Plaintiff v Defendant

PRACTICE AND PROCEDURE - Costs - Group proceedings - Application by defendant for costs of responding to competing carriage motions brought by plaintiffs in overlapping group proceedings - Where plaintiffs in overlapping group proceedings each initially sought the other proceeding be stayed, but subsequently sought consolidation by consent - Where plaintiffs had earlier been given an opportunity to confer to agree a consolidation proposal - Where one plaintiff had opposed consolidation but not the other - Where defendant consented to consolidation and had advocated for it - Whether consolidation constituted 'capitulation' by the plaintiffs to a solution proposed by the defendant - Whether plaintiffs acted unreasonably in pursuing carriage motions - Costs reserved, save for costs of the plaintiff which opposed consolidation - Supreme Court (General Civil Procedure) Rules 2015 (Vic) rr 63.20, 63.22.

1 By writ and statement of claim dated 5 October 2021, Jake Thomas commenced proceeding S ECI 2021 03645 against The A2 Milk Company Limited as a group proceeding pursuant to Part 4A of the Supreme Court Act 1986 (Vic) (the Act) (the Thomas Proceeding). The Thomas Proceeding was brought by Mr Thomas on his own behalf and on behalf of group members who acquired an interest in fully paid ordinary shares of the defendant between 19 August 2020 and 9 May 2021. The solicitors on the record for the plaintiff in the Thomas Proceeding are Slater and Gordon Limited (Slater and Gordon).

2 By writ and statement of claim dated 23 November 2021, Yue Xiao commenced proceeding S ECI 2021 04403 against the defendant as a group proceeding pursuant to Part 4A of the Act (the Xiao Proceeding). The Xiao Proceeding was brought by Mr Xiao on his own behalf and on behalf of persons who acquired an interest in ordinary shares of the defendant between 19 August 2020 and 9 May 2021 (the Acquisition Claimants) or held an interest in ordinary shares, being an interest acquired before 19 August 2020 and retained until a date after 28 September 2020 (the Retention Claimants). The solicitors on the record for the plaintiff in the Xiao Proceeding are Shine Lawyers Pty Ltd (Shine).

3 With two exceptions, the proceedings advance substantially the same claims against the same defendant on the same basis and on behalf of the same group members. The statements of claim filed in the two proceedings identify representations said to have been made by the defendant in August, September and December 2020 and in February 2021. The various representations are pleaded to constitute misleading or deceptive conduct. The plaintiffs also allege breaches of the defendant's continuous disclosure obligations.

(a) the Xiao Proceeding advances claims on behalf of Retention Claimants, whereas the Thomas Proceeding does not; and

(b) while both proceedings advance claims on behalf of group members who acquired their interests on the New Zealand Stock Exchange (as well as those who acquired interests on the Australian Stock Exchange), claims are made in the Thomas Proceeding (but not in the Xiao Proceeding) concerning contravention of New Zealand legislation[1] and relief is claimed, including compensation for loss or damage, under New Zealand legislation (the New Zealand law claims).

5 Mr Thomas and Mr Xiao each filed 'carriage motion'[2] summonses on 18 February 2022, together with supporting affidavits and submissions. Mr Thomas sought orders permanently staying the claims of the Acquisition Claimants in the Xiao Proceeding and temporarily staying the claims of the Retention Claimants. Mr Xiao sought orders permanently staying the Thomas Proceeding, but proposed consolidation of the two proceedings as his alternative position. In response to the carriage motion summonses, the defendant filed an affidavit of Jason Betts affirmed on 1 April 2022 (the Betts affidavit) and submissions. The carriage motion dispute was set down for hearing on 5 May 2022.

6 Shortly before the carriage motion dispute was to be heard, the two plaintiffs indicated that they had come to an agreement regarding consolidation of the proceedings and put forward a suite of documents for consideration by the defendant. That suite of documents was subsequently modified in some respects following observations made at a case management conference on 25 May 2022.

7 The defendant does not oppose the consolidation proposed by the plaintiffs. However, as addressed below, the defendant seeks an order for its costs relating to the two carriage motion summonses and contends that those costs should be payable forthwith.

8 The parties made written and oral submissions on the consolidation application, and written submissions on the costs dispute.

9 The plaintiffs' consolidation proposal provided for:

(a) orders consolidating the two proceedings under r 9.12 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (the Rules), s 47(1) of the Civil Procedure Act 2010 (Vic) (the CPA) and/or s 33ZF of the Act;

(b) Shine and Slater and Gordon to be granted leave to jointly represent the plaintiffs in the consolidated proceeding;

(c) undertakings to be given by each firm and each plaintiff to enter into, and comply with, a Cooperative Litigation Protocol (the Protocol) to be annexed to the orders;

(d) orders preventing costs of work performed by reason of there being two firms on the record (rather than one) not being recoverable against group members or against the defendant (cost capping order);

(e) orders appointing Ms Cate Dealehr of Australian Legal Costing Group as an 'independent costs monitor' to enquire into and report on whether the work done and legal costs incurred were necessary or reasonable, and to identify duplicated work, with Ms Dealehr's reports to be provided to the plaintiffs every six months and to the Court in connection with settlement approval or as otherwise directed by the Court; and

(f) timetabling orders for preparation of a consolidated statement of claim and the making of an application for a group costs order under s 33ZDA of the Act.

