Late last year, I noted on this blog that A2 Milk Company Ltd (A2), a company incorporated in New Zealand, was facing class actions in Australia and New Zealand, in relation to allegedly misleading or deceptive statements to the Australian Stock Exchange (ASX) and the New Zealand Exchange Main Board (NZSX) regarding its revenue and earning forecasts. I reported a decision by the Supreme Court of Victoria that it had jurisdiction to determine claims made by some of the plaintiffs in the Australian proceeding under New Zealand legislation, seeking declaratory relief and monetary compensation.
The New Zealand court has now granted a stay of the New Zealand proceeding against A2 pursuant to s 24 of the Trans-Tasman Proceedings Ac 2010 (TTPA): Whyte v A2 Milk Company Ltd [2023] NZHC 22. Like the Australian proceeding, the claim involved allegations of misleading and deceptive conduct on the ASX and NZSX and breaches of continuous disclosure obligations. However, the claim focused solely on contraventions of New Zealand law. There was no risk of overlap with the class of plaintiffs in the Australian proceeding, because the arrangement was that every person represented in the New Zealand proceeding would opt out of the Australian proceeding. Nevertheless, the High Court decided that Australia was the more appropriate court to determine the claim, because of the existence of the Australian proceeding, which was “a substantively similar proceeding”.
In coming to this decision, Edwards J first concluded that the Australian Court had jurisdiction to determine the matter, including claims brought by New Zealand shareholders who acquired shares on the NZSX (at [43]). The Supreme Court of Victoria itself had confirmed that it had jurisdiction to determine the claims and grant relief under the Fair Trading Act 1986 and the Financial Markets Conduct Act 2013. In my last blog post, I noted that a potential limitation of the Australian judgment was that it did not address the question of choice of law, because the question of choice of law could – at least in theory – affect the question of subject-matter jurisdiction. However, this did not appear to be an issue on the facts.
Taking into account the factors listed in s 24(2), the Judge then concluded that Australia was the appropriate forum, because a stay would “streamline both proceedings and promote the twin goals of efficiency and cost saving embodied in the TTPA” (at [119]). The determinative factor was that the Australian proceeding was a “substantially similar proceeding … involving the same facts, substantially the same law, same defendant, and shareholder plaintiffs” (at [101]).
Section 24(2)(f) requires the court to take into account whether “a related or similar proceeding has been commenced against the defendant in a court in Australia”. There has been considerable case law on the problem of multiplicity of class action proceedings. Her Honour provided clear and helpful analysis on this issue, grouping the cases into three different categories, depending on whether the proceedings involved the same or different plaintiff classes and whether they were commenced in the same jurisdiction or in different jurisdictions (at [78]). Here, the proceedings involved different plaintiff classes and were commenced in different jurisdictions. Such proceedings were not considered oppressive or an abuse of process per se, so a stay was not “a pre-determined response”: at [80].
However, to allow the two proceedings to continue in parallel “would be at odds with” the aims of the TTPA, which includes “streamlining the process for resolving civil proceedings with a trans-Tasman element” (at [93]). Case management techniques such as a joint trial could be a useful alternative to a stay in some cases. However, a stay of proceedings would lead to greater efficiencies, and case management techniques did not address the risk of inconsistent judgments, which was “a significant risk in this case” (at [97]). The Australian proceeding had been commenced first, and this, too, was relevant to the “streamlining and cost reduction purposes of the TTPA” (at [100]). The fact that the plaintiff’s proceeding had been commenced in New Zealand was not a permissible consideration (at [36]).
In these circumstances, even if some of the other factors in s 24(2) had favoured New Zealand as the appropriate forum, they would have been “outweighed by the existence of a substantively similar proceeding in Australia” (at [119]). As it happened, the other factors did not favour New Zealand.
It was true that the majority of the shareholders represented in the New Zealand action would be New Zealand residents, and that A2 was incorporated in New Zealand. However, this was of limited relevance because the underlying dispute had “little or no connection to place of residence or place of business” (at [49]).
In relation to “the law that it would be most appropriate to apply in the proceeding” (s 24(2)(e)), the Judge noted that “the underlying premise” of this provision was that courts are ordinarily best placed to apply their own law (at [68]). In the present case, however, the laws of both countries were engaged (at [57], [69), and the Judge did not consider “one law to be more appropriate than the other” (at [69]). It is not clear from the judgment whether the Australian court is likely to apply Australian law to claims that, in the New Zealand court, would have squarely fallen within the FTA or FMCA (and that, overall, may have had a closer connection with New Zealand). In such a scenario, the applicable law might have assumed greater relevance.
The Judge further noted that any juridical advantage enjoyed under the FMCA in the New Zealand court was not a relevant consideration (at [65]). The Judge gave a number of reasons for this conclusion. An additional – arguably more fundamental – point is that the trans-Tasman regime “must, almost of necessity, eliminate any … juridical advantage” in the forum from consideration: Nevill v Nevill [2016] FamCAFC 41, (2016) 307 FLR 23 at [34], 40] and [45], cited in Conflict of Laws in New Zealand at [2.326]; see also Richard Garnett “Determining the Appropriate Forum by the Applicable Law” (2022) 71 ICLQ 589 at 595.
Finally, the Judge noted the burden on A2 of defending multiple class actions (at [105]), and that a stay of the New Zealand proceeding would not preclude the plaintiffs from bringing their claim, which meant that “the intrusion on their access to justice interests” was “very low” (at [112]).
