Whyte v The A2 Milk Company Limited
[2023] NZHC 22
•23 January 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2022-404-000762
[2023] NZHC 22
BETWEEN KEVIN JAMES WHYTE, suing as a representative plaintiff under High Court Rule 4.24
PlaintiffAND
THE A2 MILK COMPANY LIMITED
Defendant
Hearing: 28–29 November 2022 Appearances:
P G Skelton KC, C B Pearce and A J Thorn for Plaintiff
D J Cooper KC, J L W Wass and M C Harris for Defendant
Judgment:
23 January 2023
JUDGMENT OF EDWARDS J
[redacted version]
This judgment was delivered by me on 23 January 2022 at 4.00 pm pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Counsel/Solicitors:
P G Skelton KC, Auckland C B Pearce, Auckland
Thorn Law, Auckland
D J Cooper KC, Auckland Gilbert Walker, Auckland
WHYTE v THE A2 MILK COMPANY LTD [2023] NZHC 22 [23 January 2023]
TABLE OF CONTENTS
Para No.
The claims [6]
New Zealand proceeding [10]
Australian proceedings [19]
The power to stay proceedings under s 24 of the TTPA [30]
Does the Australian Court have jurisdiction to determine the matters in issue between the parties to the proceeding? [39]
Is the Australian Court the more appropriate court? [48] Place of residence/Principal place of business (s 24(2)(a)) [48] Place of residence of the witnesses likely to be called (s 24(2)(b)) [50] Place where the subject matter of the proceeding is situated (s 24(2)(c)) [54] Any agreement between the parties about the court or place (s 24(2)(d)) [55] The most appropriate law to apply (s 24(2)(e)) [56]
Whether a related or similar proceeding has been commenced against the
defendant in a court in Australia (s 24(2)(f)) [70]
The extent of similarity between the two claims [70] Managing multiple class actions [77]
Case management tools and joint trials [94]
First in time [99]
Conclusion on s 24(2)(f) [101]
Financial circumstances of the parties (s 24(2)(g)) [103]
Any other relevant matters (s 24(2)(h))[106] Access to justice [106]
Shareholder information [113]
Funding arrangements [116]
Conclusion on whether the Australian Court is the more appropriate court [119] Should a stay of this proceeding be issued? [120] Should the Court grant leave to the plaintiff to commence a representative
proceeding? [121] Result [127] Annexure A [133]
[1] Between 19 August 2020 and 10 May 2021 (Relevant Period), The a2 Milk Company Ltd (A2) made statements to the Australian Stock Exchange (ASX) and New Zealand Exchange Main Board (NZSX) regarding its revenue and earnings forecasts.
[2] Two opt-out class representative proceedings were filed in the Supreme Court of Victoria by investors who acquired or held shares in A2 during the Relevant Period. The proceedings have now been consolidated (Australian Proceeding).1 The plaintiffs in that proceeding allege that the statements were misleading or deceptive, and that A2 contravened its continuous disclosure obligations under both Australian and New Zealand law.
[3] The plaintiff in this proceeding, Mr Kevin Whyte, seeks leave to commence an opt-in class representative proceeding against A2 in relation to the same statements made to the NZSX and ASX during the Relevant Period. The same allegations of misleading and deceptive conduct and continuous disclosure breaches are made in the proceeding, but only contraventions of New Zealand law are relied upon.
[4] A2 seeks an order under s 24 of the Trans-Tasman Proceedings Act 2010 (NZ) (TTPA) staying this proceeding pending judgment on liability in the Australian Proceeding, or final settlement, with leave to apply to lift the stay due to a change in relevant circumstances.2
[5]Each application is opposed.
The claims
[6] A2 is incorporated under the Companies Act 1993. It is a dairy nutritional company focused on products made with milk from cows that naturally produce milk containing the A2 beta-casein protein type.
1 Thomas v The a2 Milk Company Ltd; Xiao v The a2 Milk Company Ltd [2022] VSC 319.
2 The application before the Court simply refers to a stay. Mr Cooper KC confirmed the terms of the stay sought in reply submissions.
[7] Liquid milk and infant milk formula are included in A2’s range of products. The infant milk formula products are sold primarily in New Zealand, Australia, and China, through various sales channels.
[8] Between 19 August 2020 and 10 May 2021, in the midst of the COVID-19 pandemic, A2 made five statements forecasting revenue and EBITDA margin for the 2021 financial year. The statements were made to the NZSX and ASX. The forecasts are summarised in a table included in the plaintiff’s statement of claim in this proceeding:
Forecast
Paragraph pleaded at
FY21 revenue
FY21 EBITDA
margin
August 2020
45(b)
“strong revenue growth”
30% – 31%
September 2020
50(e)
$1.8 b – $1.9 b
31%
December 2020
56(f)
$1.4 b – $1.55 b
26% – 29%
February 2021
60(i)
$1.4 b
24% – 26%
May 2021
63(e)
$1.2 b – $1.25 b
11% – 12%
[9] Both this proceeding and the Australian Proceeding concern the effect of the forecasts on A2’s share price. Approximately 80 per cent of the shares traded during the Relevant Period were traded on the ASX with the balance traded on the NZSX.
New Zealand proceeding
[10] Mr Whyte filed this proceeding in May 2022. He seeks leave to commence it as an “opt-in” class representative proceeding (known as a “closed class” proceeding in Australia). The class that Mr Whyte seeks to represent is those who:
(a)at any time during the Relevant Period held an interest in A2 shares acquired on the NZSX and/or ASX markets; and
(b)are not persons excluded from the class (A2’s current or former directors or related parties, or members of the judiciary); and
(c)have signed a litigation funding agreement with CHC Investment Fund III Pty Ltd (CHC) (an Australian litigation funding firm), and a retainer with the solicitor for the plaintiff, Thorn Law.
[11] Importantly, every person the plaintiff seeks to represent would give irrevocable instructions to their solicitor to take the necessary steps to opt out of the Australian Proceeding. As a result, the class of plaintiffs in the current proceeding would not overlap with the class of plaintiffs in the Australian Proceeding.
[12] As at the date of the hearing before me, those who had executed a funding agreement and retainer agreement included a financial institution representing 3,907 beneficial owners, 3,812 of whom reside in New Zealand. Several individuals and trustees have also signed on, and others have registered their interest.
[13] Under the terms of the litigation funding agreement, CHC’s entitlement to recovery is [redacted] per cent of the amount of any award or settlement but that entitlement increases to [redacted] per cent in the event of an appeal.
[14] Mr Whyte pleads that the five statements referred to above were misleading and deceptive, and that A2 breached its continuous disclosure obligations. He says the contraventions resulted in an inflated price for A2 shares during the Relevant Period. The share price then fell as more accurate forecasts of A2’s revenue and EBITDA margin were disclosed to the market.
[15] Three causes of action are pleaded. A summary of the claims is pleaded at [6] of the statement of claim:
(a)A2 breached ss 262 and/or 19 of the Financial Markets Conduct Act 2013 (FMCA) and/or s 9 of the Fair Trading Act 1986 (FTA) during the Relevant Period by:
(i)Making statements and forecasts to the market that were false or misleading or deceptive; and/or
(ii)Failing to withdraw or to adequately correct prior statements and forecasts when it subsequently became apparent that those statements and forecasts were false or misleading or deceptive.