10 The Protocol included clauses making provision for:

(a) the consolidated statement of claim to include the claims of the Acquisition and Retention Claimants, and to include the New Zealand law claims (with the caveat that an application would be brought for determination of whether or not this Court has jurisdiction in respect of those claims, as a separate question);

(b) the parties to be bound by the terms of a Consolidation Agreement;

(c) work in relation to the claims of the Retention Claimants to be the responsibility of Shine, but otherwise for the firms to split the legal work 50:50;

(d) the firms to take all reasonable steps to avoid duplicated work;

(e) there to be a litigation committee responsible for making major decisions in the litigation, managing the litigation and distributing work;

(f) one set of counsel to be briefed to act in the consolidated proceeding;

(g) the plaintiffs to jointly make and respond to interlocutory applications, retain, brief and instruct expert witnesses, rely on only one set of expert evidence, conduct the cross-examination of the defendant's witnesses and conduct discovery;

(h) provisions for dispute resolution with the decision of the most senior member of counsel being determinative; and

(i) the primacy of the interests of group members to guide implementation of the Protocol.

11 The Consolidation Agreement, to be executed by the two firms and the two named plaintiffs, contained provisions which, in some respects, overlapped with the contents of the Protocol, but also provided agreed mechanisms for cost sharing, responsibility for provision of security for costs, funding (namely the making of an application for a group costs order on the basis that legal costs would be no more than 24% of the amount recovered) and liability for adverse costs orders.

12 The consolidation orders were sought pursuant to:

(a) a summons dated 1 June 2022 filed in the Thomas Proceeding; and

(b) the alternate relief proposed in the carriage motion summons dated 18 February 2022 filed in the Xiao Proceeding.

13 Mr Xiao relied on two affidavits of Craig Richard Allsopp of Shine, affirmed 18 February 2022 and 1 June 2022 respectively.

14 In his February affidavit, Mr Allsopp deposed to his own experience as a lawyer, the experience and features of Shine, as well as matters concerning funding and security for costs. The correspondence exhibited to that affidavit records Shine promoting the idea of consolidating the proceedings from early December 2021, and explaining to Slater and Gordon why, in Shine's view (and contrary to the views of Slater and Gordon at the time), there was no tension between the claims of the Acquisition and Retention Claimants. Mr Allsopp deposed in his February affidavit to being willing to cooperate with Slater and Gordon to prosecute a consolidated action, notwithstanding the position taken by Slater and Gordon to that point. Prior to April 2022, the position taken by Slater and Gordon was that there was a risk of conflict between the claims of the Acquisition and Retention Claimants, such that consolidation was not an available option by which to address multiplicity.

15 In his June affidavit, Mr Allsopp deposed to his firm's experience in cooperating with other firms to jointly represent parties in class action litigation. While that experience is modest (involving two proceedings), Mr Allsopp deposed to its success. He further stated that, in his view, having regard to the affidavit of Kaitlin Ferris (the solicitor for Mr Thomas) affirmed 1 June 2022, he believed Shine and Slater and Gordon would be able to work together cooperatively. In relation to the Retention Claimants, Mr Allsopp maintained his view that there is no inherent tension between the claims of those group members and the Acquisition Claimants. He also referred to provisions of the Consolidation Agreement by which Shine would be responsible for any work directly associated with those claims. He noted that Shine would bear the risk of non-recovery of the fees and any disbursements incurred in relation to that work.

16 Mr Thomas relied on an affidavit of Kaitlin Ferris of Slater and Gordon, affirmed 1 June 2022, filed in support of Mr Thomas' summons of the same date. Ms Ferris deposed to not being aware, prior to the filing of the defendant's evidence and submissions on 1 April 2022, that the defendant's preferred course was consolidation and that it was concerned to have all claims of group members advanced to avoid creating a 'tail risk' arising from some claims being deferred or litigated separately.

17 Ms Ferris stated in her affidavit that (despite the firm position taken by Slater and Gordon previously) given the position taken by the defendant, Shine's statement in its affidavit material that it was unlikely to act only on behalf of the Retention Claimants and Shine's indication that it did not intend to prosecute claims in the Xiao Proceeding on behalf of investors who purchased on the New Zealand Stock Exchange under applicable New Zealand legislation, she considered it to be in the interests of all group members for further consideration to be given to the possibility of consolidation. Negotiations between Slater and Gordon and Shine then took place between 6 April 2022 and 29 April 2022.

18 Ms Ferris deposed to being confident that the two firms could work together cooperatively, which opinion she formed following the course of negotiations with Shine in April 2022. Ms Ferris stated in her affidavit that she had not altered her view that the 'best manner of presentation' of the cases of the Acquisition and Retention Claimants may require a different approach to be taken to their respective cases at trial. In that regard, Ms Ferris noted that the Retention Claimants do not rely on market-based causation, necessarily requiring the presentation of different lay evidence. She referred to the possibility that the two cohorts will rely to some extent on different documents and that they may rely on different expert evidence. Ms Ferris noted, however, that these features of the claims of the two cohorts already exist in the Xiao Proceeding and, as such, consolidation was not introducing any risk of conflict not already present in that proceeding.

19 Ms Ferris deposed to having gained a fuller understanding of the approach which Shine intends to take in preparing and presenting the claims of the Retention Claimants through the consultations she undertook with her counterpart at Shine over April 2022. With the benefit of that fuller understanding, and having regard to the dispute resolution mechanisms built into the Protocol and Consolidation Agreement, Ms Ferris stated that she now 'consider[s] that the evidence [filed on behalf of the Retention Claimants] will not be inconsistent or in conflict with the evidence filed on behalf of the Acquisition Claimants'.

20 The principles concerning the issue of multiple overlapping group proceedings have been developed and considered in many cases, mostly involving contested applications. In circumstances where the parties now consent to consolidation and the plaintiffs have put forward a joint proposal, it is not necessary for these reasons to delve into those authorities at length. Rather, it suffices to note the key matters that guide the exercise of the discretion to permit the consolidation.

