Wigmans v AMP Limited

After a Royal Commission exposed AMP charging fees for no service and misleading the regulator, its share price dropped and five different law firms quickly filed overlapping class actions on behalf of affected shareholders. Each had different lawyers, funders and fee structures. The question was which one should go forward. AMP did not care which, so long as there was only one. The trial judge looked at all the practical differences, especially which arrangement would leave the most money in shareholders' pockets after fees, and chose the "no win, no fee" option run by Maurice Blackburn because modelling showed it would deliver the highest net return. Wigmans, whose proceeding was stayed, appealed, arguing the law contains an automatic rule that the first-filed case wins unless the later one has some special legal advantage. The High Court majority rejected that rigid rule. It said judges must instead ask what is in the best interests of the group members, taking into account funding deals, likely costs and returns, among other things. There is no "one size fits all" and no automatic first-past-the-post winner. Because the judge had properly weighed the factors and the parties had agreed the lawyers were equally good, the choice was upheld and the appeal dismissed.

What happened

In April 2018 executives of AMP Limited gave evidence to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry admitting that AMP had charged some clients fees for no service and had misled ASIC about the extent of that conduct. The share price of AMP fell sharply. Within the next five weeks five separate open class representative proceedings were commenced against AMP alleging breaches of continuous disclosure obligations under the Corporations Act 2001 (Cth) and ASX Listing Rules, together with claims for misleading or deceptive conduct and, in one instance, unconscionable conduct. The proceedings overlapped substantially but were not identical; claim periods differed, some factual allegations varied, and one proceeding alone included an unconscionable conduct claim while others added claims about off-market shares, ADRs or receipt of legal advice that conduct was unlawful.

The first proceeding was filed by Marion Antoinette Wigmans in the Supreme Court of New South Wales on 9 May 2018 and was funded by a commercial litigation funder with Quinn Emanuel acting. Seven hours later Wileypark Pty Ltd commenced a Federal Court proceeding. Further proceedings followed by Andrew Georgiou, Fernbrook (Aust) Investments Pty Ltd and Komlotex Pty Ltd. The Federal Court proceedings were transferred to the Supreme Court. Fernbrook and Komlotex were consolidated. Each lead plaintiff was a group member in the others' proceedings. The different proceedings reflected different sponsorship arrangements: some involved third-party funders taking a percentage of any recovery (up to 20 per cent in Wigmans), while the consolidated Komlotex/Fernbrook proceeding was run by Maurice Blackburn on a no-win-no-fee basis with a 25 per cent uplift on professional fees only if the resolution sum exceeded $80 million.

AMP remained neutral on which proceeding should continue but supported the outcome that it face only one. Notices of motion were filed seeking permanent stays of all but one proceeding. The primary judge (Ward CJ in Eq) approached the four stay applications by reference to a multifactorial analysis drawn from Perera v GetSwift Ltd (2018) 263 FCR 92. The eight factors considered were competing funding proposals, costs estimates and net hypothetical returns; proposals for security for costs; nature and scope of causes of action; size of classes; extent of bookbuild; experience of practitioners and funders and resources; state of progress; and conduct of the representative plaintiffs to date. The primary judge found the Wigmans and Komlotex/Fernbrook proceedings superior on security for costs. As between those two, the no-win-no-fee model was expected to produce a higher net return to group members than the funded Wigmans proceeding. Orders were made permanently staying the Wigmans, Wileypark and Georgiou proceedings.

Wigmans appealed to the Court of Appeal. Bell P (with whom Macfarlan, Meagher, Payne and White JJA agreed) upheld the primary judge's orders, finding no error in the multifactorial approach although preferring to characterise the inquiry as directed to the ends of justice rather than pure case management. The Court of Appeal held the Komlotex/Fernbrook proceedings were not an abuse of process because Komlotex was not a party to the Wigmans proceeding before opt-out and only AMP could be vexed. Wigmans obtained special leave and appealed to the High Court. By majority (Gageler, Gordon and Edelman JJ, Kiefel CJ and Keane J dissenting) the appeal was dismissed with costs.