(b)A2 additionally breached its continuous disclosure obligations under s 270 of the FMCA, and breached s 19 of the FMCA and/or s 9 of the FTA, by failing to disclose material information to the market as soon as A2 became aware of that information.
(c)The Class Members have suffered loss because of A2’s breaches of the FMCA and FTA, in that they have:
(i)Acquired A2 shares during the Relevant Period that they would not have acquired but for those breaches; and/or
(ii)Paid more for A2 shares acquired during the Relevant Period than they would otherwise have paid, were it not for those breaches; and/or
(iii)Held A2 shares for longer than they would otherwise have held them and thereby lost the opportunity to sell those shares at a higher price.
[16]Compensatory orders and declarations are sought as relief.
[17] A2 has not filed a statement of defence pending determination of its stay application. No other steps have been timetabled at this stage.
[18] If allowed to go ahead, the parties agree that this proceeding would take place in two (or more) stages. The first stage would be limited to common liability issues, that is, the claim that A2 breached its obligations under the Financial Markets Conduct Act 2013 (FMCA) and the Fair Trading Act 1986 (FTA), and any common affirmative defences to those claims. Stage two would be focused on loss. As both counsel emphasised at the hearing before me, most claims of this nature settle – if not before stage one, then certainly before stage two.
Australian proceedings
[19] On 5 October 2021, Slater and Gordon, an Australian law firm, commenced an opt-out representative proceeding (referred to as an “open class” proceeding in Australia) against A2 in the Supreme Court of Victoria. The lead plaintiff was Mr Jake Thomas (Thomas Proceeding).
[20] Approximately six weeks later, on 23 November 2021, another opt-out representative proceeding was commenced by Shine Lawyers. The lead plaintiff was Mr Yue Xiao (Xiao Proceeding).
[21] Both proceedings advanced claims on behalf of persons who invested in A2 shares on the ASX or NZSX during the Relevant Period.3 Both proceedings included allegations that A2 had contravened its continuous disclosure obligations and engaged in misleading or deceptive conduct during the Relevant Period.
[22] Contraventions of Australian law (Corporations Act 2001, Australian Securities and Investments Commission Act 2001 (Cth), and Australian Consumer Law) were pleaded in both proceedings. The Thomas Proceeding also advanced claims under New Zealand law alleging breaches of the FMCA and the FTA for A2’s conduct in New Zealand, namely the statements made to the NZSX.
[23] The plaintiffs in each proceeding initially filed “carriage motions” in the Supreme Court of Victoria seeking a determination as to which one of the two actions should continue. They ultimately agreed that the proceedings should be consolidated and an order for consolidation was made on 14 June 2022.4 The respective sets of plaintiffs and their solicitors entered into a cooperative litigation protocol and consolidation agreement which sets out how the proceeding shall be conducted.
[24] The two, now consolidated, Australian proceedings are funded by the solicitors representing the respective plaintiff classes. Under the cooperative litigation protocol and consolidation agreement the solicitors’ entitlement is calculated at no more than 24 per cent of the amount of any award or settlement.
[25] A consolidated statement of claim was filed on 20 July 2022. Mr Thomas is the first plaintiff; Mr Xiao is the second plaintiff. The New Zealand law claims originally made in the Thomas proceeding remain part of the consolidated proceeding.
[26] As discussed later in this judgment, the Supreme Court of Victoria has recently issued a judgment confirming it has jurisdiction to determine the New Zealand law claims, including the grant of relief.5
3 The Thomas proceeding was for those who had acquired shares during the Relevant Period. The Xiao proceeding included those who had retained shares in the Relevant Period also.
4 Thomas v The a2 Milk Company Ltd; Xiao v The a2 Milk Company Ltd [2022] VSC 319.
5 Thomas v The a2 Milk Company Ltd [No 2] [2022] VSC 725.
[27] Under the Supreme Court Act 1986 (Vic), notice must be given to a group member advising them of their right to opt out of the proceeding before a specified date.6 As at the date of the hearing, an opt-out date had not been specified. However, as already noted, every person Mr Whyte seeks to represent has, or will, give irrevocable instructions to their solicitors to take the necessary steps to opt out of the Australian Proceeding.
[28] A2’s Australian solicitor has sworn an affidavit in this proceeding estimating a timeline for the completion of procedural steps (assuming a reasonably accelerated timetable not delayed by protracted interlocutory steps). Those steps include: discovery produced around February 2023; evidence served around September 2023; a mediation around November 2023; and the trial of substantive issues (common questions) around the first quarter of 2024.
[29] There has been some slippage in the timetable since that affidavit was sworn which will affect these trial estimates. Nevertheless, given the Australian Proceeding is already underway, it seems likely that it will progress faster than the New Zealand proceeding.
The power to stay proceedings under s 24 of the TTPA
[30] The TTPA implements the terms of the Trans-Tasman Court Proceedings and Regulatory Enforcement Agreement between Australia and New Zealand which was executed in 2008. The agreement followed the report of the Trans-Tasman Working Group on Court Proceedings and Regulatory Enforcement into the effectiveness and appropriateness of arrangements relating to civil proceedings and certain regulatory criminal matters.
[31] As recorded in the Working Group’s public discussion document, part of the impetus for the TTPA was the significant increase in the movement of people, assets, and services across the Tasman. The discussion document recorded that managing cross-border civil disputes in the same way as disputes involving other foreign
6 Supreme Court Act 1986 (Vic), s 33X(1)(a).
countries did not “reflect the special relationship between the two countries, which have shared common law heritage and strikingly similar justice systems”.7
[32] The Working Group proposed a stay of proceedings as a way of addressing the issue of separate claims brought in separate countries involving the same issues or questions of fact. Notably, the Working Group did not propose a power to transfer proceedings between Australia and New Zealand due to the administrative complexity and cost, and constitutional limits under Australian law.8
[33] The core provisions of the TTPA came into force on 11 October 2013.9 One of the purposes of the TTPA set out in s 3(1), is to:
(a)streamline the process for resolving civil proceedings with a trans- Tasman element in order to reduce costs and improve efficiency.
[34] The power to issue a stay is found in Part 2, Subpart 2. An application for a stay may be made under s 22 of the TTPA, with s 23 governing the hearing of that application. The court’s power to issue a stay is found in s 24 of the TTPA, which provides:
24 Order of stay of proceeding
(1)On an application under section 22, the New Zealand court may, by order, stay the proceeding if it is satisfied that an Australian court—
(a)has jurisdiction to determine the matters in issue between the parties to the proceeding; and
(b)is the more appropriate court to determine those matters.
(2)In determining whether an Australian court is the more appropriate court to determine the matters in issue between the parties to the proceeding, the New Zealand court must not take into account the fact that the proceeding was commenced in New Zealand, but must take into account the following matters:
7 Trans-Tasman Court Proceedings and Regulatory Enforcement: A Public Discussion Paper by the Trans-Tasman Working Group (Attorney-General’s Department (Australia) and Ministry of Justice (New Zealand), August 2005) at Part I: Introduction, Background.
