R&B Investments Pty Ltd (Trustee) v Blue Sky Alternative Investments Limited [2022] FCA 1444 | Case summary

R&B Investments Pty Ltd (Trustee) v Blue Sky Alternative Investments Limited [2022] FCA 1444 | Case summary | Zoe

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A INTRODUCTION 1 Before the Court are three interlocutory applications filed in two competing securities class actions brought against Blue Sky Alternative Investments Limited (BLA), a company in liquidation: (1) R&B Investments Pty Ltd as trustee for the R&B Pension Fund v Blue Sky Alternative Investments Limited ACN 136 866 236 (Administrators Appointed) (Receivers and Managers Appointed) (In Liq) (NSD 665 of 2022) (R&B Proceeding); and (2) David Furniss v Blue Sky Alternative Investments Limited ACN 136 866 236 (Administrators Appointed) (Receivers and Managers Appointed) (In Liq) (NSD 948 of 2022) (Furniss Proceeding). 2 At the heart of the applications is a "carriage dispute". 3 The first application, made by the applicant in the R&B Proceeding (R&B Investments) seeks: (1) discontinuance of the R&B Proceeding as against the third, fourth, fifth, sixth, seventh, eighth, tenth, eleventh, thirteenth and fourteenth respondents pursuant to s 33V of the Federal Court of Australia Act 1976 (Cth) (FCA Act); (2) amendment of the group member definition pursuant to s 33K of the FCA Act; (3) a stay of the Furniss Proceeding pursuant to s 23, or, alternatively, s 33ZF of the FCA Act; and (4) in the alternative to a stay, consolidation of the R&B and Furniss Proceedings pursuant to s 33ZF of the FCA Act and r 30.11 of the Federal Court Rules 2011 (Cth) (FCR) and associated orders, including the appointment of a costs referee pursuant to ss 37P(2) and 33ZF(1) of the FCA Act. 4 The second application, filed by the applicant in the Furniss Proceeding, Mr David Furniss, seeks a permanent stay of the R&B Proceeding, or, in the alternative, a temporary stay, pursuant to s 23 or s 33ZF of the FCA Act, pending the resolution of common questions in the Furniss Proceeding, as well as the appointment of a costs referee under ss 33ZF and 37P of the FCA Act. 5 The third application, filed by Mr John Kain, the second respondent in the R&B Proceeding and the third respondent in the Furniss Proceeding, seeks a stay of both proceedings.

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B.1 The Furniss Proceeding 7 The solicitors in the Furniss Proceeding, Shine Lawyers (Shine), began investigating a securities class action against BLA as long ago as early 2018. Whatever the investigations involved, they did not seem to result in much, because it was only in July 2021 that Shine received instructions from a group member in the proceedings to make an application pursuant to s 247A of the Corporations Act 2001 (Cth) (Corporations Act) to obtain access to certain books and records of BLA. 8 I am told that investigations were "put on hold" because BLA voted to enter into a temporary deed of company arrangement that included a moratorium on all claims against the company. It is, however, unclear why it was necessary for investigations to be put on hold in circumstances where it is notorious that claims such as those before me today are likely subject to insurance policies. Indeed, it may, of course, have been possible for the solicitors to have investigated bringing proceedings against the insurers directly (provided the identity of those insurers was able to be ascertained by some adjectival process): see the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW). 9 What is evident, however, is that when access to documentation was obtained in accordance with orders made under s 247A of the Corporations Act, very significant work was undertaken by Shine. Production of the relevant documents occurred in six tranches, and in early 2022, Shine completed what it describes as "a detailed review and analysis" of the documents. Potential funding arrangements were sought as a consequence of this step. 10 Mr Furniss, who had previously engaged other solicitors, retained Shine in around July 2022. Around that time, LCM Funding Pty Limited (LCM) agreed to provide interim funding for Shine to continue investigations. Mr Craig Allsopp, a solicitor with extensive class actions experience, gave unchallenged evidence in his affidavit sworn 21 November 2022 (Allsopp Affidavit) as follows (at [32]): The Investigation has involved the expenditure of considerable resources and has included: (a) reviewing and analysing publicly available material relating to BLA's financial performance, including but not limited to, ASX announcements, financial documents and investor briefings, analyst reports and news articles; (b) analysing movements in the price of BLA shares in response to various events and considering the materiality and causes of those price movements; (c) identifying and considering potential causes of action against BLA and others; (d) briefing and conferring with senior and junior counsel in relation to potential causes of action; (e) launching an online registration process for potential group members, for the purposes of: (i) identifying a lead applicant; (ii) registering expressions of interest for the proposed claim (for this purpose potential group members have not been asked to enter into any legal costs agreements or litigation funding agreements); (iii) gathering, collating and analysing share trading data received from potential group members, including to confirm their eligibility; and (iv) providing relevant information on the progress of Shine Lawyers' investigation. (f) corresponding with the Receiver and Liquidators on behalf of some shareholders seeking to: (i) ensure that those shareholders' rights as creditors were recognised by the then deed administrators of BLA; and (ii) access specific categories of BLA's company records pursuant to s 247A of the Corporations Act, for the purpose of investigating shareholders' potential rights to commence a representative proceeding against BLA; (g) as mentioned above, a detailed review and analysis of the 247A Documents, which comprise in excess of 9,000 pages and include: (i) board packs, papers, minutes and agendas; (ii) audit committee packs, minutes, papers and agendas; (iii) reports commissioned by BLA from KPMG relating to BLA fund valuations; (iv) audit plans and closing reports in relation to audits conducted by the Fourth Respondent (EY); and (v) insurance policies responsive, or potentially responsive, to the claims the subject of the Furniss Proceeding; (h) exploring potential funding arrangements with litigation funders; (i) considering the Handover Material from Piper Alderman; (j) working with accounting and auditing experts to review and analyse the 247A Documents and prepare pleadings; and (k) assisting senior and junior counsel with preparation of, and filing of, the pleadings. 11 On any view, this is a very considerable amount of work.

