Consolidation on the cards for competing actions in Lendlease

Competing class actions – Proposal by plaintiffs for consolidation and joint representation – Consolidation ordered – Joint representation refused

These are two overlapping open shareholder class actions against Lendlease Corporation Ltd (Lendlease). The first proceeding was filed on 18 April 2019 by Maurice Blackburn (Pallas proceeding). The second proceeding was filed on 6 August 2019 by Phi Finney McDonald (Fletcher proceeding).

In this judgment, Hammerschlag J ordered that the Pallas and Fletcher proceedings be consolidated, but refused to grant leave for Maurice Blackburn and Phi Finney McDonald to be jointly named as solicitors on the record in the consolidated proceeding.

The plaintiffs’ position was that the proceedings should only be consolidated if joint representation was ordered. They argued that consolidation with joint representation was the best available approach because:

  • it would avoid a costly and time-consuming carriage motion (and a possible appeal) to determine which of the plaintiffs and their legal representatives should have conduct of the proceedings;
  • the Court should be cognisant of the choice made by class members to retain a particular firm of solicitors to act for them in the proceeding, and refusing to allow joint representation could result in institutional investors opting out and commencing new proceedings, which would occasion further duplication, expense and inconvenience; and
  • any theoretical risk that joint representation would give rise to increased costs would be minimised by the terms of a ‘litigation protocol’, which would regulate the firms’ cooperation and conduct of the consolidated proceeding, including by providing for the appointment by the Court of an independent costs referee to conduct periodic inquiries into whether there had been unnecessary or excessive work performed by the lawyers. The plaintiffs cited class actions in which this approach had been adopted, including Southernwood v Brambles Ltd (2019) 137 ACSR 540; [2019] FCA 1021 (Murphy J) and Zonia Holdings Pty Ltd v Commonwealth Bank of Australia (No 2) [2019] FCA 1061 (Yates J).

His Honour refused to order joint representation. His Honour observed that “there is a long standing rule of practice that plaintiffs are to be represented by one solicitor” (at [10]). While his Honour acknowledged that justice may dictate that this rule be departed from in certain circumstances (and there is no requirement that these circumstances must be “extreme” before joint representation may be ordered), he nevertheless held that in the present case there was “no good reason in principle to depart from the rule and every good reason to adhere to it” (at [24]).

In so holding, his Honour said that:

  • departure from the rule should not be generally encouraged, particularly in circumstances (such as the present) where there is no divergence of interests between the plaintiffs seeking joint representation;
  • the risk of joint representation leading to duplication of work and increased costs is real and should be avoided at the outset;
  • both law firms are highly experienced and the plaintiffs would be equally well served by either;
  • he was not persuaded that the risk of institutional investors opting out was substantial, and even if it did eventuate the Court would manage it;
  • he would not allow a lengthy, complex and expensive carriage motion to take place, and in any event the plaintiffs’ proposed orders would be equally susceptible to appeal as the determination of any carriage motion; and
  • nothing would inhibit the firms from entering into a contractual arrangement for the sharing of legal work, but these are matters into which the Court should not intrude.

His Honour stood the matter over to give the plaintiffs the opportunity to reach agreement on which firm would be named as solicitors on the record in the consolidated proceeding. His Honour said that in the event that agreement was not forthcoming, he would determine which firm would act pursuant to an “expeditious and abbreviated” procedure.

Case details

Pallas v Lendlease Corporation Ltd;
Fletcher v Lendlease Corporation Ltd [2019] NSWSC 1631

  • Supreme Court of New South Wales, Hammerschlag J, 21 November 2019
  • Plaintiffs’ Solicitors in Pallas proceeding: Maurice Blackburn;
  • Plaintiff’s Solicitors in Fletcher proceeding: Phi Finney McDonald;
  • Defendants’ Solicitors: Herbert Smith Freehills;
  • Plaintiffs’ Funder in Pallas proceeding: Harbour;
  • Plaintiff’s Funder in Fletcher proceeding: Therium

Read more about this case on Austlii: Fletcher v Lendlease Corporation Ltd [2019] NSWSC 1631

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