8 Trans-Tasman Court Proceedings and Regulatory Enforcement: A Public Discussion Paper by the Trans-Tasman Working Group (Attorney-General’s Department (Australia) and Ministry of Justice (New Zealand), August 2005) at [5.9].
9 Trans-Tasman Proceedings Act Commencement Order 2013 (SR 2013/242), cl 2; and Trans- Tasman Proceedings Act 2010, s 2.
(a)the places of residence of the parties or, if a party is not an individual, its principal place of business:
(b)the places of residence of the witnesses likely to be called in the proceeding:
(c)the place where the subject matter of the proceeding is situated:
(d)any agreement between the parties about the court or place in which those matters should be determined or the proceeding should be instituted (other than an exclusive choice of court agreement to which section 25(1) applies):
(e)the law that it would be most appropriate to apply in the proceeding:
(f)whether a related or similar proceeding has been commenced against the defendant or another person in a court in Australia:
(g)the financial circumstances of the parties, so far as the New Zealand court is aware of them:
(h)any other matters that the New Zealand court considers relevant.
[35] Before a stay may be issued, this Court must be satisfied of both limbs set out in s 24(1), that is:
(a)the Australian Court has jurisdiction to determine the matters in issue between the parties to the proceeding; and
(b)the Australian Court is the more appropriate court to determine the matters in issue between the parties to the proceeding.
[36] In determining whether the Australian Court is the more appropriate court, this Court must not take into account the fact that the proceeding was commenced in New Zealand but must take into account the factors listed in s 24(2).
[37] If both limbs of s 24(1) are satisfied, the New Zealand court retains a discretion as to whether to grant the stay.
[38]Each limb of s 24(1), and the factors in s 24(2), are considered below.
Does the Australian Court have jurisdiction to determine the matters in issue between the parties to the proceeding?
[39] There is no question about the jurisdiction of the Australian Court to determine claims brought by Australian shareholders who acquired shares on the ASX. The issue is the jurisdiction of the Australian Court to determine claims brought by New Zealand shareholders who acquired shares on the NZSX.
[40] Mr Cooper KC submits that the Australian Court’s jurisdiction over these claims arises in two different ways:
(a)First, the Australian Court has jurisdiction to determine the matters in issue between the parties through the application of relevant Australian law to the claims. Mr Cooper places emphasis on the “matters in issue” phrase in s 24(1)(a), rather than the specific law relied on in the pleaded claim.
(b)Second, and in the alternative, the Australian Court has jurisdiction to determine the proceeding as pleaded because that Court has jurisdiction to apply New Zealand law to the claims.
[41] Mr Skelton KC disagrees with the first of these alternatives. He emphasises the words “to the proceeding” in s 24(1)(a) and submits that the Australian Court must have jurisdiction to determine the claim as pleaded in the proceeding which is the subject of the stay. That is, only jurisdiction in the second of the two ways put forward by Mr Cooper will suffice.
[42] In addition, Mr Skelton submits that the Australian Court does not have jurisdiction over the plaintiffs in this claim as they will opt out of the Australian Proceeding. He submits that for the Australian Court to assume jurisdiction over these plaintiffs will be contrary to their right to opt out of the Australian Proceeding preserved by s 33J of the Supreme Court Act (Vic).
[43] It is not necessary for me to decide whether the first of Mr Cooper’s options meets the requirements in s 24(1)(a). That is because the Supreme Court of Victoria
has recently issued a judgment in the Australian Proceeding confirming that that Court has jurisdiction to determine the claims and grant relief under the FTA and the FMCA.10 That is, the Supreme Court of Victoria has jurisdiction on the second, narrower, basis put forward by Mr Cooper.
[44] Turning to the second of Mr Skelton’s arguments concerning personal jurisdiction over the class of plaintiffs in this case, there is no dispute that they have the right to opt out of the Australian Proceeding if they so wish. And if they do so, the Supreme Court of Victoria will not have jurisdiction over them.
[45] However, I do not consider s 24(1)(a) is concerned with actual jurisdiction over a plaintiff at the time the application for a stay is made. If that were so, every party trying to defeat a stay application would simply refuse to submit to the Australian jurisdiction. Rather, I consider the focus of s 24(1)(a) is on whether the court would have jurisdiction (both personal and subject matter) if the proceeding was commenced in an Australian court.
[46] Plainly the Australian Court would, and does, have jurisdiction in this case. That is so whether the plaintiffs remain part of the Australian Proceeding or whether they commence a fresh proceeding in the State of Victoria which replicates the claim in this Court.
[47] Accordingly, I am satisfied that the Australian Court does have jurisdiction to determine the matters in issue between the parties to the proceeding and the threshold in s 24(1)(a) is met.
Is the Australian Court the more appropriate court?
Place of residence/Principal place of business (s 24(2)(a))
[48] Mr Whyte is a New Zealand resident. At this stage, the majority of those he seeks to represent (approximately 3,800) also reside in New Zealand. In addition, A2 was incorporated in New Zealand and has registered offices in Auckland and Sydney. A2’s manufacturing base is also in New Zealand.
10 Thomas v The a2 Milk Company Ltd [No 2] [2022] VSC 725 at [32] and [165].
[49] These factors lean towards New Zealand as the preferred forum, but I consider they should be accorded little weight. The underlying dispute has little or no connection to place of residence or place of business. It does not relate to the place where shareholders live. Rather, the dispute concerns statements to, and trading on, both the ASX and NZSX. The circumstances in which those statements were made concerned increased demand in China. A2’s business is global in nature, and the issues in the claim are not connected to A2’s manufacturing base in New Zealand. Considered in context, therefore, this factor bears little or no weight in the overall balance.
Place of residence of the witnesses likely to be called (s 24(2)(b))
[50] It is early days to be identifying witnesses for each of the parties. Nevertheless, it seems likely that A2’s key employees and directors during the Relevant Period will be required to give evidence.
[51] The five current directors who were also directors during the Relevant Period reside in the United Kingdom (one director), Australia (two directors) and New Zealand (two directors). Of the five individuals who held the roles of CEO, or regional CEO or CFO, during the Relevant Period, four currently reside in Australia and one is currently located in China. The place of residence of A2’s witnesses favour the Australian Court.
[52] The parties are at odds about whether the plaintiff shareholders in the proceeding will be required to give evidence. Mr Skelton submits it will be necessary for them to give evidence on the reliance and loss components of the causes of action.11 Mr Cooper submits that evidence from individual shareholders is unlikely to be required.12
[53] Whether or not individual shareholders will be required to give evidence, I consider the place of residence of potential witnesses to be of little relevance to the
11 Mr Skelton relies on Houghton v Saunders (2008) 19 PRNZ 173 (HC) at [120] and [122]–[124] in making this submission.
12 Mr Cooper relies on TPT Patrol Pty Ltd v Myer Holdings [2019] FCA 1747 at [1523] and the fact that the investment decision was made by an institutional entity on behalf of most of the shareholders currently included in the plaintiff class.
determination of the most appropriate court. I reach that conclusion for two reasons. First, as both counsel highlighted at various times in the hearing, it is rare for a trial of this nature to get to the stage where individual shareholders are required to give evidence. Second, even if that stage is reached, the Court is unlikely to countenance thousands of witnesses giving individual testimony. It is more likely that their evidence will be presented by alternative means, including any oral evidence being given by audio visual link. The place of residence of witnesses holds less significance in those circumstances. This factor is neutral in the overall assessment.