21 As Gageler, Gordon and Edelman JJ observed in Wigmans v AMP Ltd:

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 or more of the proceedings.[3]

22 In determining the appropriate remedial response to multiplicity, the focus is on what is in the best interests of group members.[4] Consolidation is one of the 'variety of means' for addressing multiplicity referred to by the High Court in Wigmans.[5] It is the means by which multiplicity is often resolved, at least where the plaintiffs consent.[6]

23 In exercising the power to order consolidation as a means to address multiplicity, and to permit joint representation, the Court is to give primary consideration to the interests of group members; the interests of solicitors and funders are not relevant.[7] The impact on a defendant of proposed means of resolving multiplicity - or allowing it to continue - will also be considered.[8]

24 The Court is also required to be satisfied that the future conduct of the consolidated proceeding is likely to be consistent with the interests of group members and consistent with the overarching purpose of the CPA, which is to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute.[9] In making any order or giving any direction in a civil proceeding, the Court is to further the overarching purpose by having regard to a number of matters, which include the public interest in the early settlement of disputes, the efficient use of judicial and administrative resources and the minimisation of delay.[10]

25 It is relevant to assess the manner in which, and extent to which, a cooperative litigation protocol contains mechanisms which will ensure, to the extent practicable, that duplicated costs are avoided, and that permitting the joint representation will not result in a fractured presentation of the case or inefficiencies arising from a lack of coordination regarding the conduct of interlocutory steps. A single counsel team, a single address for service, a single set of expert witnesses, joint presentation of the evidence, and internal mechanisms (usually a litigation committee) to make decisions on significant steps in the litigation, all facilitate the efficient conduct of a consolidated proceeding with joint representation.[11] The appointment of a costs referee (or costs monitor) making periodic reports also ensures that such additional work as inevitably will arise where there are two firms on the record is both minimised and identified.

26 The plaintiffs filed a joint submission in support of the consolidation proposal. They noted that the form of the proposed Consolidation Agreement and Protocol are substantially similar to those approved by this Court in other proceedings.[12] In explaining the delay associated with the formulation of a joint consolidation proposal (given the parties had earlier filed competing carriage motion summonses), the plaintiffs submitted that, upon receiving the defendant's submissions and affidavit material on 1 April 2022 stating its preference for all claims to be brought in one proceeding, the plaintiffs again conferred and sought to reach agreement on consolidation.

27 The plaintiffs submitted that the proposed consolidation is in the interests of all group members as it permits the claims of all group members, including the Retention Claimants and group members with claims arising under New Zealand law, to have their claims resolved as part of one proceeding, rather than there being separate proceedings in which overlapping evidence is adduced and overlapping issues are determined. They submitted that consolidation provides a solution which is in the interests of group members and provides an effective and efficient solution to case management of the two proceedings.

28 The plaintiffs' submissions also addressed the risk of a tension arising from the pursuit of the claims of the Acquisition and Retention Claimants' claims in one proceeding. Those submissions were made in the context of Ms Ferris having earlier affirmed an affidavit[13] in which she expressed the view (in support of the carriage motion summons then on foot in the Thomas Proceeding) that consolidation was not a viable option having regard to the differences in the claims of the Acquisition and Retention Claimants. The plaintiffs' submissions in support of the consolidation proposal referred to Ms Ferris' subsequent affidavit in which she deposed to having gained an understanding of the approach proposed to be taken by Shine in preparing and presenting the claims of the Retention Claimants through the course of consolidation discussions, and her satisfaction that the risk of tension can be appropriately managed under the arrangements to be established pursuant to the Protocol and the Consolidation Agreement. The plaintiffs observed that a risk of tension may arise in any proceeding pursuing both sets of claims, whether consolidated or not, and that the consolidation would not create any additional risk of conflict in the manner of presentation of the cases at trial. They further noted that many class actions involve differences between the claims advanced on behalf of particular group members, which are managed by the lead plaintiff's representatives.

29 At the hearing of the consolidation summonses, counsel for the plaintiff in the Xiao Proceeding observed that the plaintiffs' position as to the timing and extent of inflation in the share price of the defendant will be established by the independent opinion evidence. As such, come trial, the evidence of the experts 'is what it is' and 'will dictate the inflation path'.[14] Accordingly, no different evidence would be adduced for the two cohorts on the issue that earlier concerned Slater and Gordon.[15] Rather, it would be additional (not different) evidence that may ultimately be relied on by the Retention Claimants to establish their claims (noting that the Retention Claimants do not rely on market-based causation).

30 The plaintiffs also relied on the affidavit evidence regarding the confidence of the lead practitioners for each firm that the firms will be able to work cooperatively, as well as their experience in conducting litigation jointly with another firm.

31 Finally, the plaintiffs submitted that the consolidation proposal contained safeguards ensuring that duplicated work is minimised and the cost of any duplication is not borne by group members or the defendant. They further noted that the consolidation proposal ensures fairness to the defendant as it will not be required to defend two group proceedings in this jurisdiction, and that the Protocol contains provisions ensuring that, from the defendant's perspective, the firms will 'operate as one'.

32 In my view, consolidation of the Xiao Proceeding and Thomas Proceeding is appropriate and in the interests of group members. Under the consolidation proposal, the claims of all group members will be prosecuted whereas, under the preceding carriage motion summonses, there was a risk that the Retention Claimants' claims would be stayed for an extended period (if the summons filed in the Thomas Proceeding succeeded), or the claims of group members who only had claims under the New Zealand legislation would be effectively abandoned (if the summons filed in the Xiao Proceeding succeeded and the Thomas Proceeding were stayed).

33 Consolidation of the proceedings is also efficient and in the interests of group members as the proceeds of the claims (if any) will be burdened by only one set of legal fees pursuant to the cost capping orders proposed, and the reviews to be undertaken by the costs monitor. The inclusion of these orders makes it appropriate, in my view, to grant leave for both firms to be jointly named as solicitors on the record. Representation by two firms in consolidated proceedings is not novel[16] and permits group members who have retained either firm to continue being represented by their chosen firm.

