Class/collective actions in Australia: overview

A Q&A guide to class/collective actions in Australia.

The Q&A gives a high level overview of class/collective actions, including current trends; the regulatory framework; limitation periods; standing and the procedural framework for bringing an action; funding and costs; disclosure; damages and relief; settlement; appeals; alternative dispute resolution and proposals for reform.

To compare answers across multiple jurisdictions, visit the Class Actions Country Q&A Tool.

This Q&A is part of the Class Actions Global Guide.

Contents

Overview of class/collective actions and current trends

1. What is the definition of class/collective actions in your jurisdiction? Are they popular and what are the current trends?

Definition of class/collective actions

Although several jurisdictions in Australia specifically provide for class action proceedings, they are mainly brought in the Federal, Victorian and New South Wales (NSW) Courts in accordance with the separate legislation constituting those courts. This chapter will be limited to the formal regimes in the Federal Court, and the Victorian and New South Wales Supreme Courts. Other jurisdictions are considering introducing formal class action regimes; for example, the Law Reform Commission of Western Australia is currently considering the desirability of a representative proceedings regime (Law Reform Commission of Western Australia, Representative Proceedings, Discussion Paper No 103 (2013)). In August 2016, Queensland Parliament considered a bill to enable class actions proceedings in the Queensland Supreme Court. At the time of publication, the Bill remains under consideration by the Parliamentary Committee.

The Australian statutory class action regimes are separate from longstanding procedures that allow courts to deal with similar claims together, such as:

  • Traditional representative proceedings.

  • The joinder of two or more persons as plaintiffs.

  • The use of a "test case" to determine common issues.

  • The consolidation of proceedings that have been commenced separately.

In Australia, a class action is brought on behalf of all class members by one (or a small number of) representative plaintiff(s), who are the only class members to be parties to the proceedings. The class can be defined by a list of names or by a set of criteria (such as "all persons who held XYZ securities during 2014"). There are four threshold requirements for the commencement of representative proceedings:

  • There must be a claim (or possible claim) by seven or more persons, although it is not necessary to specify the number of people in the class or name the group members.

  • Where there is only one respondent, the applicant and group members must all have claims against that respondent. However, if the applicant has satisfied the requirement that there are seven or more persons who have claims against the same person, then the applicant can join other respondents in respect of whom some group members have claims and some do not (Cash Converters International Limited v Gray (2014) 223 FCR 139).

  • The claims must arise out of similar or related circumstances.

  • There must be a substantial common issue of law or fact. There is no requirement that the common issues between class members dominate over the individual issues (Federal Court of Australia Act 1976 (Cth); section 33C, Supreme Court Act 1986 (Vic); section 157, Civil Procedure Act 2005 (NSW)).

In addition, in the Federal Court other considerations include whether the representative proceeding satisfies a cost-benefit analysis and whether it is an efficient mechanism for the resolution of the claims of group members. If the proceedings do not satisfy these elements, the Court can terminate the representative proceedings. There is, however no certification procedure or requirement under which the proceedings are reviewed and certified by the court as appropriate to be determined as a class action.

Use of class/collective actions

While class actions are a well recognised avenue for dispute resolution in Australia, and settlements often involve significant sums, they represent a fairly small portion of the broader litigation landscape.

In the first 22 years of the Federal Court's class action regime, 329 proceedings were filed under Part IVA of the Federal Court of Australia Act 1979 (Cth). This represents an average of just under 15 class actions filed in the Federal Court each year. This figure has experienced a slight but steady increase in recent years, with 31 class actions commenced in the Federal Court during the 18 months from January 2014 to June 2016.

The rise in Federal Court claims is complemented by a recent acceleration of class action activity in state Supreme Courts. Supreme Court filings formed more than 36% of the class action landscape from 2011 to June 2016, almost double the number of Supreme Court claims brought in the preceding five year period. One explanation for the attractiveness of state Supreme Courts may be the recent approval of substantial settlement figures. Most notably, in late 2014, the Supreme Court of Victoria approved a settlement of almost A$500 million in relation to a class action brought on behalf of victims of a 2009 bushfire in Victoria (Matthews v AusNet Electricity Services Pty Ltd [2014] VSC 663).

