REPRESENTATIVE PROCEEDINGS – three overlapping open securities class actions against the same respondent – consideration of circumstances which have led to the rise of competing securities class actions – consideration of remedial response to competing class actions in Australia and North America – identification of multiple factors relevant to response – substantially the same claims and substantially the same causes of action – consideration of proposed common fund order and advantages of a funding model linking risk and return to funders by reference to costs incurred – comparative analysis of proceedings including proposals for reducing legal costs and likely return to group members – whether a continuation of duplicative proceedings would amount to an abuse of process – whether equity should intervene to enjoin parties to prevent multiplicity of proceedings – whether a “declassing” order should be made under s 33N(1) or s 33ZF of the Federal Court of Australia Act 1976 (Cth) – application for a permanent stay of two of the proceedings allowed – orders facilitating stay of two proceedings and continuation of one open class proceeding
EQUITY – equitable remedies to control multiple proceedings before the Court and protecting the processes of the Court – bills of peace
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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Details
AGLC
Perera v GetSwift Ltd [2018] FCA 732
Case
[2018] FCA 732
Decision Date
CaseChat Overview and Summary
In the case of Perera v GetSwift Ltd, the Federal Court of Australia was presented with three overlapping securities class actions against the same respondent. The actions were brought by different promoters, and the court was tasked with resolving the issue of multiplicity. The legal issues involved determining whether the court should intervene to prevent the multiplicity of proceedings, whether a "declassing" order should be made, and whether a permanent stay of two of the proceedings should be granted. The court also considered the advantages of a funding model linking risk and return to funders by reference to costs incurred, as well as proposals for reducing legal costs and the likely return to group members.
The court's reasoning involved a consideration of the circumstances which had led to the rise of competing securities class actions, and a comparative analysis of the proceedings, including their proposals for reducing legal costs and likely return to group members. The court noted that while the promoters of class actions could initially exercise a choice of forum, it was highly undesirable for the response to one court taking active steps to exercise discipline and control over securities class actions to result in an attempt to obtain an advantage by commencing actions in different courts. The court found that a continuation of duplicative proceedings would amount to an abuse of process, and that equity should intervene to enjoin parties to prevent multiplicity. The court also found that a "declassing" order should be made under s 33N(1) or s 33ZF of the Federal Court of Australia Act 1976 (Cth), and that a permanent stay of two of the proceedings should be granted.
The court's orders included facilitating the stay of two of the proceedings and the continuation of one open class proceeding. The court also directed the provision of a draft opt out notice and fixed a hearing at which time an opt out notice would be approved. Additionally, the court made orders setting out the precise terms of the common fund order. The final orders included a requirement for the applicant to file and serve a statement of claim, for the respondents to file and serve a defence, and for the applicants to serve a copy of a proposed opt out notice and a draft common fund order. The matter was listed for a case management hearing, and leave was granted to certain parties to intervene at the hearing.
In conclusion, the court found that the continuation of duplicative proceedings would amount to an abuse of process, and that equity should intervene to enjoin parties to prevent multiplicity. The court granted a permanent stay of two of the proceedings and directed the provision of a draft opt out notice and a draft common fund order. The court also made orders facilitating the interlocutory progression of the proceedings and setting out the precise terms of the common fund order.
Orders
Orders of the court
1. The applicant file and serve a statement of claim on or by 4:00 pm on 28 May 2018.
2. The respondents file and serve a defence to the statement of claim on or by 4:00 pm on 6 June 2018.
3. On or by 2:00 pm on 7 June 2018, the applicants serve on the respondent and the solicitor for Mr Perera and the solicitor for the McTaggart applicants a copy of a proposed opt out notice and provide a copy to the Associate to Justice Lee.
4. On or by 2:00 pm on 7 June 2018, the applicants serve on the respondent a copy of a draft common fund order and provide a copy to the Associate to Justice Lee.
5. The matter be listed for a case management hearing at 9:00 am on 8 June 2018, for the purpose, among other things, of making orders in relation to the form and distribution of the opt out notice and that Mr Perera and the McTaggart applicants, International Litigation Partners No 18 Pte Ltd and Vannin Capital Ltd have leave to intervene, if they so wish, at the case management hearing for the purposes of making submissions as to the form of the opt out notice.
6. Leave be granted to the applicants to issue a subpoena to ComputerShare Investor Services Pty Ltd in substantially the same form as comprises Annexure “A” to the interlocutory application filed in NSD 226 of 2018 dated 9 March 2018.
7. Costs of the proceedings to date be reserved.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
The promotors of class actions can, at least initially, exercise a choice of forum and it should come as no surprise that the response to one court taking active steps to exercise discipline and control over securities class actions (and competing actions in particular), may be for decisions to be made which represent an attempt to obtain an advantage by commencing securities class actions in the same matter in different courts. One result of this would be to increase overall costs and make case management and a speedy comparative analysis to be undertaken, more problematical. For a variety of reasons, such a development would be highly undesirable and, like in the past, remedial responses will no doubt have to be fashioned consistent with the provisions of the cross vesting legislation, considerations as to comity and the need to avoid multiplicity. It suffices to note that the possibility of such developments occurring highlights the point I made at the commencement of these reasons: one size does not fit all and how one manages competing class actions is essentially a case management decision rooted in the particular circumstances of the relevant matter.M CONCLUSION & ORDERS Each party sought orders which would involve the Court taking steps to resolve multiplicity in one form or another. Having said this, I should finally note that I did give consideration to whether or not I should simply adopt a ‘wait and see’ approach. I do not consider that this was an appropriate response in the present matter for the same reasons it was rejected by Beach J in Bellamy’s. It is important for this problem to be resolved as soon as possible and to give each of the parties and group members certainty about the bases upon which this matter is to be conducted. Moreover, given my findings, to allow multiplicity to continue would cause the perpetuation of a state of affairs which must be brought to an end. Special problems no doubt arise when one promotor has decided, for some reason, to commence a proceeding in another court exercising federal jurisdiction, which conduct will no doubt necessitate some delay not present here. In the case of competing securities class actions all before the Court, however, one of the potential difficulties in just allowing the promoters of the various common enterprises to sort it out amongst themselves, is that there is a danger that any compromise between promotors (whereby each funder somehow ‘wets their beak’), may simply result in increased costs and may indirectly encourage forms of anti-competitive behaviour. Apart from making orders arranging for the interlocutory progression of the Webb Proceeding and permanent stays being granted in relation to the Perera Proceeding and the McTaggart Proceeding, I will also direct the provision of a draft opt out notice and fix a hearing at which time an opt out notice will be approved. For reasons I have explained, I will grant leave for Mr Perera, the McTaggart applicants and their funders to appear at that hearing. Additionally, prior to the approval of an opt out notice, I will make orders setting out the precise terms of the common fund order.