34 The consolidation proposal also relieves the defendant of the burden of defending two parallel group proceedings, and removes the 'tail risk' (posed by the earlier proposals advanced under the carriage motion summonses) arising from a stay of the Retention Claimants' claims or the defendant being exposed to additional litigation advancing the claims of group members who only have claims under New Zealand law.[17]

35 The orders proposed and the terms of the Protocol proposed are similar to those made and approved in other proceedings recently consolidated in this Court.[18] The various mechanisms set out in the Protocol are, in my view, appropriately tailored to ensure that the two firms work together cooperatively to advance the interests of group members efficiently, with an agreed 'tie breaker' mechanism in the event of disagreement within the Litigation Committee.

36 In relation to the claims of the Acquisition and Retention Claimants being pursued in a consolidated proceeding, I do not consider that the potential for a conflict to arise in the presentation of the case is a reason not to consolidate the proceedings as the plaintiffs propose. That is for three reasons.

37 First, the potential for a position of conflict to arise is only theoretical at this stage. Mr Allsopp of Shine (being the firm that devised the claims of the Retention Claimants) does not perceive any material potential for a position of conflict to arise. Ms Ferris' earlier concerns have also been substantially assuaged by gaining a fuller understanding of the intended presentation of the claims of the Retention Claimants, and by the mechanisms built into the Protocol. Further, as counsel for Mr Xiao noted, it is the expert opinion evidence that will necessarily determine, at a practical level, the approach taken to the 'inflation path' at trial.[19]

38 Secondly, to the extent that there is potential for a position of conflict to arise, that risk is not created by consolidation, but already exists within the Xiao Proceeding as it presently stands. Refusing the application to consolidate would not obviate or otherwise address that risk to the extent it exists.

39 Thirdly, a group proceeding can be commenced if seven or more persons have claims against the same person and the claims are in respect of, or arise out of, the same, similar or related circumstances and give rise to a common question of law or fact.[20] As Lee J has emphasised, class actions involve a grouping of persons making claims, not a grouping of claims.[21]

40 Group proceedings, of their nature, involve the potential for conflicts of interest to arise. In Parkin v Boral Limited (Class Closure) a Full Court of the Federal Court observed that:

[P]otential or actual conflicts of interest are an inevitable by-product of a regime where the self-appointed representative applicant's individual claim is the vehicle through which the common questions are to be tried. Pt IVA contemplates that the conflicts will be addressed through the representative applicant's duty not to act contrary to the interests of the group members and, critically, by the Court exercising its protective role in relation to group members' interests.[22]

41 Any conflict has to be managed as and when it arises. In the present case, I am satisfied that the practitioners involved are alert to the possibility of conflict arising. I have no reason to doubt that they will, in accordance with their duties, quickly identify and take appropriate action if a position of conflict arises. The Court has wide and flexible case management powers,[23] which can be exercised if a point is reached where the pursuit of the claims of both cohorts presents real issues.

42 Consolidation and cost capping orders in each proceeding will be made in substantially the form set out in the Annexure to these reasons. The undertakings to be given are also set out in the Annexure.

43 The defendant contended that there were three reasons it should have its costs forthwith.

44 First, the defendant submitted that it follows from the consolidation of the two proceedings that both plaintiffs' carriage motion summonses must be dismissed and costs should follow the event. In making that submission, the defendant acknowledged that, as the summonses were interlocutory applications, the award of costs in its favour would require the Court to exercise a discretion to 'otherwise order' under r 63.20 of the Rules. The defendant relied on the decision of Hollingworth J in Dale v Clayton Utz (No 3) in which her Honour explained that, where the interlocutory relief sought is of a 'discrete nature' and is wholly unrelated to the substantive dispute between the parties, it may be appropriate for the judge dealing with the interlocutory matter to determine what costs orders are 'fair and just'.[24]

45 Secondly, the defendant submitted that it was substantially successful in the multiplicity dispute. It submitted that the orders proposed as part of the present consolidation application are substantially those which the defendant had earlier proposed,[25] but instead of consolidating at that time, both plaintiffs pursued a stay of the other's proceeding, thereby putting the defendant to the cost of filing evidence and submissions. The defendant contended it should have its costs, notwithstanding the absence of adjudication on the merits, as it is well recognised that circumstances involving an effective capitulation by one party will warrant an order for costs.[26] The defendant also submitted that this was a case where the plaintiffs have acted unreasonably, and thus is an appropriate case for an award of costs notwithstanding the absence of determination on the merits.[27]

46 Thirdly, the defendant submitted that costs should be payable forthwith given that there is a prospect of considerable delay in the completion of the proceeding, the issue the subject of the carriage motion dispute was discrete and the conduct of the plaintiffs was, in the circumstances, unreasonable.[28]

47 The gravamen of the defendant's submission that the plaintiffs acted unreasonably was that the course the plaintiffs have taken in ultimately proposing consolidation is the very course which they had ample time to pursue prior to putting on their carriage motion summonses. The defendant submitted that it should not have been necessary for it to 'enter this fray and identify a solution', but that it was 'put to the cost and expense of working out a solution' and, by its evidence and submissions, 'explaining that solution to the plaintiffs'.

48 The plaintiffs submitted that costs should be reserved. They noted that carriage motions are not typical interlocutory applications, and that they brought on their carriage motion summonses in accordance with the Court's practice of resolving multiplicity at an early stage of the proceedings.[29] They submitted that no order for costs should be made in circumstances where there has been no contest on the merits of the applications (their applications having been resolved by consent) and all parties acted reasonably in bringing, and responding to, the applications.[30]

49 The plaintiffs' researches did not reveal any cases in which the plaintiffs or applicants have been ordered to pay the defendant's costs of a multiplicity dispute; rather, they submitted that courts usually make no order as to costs, or reserve costs. They cited a number of cases in which multiplicity has been resolved without costs orders being made against plaintiffs or applicants. They suggested that reserving costs would be most appropriate as it would allow the Court to determine where the costs should rest on the basis of complete information at the conclusion of the matter.[31]

50 The defendant distinguished the cases in which costs had been reserved, or no order as to costs had been made, on the basis that none of those cases involved circumstances analogous to the present (where the plaintiffs had ample opportunity to consolidate, declined to do so, only to later abandon their competing carriage motions in favour of consolidation). The defendant also submitted that those cases did not involve plaintiff firms with the kind of direct financial incentives to succeed in a carriage motion contest that arise where (as is the case in this proceeding) it is proposed to apply for a group costs order under s 33ZDA of the Act.

