidence, Huang advances three contentions:

(a) the progress of the AUSTRAC proceeding indicates that Star will make admissions or agree to certain facts underlying the alleged contraventions of the AML/CTF Act, concerning which there is overlap with the Huang proceeding;

(b)       if those admissions are made in the AUSTRAC proceeding, they may also be made by the defendant in the Huang class action; and

(c)        if such admissions are made in the Huang proceeding, “there would likely be a material reduction” in the costs Huang will incur in the class action. 

1. Huang’s ultimate submission was that the proposed new evidence supports the conclusion that the Huang proceeding is likely to offer the best return to group members, and the criticism of the reliability of the Huang funding proposal is unwarranted.

1. The application was made on the basis that the evidence was new.  The recognised classes of case in which a Court may grant leave to re‑open a case before judgment is entered include where fresh evidence has emerged.[65]  As the High Court said in Smith v New South Wales Bar Association:[66]

If an application is made to re‑open on the basis that new or additional evidence is available, it will be relevant, at that stage, to inquire why the evidence was not called at the hearing.  If there was a deliberate decision not to call it, ordinarily that will tell decisively against the application.

[65]Owies v JJE Nominees Pty Ltd (in its capacity as the trustee of the Owies family trust) [2021] VSC 14 (Owies), [14] and the authorities cited therein.

[66]Smith v New South Wales Bar Association (No 2) (1992) 176 CLR 256, 266-7.

1. In every case, the overriding principle to be applied is whether the interests of justice are better served by allowing or rejecting the application for leave to re‑open.[67]  Within that consideration, the criteria for determining whether to exercise the discretion to grant leave to re‑open the evidence where an application relies on fresh evidence have been expressed this way:[68]

   [67]Owies, [14].

   [68]Owies, [14]; Flash Lighting Company Ltd v Australia Kunqian International Energy Co Pty Ltd (No 4) [2018] VSC 823, [123]; Reid v Brett [2005] VSC 18, [41].

(a)        whether the further evidence is so material that the interests of justice require its admission;

(b)       whether the further evidence, if accepted, would probably affect the result of the case;

(c)        whether the further evidence could, by reasonable diligence, have been discovered earlier; and

(d)       whether any prejudice would ensue to the other party by reason of the late admission of the further evidence.

Fresh Evidence?

1. Drake and Lynch submitted that the further evidence fails at the first hurdle because it does not constitute fresh evidence.  The first stage of enquiry, then, is the explanation as to why the further evidence was not called at the hearing of the multiplicity applications on 27 and 28 June 2023.  The explanation proffered by the Huang plaintiff is that it was not then available.

1. The “new” evidence comprised statements made by Senior Counsel for Star at a case management hearing in the AUSTRAC proceeding before Lee J on 14 July 2023, to be read in context of the fact that Lee J had ordered the parties to confer under the supervision of a Registrar and attempt to reach agreement as to the facts genuinely in contention and not in contention.  The transcript of the hearing recorded the following, in substance:

(a)        Senior Counsel for AUSTRAC said that the conferral process had been very productive, that the parties wished for it to continue and were seeking orders for a mediation.  The parties expected to substantially narrow the issues, perhaps to the point where there remained no or very few disputes;

(b)       Senior Counsel for Star said that Star had delivered AUSTRAC a proposed statement of agreed facts and admissions.  The document at that stage remained “without prejudice”.  After the process including mediation was completed, the parties might have agreed everything, or substantially agreed all the facts going to contravention, or agreed most of the facts going to convention with some issues requiring determination.  They expected to have reached a position by November 2023.

1. Huang described the proposed new evidence as concerning the progress of the AUSTRAC Proceeding, and specifically the “update” given to the Court that there was a “high likelihood” that the parties “would reach agreement of background facts that would leave a limited number of issues in dispute, if any” in respect of the alleged contraventions of the AML/CTF.  Given the nature of the evidence – a report to the Court of what was occurring between the parties on a without prejudice basis – the proposition is more appropriately expressed this way: that as at July 2023 Star and AUSTRAC considered that there was a real likelihood that they would reach agreement on the issues in the AUSTRAC proceeding including as to alleged contraventions, such that it was likely there would be a limited number of issues in contest, if any.  However, they had not yet reached that agreement and the final form of the anticipated agreement was not known.  I note that Lee J described the view that everything would be agreed, as “panglossian”.