Current trends

In recent years, the majority of class actions have comprised claims by securities holders alleging market misrepresentation by listed entities. Following some recent successes, misselling of complex financial products is seen as another area for class action proliferation.

Class actions in the aftermath of natural disasters are also gaining prominence. In recent years, there have been filings of class actions in relation to:

  • The Black Saturday bushfires in Victoria in 2009.

  • The Queensland floods in 2011.

  • The Snake Valley bushfire in Victoria in 2013.

  • The Winmalee/Springwood bushfires in New South Wales in 2013.

There has been an increased number of class actions against local, state and federal governments, including in relation to the Commonwealth home insulation programme, the Liverpool City Council following the dumping of asbestos and the Royal Australian Navy in relation to alleged misrepresentations made in relation to opportunities for training.

 

Regulatory framework

2. What are the principal sources of law and regulations relating to class/collective actions? What are the different mechanisms for bringing a class/collective action?

Principal sources of law

Statutory regimes in relation to class action proceedings operate in the Federal Court, as well as in the Victorian and New South Wales Supreme Courts. In August 2016, the Queensland government introduced a bill establishing a regime for class action proceedings in the Queensland Supreme Court, largely modelled on the schemes of Victoria, New South Wales and the Federal Court.

Federal Court of Australia

Class actions in the Federal Court are regulated by:

  • Part IVA of the Federal Court of Australia Act 1976 (Cth).

  • Division 9.3 of the Federal Court Rules 2011 (Cth).

There are also a number of Federal Court practice notes which provide further directions in relation to matters of practice and procedure:

  • Class Actions Practice Note (GPN-CA) relates to representative proceedings commenced under Part IVA.

  • National Court Framework and Case Management (CPN-1).

Relevant practice notes are available on the Federal Court's website (www.fedcourt.gov.au/law-and-practice/practice-documents/practice-notes ). Practice notes, and general matters regarding procedure, are dealt with further below.

Supreme Court of Victoria

In the Supreme Court of Victoria class actions, or "group proceedings" as they are referred to, are regulated by Part 4A of the Supreme Court Act 1986 (Vic). Part 4A broadly mirrors the structure and content of Part IVA of the Federal Court of Australia Act 2011 (Cth), although there are several substantive differences between the Acts.

For example, the Victorian regime grants the court power to order that a person cannot become, or must cease to be, a group member if the court decides that the person does not have a sufficient connection to Australia, or for any other just reason (section 33KA, Supreme Court Act 1986 (Vic)). There is no equivalent provision under the federal regime or in New South Wales.

Further procedural guidance in relation to group proceedings is provided by Order 18A of the Supreme Court (General Civil Procedure) Rules 2005 (Vic), and various Practice Notes (Supreme Court of NSW, Practice Note No 10 — Conduct of Group Proceedings (Common Law Division) (1 January 2015)).

Supreme Court of New South Wales

Class actions in the Supreme Court of New South Wales are regulated by Part 10 of the Civil Procedure Act 2005 (NSW), again broadly reflecting the federal and Victorian regimes, but with some substantive differences.

For example, the Civil Procedure Act expressly provides that it is possible for a representative proceeding to be pursued despite the fact that the group does not include all persons on whose behalf the proceedings might have been brought (section 166(2), Civil Procedure Act 2005 (NSW)). The effect of this provision is to specifically allow for representatives proceedings to be brought by a "closed class". While not expressly provided for in other regimes, closed classes are now common. In Multiplex Ltd v P Dawson Nominees Pty Ltd (2007) 164 FCR 275, the Full Court of the Federal Court held that closed classes were available under the federal regime.

Principal institutions

The three principal institutions in Australia which hear representative proceedings under formal class action regimes are the Federal Court, the Supreme Court of Victoria and the Supreme Court of New South Wales.