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B.3 Case Management and Commencement of the Furniss Proceeding 16 On 4 October 2022, my Chambers was copied into correspondence sent to the Court's Registry by Shine, advising the Court that they intended to file a class action that "would be deemed a competing class action" to the R&B Proceeding. This course, if I may say so, was a sensible one to adopt in order to ensure that the Court was apprised of all relevant matters relating to the future case management of the matter. Correspondence in substantially the same terms had passed between the parties in late September. I directed my Associate to write to Shine and Banton Group indicating that any competing proceeding should be commenced immediately and would be listed for a first case management hearing alongside the R&B Proceeding. Shine advised they were not yet in a position to commence proceedings but they were: currently undertaking investigations and expect[ed] to have either commenced proceedings by 16 November 2022, or be in a position to confirm that we do not expect we will be retained to commence further proceedings against [BLA] or any of the other respondents. 17 I instructed my Associate to respond by inviting the prospective applicant to seek leave to intervene at the first case management hearing. On 7 October 2022, Shine wrote to Banton Group proposing the parties "confer and seek to resolve the multiplicity issues by agreement". Banton Group responded on 10 October 2022, declining the offer to confer and noting that "it is not clear to us what multiplicity issues there will be as your client has not filed or served any competing proceeding nor confirmed your clients intend to file such proceedings". 18 At the first case management hearing on 12 October 2022, counsel for Mr Furniss sought leave to intervene, which was opposed. But after I granted leave, I was informed of the then position of Shine, including that the rumoured involvement of another firm, Piper Alderman, could be put to one side. Following this exchange with counsel for R&B Investments, the result of that case management hearing was that an order was made for R&B Investments to serve a statement of claim by 26 October 2022 and for the R&B Proceeding to be listed for a further case management hearing on 2 November 2022. 19 When the R&B Proceeding came back before me on 2 November 2022, I remarked that R&B Investments, having taken a mark 20 metres out of goal, had then proceeded to kick the ball out of bounds by failing to file a statement of claim within time. In fact, prior to the case management hearing, I received a communication that requested that I simply defer the case management hearing which, for reasons that would already be obvious, was most unsatisfactory. 20 In any event, on 2 November 2022, regrets were expressed at the default in filing the statement of claim, and I was informed by counsel for R&B Investments that when it came to drafting the statement of claim, the task had proven more complicated than had been originally thought and further time was needed. 21 As such, I made orders listing the R&B Proceeding for case management and determination of any interlocutory applications concerning issues of multiplicity today. The Court also noted that Mr Furniss proposed to commence a proceeding and file and serve it on or by 4 November 2022, with any originating application to be made returnable today. Mr Furniss eventually decided, as I had earlier put it, to "put up" in commencing the proceedings rather than "shutting up" (albeit he was also two days later than had been indicated in filing process). 22 In any event, it is against this long background that the interlocutory applications are before me today for determination. I propose to deal with them now, notwithstanding it is already 5pm and I have heard the matter all day, because it is unlikely I would otherwise be in a position to deliver judgment until the new year, given my existing commitments. This would be an unsatisfactory delay.