51 The power to award costs is discretionary, but the power is to be exercised judicially. While oft-cited guiding principles - principally that 'costs follow the event' - serve the object of consistency, such principles do not fetter the Court's discretion.[32] Such general principles may, in many cases, be easier to state than to apply, particularly where the 'event' is not clearly identifiable or success is mixed. Determination of costs in respect of interlocutory processes in group proceedings is, as Nichols J has recently noted (in the context of group costs orders), made more complex where the 'win/loss paradigm' is less apt and particular interlocutory processes, while necessary and connected with the substantive litigation, are not typical inter partes contests between plaintiffs and defendants.[33]

52 In this case, it was common ground (as between both plaintiffs and the defendant) that the multiplicity occasioned by the existence of the two overlapping proceedings needed to be addressed. Consideration of what is 'fair in all the circumstances'[34] and whether (as the defendant submitted) the plaintiffs acted unreasonably in filing competing carriage motion summonses, only later to propose consolidation by consent, necessitates a review of the procedural chronology by which the present joint consolidation application came about.

53 The first directions hearing was held on 10 December 2021. According to proposed orders submitted by both plaintiffs and by the defendant, the plaintiffs were to explore the possibility of consolidating their proceedings.[35] A period of nearly two months was allowed for that to occur (albeit a period including the Christmas and New Year vacation). Orders were made for such conferral to be concluded by 4 February 2022, with each plaintiff to, in substance, either file an application concerning consolidation or competing carriage motions by 18 February 2022. Consequential orders were made timetabling each plaintiff's response to any carriage motion brought by the plaintiff in the other proceeding, as well as orders timetabling responsive evidence and submissions from the defendant. The hearing of the carriage motion application was fixed for 5 May 2022, whether the carriage motion involved consolidation or other means of dealing with multiplicity.

54 Initial consultations concerning the possibility of consolidation did not bear fruit, and each plaintiff filed a carriage motion summons on 18 February 2022. While the summons filed in the Xiao Proceeding identified consolidation as an alternative form of relief, the summons filed in the Thomas Proceeding did not. Despite consolidation being raised as a secondary position in the Xiao Proceeding, the principal disputes between the two plaintiffs concerned which proceeding would take forward the lion's share of the claim (being the claim advanced on behalf of the Acquisition Claimants), and what was to be done in respect of the claims of the Retention Claimants.

55 While, as noted, each plaintiff did proceed with a carriage motion summons seeking to stay the other's proceeding, it is important to note that the correspondence attached to affidavits filed in the carriage motion dispute indicate that Shine was receptive to, and even actively promoted, consolidating the two actions. The correspondence, as well as the affidavits filed in the Thomas Proceeding, indicate that Slater and Gordon took the position that consolidation was not an available option on the basis that there was of a risk of conflict arising were the claims of the Retention Claimants and the Acquisition Claimants to be pursued in the same action.

56 The perceived risk of conflict was highlighted in the affidavits of the solicitor from Slater and Gordon (Ms Ferris), and in submissions filed in the Thomas Proceeding.

57 In the face of Slater and Gordon's position that consolidation was not an option, Mr Xiao filed his carriage motion summons. Nevertheless, the solicitor from Shine (Mr Allsopp) deposed in his affidavit sworn 18 February 2022 that Shine remained willing and able to cooperate with Slater and Gordon in the conduct of the proceeding if the Court determined the two proceedings should be consolidated.

58 The two carriage motion summonses having been filed, and the two plaintiffs having filed affidavits responding to each other's initial affidavits, the defendant filed evidence (the Betts affidavit) and submissions on 1 April 2022.

59 The affidavit and submissions of the defendant identified certain deficiencies in each plaintiff's proposal. Fixing on consolidation having been raised in the alternative in the Xiao Proceeding summons, the defendant submitted that consolidation was 'the solution' which best serves the overarching purpose. The defendant's submissions included a proposed regime which would re-open the period for the plaintiffs to negotiate consolidation and provided for draft documentation to be provided to the defendant if the plaintiffs did reach agreement to consolidate.

60 There then followed a change of heart on the part of the plaintiffs, or at least Slater and Gordon, and consolidation talks resumed. By consent orders made on 20 April 2022, the plaintiffs were to advise the defendant by 26 April 2022 whether they proposed the proceedings be consolidated, and to provide draft consolidation documents to the defendant by 29 April 2022, with consequential orders providing for any comments to be made by the defendant by 6 May 2022. The matter was then fixed for a case management conference on a date after 16 May 2022. The effect of the renewal of these discussions was that the carriage motion hearing, which had been fixed for 5 May 2022, was vacated.

61 In my view, the defendant's submissions overstate the significance of its role in relation to identifying consolidation as a solution to the multiplicity issue. The prospect of consolidation was raised by the plaintiffs before the first directions hearing. The defendant's support for an order that the plaintiffs consider consolidation did not set the ball rolling. Consolidation is, after all, a common means by which the issue of multiplicity is addressed.

62 Where, as is common, proposals for consolidation of group proceedings involve two firms continuing to act, there are inevitably various matters that need to be considered and negotiated. Those matters include:

(a) developing a protocol to govern the means by which the firms are practically going to operate cohesively, and without wasted costs, while operating consistently with each firm's duties to client group members, in particular the named plaintiffs;

(b) considering matters concerning the provision of security for costs, and how the consolidated proceeding is to be funded; and

(c) considering any differences between the two proceedings, and how any such differences are to be handled in consolidating the claims.

