A2 Milk welcomes streamlining of Australia/NZ class actions

Business Reporter·NZ Herald·

7 Feb, 2023 09:45 PM3 mins to read

A2 Milk has been the subject of class actions on both sides of the Tasman. Photo / 123RF

A2 Milk said it was pleased class action lawsuits brought against it by shareholders on both sides of the Tasman would be streamlined into one action to be heard in Victoria, after the High Court in Auckland granted its application for a stay of New Zealand proceedings.

The legal issue centres on five statements made by the company between August 19, 2020, and May 10, 2021, in the midst of the Covid-19 pandemic, forecasting revenue and ebitda margin for the 2021 financial year.

The statements were made to the NZSX and ASX.

An A2 spokesman said the stay would prevent the risk of inconsistent findings by courts hearing cases with substantial overlap, and promote efficiency and cost saving for the parties and group members.

“The company considers that it has at all times complied with its disclosure obligations, denies any wrongdoing and will vigorously defend the Victorian proceedings,” the spokesman said.

The judgment puts the New Zealand proceedings “on hold” pending the outcome of the Australian proceeding.

The plaintiff and group members in the New Zealand proceedings are all still part of the group in the Victorian proceeding, which is substantially the same as the New Zealand proceedings.

Initial pantry stocking of infant formula in its key market - China - saw a2 Milk’s share price hit a record high of $21.51 in July 2020, but the stock later slumped to $4.34 due to the collapse of the unofficial daigou trade channel from Australia to the PRC.

Group proceedings were filed against a2 Milk in the Supreme Court of Victoria by Slater & Gordon Lawyers in October 2021 and by Shine Lawyers in November of that year, alleging the five statements were misleading and deceptive, and that A2 had breached its continuous disclosure obligations.

In June 2022, the Supreme Court of Victoria approved the consolidation of those two group proceedings into one Australian proceeding.

In May 2022, a representative proceeding was filed in the High Court of New Zealand making allegations under New Zealand law only, which were substantially the same as those made under the Australian proceedings.

Last November, the High Court of New Zealand heard a2 Milk’s application to stay the New Zealand proceeding.

The application was made under legislation specifically designed for managing cases with a Trans-Tasman element.

Earlier this year, the High Court of New Zealand granted a stay under the Trans-Tasman Proceedings Act.

The judge’s findings included that the New Zealand proceedings were substantially similar to the Australian proceeding and involved the same facts, substantially the same law, same defendant, and shareholder plaintiff.