Place where the subject matter of the proceeding is situated (s 24(2)(c))
[54] The subject matter of the two proceedings is the acquisition of shares in Australia and New Zealand and the market announcements made (and not made) in both jurisdictions. I agree with the parties that this factor is neutral.
Any agreement between the parties about the court or place (s 24(2)(d))
[55] There is no agreement between the parties. This factor is irrelevant to the overall analysis.
The most appropriate law to apply (s 24(2)(e))
[56] Section 24(2)(e) requires the court to take into account “the law that it would be most appropriate to apply in the proceeding”. The enquiry is not limited to the law pleaded in the New Zealand proceeding. Such an interpretation would be overly narrow and at odds with the direction in s 24(2) to disregard the fact that the proceeding was commenced in New Zealand. Rather, the subsection requires the court to make an independent assessment of the law which “would” be the “most” appropriate to apply. It is the connection with a system of law which underpins s 24(2)(e).
[57] The plaintiff’s claim in this case is advanced on behalf of New Zealand and Australian shareholders who acquired or retained shares on both the NZSX and ASX. The law of both countries is engaged. Indeed, both Australian and New Zealand statutes are pleaded in the Australian Proceeding.
[58] Mr Skelton says that A2’s continuous disclosure obligations under New Zealand law are more onerous (and hence more plaintiff-friendly) than the equivalent obligations under Australian law which applied during the Relevant Period. That is due to a change in the Australian legislation which came into force in May 2020 requiring a listed entity to only disclose information if the entity knew, or was reckless or negligent as to whether, that information would have a material effect on the price of the company’s securities. Prior to this amendment, the obligation was to disclose any information that a reasonable person would expect to have a material effect on the price of the company’s listed securities.13 This latter test applied in New Zealand at the relevant time. Mr Skelton submits that the more rigorous New Zealand test, and the additional claim under s 262 of the FMCA, means the New Zealand proceeding offers shareholders a “legitimate juridical advantage” over the Australian Proceeding.14
[59]There are several points to be made in response to this submission.
[60] First, the scope of any such advantage arising from the different legal test is not entirely clear. This was not the subject of full argument, and an interlocutory hearing is not the proper forum to determine the issue. That will be a matter for the trial Judge presiding over the substantive proceeding.
[61] Second, the reference to “legitimate juridical advantage” in Wigmans, on which the plaintiff relies, was in the context of a discussion about whether there was a presumption that a representative proceeding commenced first in time should apply.15 That is not an issue raised by s 24(2)(e).16
[62] Third, and relatedly, this is not a case where staying the proceeding will result in the loss of any such advantage for the plaintiffs. New Zealand law is currently
13 The amendments lapsed in March 2021 and the relevant test reverted back to the “reasonable person” test.
14 Wigmans v AMP (2021) 270 CLR 623 at [16] and [42].
15 Wigmans v AMP (2021) 270 CLR 623 at [11] and [14].
16 The juridical advantage discussed in Wigmans v AMP was not substantive, as is alleged here, but related to matters of process or remedy. Examples of the type of advantage cited included: a higher award of damages, more complete discovery procedures, the power to award interest, or a more generous limitation period. At [42] citing Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460 at 483.
pleaded in the Australian Proceeding maintaining any advantage for the plaintiffs who choose to remain in that proceeding. And, as discussed later in this judgment (at [106][106] to [112]), if this proceeding is stayed, the plaintiffs may choose to commence fresh proceedings in the State of Victoria advancing the claims, including those under s 262 FMCA, made in this proceeding. That too will maintain any advantage, subject of course to any orders of the Supreme Court of Victoria regarding the future course of such a proceeding.
[63] Fourth, an advantage for the plaintiffs does not lead to the conclusion that New Zealand law is the “most” appropriate to apply. If that was the measure, A2 might equally take the view that the Australian law in force at the time is most appropriate to apply as it is (arguably) more favourable to it, at least insofar as continuous disclosure obligations are concerned. The assessment of the most appropriate law to apply cannot be made from the perspective of only one of the parties.
[64] Moreover, the alleged advantage relates only to the continuous disclosure obligations which form one aspect of the plaintiffs’ claim. The remaining causes of action allege misleading and deceptive conduct to which both Australian and New Zealand law apply. The tests under s 9 of the FTA and s 18 of the Australian Consumer Law (previously s 52 of the Trade Practices Act) are materially the same. It is the entire claim which must be considered when assessing the most appropriate law to apply.
[65] In sum, I am not persuaded that any advantage to the plaintiffs under New Zealand law leads to the conclusion that New Zealand law would be the most appropriate law to apply. The law of both countries is engaged.
[66] This provides a partial answer to Mr Skelton’s further submission that the New Zealand Court is the most appropriate court to determine claims arising under the FMCA and the FTA. He says this proceeding is likely to be a leading case on provisions of the FMCA as there is only one decided case on each of ss 19 and 270,17
17 Du Val Capital Partners v Financial Markets Authority [2022] NZHC 1529 (s 19). FMA v Jackson
[2018] NZHC 2052 (s 270).
and there are no decided cases concerning s 262 of that Act. On that basis he submits it is appropriate that the New Zealand Court determine questions of New Zealand law.
[67] Mr Cooper responds by characterising this objection as “parochial” and one which carries little weight under the TTPA. He submits that the underlying assumption of the TTPA is that the New Zealand and Australian courts are capable of applying each other’s laws competently and effectively. He also points out that there are at least three other continuous disclosure class actions currently before the Court which are far more advanced than this proceeding and are therefore likely to be determined first.18
[68] There is no dispute about the competence and capability of the New Zealand and Australian courts to apply each other’s laws. That is a given under the TTPA. Nevertheless, in determining whether the Australian Court is the more appropriate court to determine the matters in issue in the proceeding, this Court must take into account the law that would be most appropriate to apply. The underlying premise of the subsection is that New Zealand courts are best placed to apply New Zealand law, and Australian courts are best placed to apply Australian law. However, having concluded that both New Zealand and Australian law applies to this dispute, this factor does not significantly advance the enquiry in this case.
[69] Given the trans-Tasman context of the dispute, I do not consider one law to be more appropriate than the other. The laws of both countries apply equally, rendering this factor neutral in the overall balance.
Whether a related or similar proceeding has been commenced against the defendant in a court in Australia (s 24(2)(f))
The extent of similarity between the two claims
[70] Although there are differences in the way the claims are pleaded, it is generally accepted that the two proceedings are substantively similar insofar as they relate to the New Zealand law claims.
18 There are two proceedings related to Livingstone v CBL Corporation Ltd (in liq), the Harbour Proceeding (CIV-2019-485-642), and the Livingstone Proceeding (CIV-2019-404-2727). The third proceeding is in relation to Fullarton v Arowana International Ltd (CIV-2020-404-551).
[71] The plaintiffs in both proceedings are shareholders who acquired and/or retained shares during the Relevant Period. The same statements to the Australian and New Zealand markets are relied upon in each proceeding. The key allegations are also the same – that the statements were misleading and deceptive, and that A2 breached its continuous disclosure obligations.