63 It is necessary, and in the interests of group members, that those acting for plaintiffs in group proceedings who are considering whether to consolidate claims, give careful and full attention to these matters. Not doing so risks consolidating proceedings on ill-considered and unfirm foundations. That would obviously not be in the interests of group members, given the delay and disputes that could emerge if issues which could, and should, have been anticipated and worked through, are not attended to with due consideration and planning.

64 The fact that the plaintiffs have now seen their way clear to consolidating the proceedings and have been able to negotiate an agreed Protocol, Consolidation Agreement and draft consolidation orders does not, in my view, mean that the plaintiffs 'capitulated' to the defendant's position. In December 2021, the defendant did not do more than propose (as did the plaintiffs) that consideration be given to consolidation. By its submissions in April 2022, it actively supported consolidation, but did so against the backdrop of deficiencies it perceived in each of the plaintiffs' carriage motion proposals. Further, the defendant's suggested regime (forming part of its April 2022 submissions) did not (nor could it) propose the necessary machinery by which consolidation may be achieved. As I have indicated, that machinery is important.

65 Nevertheless, rejection of the defendant's 'capitulation' submission does not entail acceptance of the plaintiffs' proposition that they acted reasonably.

66 In contending that they conducted themselves reasonably, the plaintiffs contended that it was not until 1 April 2022, when the defendant's affidavit and submissions were received, that it was apparent that the defendant preferred consolidation as a solution to multiplicity. Even if that were so, it does not go far in explaining why Slater and Gordon in particular was implacably opposed to consolidation earlier (based on a perceived risk of conflict), yet willing to reconsider its position in April 2022. There was nothing in the defendant's material that addressed the perceived risk of conflict raised by the solicitors acting in the Thomas Proceeding as an impediment to consolidation. Nor is the defendant's preference in a multiplicity dispute of any real moment (beyond regard being had to prejudice flowing from continued multiplicity or specific alternate proposals to address multiplicity).

67 What did change in April 2022 was that Slater and Gordon, having determined to explore consolidation (despite having earlier rejected the possibility), engaged with Shine in discussions that allowed the responsible solicitor to gain a fuller understanding of the way in which Shine proposed to advance the Retention Claimants' claims. That fuller understanding, together with engagement on the terms of the Protocol, was what gave sufficient comfort to Slater and Gordon that consolidation was possible and in the interests of group members. I do not consider that the defendant's resistance to the two primary alternatives proposed by the plaintiffs through the carriage motions, and its stated preference for consolidation, explains Slater and Gordon's willingness to engage in consolidation discussions with Shine. In other words, there is no reason why the comfort gained by Slater and Gordon from meaningful engagement with Shine in April 2022 could not have been gained between December 2021 and February 2022.

68 In considering whether to award costs in respect of discrete interlocutory disputes and in considering what is fair in all the circumstances, it is appropriate to have regard to the nature and likely ambit of the proceeding generally. The filing of more than one group proceeding in respect of the same subject matter, while not an abuse of process,[36] clearly imposes additional burdens on the defendant. As noted above, the High Court has observed that multiplicity can be inimical to the administration of justice.[37]

69 The resolution of multiplicity by consolidation means that the defendant will no longer be burdened by defending two overlapping group proceedings in this jurisdiction. Granted, it has taken longer than it should have for this outcome to be achieved, and arriving at this outcome has involved an about-face by one of the plaintiffs. It may also be accepted that the defendant has incurred some cost and expense in considering the two carriage motion summonses and affidavit material, and making submissions on the two carriage motion proposals.

70 Nevertheless, the issue of multiplicity had to be addressed one way or another. While the carriage motion summonses were put on by the two plaintiffs and resulted in a contest largely between them, it is important not to lose sight of the fact that resolving multiplicity served the defendant's interests as well. In some other cases, such as Brambles, it is the respondent/defendant who has initiated interlocutory processes to resolve multiplicity. In that regard, the issue of summonses to resolve multiplicity are not typical interlocutory summonses issued where one party seeks particular orders to advance its (and only its) litigious interests in an inter partes dispute with the other party. Here, there are broader considerations which necessitated resolution of multiplicity.

71 In addition, the matters traversed in the Betts affidavit and the defendant's submissions included substantial discussion of other matters that are yet to be resolved, including security for costs,[38] the particularisation of some aspects of the claims, and the New Zealand law claims. As such, the costs incurred in the preparation of the Betts affidavit and the defendant's submissions are not referable only to the carriage motion dispute.

72 I am also mindful that the evidence suggests that Shine was open to consolidation when Slater and Gordon was not. Mr Xiao also promoted consolidation through the alternate relief sought in his carriage motion summons. Accordingly, it cannot be said that Mr Xiao has 'capitulated' to the defendant's position or that consolidation by consent necessitates the complete dismissal of his summons.

73 Turning to what is fair in all the circumstances: having regard to all of the matters considered above (including the broader need to address multiplicity and the fact that it cannot be said that the plaintiffs capitulated to a fully formulated position advanced by the defendant), it appropriate that the costs of the defendant and the plaintiff in the Xiao Proceeding be costs reserved in the consolidated proceeding.

74 Orders reserving the costs of the plaintiff in the Xiao Proceeding and the defendant mean that, unless there is any subsequent order, those costs will be the parties' costs in the proceeding pursuant to r 63.22 of the Rules. While it is difficult at this stage to anticipate any event that may occur during the running of this group proceeding that would occasion the need for the reserved costs to be reconsidered at a later date, reserving the costs allows for that to occur, if circumstances arise which are not presently foreseen. Absent any further order, those costs will be recovered by whichever of them succeeds at trial.

