A solution to the problem of multiplicity: consolidation of the Allianz class action proceedings

Fuller v Allianz; Wilkinson v Allianz [2021] VSC 581

The plaintiffs in two competing class actions relating to car dealer “add-on” insurance have successfully applied to consolidate proceedings in the Supreme Court of Victoria as a solution to the problem of multiplicity.

Johnson Winter & Slattery and Maurice Blackburn will now act as joint solicitors on the record for the plaintiffs to the consolidated proceeding. The decision is the first to consider consolidation in the context of a foreshadowed application for a group costs order (GCO).  

Justice Nichols found that consolidation in this case would protect the interests of group members, did not prejudice the defendants, Allianz and Allianz Life Insurance, and solved the problem of multiplicity in a way that facilitates the just, efficient, timely and cost effective resolution of the dispute.

Key findings

• Justice Nichols found that there is no “one size fits all” or “silver bullet” solution for the Courts in handling the “vice” of multiplicity,[1] however her Honour stated that consolidation of class actions will usually only be employed with consent of the parties, solicitors and any funders.[2]
• While the defendants opposed the “spectre” of two solicitors on the record for the plaintiffs, it was held that there is now a well-established line of authority permitting joint representation in this context, subject to the requirement that the future conduct of the consolidated proceeding is:[3]
  • likely to be consistent with the interests of group members and the overarching purpose; and
  • not prejudicial to the defendants.
• Her Honour found that the defendants’ concerns in relation to duplication of costs were negated by the plaintiffs’ proposed orders precluding recovery by the solicitors of the costs of any duplicated work from the defendants or group members, in what was described as a “potent incentive” to curb duplication.[4]  
• In respect of the foreshadowed GCO application, it was held that costs limiting orders and proposed undertakings by the plaintiffs and their solicitors in relation to the conduct of the consolidated proceedings would remain in place even if a GCO was subsequently ordered.[5] The plaintiffs would still be required to satisfy the Court as to the appropriate rate for any GCO, which might be later adjusted by the Court, and any settlement will still be subject to the Court’s supervisory jurisdiction.[6]
• In the circumstances, Her Honour did not accept the defendants’ contention that consolidation would amount to a higher GCO rate. It was not for the Court to create a price competition through a contested carriage dispute in circumstances where the Court is satisfied that consolidation is appropriate.[7]
   

Background

Tracy-Ann Fuller, represented by Johnson Winter & Slattery, and Jordan Wilkinson, represented by Maurice Blackburn, separately commenced overlapping representative proceedings in the Victorian Supreme Court against Allianz and Allianz Life Insurance for claims arising out of the sale of “add-on” insurance products to consumers who purchased a vehicle through car dealerships.

Both plaintiffs have foreshadowed applications for a group costs order pursuant to section 33ZDA of the Supreme Court Act 1986 (Vic).[8] The regime deals with costs in class action proceedings and is the first of its kind in Australia, effectively allowing law firms to charge contingency fees as a percentage of any successful recovery, on condition that they give security for costs and will become liable for any adverse costs orders (our recent article on the first determination of a GCO application is here).

Both plaintiffs sought to consolidate the proceedings, partly as a means of avoiding a costly and drawn-out carriage dispute and to provide greater certainty and efficiency for group members who will now have their claims prosecuted in a single proceeding.

Determination

In granting the consolidation application, Justice Nichols found that there would be an immediate “meaningful, substantive benefit” for group members, whose claims will now be advanced in a single proceeding.[9] This was to be preferred to the defendants’ proposed alternative of a contested carriage dispute and a stay of one proceeding, which would entail cost, delay and inconvenience.

Her Honour was satisfied that the proposed arrangements for the conduct of the consolidated proceeding and the question of costs would be appropriately addressed by the plaintiffs, having regard to the primacy of group members’ interests and the lack of prejudice suffered by the defendants. The critical aspects of the plaintiffs’ application were:

• Costs limiting orders which would preclude recovery by the solicitors of the costs of any duplicated work from the defendants or group members, in what was described as a “potent incentive” to curb duplication.
• Proposed undertakings to the Court by the plaintiffs and their solicitors to conduct the consolidated proceeding in accordance with a cooperative litigation protocol setting out a number of mechanisms aimed at facilitating effective collaboration between Maurice Blackburn and Johnson Winter & Slattery and which emphasised the interests of the group members as the primary consideration in interpreting and giving effect to the protocol.
• The appointment of a costs referee for the purpose of identifying any duplicated work being performed in the consolidated proceeding.

The defendants sought to argue that the plaintiffs’ consolidation application should be distinguished from previous decisions on multiplicity problems in class actions because of the novel issues arising from the foreshadowed GCO applications. It was submitted that a contested carriage dispute resulting in the stay of one proceeding would result in a lower GCO rate being sought by the competing plaintiffs. 

Justice Nichols rejected this contention, finding that the submission was put speculatively and without evidentiary support. It was held that the costs limiting orders and proposed undertakings by the plaintiffs and their solicitors in relation to the conduct of the consolidated proceedings would remain in place even if a GCO was subsequently ordered.[10] Further, the plaintiffs would still be required to satisfy the Court of the appropriate rate for any GCO.[11]

In making application for a group costs order, whether in the context of a contested carriage dispute or subsequent to an order for consolidation, the plaintiffs would bear the onus of satisfying the court, on sufficient evidence, as to an appropriate rate. It is not a matter of the applicant for a GCO nominating a percentage which the court adopts.

On the question of funding, her Honour also held that the appropriate time for addressing alternative funding arrangements would be after the foreshadowed GCO application. The lack of any definitive arrangements in the event a GCO is refused was not a reason to refuse the consolidation application.[12] 

Conclusion

Justice Nichol’s decision highlights the “inherent flexibility” of the Court’s handling of multiple class action proceedings, a phenomena contemplated by Part 4A of the Supreme Court Act 1986 and corresponding legislation in other jurisdictions. Where consolidation is by consent between plaintiffs, cost limiting orders and protocols for the conduct of the consolidated proceedings will be crucial to address the interests of group members, the overarching purpose, and any prejudice of the defendants. If those mechanisms are deemed appropriate, the status of future funding arrangements and pending GCO applications are less likely to be determinative for the issue of consolidation.

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