Whether or not a claim is brought in the State or Federal Courts will depend on the nature of the claim (the Federal Court has limited jurisdiction and may only hear certain types of claims) and strategic factors, such as procedures applicable in the different courts, applicable limitation periods, and the type of remedy sought. For example, a court can make certain remedial orders in relation to a "person who is a party to the proceeding" (sections 87(1) to (1A), Competition and Consumer Act 2010 (Cth)). The federal class action regime specifically provides that a group member is "taken to be a party to the proceeding" for the purpose of these provisions (section 33ZH, Federal Court of Australia Act 1976 (Cth)). There is no equivalent section in Victoria or New South Wales.

Different mechanisms

A person can commence class action proceedings by filing an originating process that:

  • Describes or identifies the group members to whom the proceeding relates.

  • Specifies the nature of the claims made on behalf of the group members and the relief claimed.

  • Specifies the questions of law or fact common to the claims of the group members.

However, it is not necessary to name, or specify the number of, the group members (section 33H, Federal Court of Australia Act 1976 (Cth); section 33H, Supreme Court Act 1986 (Vic); section 161, Civil Procedure Act 2005 (NSW)).

A person has standing to commence class action proceedings if he or she has a sufficient interest to commence a proceeding on his or her own behalf. See Question 1 for the threshold criteria for the commencement of proceedings as a class action.

Consent of group members is not required to commence proceedings on their behalf. However, the group may be described in the originating process as those persons who have executed a funding agreement with a litigation funder, which effectively creates a closed member class (Multiplex Ltd v P Dawson Nominees Pty Ltd (2007) 164 FCR 275 ).

 
3. Are class/collective actions permitted/used in all areas of law, or only in specific areas?

Class actions under the three formal regimes in Australia are generally permitted in relation to all areas of law subject to some exceptions in Victoria (section 33B(2), Supreme Court Act 1986 (Vic)).

A recent study regarding class actions in Australia has provided a picture of the types of class actions which have been commenced under the federal regime in its first 22 years of operation (An Empirical Study of Australia's Class Action Regimes, V Morabito (3rd Report, November 2014)). Broadly speaking, the prominence of product liability claims is waning and the number of investor and shareholder claims has increased. In that period, almost 60% of proceedings which were filed under Part IVA of the Federal Court of Australia Act 1976 (Cth) (Part IVA) related to claims brought by investors and shareholders, as well as consumer protection claims.

Product liability

While the prevalence of product liability claims has decreased, there continue to be numerous class actions in relation to alleged defects.

For example, in February 2015 the Federal Court approved a settlement in a long running class action in relation to the arthritis drug Vioxx, which was alleged to have caused adverse side effects. Similarly, in late 2013 the Victorian Supreme Court approved a settlement in relation to individuals who suffered from a congenital malformation and whose mothers, while pregnant, consumed the drug thalidomide.

Environmental law

Environmental law class action claims are not common, although proceedings were commenced in relation to pollution that was alleged to have been caused by the operation of the Ok Tedi Mine in the Western Province of Papua New Guinea (Gagarimabu v The Broken Hill Proprietary Company Ltd [2001] VSC 517). While not necessarily brought under environmental laws, there have also been an increasing number of class actions relating to catastrophic events, such as claims concerning bushfires and flooding (Johnston v Endeavour Energy (No 2014/148790); More v Endeavour Energy (No 2014/313883); Rodriguez & Sons Pty Ltd v Queensland Bulk Water Supply Authority (No 2014/200854)).

Competition law

Anti-trust class actions generally follow a successful prosecution or investigation by the Australian Competition and Consumer Commission (ACCC) in relation to the same conduct. For example, class action proceedings were settled in relation to an international vitamin manufacturing price fixing cartel and an international air freight cartel following earlier settlements between the same defendants and the ACCC (Bray v Hoffman-La Roche 130 FCR 317; De Brett Seafood Pty Ltd v Qantas Airways Ltd [2011] FCA 440).