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C DISCONTINUANCE 23 When the R&B Proceeding was initially commenced, there were no less than 14 respondents. Discontinuance is now sought against ten of them. I dealt with the principled approach in considering an application under for a proposed discontinuance under s 33V(1) of the FCA Act in Lloyd v Belconnen Lakeview Pty Ltd (No 3) [2022] FCA 761 (at [2]-[3]), where I indicated that it had been the subject of extended discussion by Murphy J in Turner v TESA Mining (NSW) Pty Ltd (No 2) [2022] FCA 435; (2022) 314 IR 214 (at 217-218 [6]-[10]). 24 His Honour summarised two approaches to what he described as the "test" for determining such applications. I will not repeat that analysis, save to make the point that it might be thought that a certain over complication has arisen in relation to what is said to be the test. The question is whether or not discontinuance is "fair and reasonable". These are words of indeterminate meaning which "take their colour and content from all of the surrounding circumstances": Lloyd v Belconnen (at [5]). Similarly, what could be described as being in the interests of group members is a conception informed by all the relevant circumstances. I adhere to the view that there is no real difference between considering whether the settlement is fair and reasonable (and hence, whether the discontinuance is in the interests of group members in particular circumstances), or whether discontinuance would be unfair, unreasonable or adverse to the interests of group members. 25 In any event, this seems to me to be quintessentially the sort of case where approval should be given to discontinue the proceedings. There is no prejudice to group members and orders have been made as proposed today. 26 Usually accompanying discontinuance is an order requiring the discontinuing party to pay the costs of the party against whom the litigation has ceased. I consider that an order of this kind should be made. 27 I am also persuaded in the circumstances that an order should be made under s 33ZF of the FCA Act in essentially the same terms as that made by Murphy J in Turner, such that limitation periods that apply to the claims of the group members against the former respondents begin to run again from the date 60 days after R&B Investments files a notice of discontinuance. In Turner (at 220 [20]), Murphy J agreed with my construction in Gill v Ethicon Sàrl (No 4) [2019] FCA 1814 (at [22]) that under s 33ZE(2) a limitation period remains suspended unless and until a decision has been made by the group member to opt out, or there has been some judicial resolution of the group member's claim (which does not occur upon discontinuance by the applicant). Indeed, the whole point of discontinuance is that it does not mean the underlying res had been finalised. 28 It should be said, however, that this construction may operate unfairly. As Murphy J acknowledged in Turner (at 221 [23]-[24]): 23. As has been noted, the difficulty with this construction is that it is capable of causing real unfairness to the respondent to a class action. If s 33ZE(2) is construed in this way, upon the Court approving the discontinuance of a representative proceeding, the respondent will be left in the position that the limitation period applicable to a group member's claim (which is suspended by operation of s 33ZE(1)) will remain suspended and the respondent will be forever exposed to the risk of claims by group members. It is unlikely that the legislature intended such a result. 24. In the circumstances of the present case it is appropriate to address that unfairness by an order, pursuant to the power under ss 33V(1) and 33ZF, that the limitation periods that apply to the claims of the group members to which the proceeding relates begin to run again from the date 60 days after the applicant files a notice of discontinuance. 29 Section 33ZE is an important part of the scheme in Pt IVA. It was expressly inserted into the FCA Act to deal with circumstances which may not have been evident at the time Pt IVA was enacted. It operates as a "gap filler". As Murphy J noted, it is intolerable that respondents should be subjected to a suspended limitation period, notwithstanding there is no extant litigation against them, and it is highly unlikely this "gap" in the scheme reflected any intention of the legislature. 30 Accordingly, I will make an order in the form outlined above (at [27]).