Why the court decided this way

The majority reasoned that the text, context and purpose of s 67, read with Pt 6 and Pt 10 of the Civil Procedure Act 2005 (NSW), do not impose a first-in-time rule or presumption. Section 67 provides that the court may at any time stay any proceedings permanently or until a specified day. When exercising that power the court must seek to act in accordance with the dictates of justice (s 58(1)), must have regard to the overriding purpose of just, quick and cheap resolution of the real issues (s 56) and the case management objects in s 57, and may have regard to any other matter it considers relevant including the degree of injustice any order would cause (s 58(2)(b)(vi)-(vii)). Nothing in those provisions mandates predominant weight to filing order.

Pt 10 expressly permits one or more persons to commence representative proceedings where seven or more have claims arising out of the same, similar or related circumstances that give rise to a substantial common question of law or fact (s 157). Group members need not be identical and claims need not be based on the same conduct. The Part contains no certification or carriage-motion regime of the kind found in US Federal Rules of Civil Procedure r 23(g) or equivalent Canadian legislation. Parliament had the US example before it when enacting Pt 10 in 2010 but deliberately chose not to adopt it. Sections 162 (opt-out), 166 (power to order proceedings no longer continue as representative if not in the interests of justice for listed reasons including costs, efficiency, adequacy of representation and appropriateness), 171 (substitution where representative cannot adequately represent) and 183 (supplementary power to make orders appropriate or necessary to ensure justice is done) all focus on the just and effective resolution of the claims of group members. Section 166(2)(b) expressly recognises that aggregation for a litigation funding arrangement does not of itself make representative proceedings inappropriate. The statutory scheme therefore contemplates multiplicity and requires the court to be mindful of the best interests of group members, whose interests may diverge from those of the representative plaintiff or the funder.

The majority rejected the contention that traditional stay jurisprudence supplies a rigid first-in-time presumption. Authorities such as McHenry v Lewis (1882) 22 Ch D 397, Carron Iron Co v Maclaren (1855) 5 HLC 416, Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 and Henry v Henry (1996) 185 CLR 571 were examined at length. Those cases establish that multiplicity is prima facie vexatious and oppressive where the same plaintiff seeks the same relief in the same jurisdiction with complete relief available in the first proceeding, but the court retains discretion to determine what course is most conducive to substantial justice. Jessel MR in McHenry emphasised that the court cannot decide which action should proceed until all are before it and listed considerations such as whether one action is collusive, embraces further relief, is better framed, has more perfect parties or a solvent plaintiff. These are juridical advantages, not comparisons of which sponsor will produce the highest return. The equitable principles concerning test actions (Amos v Chadwick (1878) 9 Ch D 459; Bennett v Lord Bury (1880) 5 CPD 339) likewise direct attention to avoiding unnecessary burden on defendants while securing complete justice, not to choosing the best sponsor.

Because the primary judge's finding that the Komlotex/Fernbrook proceedings were not an abuse of process was not challenged on appeal to the High Court, and because the later proceedings offered no juridical disadvantage, the first-in-time rule could not dictate the outcome. The multifactorial approach was instead upheld as consistent with the statutory commands. The primary judge had given greatest weight to competing funding proposals, costs estimates and net hypothetical returns modelled on standardised assumptions of trial length and settlement or judgment sums. The parties had conducted the case on the explicit basis that the solicitors and counsel in each proceeding were highly experienced, that there was no reason to doubt any could run the litigation competently, and that experience and resources were a neutral factor. It was therefore open to the primary judge to assume equal experience, equal hours required, and equal prospects of achieving each possible outcome, then compare only the funding models and costs. The no-win-no-fee model with a deferred uplift produced the highest net return and no common fund order was sought. Security for costs also favoured Wigmans and Komlotex/Fernbrook over the ATE-insurance-based proposals of the others. Other factors were neutral or of little weight. The "first mover advantage" received no weight. The Court of Appeal was correct to find no error.

The majority emphasised that the task is not mere case management but ensuring justice is done in the proceedings, protecting the best interests of group members who are not yet parties and who may be affected by conflicts of interest between themselves, the representative plaintiff and the funder. The primary judge's approach, while not the only permissible one, was open on the way the case was run. Suggestions for future cases included appointing a special referee under UCPR rr 20.13-20.24 or a funded contradictor who is a common group member to inquire into and make recommendations on funding arrangements, with notice to group members under s 175(5) where appropriate. These mechanisms address the predictive nature of the inquiry and the fact that material is chosen by the competing funders and solicitors.

