Introduction

The benefit of the trans-Tasman operation as a dual-listed company comes with the attendant risk of similar litigation in both Australia and New Zealand. In Whyte v the A2 Milk Company Ltd,⁽¹⁾ the High Court addressed how a stay under the Trans-Tasman Proceedings Act (TTPA) 2010 can be utilised to manage risks associated with multiple similar representative proceedings (or class actions) across both countries, while balancing the plaintiffs' access to justice. In the first application of the TTPA to trans-Tasman class action proceedings, the a2 Milk Company Limited (A2) was granted a stay of litigation in New Zealand pending the resolution of a similar class action in Australia.

 

Facts

A2, a New Zealand company, faced class actions by investors on both sides of the Tasman on the basis of statements made both to the Australian Stock Exchange (ASX) and the New Zealand Main Exchange Board (NZSX) regarding its revenue and earnings forecasts during August 2020 and May 2021.

In Victoria, two opt-out class representative proceedings were commenced in 2021 which have since been consolidated (the Australian proceeding).⁽²⁾ The Australian proceeding encompassed both Australian and New Zealand investors, and alleged that statements made to the ASX and NZSX were misleading or deceptive and contravened continuous disclosure obligations, in breach of both New Zealand and Australian law.⁽³⁾ On 24 November 2022, the Supreme Court of Victoria held that it had jurisdiction to determine the claimed breaches of New Zealand law.⁽⁴⁾

In May 2022, a separate class action proceeding was filed in New Zealand. The representative plaintiff, Mr Whyte, sought leave to commence an opt-in class action regarding the same statements to the NZSX, but alleging breaches only of New Zealand law. To avoid overlap, it was proposed that every person who opted into the New Zealand proceeding would have to irrevocably "opt-out" of the Australian proceeding.

A2 sought an order under section 24 of the TTPA staying the New Zealand proceeding pending judgment on liability in the Australian proceeding or final settlement. Section 24 of the TTPA provides that the New Zealand court may stay a proceeding if it is satisfied that an Australian court:

• has jurisdiction to determine the matters in issue between the parties; and
• is the more appropriate court to determine those matters.

Decision

Grant of stay

Edwards J granted A2's application for a stay. She began by recognising that the genesis of the TTPA was the "special relationship" between New Zealand and Australia, and that the purpose underpinning the power to stay proceedings under section 24 was to "streamline the process for resolving civil proceedings with a trans-Tasman element in order to reduce costs and improve efficiency".⁽⁵⁾

Addressing the first limb in section 24, Edwards J agreed with the Supreme Court of Victoria's conclusion that the Australian courts did have jurisdiction to determine the claims under New Zealand law by New Zealand shareholders.⁽⁶⁾

Secondly, applying the factors listed in section 24(2) of the TTPA, Edwards J was satisfied that the Australian court was the more appropriate court to determine the claim. While several factors identified in section 24(2) were either neutral or mildly favoured a stay,⁽⁷⁾ the determinative factor was that the pre-existing Australian proceeding was substantially similar to the proposed New Zealand proceeding.

Although the two sets of proceedings were not identical, outside of pleading convention and form, they were substantively very similar insofar as they related to the New Zealand law claims.⁽⁸⁾ Placing emphasis on the purpose of the TTPA, Edwards J observed that a stay would promote the twin goals of efficiency and cost saving.⁽⁹⁾ Conversely, "[a] multiplicity of proceedings raises a multiplicity of issues" including duplication of costs and resources as well as the risk of inconsistent judgments.⁽¹⁰⁾ While the fact that the Australian proceeding was filed "first in time" was not determinative of the appropriate forum, in the context of section 24 of the TTPA it did carry weight – the likelihood that the Australian proceeding would get to trial first meant that a stay in New Zealand was the appropriate mechanism for streamlining and cost-reduction.⁽¹¹

 

Representative orders

Edwards J granted Whyte's application for leave to commence the proceedings under rule 4.24 of the High Court Rules 2016. A2 had opposed the order on the basis that the New Zealand proceeding duplicated the Australian proceeding. However, the Court held that a stay was the appropriate response to the issues of duplication between concurrent proceedings. Granting leave, albeit accompanied by a stay, provided Whyte (and those plaintiffs he represented) with various future options that were consistent with their rights to access to justice.⁽¹²⁾ For example, Edwards J noted that they could await judgment (or settlement) in the Australian proceeding and then pursue the New Zealand proceeding utilising their choice of litigation funder, lawyers and forum. Alternatively, they could choose to either join the existing Australian proceeding (by not opting out) or commence a new proceeding in Australia which replicated the New Zealand proceeding.⁽¹³⁾

 

Comment

This decision has significance for businesses with operations on both sides of the Tasman and businesses with dual listing on the ASX and NZSX. It adds to a growing body of case law and commentary addressing the problem of multiplicity of class action proceedings, as the first reported decision addressing overlapping class actions across Australia and New Zealand.

Parties should be aware that, in appropriate cases, Australian courts can exercise jurisdiction over representative claims that involve New Zealand parties, arise from events in New Zealand and are based on breaches of New Zealand legislation. Notably, the New Zealand High Court and the Supreme Court of Victoria agreed that it is appropriate for an Australian class action to extend to claims under New Zealand law in circumstances where New Zealand and Australian claims co-exist.

This decision is the first judicial guidance regarding concurrent class actions across Australia and New Zealand. It indicates that the New Zealand courts' general reluctance for concurrent representative proceedings is likely to extend to situations where there are concurrent proceedings in Australia that involve substantially similar issues. This is significant because the New Zealand Law Commission's 2022 review of New Zealand's class action regime recognised that concurrent actions are generally undesirable but recommended that the issue continued to be managed by the courts, either by ordering stays or active case management mechanisms
(such as consolidation and joint trials).⁽¹⁴⁾

Overall, this judgment highlights that parties to disputes with a trans-Tasman context need to carefully consider their litigation strategy and be aware of the mechanisms available in the TTPA for appropriately managing issues of efficiency, cost and complexity.

For further information on this topic please contact Guy Tompkins or Portia Baine at Wilson Harle by telephone (+64 9 915 5700) or email ([email protected] or [email protected]).

 

Endnotes

⁽¹⁾ Whyte v the a2 Milk Company Ltd [2023] NZHC 22.
⁽²⁾ Thomas v the a2 Milk Company Limited [2022] VSC 319.
⁽³⁾ Namely, the Financial Markets Conduct Act 2013 (New Zealand) and the Fair Trading Act 1986 (New Zealand).
⁽⁴⁾ Thomas v the a2 Milk Company Ltd [No. 2] [2022] VSC 725.
⁽⁵⁾ Whyte v the a2 Milk Company Ltd [2023] NZHC 22 at [30] – [38]; citing section 3(1) of the Trans-Tasman Proceedings Act 2010.
⁽⁶⁾ At [39] – [47]; see also Thomas v the a2 Milk Company Ltd [No. 2] [2022] VSC 725.
⁽⁷⁾ Neutral factors included the place of residence of witnesses and the most appropriate law to apply. Another factor favouring a stay was the financial circumstances of the parties (specifically, the financial burden on A2 of defending simultaneous class actions in both jurisdictions).
⁽⁸⁾ At [70] – [76].
⁽⁹⁾ At [119].
⁽¹⁰⁾ At [77].
⁽¹¹⁾ At [99] – [101].
⁽¹²⁾ At [121] – [126].
⁽¹³⁾ Although both options would require them to discontinue the New Zealand proceeding, see at [106].
⁽¹⁴⁾ Class Actions and Litigation Funding (Law Commission, report 147, May 2022) at [5.3] – [5.20].