[72] Both proceedings also include claims that s 19 of the FMCA and/or s 9 of the FTA, and s 270 of the FMCA have been breached. However, the New Zealand proceeding includes an additional claim that s 262 of the FMCA was breached. That statutory provision is not relied on in the Australian Proceeding.
[73] The claims advanced in the Australian Proceeding include claims advanced under both Australian and New Zealand law on behalf of both NZSX and ASX investors. The claims in the New Zealand proceeding are also advanced on behalf of both NZSX and ASX investors, but only under New Zealand law. In that sense, the Australian Proceeding is more comprehensive.
[74] Both sets of proceedings also rely on the same theories of causation and loss arising from the alleged breaches.
[75] There are differences in the presentation of the claims. The Australian pleading is significantly longer than its New Zealand equivalent and the claims are framed differently. But these are matters of pleading convention and form, and do not impact on the degree of overlap between the substance of each claim.
[76] Overall, although the two sets of proceedings are not identical, they are nevertheless substantively very similar. This has a significant bearing on whether a stay should be issued, as discussed below.
Managing multiple class actions
[77] A multiplicity of proceedings raises a multiplicity of issues. These include duplication in costs and resources for the parties and for the courts in each jurisdiction, and the “scandal” of inconsistent judgments.19
[78] Counsel for each party referred me to a great deal of case law and commentary in respect of the courts’ response to this problem. Those cases and commentary may be sorted into three categories, each concerning proceedings which involve:
(a)the same plaintiff classes, same or similar subject matter, commenced in the same jurisdiction;
(b)different plaintiff classes, same or similar subject matter, commenced in the same jurisdiction; and
(c)different plaintiff classes, same or similar subject matter, commenced in different jurisdictions.
[79] The courts have tended to consider multiple proceedings falling into the first category as vexatious and an abuse of process. As was said in McHenry v Lewis, double action on the part of the plaintiff leads to manifest injustice.20 The response to this category of case is to either consolidate the proceedings,21 stay all but one, or to require a change in the class structure of one proceeding (for example, from an opt- out to an opt-in proceeding).22
[80] Concurrent proceedings falling within the second category are not considered oppressive or an abuse of process per se, and a stay is not a pre-determined response.23
19 Parkin v Boral Ltd [2021] FCA 889 at [22].
20 McHenry v Lewis (1882) 22 Ch D 397 (CA) at 408.
21 As occurred in the consolidation of the Thomas and Xiao proceedings in this case.
22 See Perera v GetSwift [2018] FCAFC 202, (2018) 363 ALR 394 where two of three concurrent opt-out class actions were stayed at the first instance. The decision was upheld by a Full Court on appeal. In Parkin v Boral Ltd [2021] FCA 889, one of the three opt-out class actions was stayed, with the other two allowed to continue on condition that one of the class actions was converted to an opt-in proceeding and case managed together with a single trial. See also Ross v Southern Response Earthquake Services Ltd [2019] NZCA 431 at [107].
23 Perera v GetSwift [2018] FCAFC 202, (2018) 363 ALR 394.
Nevertheless, concurrent proceedings falling within this category are still generally considered undesirable. That opinion was expressed by Te Aka Matua o te Ture/the Law Commission in their report on class actions and litigation funding released in May 2022. The report states:24
… having competing class actions relating to the same dispute is generally undesirable. It can cause increased costs for all parties, inefficient use of court resources, an increased burden on defendants, confusion for class members and the risk of inconsistent court rulings on common issues. …
(footnote omitted)
[81] The Commission recognised that the appropriate response to a multiplicity of proceedings will ultimately depend on the circumstances of the case. For that reason, it did not recommend a statutory presumption in favour of allowing only one case to proceed. The Commission acknowledged that concurrent class actions might be allowed to proceed where the parties had proposed an efficient way of progressing both proceedings together.25
[82] Case management of concurrent proceedings, rather than a stay, was the tool of choice in Livingstone v CBL Corporation Ltd (in liq).26 In that case, leave was granted under r 4.24 of the High Court Rules 2016 for both proceedings to be brought on a representative basis, subject to a direction designed to ensure there was no overlap in class membership.27 Subsequently, Gault J ordered that the two separate representative proceedings and proceedings issued by the Financial Markets Authority, were to be heard together.28
24 Ko ngā Hunga Take Whaipānga me ngā Pūtea Tautiringa / Class Actions and Litigation Funding (Te Aka Matua o te Ture / Law Commission, Pūrongo / Report 147, May 2022) at 5.3. This conclusion related to class actions about the same matter, even where there was no overlapping class membership. See also 5.14.
25 Ko ngā Hunga Take Whaipānga me ngā Pūtea Tautiringa / Class Actions and Litigation Funding (Te Aka Matua o te Ture / Law Commission, Pūrongo / Report 147, May 2022) at 5.3. This conclusion related to class actions about the same matter, even where there was no overlapping class membership at 5.66–5.68.
26 Livingstone v CBL Corporation Ltd (in liq) [2022] NZHC 1734 at [82]–[86].
27 Livingstone v CBL Corporation Ltd (in liq) HC Auckland CIV-2019-404-2727 / CIV-2019-404- 2739 / CIV-2019-404-2745 / CIV-2019-404-2792 / CIV-2019-485-642, 21 August 2020 (Minute of Lang J).
28 Livingstone v CBL Corporation Ltd (in liq) [2022] NZHC 1734 at [86].
[83] In Australia, the principles relevant to multiple class actions falling within the second category were set out by the High Court of Australia in Wigmans v AMP Ltd. The majority said:29
The starting point is that multiplicity of proceedings is not to be encouraged and that competing representative proceedings run by different firms of solicitors, with different funders, may in principle be inimical to the administration of justice. But, as was earlier stated, there is no “one size fits all” approach. Multiplicity may be addressed by a variety of means instead of, or in addition to, staying one of more of the proceedings.
(footnotes omitted)
[84] A footnote to that paragraph set out some of the other means by which multiplicity of proceedings may be addressed. These include: consolidating the proceedings; de-classing one or more of the proceedings; holding a joint trial of all proceedings with each left constituted as opt-out (open class) proceedings; and closing the classes in one or more of the proceedings (that is, making them opt-in) but leaving one of the proceedings as an opt-out proceeding with a joint trial of all.
[85] A survey of relevant cases in Australia shows a number of these tools being used to manage concurrent class actions within the same jurisdiction in preference to a stay of proceedings.30
[86] The key difference between cases in the second and third categories is that the latter category involves proceedings commenced in different jurisdictions. The courts’ response to concurrent proceedings filed in different Australian states, and different Australian courts provide some assistance in this case.
[87] The cases of Creighton v Australian Executor Trustees Ltd and Smith v Australian Executor Trustees Ltd fall into this category.31 Both proceedings were shareholder class actions against the same defendant. Creighton was initially filed in
29 Wigmans v AMP Ltd [2021] HCA 7, (2021) 270 CLR 623 at [106].
30 See for example, Kirby v Centro Properties [2008] FCA 1505 at [9]; Smith v Australian Executor Trustees Ltd [2016] NSWSC 17; McKay Super Solutions Pty Ltd (Trustee) v Bellamy’s Australia Ltd [2017] FCA 947; Zonia Holdings Pty Ltd v Commonwealth Bank of Australia Ltd (No 2) [2019] FCA 1061; CJMCG Pty Ltd v Boral Ltd (No 2) [2021] FCA 350, (2021) 389 ALR 699; and Haselhurst v Toyota Motor Corporation Australia Ltd t/as Toyota Australia [2022] NSWSC 1076.
