Bain v International Capital Markets Pty Ltd (No 2)

This judgment is a procedural class action decision from the Federal Court of Australia. It is not a ruling on whether the respondents actually broke the law. The immediate problem before the Court was that three open class proceedings had been launched against the same defendants on similar allegations. Two were in the Federal Court and one was in the Supreme Court of Victoria.

The respondents were International Capital Markets Pty Ltd and Andrew Budzinski. The applicants were Nathaniel Bain, Christopher Wyer and Nathan Vingrys. The Court described the proceedings as competing class actions because they involved similar allegations, overlapping group members and the risk of multiple firms and funding structures running substantially the same dispute at the same time.

That created a classic multiplicity problem. If all proceedings continued separately, the respondents could face duplicated pleadings, duplicated evidence, repeated interlocutory disputes, multiple legal teams, inconsistent timetables and significantly higher cost. The Court also recognised that duplication burdens the court system itself.

The judgment records that by early March 2024, before the Victorian proceeding was filed, Bain and Wyer had already agreed to seek consolidation of their two Federal Court proceedings. Once the Vingrys proceeding was commenced in the Supreme Court of Victoria, the issue became more complicated. It was no longer just a question of whether two Federal Court matters should be combined. It became a cross-court dispute about forum, carriage and case management.

The underlying allegations were about financial products, specifically contracts for difference or CFDs. The Court explained that ICM allegedly carried on a business in Australia issuing highly leveraged CFDs to investors and providing online and mobile trading platforms through which those products could be acquired. CFDs were described as products that let an investor take a position based on the predicted future value of an underlying reference asset such as equities, foreign currencies, indices, commodities, bonds or cryptocurrencies.

The Court summarised the allegations in three broad categories. First were the primary claims for the period from 20 December 2017 to 28 March 2021. These included allegations that ICM offered volatile and highly leveraged products, used pricing that was not transparent, sold complex and unsuitable products, facilitated poor decision-making and continuous trading, failed to assess suitability adequately, charged significant and non-transparent fees, allowed credit card funding, encouraged high-volume trading and made misrepresentations about the nature and risks of CFDs.

Second were claims linked to ASIC's product intervention order for the period from not later than 29 March 2021 to 6 February 2024. The Court said it was alleged that, aware of the forthcoming restrictions, ICM recommended that some retail clients apply for higher leverage accounts and be re-categorised as wholesale investors, without adequate assessment and with misleading statements in connection with that process.

Third were target market determination claims from at least 5 October 2021 to 6 February 2024. The allegation was that ICM failed to take reasonable steps to ensure retail product distribution conduct in relation to CFDs was consistent with its target market determination.

The Court also noted allegations of misleading or deceptive conduct, unconscionable conduct, negligence, negligent misstatement, conflicted remuneration and accessory liability against Mr Budzinski. But this judgment did not decide whether any of those allegations were made out.

The legal issue was how to manage three competing open class proceedings that overlapped heavily in parties, issues and proposed group members. The Federal Court had to decide whether the Bain and Wyer proceedings should be transferred to the Supreme Court of Victoria, permanently stayed, or instead consolidated and allowed to continue in the Federal Court.

The judgment places that issue in the broader law on multiplicity in representative proceedings. O'Bryan J referred to the High Court's statement in Wigmans v AMP Ltd that multiplicity of proceedings is not to be encouraged and that competing representative proceedings run by different firms and funders may be inimical to the administration of justice. The Court identified a range of possible responses, including consolidation, de-classing one or more proceedings, a joint trial, staying one or more proceedings, or closing classes in some proceedings while leaving one open class proceeding on foot.

This was also a cross-court management problem. The Federal Court and the Supreme Court of Victoria were both exercising federal jurisdiction in relation to the subject matter. None of the applicants consented to transfer their proceeding to the other court. Because of that, the courts used a protocol for communication and cooperation in class action proceedings. The protocol is designed to facilitate access to justice and the just, quick and cheap resolution of the real issues in dispute where similar class actions are on foot in both courts.

With the agreement of the parties, the multiplicity applications were heard in a concurrent sitting of the Federal Court and the Supreme Court of Victoria on 4 July 2024. The Federal Court's reasons dealt with the consolidation application and the applications filed in the Federal Court seeking transfer or stay of the Bain and Wyer proceedings.

O'Bryan J dismissed Nathan Vingrys' interlocutory applications seeking to transfer the Bain and Wyer proceedings to the Supreme Court of Victoria or, alternatively, to have those Federal Court proceedings permanently stayed. The Court also ordered that the Bain and Wyer proceedings be consolidated into a single Federal Court proceeding, to continue under the Bain file number and be known as Nathaniel Bain and Anor v International Capital Markets Pty Ltd and Anor.

The orders did more than simply combine the cases. They imposed a detailed operating structure for the consolidated proceeding. Echo Law was granted leave to be named as solicitors on the record, with Piper Alderman acting as Echo Law's agent under an agency agreement. The lawyers were required to conduct the proceeding in accordance with specified costs, agency, funding and lawyer terms. All correspondence to the respondents or the Court on behalf of the applicants and group members was to be sent by Echo Law.