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D THE S 33K APPLICATION 31 In the R&B Proceeding, an application was made to amend the group definition pursuant to s 33K of the FCA Act. It was not opposed, and I was content to make it. This is despite the fact that the amended group definition, which I will refer to later in this judgment, identifies, among other things, that group membership is defined by persons who have an "interest" in certain securities. This is a very common criterion adopted in defining group membership. There is, at least in my mind, a real question as to whether or not such drafting is appropriate. Although distinct concepts, the claim made by group members in this class action needs to be enforced, eventually, by a chose in action. The legal holder of that chose in action is the legal person able to agitate the claim at law. 32 Although it has not caused any practical problem in the past, what is meant by the term "interest" in a group definition? Does it mean that both a trustee and the beneficiary of the same inter vivos trust are said to be group members? How could this be right? What about persons holding other interests that might be described as mere equities, which might be thought "proprietary" in certain circumstances, but do not amount to any equitable interest in the property to which it relates - are they group members, if the property is the subject of the chose in action? What about a minor, or the objects of a discretionary trust, or beneficiaries under an unadministered estate? Surely the group member should be the parent or guardian on behalf of the minor, the trustee, or the legal personal representative. 33 The use the concept of a holder of an interest in property causes all sorts of potential confusion and lacks precision. While it does not fall for consideration in this case, I find it difficult to understand why group membership should not be restricted to persons who have the ability at law to agitate and get in the claim advanced in a representative capacity by the applicant.

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E CARRIAGE APPLICATION 34 It is now appropriate to turn to the main game: the carriage application. 35 As Gageler, Gordon and Edelman JJ emphasised in Wigmans v AMP Limited [2021] HCA 7; (2021) 270 CLR 623 (at 666 [106]), multiplicity of proceedings is not to be encouraged. The continuation of competing representative proceedings run by different firms of solicitors with different funders may be inimical to the administration of justice. 36 There is no "one size fits all" approach to issues of multiplicity: Wigmans (at 666 [106] per Gageler, Gordon and Edelman JJ); Klemweb Nominees Pty Ltd (as trustee for the Klemweb Superannuation Fund) v BHP Group Limited [2019] FCAFC 107; (2019) 369 ALR 583. A wide variety of factors may be relevant to the exercise of the Court's discretion depending upon the particular circumstances of the case. 37 In any event, following the decision of the High Court in Wigmans, my summary of the relevant principles in CJMcG Pty Ltd as Trustee for the CJMcG Superannuation Fund v Boral Limited (No 2) [2021] FCA 350; (2021) 389 ALR 699 (at 703-704 [9]-[13]) remains an appropriate touchstone: 9. First, in determining the appropriate remedial response, the focus of the Court is on what "would be in the best interests of group members": at [52]. This is a task directed to ensuring that justice is done in the competing proceedings: at [116]. In this way, the approach mandated by Wigmans is entirely consonant with the Court's statutory requirement contained in Pt VB of the Federal Court Act 1976 (Cth) (Act) to facilitate the overarching purpose. 10. Secondly, there is no race to the courthouse. The High Court has decisively rejected that there be a presumption that the "first in time" rule applies: at [52] and [94]. In and of itself, it is not vexatious, oppressive or an abuse of process to commence a subsequent bona fide class action prior to the Court giving substantial directions in existing but overlapping proceedings: at [107], citing Getswift (at [150]). Although the time of filing may remain a relevant consideration, as I will explain below, it is a less relevant consideration in cases such as the present where the competing proceedings have been commenced within a relatively short time of each other: at [107], citing Wigmans v AMP Ltd (2019) 103 NSWLR 543; 373 ALR 323; [2019] NSWCA 243 (at [83] per Bell P, with whom [Macfarlan], Meagher, Payne and White JJA agreed). 11. Thirdly, as is to be expected in a multifactorial inquiry, the factors relevant to the determination of applications such as the present will vary from case to case: at [109], citing Getswift First Instance (at [169]) and Getswift (at [195]). The point made by the High Court is that it is necessary for a court to determine, by reference to all relevant considerations, which proceeding going ahead would be in the best interests of group members: at [109]. 12. Fourthly, the litigation funding arrangements adopted by the competing applicants are not irrelevant, and there is nothing foreign to the judicial process for a court to take into account likely success in proceedings or quantum of recovery, both of which may be affected by the litigation funding arrangements in place: at [111]-[112]. 13. It follows from the above that the factors that will be relevant in conducting a multifactorial analysis for the purposes of staying one or more of the duplicative proceedings cannot be exhaustively stated. Having said that, previous cases, for example, Wigmans v AMP Ltd [2019] NSWSC 603 (at [121]-[126] per Ward CJ in Eq) (Wigmans First Instance), McKay Super Solutions Pty Ltd (as trustee for the McKay Super Solutions Fund) v Bellamy's Australia Ltd [2017] FCA 947 (at [71] per Beach J) and GetSwift First Instance (at [169] per Lee J), have identified at least the following factors, which all participants have suggested are relevant considerations to a greater or lesser extent (summarised in Wigmans (at [6])): (1) the competing funding proposals, cost estimates and net hypothetical return to group members; (2) proposals for security; (3) the nature and scope of the causes of action advanced (and relevant case theories); (4) the size of the respective classes; (5) the extent of any book build; (6) the experience of the legal practitioners (and funders) and availability of resources; (7) the state of progress of the proceedings; and (8) the conduct of the representative applicants to date.