Kiefel CJ and Keane J dissented, holding that the prima facie entitlement of the first plaintiff to insist on determination of her proceeding should have been given effect. Later proceedings offered no legitimate juridical advantage and were therefore vexatious. Neither the CPA nor inherent power authorises the court to select the best sponsor of representative proceedings; that would require legislative direction and is incompatible with the court's role as independent arbiter. The multifactorial analysis imported US carriage-motion concepts not found in the CPA. The appeal should have been allowed and the Komlotex/Fernbrook proceedings stayed.

The majority disposition therefore prevailed: the appeal was dismissed.

Before and after state of the law

Before Wigmans v AMP Limited the law on competing representative proceedings was unsettled. Lower courts had applied the multifactorial approach endorsed by the Full Federal Court in Perera v GetSwift Ltd, weighing funding proposals, costs estimates, net returns, security for costs, experience of practitioners, progress of proceedings and conduct of plaintiffs. Some first-instance decisions had expressed concern about "race to the courthouse" and insufficient due diligence. However, no High Court authority had determined whether a first-in-time presumption from traditional stay jurisprudence applied or whether litigation funding arrangements could be considered under s 67. Appellate courts had not authoritatively reconciled the equitable principles in McHenry v Lewis and Carron Iron Co v Maclaren with the statutory regime in Pt 10 of the CPA and its analogues.

Section 67 had been treated as encompassing the inherent power to prevent abuse of process, but the breadth of considerations relevant to its exercise in the representative proceeding context remained unclear. BMW Australia Ltd v Brewster had emphasised that s 183 is a gap-filling power not to be used to rewrite Pt 10, yet lower courts continued to grapple with multiplicity without statutory carriage procedures. The ALRC reports preceding Pt 10 and Pt IVA of the Federal Court of Australia Act 1976 (Cth) had not foreseen the scale of competing funded actions and had considered the regime adequate to protect group members.

After the decision, the law is settled that no first-in-time rule or presumption governs. Courts must instead ask which proceeding is in the best interests of group members by reference to all relevant circumstances, including but not limited to funding arrangements, costs and net returns where those matters are raised and the evidence permits comparison. The judgment confirms that Pt 10 and Pt 6 operate as a harmonious whole; multiplicity is not prohibited and the court is obliged to protect group members' interests even though they are not yet parties. Litigation funding is expressly recognised as a legitimate feature of the regime (s 166(2)(b)) and differences in funding models may be decisive. The decision endorses the continued use of multifactorial analysis while cautioning that the inquiry is not an "auction process" and that adversarial safeguards such as special referees or contradictors should be considered where conflicts are acute. The judgment also clarifies that the power under s 67 is not limited to the time of filing; post-filing conduct, expedition and group member behaviour remain relevant (s 58(2)(b)(ii)).

The practical effect is that primary judges now have clear statutory and principled authority to examine funding terms, modelled returns and incentives without fear that doing so exceeds judicial power or imports alien US certification concepts. Defendants remain largely neutral while plaintiffs' representatives compete on the merits of their proposals for group members. The decision reinforces that the overriding purpose (s 56) and dictates of justice (s 58) are not served by mechanically preferring the first filer where a later proceeding offers superior net returns.

Key passages with plain-English translation

Paragraph 51 states: "There can be no 'one size fits all' approach. There is no rule or presumption that the representative proceeding commenced first in time should prevail. In matters involving competing open class representative proceedings with several firms of solicitors and different funding models, where the interests of the defendant are not differentially affected, it is necessary for the court to determine which proceeding going ahead would be in the best interests of group members. The factors that might be relevant cannot be exhaustively listed and will vary from case to case." In plain English this rejects any automatic "first past the post" rule and requires judges to focus on what actually benefits the people whose claims are being brought, looking at whatever practical matters are relevant in that particular dispute.

Paragraph 104 explains: "Litigation funding arrangements are not a mandatory consideration under s 67, but they are not irrelevant. It would be inappropriate to read s 67 with Pt 10 as conferring jurisdiction or granting power subject to limitations not found in their express words." This makes clear that while judges are not forced to look at funding deals in every case, nothing in the Act stops them from doing so when the difference between models is stark and the parties have put the issue in play. The court is not required to ignore commercial reality that will directly affect how much group members ultimately receive.

Paragraph 107 notes that the inquiry into funding "will directly affect the quantum of recovery. There is no reason to exclude those considerations in exercising the power under s 67 to stay one or more of representative proceedings in relation to the same controversy." Plainly, if one model eats up more of the settlement in commissions or fees, that is a legitimate matter when deciding whose case should go forward.

