This is a class action against multiple respondents alleging misleading conduct and unconscionable conduct which induced investors to acquire or invest in a cryptocurrency known as ‘Qoin’. Qoin was illiquid and not easily convertible into fiat currency or goods and services and ultimately lost all of its value, thereby resulting in loss and damage to the investors.
The Australian Securities and Investments Commission (ASIC) has commenced a civil penalty proceeding against the first respondent in respect of substantially the same conduct. On that basis, several of the respondents applied for a stay of the class action pending the conclusion of the civil penalty proceeding. Specifically, the respondents pointed to difficulties in defending the class action arising from possible claims of penalty privilege by two key witnesses (who are themselves respondents to the class action); the possibility of the first respondent having to expose its defence to the class action and thereby exposing its defence to the ASIC proceeding; the wastage of costs and the practical burden of defending two overlapping proceedings; and the risk of inconsistent findings.
Although the ASIC proceeding is not a criminal proceeding per se, Rangiah J considered that the guidelines set out in the context of overlapping civil and criminal proceedings, as well as in two overlapping civil proceedings, were still relevant. Ultimately, the question to be determined was “whether the interests of justice would be served by ordering a stay of the [class action], taking into account all relevant factors” (at ).
His Honour considered that:
His Honour therefore refused the application for a stay (and indicated that he would recommend to the Chief Justice that both proceedings be managed by the same judge so as to facilitate their appropriate case management).
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