Despite protests from CBA, two law firms have been granted permission to work together to bring two separate class actions against the major bank without combining their proceedings.
CBA is facing two separate class actions on behalf of shareholders, both in regard to the bank’s failure to alert the market about money laundering through its deposit machines.
The major bank argued that the reasoning for the abandonment of the consolidation proposal in face of a cooperative case was down to an opportunity in the interest of the lawyers, and not who they represented.
However, the Supreme Court’s Honourable Justice Yates disagreed and made a cooperative case order, which will allow both firms to work on behalf of their clients in their own class actions but with one set of counsel to represent applicants and group members in proceedings.
The class actions stem from a 2018 AUSTRAC court case where the bank settled with AUSTRAC due to 53,700 contraventions of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) for failing to carry out AML/CTF financing risk assessments prior to rolling out intelligence deposit machines (IDMs), which facilitate anonymous cash deposits.
The Phi Finney McDonald claim was brought on behalf of investors who acquired CBA shares between 16 June 2014 to 3 August (inclusive) 2014, but was also noted as being limited to those that executed litigation funding agreements with Therium Australia Ltd prior to commencement, a statement from Phi Finney McDonald said.
The Maurice Blackburn class action, filed in 2017, was filed on behalf of investors who suffered losses due to the share price fall following AUSTRAC’s institution of legal proceedings against the CBA, and is open to purchasers of ordinary CBA shares during the period from 1 July 2015 to 3 August 2017 and still held some or all of those shares until after 1pm on that end date.
The cooperative case management order also aims to ensure that applicants “use their best endeavours to ensure that all correspondence and other communication from the applicants’ solicitors to the respondent’s solicitors shall be sent or made jointly on behalf of the applicants by only Maurice Blackburn Pty Ltd or Phi Finney McDonald Pty Ltd” where proceedings are common, the judgment explained.
In coming to his decision, Justice Yates had required the firms to prepare a cooperative litigation protocol that would govern joint activity under any proposed cooperative case management orders, with CBA submitting that it had “considerable concerns” with the protocol.
CBA had argued that Maurice Blackburn and Phi Finney McDonald’s reasoning for abandonment of an original consolidation proposal in favour of cooperative case management orders “can only be seen as an opportunity to advance the interests of the ‘service providers’ (the two litigation funders and the two firms of solicitors), not the group members”.
It also submitted that the regime proposed by the cooperative case management orders relied heavily on true cooperation between “the funders, lawyers and the applicants”, which, according to CBA, “is unlikely to be realised if the conduct of the two proceedings to date is an indicator of the extent of future cooperation”, the judgment noted.
Justice Yates did say one possibility for the best management of the two proceedings could be to consolidate the pair, but was reluctant to order consolidation “when no party advances it (or supports it) and where, as presently advised, I see no real advantage in taking that step”.
He added that absent any cooperation between the applicants in the conduct of the two proceedings, such as it was proposed by the plaintiff firms, “there will inevitably be a large amount of duplicated work undertaken in respect of the management of the two proceedings, and in preparing and presenting the two cases at trial”.
“Much of this duplication can be avoided if the work required is undertaken cooperatively on a joint basis. And if the duplication of work and resources can be avoided as is now proposed, it can be expected that overall costs will be correspondingly reduced,” he explained.
“This outcome would be to the advantage of all parties, in particular CBA.”
Justice Yates also accepted that while cooperative case management orders and the litigation protocol “have the potential to add to overall costs and, possibly, to produce some delay”, the bank “greatly overstates that potential”.
“What is abundantly clear is that, whatever potential might exist for increased costs or some possible delay, that potential is far outweighed by the benefits that the cooperative case management orders and litigation protocol will almost certainly bring to the proceedings,” he continued.
A case management hearing for both proceedings will take place on 26 July 2019.
Eliot Hastie is a journalist at Momentum Media, writing primarily for its wealth and financial services platforms.
Eliot joined the team in 2018 having previously written on Real Estate Business with Momentum Media as well.
Eliot graduated from the University of Westminster, UK with a Bachelor of Arts (Journalism).
You can email him on: [email protected]
Despite a low interest rate environment and growing uncertainty in equities markets, a new report has found the majority of Australian onlin...
A new UBS report has said that regulators getting tougher on capital is a threat to dividends, particularly those of the major banks. ...
Platinum Asset Management saw its profit fall by 16.7 per cent during financial year 2019, with the group saying it experienced “challengi...