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E.2 Competing Funding Proposals 39 Two funding agreements are in evidence. The costs and disbursements of the R&B Proceeding are funded by ILP, a member of the ILP group of companies that are well-known and longstanding litigation funders in the Australian market. ILP has explicitly foreshadowed seeking what has been described as a settlement common fund order (CFO) at the conclusion of the proceeding. 40 Three aspects of the ILP funding agreement merit particular attention. 41 First, unlike the funding agreement in the Furniss Proceeding, it provides, as noted above, funding for both costs and disbursements, meaning that during the currency of the class action, ILP is responsible for meeting solicitor and barrister costs. 42 Secondly, the funder's remuneration should be noted, which is set out as follows: Item 1: Funder's Remuneration The Funder's Commission comprises: (a) an amount equal to 10% of the Legal Costs; and (b) an amount calculated as the percentage amount of the aggregate of the Resolution Sum and any Resolution Costs (if applicable) in accordance with the table below (having regard to the timing of a Resolution): Funder's Commission scale: 43 Thirdly, there does not seem to be any dispute that if any of the 76 group members who signed the funding agreement obtained any sum from the resolution of the underlying dispute (even if that sum was obtained in another proceeding, such as the Furniss Proceeding), ILP would be entitled to a commission from its contractual counterparty, subject to any intervention by the Court, at law or in equity, relieving that party from paying those sums. 44 Turning to the Furniss Proceeding, LCM seeks to be reimbursed for any settlement or judgment in its investment in funding disbursements and security for costs. The funding commission rates are as follows: (1) 15% if the proceeding is resolved within 18 months of its commencement; (2) 18% if the proceeding is resolved between 18 and 24 months of its commencement; and (3) 20% if the proceeding is resolved 24 months after commencement. 45 In order to achieve these competitive rates, Shine has agreed to conduct the proceeding on a "no win, no fee" basis to obviate the need for LCM to pay legal costs during the currency of the proceeding. 46 It is also the intention of the applicant in the Furniss Proceeding to seek a settlement CFO.

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E.8 Size of Classes and Scope of Claims 59 These matters can be addressed together. 60 Both proceedings contemplate an open class. Despite this, and in the wake of the successful s 33K application, there are significant differences in the group definition. The claim period for the R&B Proceeding is longer than the claim period for the Furniss Proceeding, but likely excludes a number of persons who are group members in the Furniss Proceeding. This can be seen by reference to the following table which sets out the difference in the group definition between the two cases: R&B Investments Proceeding The Applicant brings this proceeding as a representative party under Part IVA of the Federal Court of Australia Act 1976. The group members to whom this proceeding relates are referred to in paragraph 3 of the Statement of Claim, specifically on behalf of all persons who or which: (a) as at the date of commencement of this proceeding had executed a litigation funding agreement (LFA) with International Litigation Partners No.10 Pte Ltd in respect of proposed litigation against inter alia the First Respondent (Blue Sky); or (b) at any time during the period between 19 August 2016 and 20 May 2019 (Claim Period) held an interest in fully paid ordinary shares in Blue Sky, which interest was acquired either: (i) prior to the Claim Period but retained until after the release by Glaucus Research Group on 28 March 2018 of a 'Research Report' concerning Blue Sky (First Glaucus Report) (such interests being Pre-Period Shares); or (ii) during the Claim Period: (A) prior to the release of the First Glaucus Report; or (B) after the First Glaucus Report but before one or more of: (a) the Post-April Disclosures (defined below); or (b) the Post-August Disclosures (defined below); (together and severally Disclosure Events) and then retained until after at least one subsequent Disclosure Event (such interests being Period Shares); (c) were not, during any part of the Claim Period, and are not as at the date of this Statement of Claim: (i) in relation to Blue Sky: (A) a related party (as defined by s 228 of the Corporations Act 2001 (Cth) (Corporations Act) of Blue Sky; (B) a related body corporate (as defined by s 50 of the Corporations Act) of Blue Sky; (C) an associated entity (as defined by s 50AAA of the Corporations Act); (D) an officer or a close associate (as defined by s 9 of the Corporations Act); or (ii) a Justice, Registrar, District Registrar or Deputy District Registrar of the High Court of Australia or the Federal Court of Australia; (the Applicant and Group Members being, together and severally as the context admits, Claimants). Furniss Proceeding This proceeding is commenced by the Applicant as a representative proceeding pursuant to Part IVA of the Federal Court of Australia Act 1976 (Cth) (FCAA), on his own behalf and on behalf of all persons who (Group Members): (a) acquired an interest in ordinary shares in Blue Sky Alternative Investments Limited (Administrators Appointed) (Receivers and Manager Appointed) (in Liquidation) (BLA) between 10 February 2017 and 20 May 2019 (Relevant Period) (Acquisition Group Members); or (b) had acquired an interest in ordinary shares in BLA before 10 February 2017 and retained that interest after 10 February 2017 (with such interest being Pre-Relevant Period Shares, and such persons being Retention Group Members); and (c) have suffered loss or damage by reason of the conduct of the respondents pleaded in this Statement of Claim; and (d) were not during any part of the Relevant Period, and are not as at the date of this Statement of Claim, any of the following: (i) a related party (as defined by section 228 of the Corporations Act 2001 (Cth) (Corporations Act)) of the respondents; (ii) a related body corporate (as defined by section 50 of the Corporations Act) of the respondents; (iii) an associate entity (as defined by section 50AAA of the Corporations Act) of the respondents; (iv) an officer or a close associate (as defined by section 9 of the Corporations Act) of the respondents; or (v) a judge or the Chief Justice of the Federal Court of Australia or a Justice or the Chief Justice of the High Court of Australia.