1. Drake submitted, and I agree, that nothing in the transcript revealed with any specificity the content of the foreshadowed admissions or agreed facts, excepted that they were to be directed to “agreeing foundation of contraventions and circumstances fitting into the contraventions” (as was put by Star’s Counsel). 

1. Drake submitted that to the extent that there is a prospect of Star making admissions in the AUSTRAC proceeding that concern the underlying conduct giving rise to contraventions of the AML/CTF Act, that prospect had been present since the Bell Review. Drake set out a number of concessions and admissions made by the Star entities, through its senior counsel, in closing submissions to the Bell Review, taken from the transcript of the relevant hearings. Jowene made a similar submission by reference to the Bell Report. I need not set out the concessions to which Drake drew attention, but I agree that they traverse matters pleaded by the plaintiff parties in the present proceedings.

1. Lynch submitted that what occurred on 14 July 2023 did not constitute fresh evidence because the prospect that the AUSTRAC Proceeding would be the subject of an agreement between the parties has been known since at least 13 February 2023, when Senior Counsel for Star informed the Court that it was Star’s goal to reach agreement on all facts, liability and penalty, and that he didn’t see why the AUSTRAC Proceeding could not resolve in complete agreement between the parties, having regard to the manner in which other proceedings brought by the regulator had concluded.  The transcript of the case management conference before Lee J on 13 February 2023 recorded that Star’s Senior Counsel said the following:

Given this is volume 1, your Honour will appreciate that our position is we haven’t got across this case yet, and it will take us some while to do so.  In all the cases that I have been in of this kind, the matter has resulted in complete agreement between the parties, that is to say, agreement on all facts and liability and penalty.  It’s early days with this one.  I can’t say that I have read to the end of the 2000 pages of the statement of claim, so anything I say about what might happen in the future is necessarily provisional.  But given the nature of the proceedings and the experience that the applicant has had in the conduct of these proceedings, I don’t see, in principle, any reason why this case, despite its massive size, could not have the same outcome as the others I’ve been involved in.  It is the goal of my client and, I’m sure, of AUSTRAC to bring that outcome about, if at all we can… I think I can say join with AUSTRAC in asking to do is to give us more time to get our feet on the ground with this particular case before we come back and, in effect, have the first case management hearing in the way that your Honour envisages such an exercise, where we can talk to your Honour with more confidence about what the issues – where the issues in dispute are likely to be and how we best see them efficiently being managed by the court.

1. To summarise, the statement by Star’s counsel on 13 February 2023 indicated that it was, in Counsel’s view, a possibility in principle that the matter might resolve and that both parties were intending to bring about that outcome if possible, caveated by the fact that predictions about what might occur in the future were necessarily provisional. 

1. The defendant submitted that the evidence was not fresh, for the reasons advanced by the other parties.

1. I accept that what occurred on 14 July 2023 was a development in the AUSTRAC proceeding in that the parties had, since the February hearing, engaged in productive work resulting in their forming the opinions set out earlier.  The prospect of the parties agreeing facts and Star making admissions was, at the February hearing, discussed in only very provisional terms, whereas by July 2023, what the parties expected was discussed more explicitly and more definitely.  However, the development in the case was a progression of something that was in prospect at an earlier time, and remained uncertain in the sense no admissions had by that time been made, or described in other than general terms. 

1. Furthermore, given the making of concessions and admissions in the course of the Bell Review, and the fact that what was said on 14 July 2023 rose only as far as I have set out above, I am not satisfied that the prospect of resolution in the AUSTRAC proceedings has been demonstrated to be fresh evidence.  Whether it is genuinely new cannot be ascertained with any certainty because of the uncertain nature of the progress actually reached and described in Counsel’s statements made on 14 July 2023. 

1. Even if the evidence were properly characterised as fresh, that is not the end of the matter.  The Contradictors and all parties other than Huang went on to submit that the established criteria for consideration by the Court regarding the admission of fresh evidence weighed against the granting of leave to adduce the further evidence.

What are the proper inferences to be drawn from the evidence?

1. The question as to the inference that may be properly drawn from the new evidence is itself relevant to the admissibility of the evidence.[69]

   [69]Owies, [15].

1. Huang submitted that several of the allegations advanced in the AUSTRAC proceeding find equivalent allegations in this proceeding. It was submitted that there is significant and material equivalence between the AUSTRAC proceeding and the present proceedings with respect to the basis upon which it is alleged (in both proceedings) that Star’s AML CTF program did not satisfy the requirements in s 81(1) AND 36(1) of the AML/CTF Act. It may be accepted that the allegations made in the proceedings have some equivalence. 

