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Parkin v Boral Limited (Temporary Stay) [2021] FCA 889

  • Legal Development 21 December 2021 21 December 2021
  • Asia Pacific

  • Insurance & Reinsurance

A series of decisions by Justice Lee in the Federal Court of Australia consider the issues of cost duplication and re-litigation in the context of competing securities class actions, highlighting the balancing act the Court must undertake when dealing with a multiplicity of proceedings covering substantially similar facts and the practical mechanics of case management that must follow.

The competing actions

Three separate open class actions were filed against Boral Limited (Boral) in 2020, alleging that Boral had engaged in misleading or deceptive conduct and had breached its continuous disclosure obligations in relation to financial irregularities found in its US business, Headwaters Inc. They were:

  1. CJMcG Pty Ltd as Trustee for the CJMcG Superannuation Fund v Boral brought by Quinn Emanuel Urquhart & Sullivan (CJMcG proceeding);
  2. Parkin v Boral brought by Maurice Blackburn (Parkin proceeding); and
  3. Martini Family Investments ATF Martini Family Investments Super Fund v Boral brought by Phi Finney McDonald (Martini proceeding).

Consideration of how to deal with the multiplicity issues was initially deferred[1] until after the High Court had delivered its decision in Wigmans v AMP Limited [2021] HCA 7 (Wigmans)[2]. That case set out a “multifactorial approach”[3]:

“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.”

The ‘Beauty Parade’ and the selection of the Parkin proceeding

In his initial decision[4] following the judgment in Wigmans, Justice Lee considered a large number of factors, the vast majority of which were considered to have a minimal or neutral effect on the assessment of the competing claims.

Ultimately, his Honour determined that the Parkin proceeding should proceed as the primary proceeding and the CJMcG proceeding should be permanently stayed. The key factor in reaching this decision was that his Honour considered the Parkin proceeding was likely to offer the best financial return to group members as it was brought on the basis of a no-win/no-fee funding model, as compared to the other two class actions which were supported by litigation funders.

The Martini proceeding was not stayed, but allowed to proceed as a closed class proceeding because of the significant number of institutional investors that were signed up in that class action.

Opt-out notices

In a subsequent decision[5], his Honour considered the appropriate mechanism by which to provide notice of his earlier judgment to the group members in the Parkin proceeding and Martini proceeding and the steps that needed to be taken if the group members in the Martini proceeding (who were also group members in the Parkin proceeding) wished to continue to advance their claims in the Martini proceeding.

Justice Lee determined that it was appropriate to order that a notice be sent to those persons who were group members in the Parkin and Martini proceedings to inform them that, amongst other things, the Court had selected the Parkin proceeding as the most appropriate vehicle to advance group member claims.

What to do with the Martin proceeding?

Following the sending out of the notices and in a further judgment[6], Justice Lee considered whether the the Martini proceeding should be allowed to continue to proceed in the ordinary course alongside the Parkin proceeding or whether it should be stayed (a course which Boral and the applicant in the Parkin proceeding initially supported).

Evidence was provided by the solicitor for Boral, who said that in his experience, actions involving more than one firm of solicitors acting for the representative parties or more than one representative party with separate representation lead to increased complexities, and therefore increased costs. Justice Lee agreed with this unchallenged evidence. Having concluded that one proceeding advancing one pleading, with one set of solicitors and counsel was most likely to facilitate the overarching purpose, His Honour engaged in an analysis of the pros and cons of staying the Martini proceeding.

As the parties had not given an undertaking to not to re-litigate common issues in the Martini proceeding, there was a risk that the applicant in the Martini proceeding could seek to re-litigate the common issues again, in the event that the Parkin proceeding was unsuccessful. Solicitors for the Applicant in the Martini proceeding conceded that they did indeed hope to keep this prospect open.

Justice Lee examined the general operation of Part IVA of the Federal Court of Australia Act acknowledging that theoretically, there was nothing which prevented a group member who had opted out of the representative proceeding to be able to relitigate issues in a different proceeding. In particular, having noted the caution expressed by the High Court concerning the use of provisions in the Act such as s 33ZF for “rewriting the scheme of the legislation”[7], his Honour did not think that an order made under s 33ZF of the FCA Act could be used to prevent the common issues being relitigated by a group member who had opted out. Ultimately, his Honour concluded that in reality, the risk of relitigating the same issues was low, not only because the prospective applicant would need to overcome the case law against them, but also it would not be commercially viable for a litigation funder to contemplate advancing funds to relitigate issues that were adversely decided in another proceeding.

Ultimately, his Honour decided not to order a stay of the Martini proceeding for the following reasons:

  1. First, and most importantly, Boral was no longer actively supporting the application for a temporary stay;
  2. Secondly, Boral’s proposed orders to avoid duplicative costs had been agreed to by the Applicant’s solicitors in the Martini proceeding;
  3. Thirdly, the solicitors in each of the Martini and Parkin proceedings were highly experienced and had cooperated together previously; and
  4. Fourthly, the proceedings would be closely case managed so as to ensure that unnecessary costs were not incurred.

Justice Lee’s comments concerning the limited ability of an individual group member who opts out of a successful class action or a funder to seek to relitigate common issues are a pragmatic assessment of the commercial limitations and inherent difficulties posed by competing class actions after the ‘beauty parade’ has been won.

The outcome is heavily based on the factual circumstances of the case. But it does demonstrate that a Court will not automatically merge multiple class actions into one proceeding, even if the factual circumstances are similar, when one proceeds on an open class basis and the other on a closed class basis. The Court will consider practical realities, including how the parties are likely to interact with each other, and the views of the respondent. On this occasion, the fact that Boral was “agnostic” on the issue was a very significant factor in his Honour’s decision to let the Martini proceeding run along the Parkin proceeding.

[1] CJMCG Pty Ltd as Trustee for the CJMCG Superannuation Fund v Boral Limited [2020] FCA 914 (19 June 2020).

[2] Wigmans v AMP Limited [2021] HCA 7 (10 March 2021).

[3] Per Gageler, Gordon and Edelman JJ at [52].

[5] Parkin v Boral Limited (Opt Out Notices) [2021] FCA 478 (27 April 2021).

[6] Parkin v Boral Limited (Temporary Stay) [2021] FCA 889 (21 July 2021).

[7] In BMW Australia Ltd v Brewster [2019] HCA 45.


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