Parties to private proceedings often seek to subpoena documents obtained by the ACCC when it investigated the same conduct. The ACCC has resisted such applications in the context of cartels, and amendments to the Competition and Consumer Act 2001 (Cth) have provided that the ACCC is not required to disclose information that was given to the ACCC in confidence and relates to a breach or possible breach of the criminal or civil cartel provisions to any court, tribunal or other party (section 157, Competition and Consumer Act 2010 (Cth)).

Where documents do not relate to a whistleblower, the courts have granted private litigants access to documents obtained by the ACCC, including where those documents were obtained pursuant to the ACCC's coercive powers (De Brett Seafood Pty Ltd v Qantas Airways Ltd [2011] FCA 440 [10]).

Pensions disputes

The advanced state of Australia's superannuation statutory regime, which includes a specialised Superannuation Complaints Tribunal, has tended to preclude class actions proceedings deriving from pensions disputes.

Financial services: consumer redress

Shareholder class actions are a dominant and growing part of Australia's class action landscape. From March 2003 to March 2014, almost 60% of proceedings which were filed under Part IVA related to claims brought by investors and shareholders, as well as consumer protection claims (V Morabito, An Empirical Study of Australia's Class Action Regimes (3rd Report, November 2014) 10–12).

Cases commonly involve a listed company's failure to comply with market disclosure obligations, causing loss to investors who invested, or who did not sell an existing investment, after non-disclosure occurred. These cases are usually precipitated by a corrective market disclosure by the company, where that disclosure causes a marked decline in the share price.

Consumer protection claims in the financial services context include claims against rating agencies and financial institutions regarding collateralised debt obligations and other complex financial products.

Other areas of law/policy

The object of Part IVA of the Federal Court of Australia Act 1976 (Cth) establishing class actions includes providing a procedure where persons who may not have the funds to bring a separate action, or who may not bring an action because the cost of litigation is disproportionate to the value of the claim, can seek a remedy. The object of Part IVA is also to protect defendants from multiple suits and the risk of inconsistent findings (Bright v Femcare Ltd (2002) 195 ALR 574 [152]). While procedures exist for regulators to bring group actions on behalf of affected consumers and members of the public, such actions are rare and commentators have suggested that private class actions function as a quasi-regulatory tool to increase access to legal remedies (Australian Law Reform Commission, Managing Justice: A Review of the Federal Civil Justice System, Report No.89 (2000) [7.89]–[7.91]).

 

Limitation

4. What are the key limitation periods for class/collective actions?

The limitation period that applies to a class action will be determined by the cause or causes of action which are pleaded in the proceeding. The relevant limitation period will be the same as if the proceeding had been commenced by an individual claimant.

In Australia, limitation periods can be set out:

  • In general legislation that broadly addresses limitation periods. For example, in section 14(1)(b) of the Limitation Act 1969 (NSW) and in the Limitation of Actions Act 1958 (Vic). There is no general act addressing limitation periods at the federal level.

  • In the legislation that creates the cause of action. For example, section 236(2) of the Australian Consumer Law, which is Schedule 2 to the Competition and Consumer Act 2010 (Cth), provides that a claim in relation to contravening conduct must be commenced within six years from when the cause accrued.

The decision as to whether the limitation period in respect of a representative party, or any group member has expired prior to the commencement of the proceedings, is a matter to be decided separately with respect to each claimant; it cannot be a common question (Giles v Commonwealth of Australia [2014] NSWSC 83 [148]–[186]).

Suspension of limitation periods

Each of the class action regimes in Australia includes a mechanism to "stop the clock" in relation to limitation periods. The frameworks provide that on the commencement of a group proceeding, the running of the limitation period that applies to the claim of a group member to which the proceedings relate is suspended (section 33ZE, Federal Court of Australia Act 1976 (Cth); section 33ZE, Supreme Court Act 1986 (Vic); section 182, Civil Procedure Act 2005 (NSW)), although whether that suspension would apply to common law claims has not yet been tested.