The Court also required a single counsel team. The applicants were to act jointly in making interlocutory applications, responding to interlocutory applications filed by the respondents, and retaining, briefing and instructing expert witnesses, except where non-common issues arose. Existing costs in both proceedings were treated as costs in the consolidated proceeding.

Most importantly for respondents and insurers, the Court built in cost-control measures. If security for costs was required, the funder had to provide a form acceptable to the respondents or as otherwise ordered by the Court. If an adverse costs order was made against the applicants, the funder was to meet it unless otherwise ordered. The Court also ordered the appointment of an independent costs referee to conduct six-monthly inquiries into whether unnecessary or excessive work, including duplication, was being performed. The referee was to provide confidential written reports to the Court and the lawyers. The referee's reasonable fees were to be borne equally by the applicants and were not recoverable against the respondents. The Court further ordered that work identified as having been performed because two firms were conducting the proceeding, where that work would not have been needed if only one firm were involved, would not be recoverable against the respondents.

The applicants were also ordered to file and serve a consolidated statement of claim by 23 August 2024, and the matter was listed for further case management on 30 August 2024.

For businesses, this case is a reminder that the first major fight in a class action can be procedural rather than substantive. If several representative proceedings are filed over the same conduct, the court may need to decide who gets carriage, which court should hear the matter, whether proceedings should be consolidated, and what safeguards are needed to stop duplication.

If your business is a respondent, the practical burden of competing class actions is obvious. You may need to preserve and collect documents for multiple proceedings, respond to overlapping pleadings, deal with different legal teams and funders, and manage the reputational and commercial pressure of several public claims at once. This judgment shows the Court is alert to that burden and may use active case management to reduce it.

The cost-control features are especially important. The Court did not just say that duplication was undesirable. It created a mechanism to monitor it. A six-monthly costs referee, a single counsel team, joint interlocutory work and limits on recoverability of duplicated work are all practical tools that can materially affect the economics of the litigation. Businesses defending class actions should pay close attention to these kinds of orders because they can reduce the risk that inefficient claimant-side structures inflate the respondent's exposure.

If your business is involved in funding, plaintiff-side legal services or claims management, the case also shows that the Court may scrutinise the practical mechanics of a proposed consolidated structure. Funding arrangements, agency arrangements, costs agreements, security for costs and adverse costs support can all matter. A party seeking procedural advantage may need to show not only that its preferred forum or structure is legally available, but also that it is workable, proportionate and fair.

The orders show that the Court was not only concerned with abstract questions of forum. It focused on the actual documents and arrangements that would govern how the consolidated proceeding would run. The orders were expressed to be conditional on execution within 14 days of a conditional costs agreement and costs disclosure statement, an agency agreement between Echo Law and Piper Alderman, a litigation management and funding agreement with the funder, and standard lawyer terms involving the funder and both firms.

That is commercially important. In competing class actions, the Court may look closely at the real operating model behind the litigation. Who is on the record, who sends correspondence, who briefs counsel, who instructs experts, who pays for the case, who provides security for costs and who bears adverse costs risk can all influence whether a proposed structure is acceptable.

The Court also focused on conduct that would minimise overlap after consolidation. It required a single counsel team and joint conduct of interlocutory applications and expert evidence. It required a consolidated statement of claim. It required the lawyers to provide information, access to personnel and access to documents to the costs referee as needed. These are practical management tools designed to stop a consolidated proceeding from becoming two parallel cases under one file number.

For businesses, the lesson is that procedural applications should be supported by concrete proposals. Courts are more likely to engage with a consolidation or carriage proposal if it is backed by a clear and disciplined plan for legal representation, funding, communication and cost control.

The Bain proceeding was commenced on 20 December 2023. The Wyer proceeding followed on 6 February 2024. A joint case management hearing of those two Federal Court proceedings was held on 9 February 2024, and the Court directed the applicants to confer about cooperation and possible consolidation. On 7 March 2024, the Court was told that Bain and Wyer had reached agreement to seek consolidation. On 13 March 2024, they filed submissions and evidence in support of that application. On 14 March 2024, Vingrys commenced the competing Supreme Court proceeding.

Because there were now proceedings in two courts, the courts used their class action cooperation protocol. Timetabling orders were made by consent on 4 June 2024 to facilitate a concurrent hearing. That hearing took place on 4 July 2024. O'Bryan J delivered the Federal Court judgment and orders on 2 August 2024. The orders required a consolidated statement of claim by 23 August 2024 and listed the matter for further case management on 30 August 2024.

This page should be read as a procedural summary of the Federal Court decision at that point in time. It does not describe any later steps in the consolidated proceeding or the final resolution of the underlying claims.

This page is based on the Federal Court judgment in Bain v International Capital Markets Pty Ltd (No 2) [2024] FCA 847, dated 2 August 2024. The available text includes the catchwords, orders, introduction, overview of the proceedings and procedural background, but the reasons available for review are truncated before the full analysis is reproduced.

Because of that limitation, this page does not attempt to reconstruct detailed reasoning that is not visible in the available text. It focuses on what can be stated confidently from the judgment itself: the procedural setting, the allegations as summarised by the Court, the applications that were brought, the orders that were made, and the practical significance of those orders for businesses dealing with overlapping class actions.