75 However, in my view, the plaintiff in the Thomas Proceeding should bear his own costs of the carriage motion summonses prior to 6 April 2022 when Slater and Gordon changed course and engaged with Shine regarding consolidation. Shine was open to consolidating the proceedings from an early stage. There was no reason why the engagement which occurred in April 2022 could not have occurred earlier, in December 2021 and January 2022. However, I consider that the costs of the plaintiff in the Thomas Proceeding should be treated on the same basis as the costs of the defendant and the plaintiff in the Xiao Proceeding from the point when engagement on consolidation resumed on 6 April 2022. By reason of meaningful engagement having commenced on 6 April 2022, and because the joint consolidation proposal was advanced partly on the basis of the alternative relief in the Xiao carriage motion summons,[39] it is appropriate that the plaintiff in the Thomas Proceeding have his costs from that date reserved.

ANNEXURE: CONSOLIDATION AND COST CAPPING ORDERS, UNDERTAKINGS

1. Pursuant to rule 9.12 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (Rules) and/or section 33ZF of the Supreme Court Act 1986 (Vic) (SCA):

(a) the Thomas Proceeding and the Xiao Proceeding be consolidated and the consolidated proceeding be identified as proceeding S ECI 2021 03645 (Consolidated Proceeding); and

(b) the Plaintiff in the Thomas Proceeding and the Plaintiff in the Xiao Proceeding are to be joint representative Plaintiffs in the Consolidated Proceeding (the Plaintiffs).

2. Slater and Gordon and Shine Lawyers (together, the Plaintiffs' Solicitors) be granted leave to be jointly named as solicitors on the record for the Plaintiffs in the Consolidated Proceeding.

(a) an undertaking by each of the Plaintiffs in the Thomas Proceeding and the Xiao Proceeding in the form that appears in Schedule A; and

(b) an undertaking by each of Slater and Gordon and Shine, by their representatives, in the form that appears in Schedule B.

4. Other than costs in respect of the application by summons filed by the Plaintiff in the Thomas Proceeding on 18 February 2022 and the application by summons filed by the Plaintiff in the Xiao Proceeding on 18 February 2022 (together, the Carriage Motion Summonses), the costs incurred to date in the Thomas Proceeding and in the Xiao Proceeding be reserved costs in the Consolidated Proceeding.

5. The costs of any work performed in the Consolidated Proceeding on and after the date of these orders that is performed by reason of there being two firms jointly representing the Plaintiffs rather than one firm (Duplicated Work):

(a) not be recoverable against group members in the Consolidated Proceeding; and

(b) not be recoverable against the Defendant in the Consolidated Proceeding.

6. Pursuant to section 33ZF of the SCA, Cate Dealehr of Australian Legal Costing Group is appointed by the Court as an independent costs monitor (Costs Monitor).

7. The Costs Monitor shall in each six-month period after the date of these orders:

(a) make such enquiries of the Plaintiffs' Solicitors as she may consider necessary or appropriate to make an informed assessment of:

(i) what work done and costs incurred by each firm have been necessary or reasonable for the purposes of recovery of costs on a solicitor-own client taxation;

(ii) whether in her opinion any, and if so what, work done and costs incurred by either firm have not been necessary or reasonable for the purposes of recovery of costs on a solicitor-own client taxation; and

(iii) whether in her opinion there has been any, and if so what, work has been performed by the Plaintiffs' Solicitors in the Consolidated Proceeding by reason of there being two firms jointly representing the Plaintiffs rather than one firm (ie, Duplicated Work); and

(b) provide to the Plaintiffs' Solicitors on a confidential basis a written report addressed to the Court (Costs Reports) as to each assessment in subparagraph (a) in sufficient detail to enable quantification of the costs approved, and costs disapproved or queried, by the Costs Monitor, and which includes the identification of any Duplicated Work, and associated costs thereof.

8. Subject to any further order, the Costs Reports shall be provided by the Costs Monitor to:

(a) the Chambers of the trial judge:

(i) at the direction of the Court, where given; and

(ii) at the time of any settlement approval; and

(b) any mediator at the time of any mediation.

9. The Plaintiffs' Solicitors must provide such information, access to personnel and access to documents as the Costs Monitor requires.

10. The reasonable fees of the Costs Monitor shall be borne equally by the Plaintiffs in the Consolidated Proceeding and shall not be recoverable against the Defendant in the Consolidated Proceeding.

[Jake Thomas / Yue Xiao] undertakes to the Court to enter into the Cooperative Litigation Protocol annexed to the orders of the Court dated 14 June 2022 and undertakes to instruct his solicitors [Slater and Gordon / Shine Lawyers] to comply with the Cooperative Litigation Protocol being Schedule C to the Orders made 14 June 2022 and the Consolidation Agreement being Schedule D to the Orders made 14 June 2022 in conducting the consolidated proceeding.

[Slater and Gordon Limited / Shine Lawyers Pty Ltd] undertakes to the Court to conduct the consolidated proceeding in accordance with the Cooperative Litigation Protocol being Schedule C to the Orders made 14 June 2022 and the Consolidation Agreement being Schedule D to the Orders made 14 June 2022.

[1] The Fair Trading Act 1986 (NZ) and the Financial Markets Conduct Act 2013 (NZ).

[2] The parties used the 'carriage motion' terminology. I will use that terminology for convenience, without drawing anything from carriage motion procedures in North American jurisdictions.

[3] Wigmans v AMP Ltd (2021) 270 CLR 623 (Wigmans), 666 [106] (internal footnotes omitted).

[4] Wigmans, 649 [52], 667-8 [109], 670 [116] (Gageler, Gordon and Edelman JJ).

[6] On the significance of consent in resolving multiplicity, see the discussion of Nichols J in Fuller v Allianz Australia Insurance Ltd [2021] VSC 581 (Allianz), [17].