Once suspended, the limitation period does not begin to run again unless:

  • The member opts out of the proceedings. However, it is not settled whether a person opting out in a Victorian class action would obtain the benefit of this provision (Matthew v SPI Electricity (2013) 39 VR 255 [72]–[73]).

  • Any appeals arising from the proceedings are determined without finally disposing of the group member's claim (section 33ZE(2), Federal Court of Australia Act 1976 (Cth); section 33ZE(2), Supreme Court Act 1986 (Vic); section 182(2), Civil Procedure Act 2005 (NSW)).

These provisions are designed to remove the need for a group member to initiate individual proceedings, and to protect them from the expiry of the relevant limitation period in the event that the representative action is dismissed on a procedural basis.

 

Standing and procedural framework for bringing an action

Standing

5. What are the rules for bringing a claim in a class/collective action?

Definition of class

Generally, an applicant in a representative proceeding is free to define the group which it seeks to represent as narrowly or widely as it wishes, provided that it does so:

  • With the necessary clarity and in a way which allows clear identification of the group members to whom the proceeding relates, since group members who do not wish to be bound by the outcome of the proceeding must have the opportunity to opt out (sections 33H(1)(a) and 33J, Federal Court of Australia Act 1976). It is therefore necessary that the group be defined with sufficient clarity to ensure that people know whether they are, or are not, caught by the group definition.

  • In accordance with a pleading that sets out sufficient material facts to demonstrate that the applicant shares with group members the same identifying criteria (Auskay International Manufacturing & Trade Pty Ltd v Qantas Airways Ltd (2008) 251 ALR 166).

Class definitions can in practical terms "close" the class. For example, class definitions that identify members of the class as all those parties who have, at the commencement of proceedings, entered into a litigation funding arrangement with a litigation funder in relation to the proceedings will result in a class that is known and defined at the commencement of the claim. Alternatively, a class definition can be "at large", giving rise to the need for a subsequent "opt-out" procedure (see Question 6).

Potential claimant

If the threshold requirements for a class action are met (see Question 1), then a person with "sufficient interest" to commence the action can bring the claim as the representative party for the group (sections 33C–33D, Federal Court of Australia Act 1976 (Cth);section 33C, Supreme Court Act 1986 (Vic); sections 158(1) and 158(3), Civil Procedure Act 2005 (NSW)). To have a sufficient interest, the representative party must itself satisfy each threshold requirement.

Once the proceedings are commenced, the representative party is deemed to continue to have a sufficient interest, even if the representative party ceases to satisfy each threshold requirement (section 33D, Federal Court of Australia Act 1976 (Cth)). There is no requirement that the representative party must have the largest claim.

The standing provisions mean that "ideological" groups, such as environmental or political organisations, are unable to bring class action proceedings if they do not have a personal claim against the defendant(s).

Claimants outside the jurisdiction

Claimants in Australian class actions can be located outside Australia, as long as the statutory or common law action forming the basis of the claim contains the relevant jurisdictional nexus with Australia.

In Victorian class actions, however, the parties can seek, or the court of its own motion can make, an order excluding a group member on the basis that a person does not have sufficient connection with Australia to justify inclusion as a group member (section 33KA, Supreme Court Act 1986 (Vic)), although the basis on which such an order can be made is unclear.

Professional claimants

Although in theory a professional claimant could take an assignment of a claim from a potential group member in order to have sufficient standing to bring a class action, in practice there is no reason for this to occur. Litigation funding arrangements often provide for the group member to vest significant control in the funder, who, in return for meeting the costs of the proceedings and the risk of an adverse costs order, receives a percentage of any settlement or damages sum (percentages vary, but generally range from 20% to 50%).

Other

Perhaps reflecting concerns about the control that a representative party (and its solicitors and litigation funder) could have over the proceedings, the courts have significant powers to manage and supervise the litigation. In particular, the courts:

  • Can substitute another group member for a representative party who is not adequately representing the interests of the group members (section 33T(1), Federal Court of Australia Act 1976 (Cth); section 33T(1), Supreme Court Act 1986 (Vic); sections 166(1)(d) and 171, Civil Procedure Act 2005 (NSW)).