31 Creighton v Australian Executor Trustees Ltd [2015] FCA 1137; and Smith v Australian Executor Trustees Ltd; Creighton v Australian Executor Trustees Limited [2016] NSWSC 17.
the Federal Court, and Smith was filed in the New South Wales Supreme Court. On the defendant’s application, the Creighton proceeding was transferred to the New South Wales Supreme Court. The Federal Court noted that the interests of justice required not having separate proceedings in more than one court dealing with the same issue being run concurrently where there was potential for inconsistent factual findings and determinations as well as wasted costs.32
[88] Once transferred, the New South Wales Supreme Court permitted both proceedings to proceed, but only on the basis that they were case managed and heard together in order to reduce costs and avoid the possibility of inconsistent judgments.33
[89] In Wileypark v AMP Ltd, the Federal Court ordered that four separate class actions commenced in the Federal Court be transferred to the New South Wales Supreme Court where a fifth class action had been commenced. The transfer was to allow the New South Wales Supreme Court to consider which one or more of the proceedings would be allowed to continue and on what basis. The Federal Court said:34
… None of what might be called the usual considerations in a forum conveniens or transfer application outweigh the convenience of ensuring only one substantive hearing. No party put the submission that two proceedings (one in this Court and one in the Supreme Court) could be managed simultaneously and co-operatively. … What does need to happen … is that a careful and balanced case management analysis be made as to which one or more of the five proceedings go ahead to resolve the issue for the lead plaintiff or plaintiffs and group members, and on what terms. …
[90] Once all five opt-out claims were transferred to the New South Wales Supreme Court, two were consolidated by consent. The remaining three were permanently stayed. That decision was upheld on appeal to the New South Wales Court of Appeal, and subsequently the High Court of Australia, in Wigmans v AMP Ltd.35
32 Creighton v Australian Executor Trustees Ltd [2015] FCA 1137 at [7].
33 Smith v Australian Executor Trustees Ltd; Creighton v Australian Executor Trustees Limited
[2016] NSWSC 17 at [22].
34 Wileypark v AMP Ltd [2018] FCAFC 143 at [23].
35 Wigmans v AMP Ltd [2021] HCA 7, (2021) 270 CLR 623; Wigmans v AMP Ltd [2019] NSWCA 243, (2019) 103 NSWLR 543; Wigmans v AMP Ltd [2019] NSWC 603.
[91] Mr Skelton relies on other cases involving parallel proceedings in different jurisdictions. He refers to class actions commenced by consumers against Apple in relation to excessive and anti-competitive fees in Australia, the United Kingdom and the United States. He also refers to litigation concerning Takata airbags filed in Australia, Canada (different states) and the United States. Three cases are relied on to support a “wait and see” approach where concurrent proceedings, including those with an overlapping class, are commenced in different jurisdictions: McHenry v Lewis;
Silver v IMAX Corp; and J Wisbey & Associates Pty Ltd v UBS AG.36
[92] Self-evidently, none of the cases relied on by Mr Skelton arise under the TTPA. That is a significant distinguishing factor. The Trans-Tasman Working Group on Trans-Tasman Court Proceedings and Regulatory Enforcement referred to the special relationship between Australia and New Zealand in the following terms:37
… Australia and New Zealand handle cross-border civil disputes involving the other country in the same way as for any other foreign country. This does not reflect the special relationship between the two countries, which have a shared common law heritage and strikingly similar justice systems. Each country also has confidence in the other’s judicial and regulatory institutions. Because of this, many of the safeguards needed with more distant, dissimilar countries are unnecessary.
[93] That special relationship informs the purposes of the TTPA, including streamlining the process for resolving civil proceedings with a trans-Tasman element in order to reduce costs and improve efficiency.38 To allow the two proceedings to continue unmanaged and in parallel would be at odds with these aims. The question is whether these aims may be achieved by means other than the issue of a stay. That question is considered next.
Case management tools and joint trials
[94] Mr Skelton submits that this proceeding may be case managed in parallel with the Australian Proceeding. Timetable orders could be made dealing with matters such
36 McHenry v Lewis (1882) 22 Ch D 397 (CA); Silver v IMAX Corp (2009) 184 ACWS (3d) 28 (ONSC); Silver v IMAX Corp (2011) 105 OR (3d) 212 (ONSC); Silver v IMAX Corp (2013) 227 ACWS (3d) 23 (ONSC); and J Wisbey & Associates Pty Ltd v UBS AG [2021] FCA 36.
37 Trans-Tasman Court Proceedings and Regulatory Enforcement: A Public Discussion Paper by the Trans-Tasman Working Group (Attorney-General’s Department (Australia) and Ministry of Justice (New Zealand), August 2005) at Part I: Introduction, Background.
38 Trans-Tasman Proceedings Act 2010, s 3(1)(a).
as discovery and other interlocutory applications which mirror those in the Australian Proceeding. Further, he says that when the matter is ready to be allocated a fixture, the Court could direct a joint trial with the Australian Proceeding. Alternatively, the proceeding could be set down for hearing either before or after the Australian Proceeding. The possibility of a stay of this proceeding being entered at that stage in favour of a trial of the Australian Proceeding was also put forward as a possibility.
[95] Dealing with each of these proposed measures in turn, I accept that case management techniques may (at least in theory) achieve some efficiencies. Just how they would work in practice, and the extent of the efficiencies gained, is less clear. What is clear, however, is that any efficiencies gained are unlikely to be as effective as case management of multiple proceedings within a single jurisdiction.
[96] A joint trial was recently convened involving the cross-border insolvency of an Australian and New Zealand company.39 The hearing took place in both New Zealand and Australia and both Judges sat together (although via remote means due to COVID-19 restrictions in place at the time). Separate judgments were issued in each jurisdiction.
[97] It is too early to tell whether a joint trial would be possible in this case. Much will depend on how the trial is structured and the extent and scope of the evidence. Even if there was a joint trial, however, that would not address the risk of inconsistent judgments. That is a significant risk in this case given the substantial overlap in the New Zealand law claims pleaded in both proceedings. Inconsistent factual and legal findings would create uncertainty in an area of law where certainty is a mainstay of its effectiveness. Moreover, inconsistent findings could incentivise forum shopping – a consequence at odds with the objectives of the TTPA.
[98] Mr Skelton suggests that this risk could be addressed at a later stage in this proceeding by, for example, issuing a stay to allow the trial to go ahead in Australia first. I see little advantage in that course. Deferring a stay until a later date would mean the efficiencies to be gained through case management in a single jurisdiction would be forgone. If a stay is to issue, then there is no reason to delay.
