Larsson v WealthSure Pty Ltd

Case [2013] FCA 926

FEDERAL COURT OF AUSTRALIA

Larsson v WealthSure Pty Ltd [2013] FCA 926

Citation: Larsson v WealthSure Pty Ltd [2013] FCA 926
Parties:

MARK LARSSON v WEALTHSURE PTY LTD (ACN 097 405 108)

WEALTHSURE PTY LTD (ACN 097 405 108) v AAI LIMITED (ACN 005 297 807)
File number(s): NSD 169 of 2013
Judge(s): BUCHANAN J
Date of judgment: 16 September 2013
Catchwords: PRACTICE AND PROCEDURE – representative proceedings – whether proceedings should continue as representative proceedings – where class defined by certain criteria, including that all members had appointed particular solicitors to act for them
Legislation: Federal Court of Australia Act 1976 (Cth), Pt IVA, ss 33C, 33N, 33N(1)(b), 33P, 33P(b)
Cases cited: Connell v Nevada Financial Group Pty Ltd (1996) 139 ALR 723
Dorajay Pty Ltd v Aristocrat Leisure Ltd (2005) 147 FCR 394
Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd (2007) 164 FCR 275
Wong v Silkfield Pty Ltd (1999) 199 CLR 255
Date of hearing: 9 August 2013
Date of last submissions: 8 August 2013
Place: Sydney
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 43
Counsel for the Applicant: Dr S C Derrington
Solicitor for the Applicant: Mills Oakley Lawyers
Counsel for the Respondent: Mr M S White
Solicitor for the Respondent: Clyde & Co Australia
Counsel for the Cross-Respondent: Ms H Younan
Solicitor for the Cross-Respondent: Moray & Agnew Lawyers

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 169 of 2013
BETWEEN:

MARK LARSSON
Applicant
AND:

WEALTHSURE PTY LTD (ACN 097 405 108)
Respondent
BETWEEN:

WEALTHSURE PTY LTD (ACN 097 405 108)
Cross-Claimant
AND:

AAI LIMITED (ACN 005 297 807)
Cross-Respondent

JUDGE:

BUCHANAN J

DATE OF ORDER:

16 SEPTEMBER 2013

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.The proceedings no longer continue as representative proceedings.

2.The parties submit proposed short minutes of order to give effect to these Reasons for Judgment.  In the absence of consent, the respondent submit proposed short minutes of order by 12 October 2013.

Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 169 of 2013
BETWEEN:

MARK LARSSON
Applicant
AND:

WEALTHSURE PTY LTD (ACN 097 405 108)
Respondent
BETWEEN:

WEALTHSURE PTY LTD (ACN 097 405 108)
Cross-Claimant
AND:

AAI LIMITED (ACN 005 297 807)
Cross-Respondent

JUDGE:

BUCHANAN J

DATE:

16 SEPTEMBER 2013

PLACE:

SYDNEY

REASONS FOR JUDGMENT

Background

  1. This interlocutory judgment concerns proceedings which were commenced in this Court as representative proceedings on 5 February 2013. 

  2. Section 33C of the Federal Court of Australia Act 1976 (Cth) (“the Act”) provides:

    33C     Commencement of proceeding

    (1)       Subject to this Part, where:

    (a)7 or more persons have claims against the same person; and

    (b)the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances; and

    (c)the claims of all those persons give rise to a substantial common issue of law or fact;

    a…

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Details
AGLC
Larsson v WealthSure Pty Ltd [2013] FCA 926
Case
[2013] FCA 926
Decision Date

CaseChat Overview and Summary

In the matter of Larsson v WealthSure Pty Ltd, the applicant, Larsson, sought to proceed with the case as representative proceedings on behalf of a group of people who had invested with WealthSure, a financial services company. The dispute centred around allegations of misleading and deceptive conduct by WealthSure, which Larsson claimed had caused financial loss to the group members. The case was heard in the Federal Court of Australia.

The primary legal issue the court had to decide was whether the proceedings could continue as representative proceedings or if they should be amended to allow individual claims to be brought by each affected party. The court also had to consider whether the continuation of the proceedings as representative proceedings was justified given the lack of shared losses or common issues among the group members.

The court found that the proceedings were fundamentally flawed as representative proceedings because there was no suggestion that the group members shared any common pool or losses. Instead, each group member sought individual orders for individually calculated amounts to address their own losses. The court held that the nature of the claims was such that they should be brought individually by each affected party, as they sought to vindicate individual interests rather than shared ones. The court concluded that the proceedings were not suited to proceed as representative proceedings and ordered that they no longer continue in that form. The court also mandated that group members should have the opportunity to apply to join the proceedings individually and directed the parties to discuss and propose appropriate orders to manage the transition, including a suitable timeframe for these applications and amendments to the pleadings.

The final orders required the respondent to propose the necessary orders by 12 October 2013, unless the parties could reach a consensus beforehand. This decision underscored the importance of ensuring that representative proceedings are appropriately structured to address common issues among the group, rather than individual claims which should be pursued separately.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

Some of the cases for relief are apparently weak in an evidentiary sense. The only significance that has been identified of the proceedings going forward as representative proceedings is that group members other than the applicant will be immunised from the possibility of a costs order in favour of the respondent if the case with respect to that group member does not succeed. That is not a matter which I regard as favouring continuation of the proceedings as representative proceedings. Conclusion In my view, the proceedings in their present form are flawed. I have given consideration to whether I should permit them to be amended to overcome those flaws but, ultimately, I think that the proceedings are not by their nature proceedings which are innately suitable to proceed as representative proceedings. It is a striking feature of the proceedings that there is no suggestion that group members should share in any respect from a common pool. In every instance, individual orders are sought for individually calculated amounts to address individual losses. The proceedings are, in reality, proceedings which seek to vindicate the individual interests of a limited and known group of persons who might ordinarily be expected to advance their claims as applicants in their own right. They will be under no obligation to make an application to join the proceedings, but if they do so they may be expected to advance their own interests and take responsibility for what is said and done about their particular personal circumstances and transactions. Orders I will order that the proceeding no longer continue as a representative proceeding. It will be necessary for group members to have an opportunity to apply to be joined as applicants in their own right and it seems inevitable that significant attention will be necessary to the pleadings once those decisions have been made. The parties should discuss a form of orders which will impose a suitable time frame in which those matters might be attended to and bring in short minutes of order (if possible by consent). In the absence of consent, the respondent should propose the orders to be made by 12 October 2013.

Ratio Decidendi

Legal Principle Established

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