The Brambles shareholder class action has it all

This shareholder action sees the Court determine whether two competing class actions – both with substantial bookbuild – should be consolidated, stayed or proceed, and on what terms. The case judge also deals with applying a common fund order and rejects attempts by the defendant to cost-cap the work of plaintiff lawyers in the mater.

In this matter there were two competing 'open' securities class actions, which were commenced within a week of each other. In the Southernwood proceeding (commenced by Slater & Gordon and funded by IMF) there were more than 4,900 signed-up class members. In the Kidd proceeding (commenced by Maurice Blackburn and funded by Harbour) there were more than 2,400 signed-up class members. Although the claim periods in the two proceedings did not initially coincide precisely, as a result of an amendment they now do.

In this judgment Murphy J determined how to deal with the competing actions. The applicant in the Southernwood proceeding sought an order that the two proceedings be consolidated. The applicant in the Kidd proceeding opposed consolidation, but did not oppose the two firms working co-operatively together, which it contended could be achieved without consolidation by way of detailed case management orders. The respondent did not oppose the two proceedings being consolidated, but on the basis that only one firm of solicitors should represent the applicants in the consolidated proceeding to avoid duplication of costs, or that there otherwise be detailed orders so as to avoid duplication of costs; but if that was not to occur, then one of the proceedings should be permanently stayed.

His Honour indicated that he would have been inclined to permanently stay one of the two proceedings, if it weren’t for the fact that both proceedings have a substantial number of signed-up class members, which he considered distinguished the circumstances in this case from those in the GetSwift case (at [8]-[9], [14]).

His Honour determined that the appropriate course was to consolidate the two proceedings, and that the solicitors for the applicants in the respective proceedings should jointly act for the applicants in the consolidated proceeding, but subject to a series of prescriptive orders which were designed to minimise any duplication of costs (and which would, to a large extent, assuage the respondent’s concerns about excessive costs arising from the applicants being represented by two firms of solicitors, instead of one). Those orders included:

  • the establishment of a Litigation Committee', comprising an equal number of solicitors from Slater & Gordon and Maurice Blackburn, for the purpose of making 'major strategic decisions, managing the litigation and allocating tasks … on an equal basis (calculated by reference to hours of work performed)'
  • the engagement of one set of counsel
  • the solicitors entering into a 'cooperative litigation protocol'.

His Honour also made: (i) a common fund order under which IMF and Harbour are to jointly fund the consolidated proceeding, and to each contribute 50% to any security for costs and any adverse costs order; (ii) an order for the appointment of an expert costs referee to undertake a review, once every four months, and report to the Court as to whether there is any unnecessary or excessive duplication of work between the applicants' solicitors.

His Honour rejected the submission of the respondent that 'extreme' circumstances were required before two or more sets of solicitors would be permitted to act jointly for the applicants / plaintiffs in a representative proceeding – even if that proposition were true in relation to ordinary civil proceedings, it did not apply in the context of representative proceedings (at [54]-[58]).

His Honour also rejected the respondent’s application for a 'costs capping' order, on the basis that any unnecessary or excessive duplication of work (and therefore costs) will be identified early via the costs referee, and can be addressed appropriately at that time (at [63]).

Finally, his Honour also considered it appropriate to make a common fund order, which was not opposed by the respondent (notwithstanding that the Court’s power to make such an order is currently before the High Court) (at [68]-[77]).

Case details

Southernwood v Brambles Ltd [2019] FCA 1021

  • Federal Court of Australia, Murphy J, 28 June 2019
  • Applicant's Solicitors (Southernwood Proceeding): Slater & Gordon
  • Applicant's Funder (Southernwood Proceeding): IMF Bentham Ltd
  • Applicant's Solicitors (Kidd Proceeding): Maurice Blackburn
  • Applicant's Funder (Kidd Proceeding): Harbour Fund III LP
  • Respondent’s Solicitors: Allens

Read more on Austlii: Southernwood v Brambles Ltd [2019] FCA 1021

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