At paragraph 112 the majority observes that the task "is not a judgment regarding a matter of 'mere' case management but a larger task of ensuring that justice is done in the competing representative proceedings which have been commenced under Pt 10 of the CPA where all courts must be astute to protect the best interests of group members." This elevates the exercise beyond routine docket management to a substantive protective jurisdiction.

Paragraph 88 quotes and endorses Jessel MR in McHenry v Lewis that the court must have all plaintiffs before it because "the first action may be a collusive action, one action may embrace further relief than another, one action may be better framed... Various considerations may arise, and until you get the whole of the actions before the Court the Court cannot decide which is to be allowed to proceed, or on what terms." The translation is that judges need the full picture and a flexible discretion; rigid timing rules are not the solution.

These passages collectively ground the rejection of the appellant's primary submission and the approval of the primary judge's methodical comparison of net returns on standardised assumptions.

What fact patterns trigger this precedent

The precedent is triggered whenever two or more open class representative proceedings under Pt 10 of the Civil Procedure Act 2005 (NSW) (or its analogues) are on foot in the same court in relation to the same or substantially overlapping controversy, the defendant is not differentially affected, and applications are made to stay all but one. The judgment expressly contemplates that the proceedings need not be wholly duplicative; substantial overlap is sufficient provided the overlap is not complete and the later proceedings are not an abuse of process. The existence of different funding models (commercial commission versus no-win-no-fee with conditional uplift), different solicitors, different security proposals and different modelled net returns to group members brings the multifactorial analysis into play.

The precedent applies even if the proceedings were commenced within weeks of each other and before any substantive directions have been given. It is engaged whether the competing applications are brought by the representative plaintiffs themselves or, as in traditional equity practice, by the defendant. The fact that group members have not yet been given an opt-out opportunity and are therefore not parties is relevant to whether later proceedings are abusive. The decision is engaged where one proceeding includes additional causes of action or factual allegations that the first plaintiff contends are already encompassed in her claim. Standardised modelling assumptions about trial length, settlement ranges and success probabilities are commonplace triggers.

The precedent does not apply where the defendant's interests are differentially affected, where proceedings are in different jurisdictions without transfer, where one proceeding has already progressed to a stage that makes consolidation or joint hearing impracticable, or where a clear juridical deficiency (insolvent plaintiff, inadequate parties, collusive action) exists in the first proceeding. It is not engaged by closed class proceedings or where only one representative proceeding has been filed. The judgment emphasises that the analysis is fact-sensitive; the weight given to funding will be greater where the difference in net returns is stark and the parties have joined issue on the competence of the respective teams.

How later courts have treated it

The judgment itself treats earlier authorities as consistent with its conclusion once properly understood. McHenry v Lewis is followed for the proposition that the court requires all actions before it and must consider a range of juridical considerations before deciding which should proceed; the passage quoted at paragraph 88 is treated as supporting a discretionary, multifactorial inquiry rather than a mechanical first-in-time rule. Carron Iron Co v Maclaren is followed for the principle that a court of equity will restrain later proceedings only if doing so is conducive to substantial justice; the qualification that the second proceeding should be allowed to continue if that course better serves the ends of justice is emphasised at paragraphs 91-94. Voth v Manildra Flour Mills Pty Ltd is cited for the prima facie right of a plaintiff to insist on determination of regularly invoked jurisdiction, but the majority distinguishes its application to the representative proceeding context where group members' interests must also be protected.

Perera v GetSwift Ltd is distinguished because the Full Federal Court's endorsement of the multifactorial approach was not based on a statutory first-in-time presumption; the High Court majority approves the outcome in GetSwift while rejecting any suggestion that the approach is confined to "case management principles" divorced from the dictates of justice. BMW Australia Ltd v Brewster is applied for the proposition that s 183 is a supplementary gap-filling power that cannot be used to pursue objectives outside the scope of Pt 10; the majority relies on this to confirm that selection of the best sponsor must be anchored in the statutory commands of ss 56-58 and 67 rather than an unconfined judicial preference for one funder.