  • Must formally approve a settlement (section 33W(1), Federal Court of Australia Act 1976 (Cth); section 33W(1), Supreme Court Act 1986 (Vic); section 174, Civil Procedure Act 2005 (NSW)).

  • Can make any order they think necessary to ensure that justice is done in the proceedings (section 33ZF, Federal Court of Australia Act 1976 (Cth); section 33ZF, Supreme Court Act 1986 (Vic); section 173, Civil Procedure Act 2005 (NSW)).

Qualification, joinder and test cases

 
6. What are the key procedural elements for maintaining a case as a class action?

Certification/qualification

Court approval or certification is not a prerequisite to the commencement of class action proceedings in Australia, nor is it necessary to obtain the consent of other group members. However, a respondent to a class action can seek interlocutory relief on the grounds that the group definition is unclear or the applicant has not satisfied the required threshold criteria (see Question 1).

A court can also order the discontinuance of proceedings as a class action at any time if it is satisfied that (sections 33L-N, Federal Court of Australia Act 1976 (Cth); sections 33L-N, Supreme Court Act 1986 (Vic); sections 164-166, Civil Procedure Act 2005 (NSW)):

  • There are fewer than seven group members.

  • The cost of the litigation, or distribution of proceeds, is excessive.

  • The proceedings are not an efficient mechanism for resolution of the group members' claims.

If a court orders the discontinuance of proceedings as a class action, the representative party can continue the proceedings against the respondent on his or her own behalf, and former group members can apply to the court be joined in those proceedings (section 33P, Federal Court of Australia Act 1976 (Cth); section 33P, Supreme Court Act 1986 (Vic); section 167, Civil Procedure Act 2005 (NSW)).

The US requirement that the representative party will fairly and adequately protect the interests of the class is partially addressed in Australia by the court's power to substitute the representative party if they are unable to adequately represent the interests of group members (section 33T, Federal Court of Australia Act 1976 (Cth); section 33T, Supreme Court Act 1986 (Vic); section 171, Civil Procedure Act 2005 (NSW)). It worth noting that in New South Wales, the court can also order that proceedings be discontinued entirely if the representative party cannot adequately represent the interests of group members (section 166(1)(d), Civil Procedure Act 2005 (NSW)).

Minimum/maximum number of claimants

The class action threshold requirement is that there must be a claim (or possible claim) by seven or more persons before proceedings can be commenced (see Question 1).

Joining other claimants

Class actions are initiated in respect of a defined group, who then comprise the universe of possible claimants. The proceedings can be commenced without the consent of the group members, but group members are later informed via opt-out notices usually sent by and at the cost of the representative party, that they can elect not to continue as group members and to instead pursue their own claim. The form and content of the opt-out notices are approved by the court, and can be delivered as a letter, or more commonly, via a press advertisement or broadcast. The Federal Court has issued a practice note which outlines the approach to the opt-out procedure and includes a sample opt-out notice (Class Actions Practice Note (GPN-CA), 25 October 2016, [11]).

Opt-out notices can be ordered by the court of its own motion or on request by the parties (section 33X(1)(a), Federal Court of Australia Act 1976 (Cth); section 175(1)(a), Civil Procedure Act 2005 (NSW); section 33X(1)(a), Supreme Court Act 1986 (Vic)). There is no deadline by which such notices must be sent, save that unless the court is satisfied that it is just to do so, an application for approval of a settlement must not be determined by the court unless opt-out notices have been issued (section 33X(4), Federal Court of Australia Act 1976 (Cth); section 175(4), Civil Procedure Act 2005 (NSW); section 33X(4), Supreme Court Act 1986 (Vic)). Notices may also be required to be sent to group members informing them that orders will be made that have the effect of "closing the class" of group members able to maintain a claim in the proceedings (section 33X(5), Federal Court of Australia Act 1976 (Cth); sections 175(5) and 183, Civil Procedure Act 2005 (NSW); section 33X(5), Supreme Court Act 1986 (Vic)). These orders are commonly made once a settlement has been reached and prior to distribution.