[7] Wigmans v AMP Ltd [2019] NSWCA 243; (2019) 103 NSWLR 543 (Wigmans NSWCA), 566 [103]-[104] (Meagher and Payne JJA) citing Allsop CJ in Wiley Park Pty Ltd v AMP Ltd [2018] FCAFC 143; (2018) 265 FCR 1, [18]; Allianz, [13] (Nichols J).

[8] Wigmans NSWCA, 566 [104] (Meagher and Payne JJA); Allianz, [13] (Nichols J).

[9] CPA s 7; Klemweb Nominees Pty Ltd v BHP Group Ltd [2019] FCAFC 107 (Klemweb), [155] (Lee J, Middleton and Beach JJ agreeing with this part of Lee J's analysis) (referring to the overarching purpose under s 37M of the Federal Court of Australia Act 1976 (Cth).

[10] CPA s 9.

[11] See the observations of Murphy J in Southernwood v Brambles Ltd [2019] FCA 1021 (Brambles), [11]-[12]; Klemweb, [159]-[160] (Lee J; Middleton and Beach JJ agreeing with this part of Lee J's analysis).

[12] Allianz; Stallard v Treasury Wine Estates Ltd and Napier v Treasury Wine Estates Ltd [2020] VSC 679 (Treasury Wine).

[13] Affidavit of Kaitlin Ferris affirmed 18 February 2022.

[14] Transcript of hearing, 2 June 2022: T32.8-17.

[15] The concern was that there would be a tension in the presentation of the case on the basis that the interests of the Acquisition Claimants would be best served by attempting to establish the maximum inflation in the share price from the start of the relevant period, whereas the interests of the Retention Claimants would be best served by establishing that the relevant information became available in a piecemeal way across the duration of the relevant period.

[16] See, eg, Brambles; Klemweb; Allianz; Treasury Wine.

[17] The subsequent commencement of a proceeding in the High Court of New Zealand advancing similar allegations on behalf of an overlapping group membership on 16 May 2022 (Whyte v The a2 Milk Company Limited) does not obviate the 'tail risk' arising from the exclusion of the New Zealand claims (were the Xiao Proceeding to have prevailed in the carriage motion dispute) as it is an 'opt in' proceeding.

[19] I also note that the Protocol only allows for one set of expert evidence to be relied on by the plaintiffs, so there will be no bifurcation of the case.

[21] Dyczynski v Gibson [2020] FCAFC 120; (2020) 280 FCR 583, 662 [330]; Hodges v Sandhurst Trustees Ltd [2018] FCA 1346, [15]. See also King v GIO Australia Holdings Ltd [2000] FCA 617; (2000) 100 FCR 209, 222-3 [35] (Moore J). Sections 33Q, 33R and 33S of the Act also make express provision for the (not uncommon) circumstance that the Court's determination of the answers to common questions will not finally determine the claims of all group members.

[22] [2022] FCAFC 47, [126] (Murphy and Lee JJ, Beach J agreeing) (emphasis added). The necessity for the Court to be alert to conflicts that may be embedded in settlement proposals has also been referred to in other cases: see, eg, Kelly v Willmott Forests Ltd (in liq) (No 4) [2016] FCA 323, [63] (Murphy J); McKenzie v Cash Converters International Ltd (No 3) [2019] FCA 10, [24] (Lee J).

[24] [2013] VSC 593, [20].

[25] The defendant submitted that it had proposed that the two plaintiffs consolidate their claims in December 2021 and sought a timetable for the resolution of the multiplicity dispute which afforded the plaintiffs two months to confer and seek to agree to terms of cooperation and consolidation.

[26] Saeco International Group (Australia) Pty Ltd v Ubertini [2011] VSC 360 (Saeco), [2] (Davies J).

[27] Saeco, [2] (Davies J), referring to the observations of McHugh J in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622 (Lai Qin), 624.

[28] The defendant relied on the factors identified in Setka v Abbott [2013] VSCA 376, [27] (Warren CJ, Ashley and Whelan JJA).

[29] Supreme Court of Victoria, Practice Note SC Gen 10: Conduct of Group Proceedings (Class Actions), 13 October 2020, [7.8]-[7.9].

[30] The plaintiffs relied on Lai Qin, 625 (McHugh J).

[31] The plaintiffs cited Lee J's discussion in Perera v GetSwift Limited (No 2) [2018] FCA 909 , [13]-[19].

[32] Northern Territory v Sangare [2019] HCA 25; (2019) 265 CLR 164, 172-3 [24]-[25] (Kiefel CJ, Bell, Gageler, Keane and Nettle JJ).

[33] See the discussion in Allen v G8 Education Ltd (No 3) [2022] VSC 302 (G8).

[34] See, eg, Madgwick v Kelly [2013] FCAFC 61; (2013) 212 FCR 1, 20 [83] (Allsop CJ and Middleton J); Clarence City Council v Commonwealth (No 2) [2020] FCAFC 147, [16] (Jagot, Kerr and Anderson JJ); Australian Receivables v Tekitu Pty Ltd [2011] NSWSC 1425, [60] (Ward J).

[35] The affidavit of Kaitlin Ferris affirmed 24 May 2022 explains that an order for the plaintiffs to consider consolidation was first proposed by the plaintiffs and agreed to by the defendant.

[36] Wigmans, 667 [107] (Gageler, Gordon and Edelman JJ).

[37] Wigmans, 666 [106] (Gageler, Gordon and Edelman JJ).

[38] The defendant's submissions and affidavit delved into security for costs to a degree of detail that was not reasonably necessary to address the two carriage motion summonses but used the plaintiffs' submission that their security for costs positions were similar as a vehicle to mount arguments regarding the (in)adequacy of the security for costs proposed.

[39] Such that the costs of the plaintiff in the Thomas Proceeding from 6 April 2022 may be regarded as referable in part to the original Xiao carriage motion summons.