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61 It is impossible, with my current state of knowledge, to understand the precise extent of the differences between the two groups. One must recognise the fact that a group member definition serves the purpose of identifying a collection of persons, not a collection of claims. There will be people who will be group members, for example, in the narrower Furniss Proceeding, who may have also purchased shares prior to the commencement of the relevant period in that proceeding and, hence, would also be group members in the R&B Proceeding. Although one cannot identify with any precision how different the group memberships would be, I suspect that they would be largely co-extensive. 62 What is of more significance is the scope and nature of the claims in each proceeding. Superficially, there are significant similarities. For example: (1) both proceedings cover group members who might be described as "retention claimants" and "acquisition claimants"; (2) both proceedings involve the same respondents in the wake of the successful discontinuance application; (3) both are fairly "stock standard" securities class actions, involving allegations of conduct contrary to misleading and deceptive conduct norms and continuous disclosure requirements; (4) both, again, allege misleading and deceptive conduct arising from alleged breaches of various Australian accounting and auditing standards; and (5) both proceedings are in respect of the same matter, to use that word in its constitutional sense. 63 There are also, however, important differences, even leaving to one side the differing claim period. As R&B Investments submits: (a) the R&B Proceeding dissects with greater specificity the alleged flaws in each of the various ASX announcements or other disclosures, with corresponding references to the particulars accounting or auditing 'Standards' alleged to have been contravened in each respect. This necessary disaggregation of the alleged flaws attending each disclosure is only (and at best) implied in the Furniss pleading; (b) the R&B Proceeding fully pleads out the case theory regarding causation in respect of misleading statement or omission (disclosure failure), addresses the complicating effects of the drip-feed of corrective disclosures, and articulates how the changing information translated into an effect on the Trading Price of Blue Sky Shares. There is no equivalent detail in the Furniss Proceeding. 64 The second matter identified above is, in my view, of some real significance. This is seen by reference to Sections E, M, N, O and P of R&B Investments' statement of claim. Section E pleads (at [31]) what are described as "Corporate Governance Representations". In effect, the approach taken by R&B Investments is that the publication of a report by a short seller, the "Glaucus Report", resulted in the disclosure of significant information. This had the effect of causing pre-existing "share inflation" to dissipate through what could be described as a "drip feed" of corrective disclosures. 65 The approach taken to the significance of publication of the Glaucus Report in the Furniss Proceeding is markedly different. It is said that what really matters is the response to the publication, which response was said to give rise to representations which, themselves, amounted to contravening conduct causing their own share inflation. The responsive conduct said to be contravening conduct is then relied upon as causing its own loss and damage. 66 This is a very simplistic analysis of the difference. However, it suffices to note that the approach taken by the respective pleaders is different and, one might speculate, only one can be right. It would not be appropriate at this stage to comment on which forensic choice is more likely to be vindicated (although I think it is fair to say that the approach taken in the R&B Proceeding has some apparent cogency should the underlying premises be made out).