39 Re Halifax New Zealand Ltd (in liq) [2021] NZHC 1113; and Kelly v Loo [2021] FCA 531.
First in time
[99] Mr Skelton submits that the Australian Proceeding should not be preferred simply because it was filed first in time. This is consistent with the majority’s conclusion in Wigmans that there is no presumption that the proceeding commenced first in time should prevail.40
[100] While the first in time consideration is not determinative of the forum question, I consider it carries weight in the context of s 24 of the TTPA. The prospect of a substantively similar proceeding getting to trial first is relevant to the streamlining and cost reduction purposes of the TTPA. To that end, the first in time consideration is a relevant consideration in this case and favours the Australian Court as the more appropriate court.
Conclusion on s 24(2)(f)
[101] The existence of a substantially similar proceeding commenced in Australia involving the same facts, substantially the same law, same defendant, and shareholder plaintiffs, is significant in the overall balance. While some efficiencies may be gained through parallel case management orders and a joint trial, they are unlikely to be as extensive as if both proceedings were heard in the same jurisdiction. And, the risk of inconsistent judgments would still remain. A stay of this proceeding pending judgment on liability or settlement in the Australian Proceeding addresses that risk and is consistent with the objectives of the TTPA.
[102] This factor weighs heavily in favour of the Australian Court as the more appropriate court to determine this dispute.
Financial circumstances of the parties (s 24(2)(g))
[103] As Mr Skelton submits, the focus of this subsection is on the financial circumstances of the parties rather than the costs of litigation. But that does not mean the two are unrelated. A financially constrained defendant is likely to face greater hardship than a well-resourced defendant if engaged in litigation in two countries.
40 Wigmans v AMP Ltd [2021] HCA 7, (2021) 270 CLR 623.
[104] It is the financial circumstances of A2 which is in issue in this case. A2 is a large corporate entity and has the resources to defend two class actions at the same time. To that extent, this factor is neutral in the overall balance.
[105] However, the burden on A2 of defending multiple class actions is also relevant. The affidavit evidence filed on behalf of A2 suggests that this burden is significant – both in terms of legal costs and the imposition on A2’s time and resources across multiple levels of the organisation. That burden engages one of the purposes of the TTPA which is to reduce costs. To that extent, therefore, this factor favours the Australian Court as the more appropriate court.
Any other relevant matters (s 24(2)(h))
Access to justice
[106] The effect of granting a stay in the terms sought by A2 leaves the plaintiffs with three options in this case:
(a)First, they could take no further steps until a judgment is issued in the Australian Proceeding or settlement reached.
(b)Second, they could commence a new proceeding in the State of Victoria which replicates the current New Zealand proceeding. If this option is taken, the plaintiffs would be required to discontinue this proceeding.
(c)Third, the plaintiffs could choose not to opt-out of the Australian Proceeding. This option would also require the plaintiffs to discontinue this proceeding.
[107] The first option means the plaintiffs retain their choice of litigation funder, lawyers, and forum. However, they will be unable to pursue their claim in this Court expeditiously and must wait for resolution of the Australian Proceeding.
[108] Mr Skelton submits that there is a risk that determining the Australian Proceeding first will mean the prospective New Zealand plaintiffs will be unable to
pursue their claim at all. He points to statements made in Kirby v Centro Properties to substantiate that risk.41 An application for a stay of proceedings was sought in that case. Finkelstein J considered whether the plaintiffs in the stayed proceeding would be bound by the findings made in the other proceeding. The Judge found that it was unlikely that any court would permit a party to relitigate a question or issue which had already been decided against it, even though the other side could not strictly satisfy the requirements of res judicata or issue estoppel.42
[109] It is difficult to assess how real such a risk is in this case. Much will depend on the reasons for any findings made. Furthermore, the plaintiffs accept that a stay of this proceeding closer to trial may be necessary to prevent the risk of inconsistent judgments. If the risk of being unable to relitigate issues exists at this stage, then it also exists at the later stages of the proceeding. As matters presently stand, I put little weight on the risk that the plaintiffs will be unable to litigate at all if a stay in the terms sought by A2 is issued at this stage.
[110] The second option brings with it an element of uncertainty. The future course of any fresh proceeding filed in Victoria depends, at least in part, on the positions taken by the plaintiffs in the current Australian Proceeding (for example, they may seek to stay or strike out a new proceeding, or seek agreement to the cooperation protocol), and orders of the Supreme Court of Victoria. However, on the basis that the proceeding is allowed to proceed in its current form, the plaintiffs would retain control over the shape of their claim, their choice of litigation funder, and their choice of lawyers (qualified to act in Victoria). However, they would not have their choice of forum.
[111] The third option represents the greatest inroads into the plaintiffs’ rights to manage their claim as they see fit. If this was the only consequence of staying the current proceeding, then I would accept Mr Skelton’s submission that a stay undermines the right to opt out of proceedings preserved by s 33J of the Supreme Court Act (Vic). That is not the case, however, and the choices open to the plaintiffs erode the force of this argument.
41 Kirby v Centro Properties Ltd [2008] FCA 1505.
42 Kirby v Centro Properties Ltd [2008] FCA 1505 at [16].
[112] Access to justice considerations are, of course, important, but they do not confer an unfettered licence to litigate. Those considerations must be balanced against others such as proportionate use of public resources, public confidence in courts, predictability, certainty, and finality of litigation.43 Granting a stay pending judgment or settlement of the Australian Proceeding does not preclude the plaintiffs from bringing their claim and the intrusion on their access to justice interests is very low. Ultimately, I consider these interests are outweighed by the other considerations in this case which favour a stay.
Shareholder information
[113] Mr Cooper submits that the information provided to class members in this case is inadequate, and there is a failure to advise class members of their existing rights under the Australian Proceeding. This point is also advanced as a ground of opposition to the application for leave to commence a representative proceeding.
[114] It is true that the “advertising” for potential plaintiffs does not mention the Australian Proceeding at the outset. Nevertheless, there is reference to it in the frequently asked questions section of the website set up for those wishing to register their interest in joining the class action. That reference contains a link to further information about the Australian Proceeding for those who want to know more.
[115] More importantly, those wishing to join the New Zealand claim must give irrevocable instructions to opt out of the Australian claim. It is at that point they will be asked to exercise an informed choice. At this early stage in the proceeding, I am not satisfied that the sufficiency of shareholder information is relevant to whether the Australian Court is the more appropriate court. Nor is it a reason to decline leave for the claim to be commenced as a representative proceeding.
43 Parkin v Boral Ltd [2021] FCA 889 at [22].
Funding arrangements
[116] Mr Cooper submits that the plaintiffs would not be prejudiced by remaining in the Australian Proceeding as the litigation funding arrangements for each proceeding are broadly comparable. He submits that this factor favours a stay.
[117] The effect of a stay on contractual litigation funding arrangements may also be relevant. This factor lead the Court in McKay Super Solutions Pty Ltd (Trustee) v Bellamy’s Australia Ltd to decline the application for a stay and allow both proceedings to progress in tandem.44 However, in Perera v GetSwift, the Court noted that the approach in Bellamy’s had been criticised for giving diminished weight to the increased costs suffered by the respondent and the increased transaction costs ultimately suffered by group members of having two sets of solicitors, and giving too much weight to the contractual arrangements.45 The Court stressed that each case turned on its own facts and circumstances. Similar sentiments were expressed in Impiombato v BHP Billiton Ltd (No 2).46
[118] Given that the terms of the stay now sought will afford the plaintiffs some choice, I consider the comparative benefits of the funding arrangements are matters for the plaintiffs to assess and determine for themselves. To the extent that a stay in this case will cut across contractual arrangements (and it is not entirely clear that it will), then it is not a factor that has much, if any, bearing on whether the Australian Court is the more appropriate court. I put this factor to one side.
