Kosen-Rufu Pty Ltd v Dixon Advisory and Superannuation Services Ltd

In the matter of Kosen-Rufu Pty Ltd v Dixon Advisory and Superannuation Services Ltd, the Federal Court was tasked with determining the appropriate course of action in light of two substantially duplicative class actions brought by the same group of plaintiffs against the same defendant. The Court was called upon to decide whether the proceedings should be consolidated or if one should be stayed pending the resolution of the other. This decision was influenced by the differing funding models proposed by the respective law firms representing the plaintiffs in each proceeding.

The primary legal issues before the Court were whether the "no win, no fee" model proposed by the law firm Shine Lawyers in the second proceeding was more likely to result in a greater recovery for the group members compared to the commission-based model proposed by Balance Law in the first proceeding. Additionally, the Court had to consider whether consolidating the proceedings would result in additional cost and delay, and if such consolidation would likely lead to more group members nominating to participate on the terms offered by Shine Lawyers.

In its reasoning, the Court found that the "no win, no fee" model was more likely to result in a better return to all group members and that the probabilities favoured that most uncommitted group members would be likely to nominate as group members in the distribution of recoveries on the terms offered by Shine Lawyers. The Court also considered that the complexity and additional cost and delay which is likely to result from a consolidated proceeding was not outweighed by the uncertain benefit in a consolidated proceeding which allows for a nomination as contemplated by the proposed terms. Therefore, the Court decided to stay the Kosen-rufu Proceeding pending the determination or settlement of the Watson Proceeding rather than consolidating the two proceedings.

The Court's final orders were that the parties confer with a view to submitting agreed orders in the two proceedings within 7 days, and to reserve liberty to Kosen-rufu to apply in the Watson Proceedings in relation to any Court-ordered mediation. The Court also noted that entry of orders was dealt with in Rule 39.32 of the Federal Court Rules 2011.