This is a decision in the shareholder class actions against The a2 Milk Company Ltd (A2).
A2 was incorporated in New Zealand and the company’s shares are listed on both the New Zealand stock exchange (NZSX) and the Australian stock exchange (ASX). As noted by Button J, the class action advances claims on behalf of persons who at any time between 19 August 2020 and 9 May 2021 held an interest in fully paid ordinary shares in A2 that was either acquired by buying those shares on the ASX or the NZSX, or acquired before 19 August 2020 and retained until a date after 28 September 2020. The proceedings allege that A2 breached its continuous disclosure obligations and engaged in misleading or deceptive conduct, in contravention of both Australian and New Zealand statutes. A separate opt-in class action was also commenced in the High Court of New Zealand in May 2022 on behalf of persons who bought A2 shares on either the NZSX or the ASX, but only makes claims under New Zealand legislation.
By summons filed by the plaintiffs on 15 June 2022, the Court was asked to determine, at an early stage ahead of trial, three questions, being:
Her Honour appointed Mr Alistair Pound SC as contradictor because A2, in her Honour’s words, “decided to take a largely neutral stance”.
It was submitted by both the plaintiffs and the contradictor that the Court had jurisdiction to determine the NZ Claims. Her Honour agreed, finding that the Court had jurisdiction over the NZ Claims.
In considering the issue, her Honour emphasised that the term ‘jurisdiction’ has different dimensions and that “care is required to avoid erroneously conflating [them]…” (at ). Her Honour noted that jurisdiction has a personal dimension, a subject matter dimension and a geographic, or territorial, dimension. Her Honour held that the Court had personal jurisdiction on the basis of A2 filing an unconditional appearance. Her Honour also noted that caution must be taken when considering personal and subject matter jurisdiction, noting (at ):
“while subject matter jurisdiction will determine whether the desired fruits of the exercise of personal jurisdiction are available, a finding that subject matter jurisdiction is wanting does not impugn a finding of personal jurisdiction”. Her Honour held that in any event the Court had subject matter jurisdiction by virtue of the unlimited jurisdiction granted by the Victorian Constitution and that no issues around territorial jurisdiction were present.
Her Honour noted that it was not unusual for an Australian court to apply foreign law where the court choses to apply that law (the lex causae) and that foreign law can include foreign statutes. Her Honour noted that there are, however, limits. In this instance, the two issues that arose were: (1) whether enforcement of the NZ Claims advanced a foreign governmental interest; and (2) whether the NZ statutes conferred exclusive jurisdiction on New Zealand courts.
Her Honour agreed with the submissions of the plaintiffs and the contradictor that the NZ Claims did not advance government interests (see -).
In relation to the issue regarding the NZ statutes, the defendants submitted an expert report from a New Zealand QC, Ms Cooper (Cooper Report). The Cooper Report stated that it was Ms Cooper’s opinion that the relevant provisions of the FT Act concerning jurisdiction “do not evince a parliamentary intention that only the courts of New Zealand are to have the jurisdiction to enforce those statutory provisions” (at ). The parties also agreed as to the content of New Zealand law regarding the FT Act. On these bases, her Honour held that the Court had jurisdiction to determine those NZ Claims that fell under the FT Act.
As to the FMC Act, both the plaintiffs and contradictor submitted that it did not disclose an intention that claims under it could only be brought in New Zealand courts. The Cooper Report did not address the FMC Act. Her Honour then considered (at -) relevant sections of the Interpretation Act 1999 (NZ) and the FMC Act, holding ultimately that the FMC Act did not expressly or by implication prohibit foreign courts from enforcing the provisions of the FMC Act.
Her Honour held, agreeing with the submissions of the plaintiffs and the contradictor, that the Court had power to grant declaratory relief (at -). As to the Court’s power to grant monetary relief, her Honour considered the question to be confusingly framed in the summons. Her Honour considered that the substantive issue was “whether, assuming that the lex causae is the law of New Zealand and that the plaintiffs succeed in establishing contraventions of the New Zealand provisions in issue, this Court will be able to award monetary compensation to the plaintiffs and group members who establish loss with the necessary causal connection” (at ). Her Honour then set out a detailed analysis of the issue at -, ultimately concluding that the Court had the power to award monetary relief.
Supreme Court of Victoria, Button J,
28 November 2022
Plaintiffs’ Solicitors: Shine Lawyers / Slater & Gordon
Defendants’ Solicitors: Herbert Smith Freehills
Plaintiff’s Funder: N/A
Austlii Link: Available here
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