Conclusion on whether the Australian Court is the more appropriate court
[119] Looking at the s 24(2) factors in totality, I consider they favour the Australian Court as the most appropriate court. Even if I had found that some of the factors (such as the place of residence of the parties and witnesses, and the most appropriate law to apply) favoured New Zealand, they would still be outweighed by the existence of a substantively similar proceeding in Australia. A stay would streamline both proceedings and promote the twin goals of efficiency and cost saving embodied in the
44 McKay Super Solutions Pty Ltd (Trustee) v Bellamy’s Australia Ltd [2017] FCA 947.
45 Perera v GetSwift Ltd [2018] FCAFC 202.
46 Impiombato v BHP Billiton Ltd (No 2) [2018] FCA 2045 at [155]–[157].
TTPA. That is the very purpose of s 24 of the TTPA. Ultimately, it is this factor which tips the balance in favour of the Australian Court as the most appropriate court. I find accordingly.
Should a stay of this proceeding be issued?
[120] There is no reason not to exercise the discretion to issue a stay in the terms sought by A2 in this case. An order in those terms is set out at the end of this judgment.
Should the Court grant leave to the plaintiff to commence a representative proceeding?
[121]Rule 4.24 of the High Court Rules provides as follows:
4.24Persons having same interest
One or more persons may sue or be sued on behalf of, or for the benefit of, all persons with the same interest in the subject matter of a proceeding—
(a)with the consent of the other persons who have the same interest; or
(b)as directed by the court on an application made by a party or intending party to the proceeding.
[122] Subject to the “same interest” requirement being met, a plaintiff “may” sue on behalf of other persons either with their consent, or as directed by the Court.
[123] Those who are to be represented in this case will consent to the proceedings. Nevertheless, as the authors of McGechan on Procedure note, it is prudent for a plaintiff to apply for court directions confirming the authority to act as a representative plaintiff.47 The principles governing applications for leave under r 4.24 were summarised by the Court of Appeal in Cridge v Studorp.48 There is no dispute as to those principles, and no need to set them out again in this judgment.
[124] There is no dispute that Mr Whyte has the same interest in this proceeding as those he seeks to represent. The requisite commonality in interest is established. A2’s
47 Robert Osborne (ed) McGechan on Procedure (online looseleaf ed, Thomson Reuters) at [HR4.24.02].
48 Cridge v Studorp [2017] NZCA 376, (2017) 23 PRNZ 582 (CA) at [11].
opposition to the application is based on duplication between the current proceeding and the Australian Proceeding. A2 says this duplication means the representative orders would not benefit the proposed class members, would unfairly prejudice A2, and would be an inefficient use of judicial resources.
[125] Evidently, there is substantial overlap between the grounds advanced in support of A2’s stay application and the opposition to the plaintiff’s application for leave to commence the proceeding as a representative proceeding. The issues concerning concurrent proceedings are comprehensively canvassed at [70] to [102] of this judgment. I have already determined that a stay pending judgment on liability and/or settlement in the Australian Proceeding should be granted. That is the appropriate response to the issues raised by concurrent proceedings. Declining to grant leave to Mr Whyte to commence an opt-in representative action would deprive Mr Whyte and those he represents of the choices outlined in [106] of this judgment. I consider such a limitation would be an unreasonable restriction on access to justice considerations.
[126] As the requisite commonality exists, and the members of the proposed class all consent to representation, it is appropriate that the application for leave to commence a representative proceeding be granted. The draft orders sought by the plaintiffs will be made, with an additional order requiring any person opting into this proceeding to opt out of the Australian Proceeding so as to avoid any overlap in class membership.49
Result
[127] The plaintiff’s application for leave to commence a representative proceeding is granted. I make the orders set out in Annexure A to this judgment.
[128] The defendant’s application for a stay is granted. This proceeding is stayed pending delivery of a judgment on liability in the Australian Proceeding, or final settlement of the Australian Proceeding, whichever occurs first.
49 Such an order mirrors the contractual arrangements between Thorn Law and those wanting to opt into this proceeding.
[129] Leave is reserved to the plaintiff to apply to lift the stay of proceeding if there is a material change of circumstances. Leave may be sought by filing a memorandum of counsel.
[130] Each party has been successful in their respective applications. However, as most of the submissions were directed towards the stay application, my preliminary view is that A2 is the overall successor and entitled to an award of costs. The parties are urged to agree quantum. If quantum cannot be agreed, memoranda of no more than five pages in length may be filed and served in support of an award of costs 15 working days after delivery of this judgment, and in opposition 10 working days thereafter.
[131] This judgment shall be disclosed to the parties only in the first instance so that any matters of commercial sensitivity may be identified and redacted before public release. The parties shall have five working days from the date of delivery to submit a memorandum (preferably joint) identifying those parts of the judgment (if any) they seek to have redacted on the grounds of commercial sensitivity.
[132] Finally, I wish to acknowledge the very high calibre of submissions (both written and oral) made by counsel for the respective parties.
Edwards J
Annexure A
[133] The plaintiff may, pursuant to r 4.24 of the High Court Rules 2016, sue on behalf of, or for the benefit of, all persons with the same interest in the subject matter of this proceeding, being those persons who:
(a)At any time between 19 August 2020 and 9 May 2021 inclusive (the Relevant Period) held an interest in ordinary shares of The a2 Milk Company Limited (A2) acquired on the markets operated by the New Zealand Exchange Main Board (NZSX) and/or the Australian Securities Exchange (ASX); and
(b)Are not, and were not, during the Relevant Period, any of the following:
(i)A related company (as defined in s 2 of the Companies Act 1993) of A2;
(ii)A director or former director of A2, or a relative (as defined in s 2 of the Companies Act 1993) of a director or former director of A2;
(iii)Any entity, or a trustee of any trust, owned or controlled (whether legally or beneficially) by, for or on behalf of a director or former director of A2; or
(iv)A Chief Justice, Justice, Associate Justice, Associate Judge or Registrar of the High Court of New Zealand, High Court of Australia, Federal Court of Australia, or Supreme Court of any Australian state or territory; and
(c)Have entered into a litigation funding agreement with CHC Investment Fund III Pty Limited (CHC) in relation to this proceeding.
[134] The persons described in Order 1 above (the Class Members) are represented by the plaintiff in this proceeding if:
(a)within six months of these orders being made, they “opt into” the proceeding by:
(i)completing the registration process on The a2 Milk Class Action website ( and
(ii)being invited by Thorn Law to join the proceeding; and
(iii)executing a litigation funding agreement with CHC and a retainer within Thorn Law; and
(b)they exercise their right to opt out of the Australian Proceeding when legally entitled to do so.
[135] Within five working days of the deadline in Order 2, the plaintiff will send to the Registrar of the High Court a list of all Class Members who have opted into the proceeding by that deadline.
[136] These orders take effect from the date on which this proceeding was commenced.
1