Class Action Drivers In Australia: D&O Insurance And Access To Deep Pockets

The discontinuance of proceedings against a number of former directors in Mercedes Holdings Pty Ltd v Waters (No 6) [2012] FCA 1412 illustrates the importance of D&O insurance and the respondent's ability to pay in the decision-making of claimants and litigation funders. The discontinuance also highlighted the significance of proportionate liability for claims with multiple respondents as liability is linked to responsibility for loss. The significance is even greater where some respondents are insolvent or have limited financial resources.

Introduction

The MFS Premium Income Fund class action ("MFS class action") recently saw the applicant, a unit holder in the fund, discontinue proceedings against a number of former directors of the responsible entity for the fund. The discontinuance of a class action must be approved by the court,¹ with the result that the judgment—Mercedes Holdings Pty Ltd v Waters (No 6) [2012] FCA 1412—provides an insight into the drivers