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E.10 Concluding Remarks 69 As I noted above (at [38]), I have taken into account all the matters referred to in the submissions made by the respective applicants and have canvassed the principal matters relied upon above. It is well, however, to summarise also four principal submissions made by the active, remaining respondents. 70 First, the appropriate response in the circumstances is to stay one or other of the proceedings. There is, it is said, no good reason for the Court to allow two separate representative proceedings to continue. This is a very different case to those in which such orders have been made: see, for example, Parkin v Boral Limited (Temporary Stay) [2021] FCA 889; (2021) 155 ACSR 457 (at 464-467 [31]-[40]). 71 Secondly, I should have as my lodestar the resolution which is in the best interests of group members. The fact, for example, that two funders have incurred costs that would be irrecoverable if their proceeding was stayed is an irrelevant consideration. 72 Thirdly, in reliance on my observations in Parkin v Boral (at 460 [13]-[14]), it is said that if multiple proceedings remain on foot, there will be increased costs. Proper regard must be had to the interests of respondents of not only being subjected to the vexation of multiple proceedings, but also the costs associated with either consolidation or allowing both proceedings to continue. 73 Fourthly, although there are differences between the cases, the Court will be alive to the fact that those acting for a representative applicant have duties to group members to advance the case in a responsible fashion. To the extent that there are differences, the proper approach is that outlined in my judgment in Klemweb (at 601-602 [85]-[86]). The Court is entitled to expect that practitioners will act responsibly and ensure the optimal case is advanced on behalf of group members. In this regard, reference is made to the Allsop Affidavit, where Mr Allsopp indicated (at [43]) that he would be alive to considering whether the claim period should change, depending upon further developments in the litigation. As noted above, the Furniss Proceeding is broader, but the R&B Proceeding is longer. The same pragmatism should be expected of those acting in the R&B Proceeding.

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F THE POSSIBLE WAYS FORWARD 74 The transcript will record that during the course of oral submissions, a number of options were canvassed. Without seeking to be exhaustive, most attention was given to the following options: (1) one or other of the proceedings be stayed, allowing the unstayed proceeding to continue in its current form; (2) both proceedings continue for a period in order to allow group members to be notified and elect between the two proceedings; one or other of the proceedings would the proceed as an open or closed class, and the proceedings would be heard together; (3) the Furniss Proceeding proceed on an open basis; and (4) the R&B Proceeding proceed on a closed basis, restricted to the 76 persons who have signed funding agreements. 75 In determining the way forward, two aspects of the evidence in the Furniss Proceeding require further consideration. 76 First, Mr Allsopp gave the following evidence (at [70]): In my respectful opinion, the continuation of the Furniss Proceeding in the manner set out in the Application filed on 16 November 2022, and a stay of the R&B Proceeding (if not permanently then until the conclusion of the Furniss Proceeding) would be in the best interests of group members, including because: (a) having regard to the matters to which I depose at paragraphs 36 to 37 above, in my respectful opinion it is not economically viable for the Furniss Proceeding and the R&B Proceeding to otherwise remain on foot in some form, such as through consolidation or being divided between open and closed classes; (b) the Furniss Pleading has been prepared with the benefit of the 247A Documents, including analysis of those documents by the Shine Legal Team, counsel and experts; (c) the Furniss Proceeding would have measures in place to control costs; (d) the funding arrangements in respect of the Furniss Proceeding are amongst the most competitive I have seen available in a securities class action; (e) I have confidence in LCM's ability to meet its funding obligations and comply with all necessary licensing and regulatory requirements as LCM: (i) is a highly experienced and reputable litigation funder; and (ii) has demonstrated and transparent financial capacity (particularly as LCML is listed on the London Stock Exchange). 77 The reference to "paragraphs 36 to 37" is a reference to information gleaned upon a review of BLA's insurance policies. I do not think it is necessary to set out the value of the policies at the time of delivery of this judgment. I made an interim confidentiality order in respect of those matters and have invited submissions from the insurers who had the benefit of an express obligation of confidence as to why it is necessary, in the administration of justice, for information concerning the insurance policies to be suppressed. 78 Mr Allsopp was not cross-examined and I was not asked to reject the evidence in paragraph 70 outlined above. Mr Allsopp is an experienced solicitor and I have no reason to doubt that his comments reflect discussions he has had with those funding the Furniss Proceeding. I give some weight to that evidence. 79 I reiterate here that the proper approach requires me to fasten upon what I think is in the best interests of group members: Wigmans (at 667-668 [109] per Gageler, Gordon and Edelman JJ). If I form the view that consolidation is the best approach in all the circumstances, then the mere fact that a funder might not find that result to its commercial advantage should not, in my view, impact upon what I consider to be best for group members. 80 Secondly, one aspect of the evidence was initially confusing. Annexed to the Allsopp Affidavit was a proposed funding agreement which foreshadowed the arrangements in the event that the Furniss Proceeding continued and the R&B Proceeding was stayed. That proposed agreement has a number of curiosities. Most notable is that it identifies an express right on behalf of the funder to take steps to notify members that the funding agreement will be terminated in the event that Shine is not granted sole carriage of the claim. In any event, that is a matter for the funder and does not seem to me to be of any significance in the discretion I am called to exercise. 81 Ultimately, like any multiplicity dispute, the resolution must be grounded in the facts and circumstances of the case. There is limited utility in drawing comparisons with the way this Court has resolved other multiplicity proceedings because there are both obvious and subtle differences between the factors informing the exercise of a discretion in any particular set of circumstances.