The judgment treats Henry v Henry and Moore v Inglis as concerned with abuse of process in the strict sense where the same plaintiff seeks the same relief twice; those cases do not dictate the outcome where the plaintiffs are different representative parties and group members are not yet parties. The equitable test-action line of authority (Amos v Chadwick, Bennett v Lord Bury) is treated as supporting the protective approach to group members rather than contradicting it. Overall the court presents its conclusion as a harmonious development of existing principle rather than a departure, reinforcing that the CPA must be read as a whole and that Pt 10 does not dilute the court's existing powers but supplements them with an explicit focus on group members' best interests.

Still-open questions

The judgment leaves open the precise procedural mechanisms courts should adopt in future competing-stay applications. While it suggests the appointment of a special referee under UCPR rr 20.13-20.24 or a funded contradictor who is a common group member, it does not mandate either course. The majority notes that the answer will depend on the nature of the case and that an adversarial approach is preferable where conflicts are acute, but the circumstances in which a court must go beyond the material chosen by the competing parties remain unspecified.

The weight to be given to post-filing conduct, including the degree of expedition after the initial race, is acknowledged as relevant under s 58(2)(b)(ii) but the judgment does not prescribe how courts should balance early filing against later, more carefully prepared models. The interaction between a stay decision and subsequent common fund orders (noted but not resolved by reference to the then-recent BMW v Brewster) is left for another day. Whether a stark difference in modelled returns can ever be decisive if the legal teams are not of equal quality was not tested, because the parties had agreed the teams were equal.

The judgment does not decide whether the same principles apply to closed class proceedings, to proceedings in different registries or courts without transfer, or to cases where the defendant actively opposes one proceeding on liability grounds. The limits of the "best interests of group members" inquiry, and the extent to which a court may investigate matters beyond the evidence adduced by the competitors, are flagged but not exhausted. The precise content of the fiduciary obligations owed by a representative plaintiff to group members in the funding context is acknowledged but not elaborated. Finally, the judgment leaves unanswered how s 175(5) notice to group members should be crafted in contested carriage disputes and what response rate or evidentiary weight such notice should carry. These matters will require future litigation to resolve.

Judgment (7 paragraphs)

[2]

the 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 bookbuild;

[6]

the experience of the legal practitioners (and funders, where applicable) and availability of resources;

[7]

the state of progress of the proceedings; and,

[8]

the conduct of the representative plaintiffs to date."

Her Honour gave most weight to the first consideration - a comparison of "competing funding proposals, costs estimates and net hypothetical return to members". That comparison was based on comparative tables provided by Komlotex that modelled the expected return to group members for each proceeding.
The primary judge found that Komlotex's funding model was likely to provide the best return for group members taking into account the combination of: the absence of a separate funding commission; the incentive created by an uplift in fees only once a specified resolution sum is achieved; the comparable return based on some standardised assumptions; and the fact that no common fund order was being sought by Komlotex[58]. Her Honour said she considered that "there [was] no sensible basis for differentiation between the experience or abilities of the respective legal/funding teams".
Ms Wigmans had submitted before the primary judge that the firms of solicitors and counsel each party had retained were highly experienced and that there was no reason to doubt that any of the firms would have any difficulty in running the litigation on behalf of the class. Ms Wigmans further submitted that the experience of legal practitioners (and funders where applicable) and the availability of resources was a neutral factor. The case being conducted on this basis, it is unsurprising that her Honour assumed that the solicitors in each proceeding were of equal experience and ability, that each of them would take the same number of hours of work to reach settlement or judgment, and, at least implicitly, that each of them had the same chance of achieving each given settlement or judgment sum. In relation to funding arrangements, her Honour assumed that the litigation funders were similarly equal and that each funding model provided incentives and disincentives to achieving the best outcome for group members.
In relation to the second consideration, proposals for security for costs, the primary judge identified the key difference as being that the Wileypark and Georgiou proceedings relied on "after the event" or "ATE" insurance policies of which the provisions were not disclosed. Her Honour concluded that this favoured the Wigmans and consolidated Komlotex proceedings, in which $5 million in security for costs either had been or would be paid into court.

At a glance

Result

Key principles

Issues before the court

Plain English Summary

Deep Dive

Cited legislation

What happened

Why the court decided this way

Before and after state of the law

Key passages with plain-English translation

What fact patterns trigger this precedent

How later courts have treated it

Still-open questions

Catchwords

Judgment (7 paragraphs)

Parties

Legislation Cited (13)

Cases Cited (64)

Cited By (19)

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