1. The relevant period in the Huang allegations is between 29 March 2016 and 31 October 2019, whereas the allegations in the AUSTRAC proceeding concern the period from 30 November 2016.  The Huang material is silent on the impact (if any) on the Huang funding proposal of the need to establish those matters alleged in the Huang statement of claim in the period 29 March 2016 to 29 November 2016, if the period from 30 November 2016 is conceded by Star.  More significantly, as the parties submitted, the class action proceedings are different in nature to the AUSTRAC litigation.  They include different parties, different causes of action and different forms of relief and arise for adjudication in different statutory contexts.  The proposition that admissions by an entity in a regulatory prosecution will not of necessity translate to a wholescale resolution of the issues in contention in a related class action can illustrated by the course taken in the CBA class action[70] and the Centro class action.[71]

   [70]The ‘CBA class action’ in the Federal Court of Australia is a shareholder class action against the Commonwealth Bank of Australia (CBA), relating to the CBA’s share price fall following the institution of legal proceedings by AUSTRAC against the CBA. Maurice Blackburn is jointly conducting this proceeding. As Drake submitted, in the AUSTRAC proceeding against CBA, CBA admitted a number of contraventions of the AML/CTF Act but the class action concerning equivalent subject matter was vigorously defended and is currently reserved following an initial trial on liability.

   [71]The Centro class action proceeded to trial before Gordon J, notwithstanding the earlier judgment of Middleton J in ASIC v Healy (2011) 196 FCR 291 in which findings were made about a central issue in the class action.

1. Hung contends that if admissions are made by Star in the AUSTRAC proceeding, then there is a reasonable prospect that Star will make equivalent admissions in the Huang proceeding or be prepared to “significantly narrow the issues in dispute” in that proceeding.  In effect, the submission relies on general experience that the same entity is unlikely to contest a factual matter in one jurisdiction that it has admitted in another.

1. While it is possible that some admissions might be made in this proceeding that mirror some admissions that might be made in the AUSTRAC proceeding (including because the defendant considers that it cannot properly maintain an inconsistent position in respect of the same facts) it cannot be inferred on the evidence on this application at what point in time that will occur and to what extent any admissions made will affect the scope of the factual controversy across all of the issues in this proceeding. 

1. In my opinion, there is not a sufficient basis from which the Court can infer the likelihood that admissions of any particular facts will be made in the Huang proceeding, and if that were to occur, when it would occur.  Drake submitted that the evidence on which Huang relies does not rationally support the inference that because there is a prospect of Star making admissions as to its conduct in the AUSTRAC proceeding it will likewise make equivalent admissions in the Huang proceeding, much less, equivalent admissions that make a material difference to what is in dispute in the group proceeding.  I agree. 

1. Huang’s third contention was that if admissions are made in the Huang proceedings that are equivalent to admissions that may be made in the AUSTRAC proceeding then “there would likely be a material reduction” in the costs Huang will incur in prosecuting the class action.  That submission relied on the opinion of Mr Allsopp.  Most significantly for Huang’s application, the evidence did not establish that contention. 

1. The opinion (stated in a single paragraph in Mr Allsopp’s affidavit) was expressed in conclusionary and unspecific terms.  The basis of the asserted reduction in costs was entirely unquantified.  Mr Allsopp said that Huang may not need to incur some, or some proportion, of the costs currently estimated in his budget, “for example” with regard to certain expert evidence or discovery.  However, the Huang material does not identify the items in the Huang proposed litigation budget which would be affected in the event of the posited admissions being made, in what respects and by how much.  Nor does the material attempt to quantify the potential “material reduction” by reference to the proportion of the Huang proceeding that would be resolved if the hypothetical admissions were made. 

1. Huang’s submission was that Huang’s [redacted] costs associated with the preparation of expert evidence would be reduced.  The evidence did not support that submission.  It did not go to explain what aspect of expert evidence would be curtailed by which expected admissions, what discipline of expert evidence might be limited or rendered unnecessary, or why the factual basis of particular expert evidence would be materially reduced. 

1. I consider that the admission of the proposed new evidence would not have any material effect on the proper analysis of the relevant issues on this application.  The proposed new evidence is of no real probative weight, because of what it leaves in the arena of speculation and guesswork.  I cannot conclude that, if accepted, it would probably affect the result of the case.

1. The application is rejected.

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Cost Estimates [NOTE the whole of this schedule is redacted]

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