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G RESOLUTION 82 While the factors relied upon by the respondents are weighty, I think it is a considerable overstatement to say that there is no good reason to order consolidation. And in the end, it is an unusual aspect of these applications that I consider to be decisive in favouring this solution. 83 Shine has had the opportunity over a quite lengthy period to apprise itself of detailed information concerning the underlying dispute. It would be inimical to the overarching purpose of civil litigation in this Court for that detailed analytical work to be lost. It follows that I do not think a resolution which involves the Furniss Proceeding being stayed could ever be in the interests of group members. 84 Similarly, recent, intensive, and obviously careful work has been undertaken by those acting in the R&B Proceeding in order to develop a case theory, particularly as to how alleged loss is to be calculated. The pleading, with respect, shows some real sophistication as to how the liability and damages case is to run in relation to BLA. Additionally, I am told by senior counsel for R&B Investments that extensive work has been undertaken with a consulting expert concerning the case to be advanced against the auditor. If I elect to stay the R&B Proceeding, there is a prospect that this accumulated knowledge and analysis being lost to group members. I reach this conclusion notwithstanding those acting for Mr Furniss are highly competent practitioners who, in due course, would advance the case they perceive to be optimal. 85 This seems to me a case where group members would be best assisted by the fruits of the work that has been done by both sets of solicitors and counsel. At the end of the day, if I am focusing on the interests of group members, this is determinative. 86 A further factor not pointing away from consolidation is that 76 people have signed funding agreements with ILP. If the R&B Proceeding was stayed, I harbour very considerable doubts as to whether it would be consistent with good conscience for ILP to enforce a claim for a contractual funding commission against these claimants (in circumstances where they obtained an amount by way of resolution in the Furniss Proceeding). Having said this, I would not suggest that it would necessarily be inappropriate for some monetary claim to be made on behalf of ILF in a sum representing lost costs against recoveries in the Furniss Proceeding. Again, I stress this is not a weighty consideration, but to suggest that the funder would necessarily be the only one out of pocket if the R&B Proceeding was stayed may be somewhat simplistic. In any event, those costs will not be lost in the event of consolidation. 87 Of all the matters raised by the respondents, the most powerful relates to the issue of costs. I agree that it may be, as I had previously indicated, overly optimistic to think that one can eradicate rather than merely ameliorate costs in the case of a consolidation. This has given me significant pause. 88 In view of this, I propose to put in place a regime to ensure that the costs recoverable against the respondents are limited, to the extent possible, to the costs that would have been recoverable if only one proceeding had continued. This will involve a high degree of cooperation by the legal team acting in the consolidated proceedings, but I have no doubt, given the quality of the people involved, that this is achievable. 89 I am conscious that in fastening upon this solution the evidence given by Mr Allsopp may assume significance and LCM may, for its own idiosyncratic commercial reasons, decide not to be involved in the consolidated proceeding. In these circumstances, it is appropriate to foreshadow consolidation now, but require it to be completed within a certain period.

R&B Investments Pty Ltd (Trustee) v Blue Sky Alternative Investments Limited

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