Multiple class actions

Judicial approaches to multiple class actions have varied, according to the complexity of each case. Courts in Australia have sought to case manage multiple class actions, for example:

  • Through early consolidation of proceedings in one single case.

  • By selecting one case to proceed and ordering a stay in other proceedings.

  • Permitting multiple class actions to proceed in parallel.

Issues can arise where multiple class actions are commenced in relation to similar claims, a risk that arises in particular where a class is in part defined by not only their alleged loss and damage, but whether members have signed a funding agreement with a particular litigation funder. This occurred in the Centro set of proceedings (Kirby v Centro Properties Ltd, Federal Court of Australia, Proceeding No VID326/2008; Kirby v Centro Retail Ltd, Federal Court of Australia, Proceeding No VID327/2008; Vlachos v Centro Properties Ltd, Federal Court of Australia, Proceeding No VID366/2008), where the court considered whether the class actions should be formally consolidated, one stayed or a novel approach be adopted, such as the appointment of a litigation committee or the use of plaintiff law firm "auctions". Ultimately, none of these possibilities occurred, and the three class actions progressed together.

In a recent judgment concerning two class actions against Australian Executor Trustees Limited (AET), arising from the collapse of Provident Capital Limited (Provident), Justice Ball ordered a joint trial. This decision was based on the common issues and a common defendant across both proceedings, such that, "interests of justice strongly point to the proceedings being heard together, with evidence in one being evidence in the other, so as to reduce costs and avoid the possibility of inconsistent judgments" (Smith v Australian Executor Trustees Limited; Creighton v Australian Executor Trustees Limited [2016] NSWSC 17 at [22]).

Test cases

Australian courts will sometimes determine a class action against a particular respondent ahead of the claims against remaining respondents, as occurred in a relatively recent travel agency class action (Leonie's Travel Pty Ltd v Qantas Airways Limited [2010] FCAFC 37 and related cases). However, this is rare, and typically occurs by agreement of the parties and where all the issues are likely to be canvassed in the test case. A recent suite of claims against large retail banks in respect of credit card and overdraft fees have not strictly proceeded through a test case regime, as all have been separate class actions, but one of the actions was dealt with first, and a recent appellate determination in that case adverse to the plaintiffs is likely to affect how the remaining class actions proceed.

Courts are also willing to determine separate common or fundamental questions ahead of the main body of issues raised in a pleading in class actions and other proceedings (Andrews v Australia and New Zealand Banking Group Ltd [2011] FCA 388 (19 April 2011); Reading Australia Pty Ltd v Australian Mutual Provident Society(1999) 217 ALR 495), as long as:

  • It is just and convenient to do so.

  • It is likely to contribute to saving time and costs by narrowing the issues for trial, and possibly leading to a disposal of the action or to settlement of the litigation.

  • It does not give rise to significant contested factual issues both at the time of the hearing of the preliminary question and at the time of trial.

  • It does not result in a significant overlap between the evidence adduced on the hearing of the separate question and at trial, possibly involving the calling of the same witnesses at both stages of the hearing of the proceeding.

  • It does not prolong rather than shorten the litigation.

Timetabling

 
7. What is the usual procedural timetable for a case?

Courts in Australia have extensive powers to manage the conduct of proceedings, including class actions. The three jurisdictions with formal class action regimes are each guided by an overarching purpose in relation to civil litigation: that proceedings be conducted as quickly, inexpensively and efficiently as possible, according to law (sections 37M-N, Federal Court of Australia Act 1976 (Cth); sections 56 and 57, Civil Procedure Act 2005 (NSW); Civil Procedure Act 2010 (Vic) pt 2.1).

Many of the procedural aspects in relation to class actions are dealt with in the relevant practice note. For example, the Federal Court practice note provides information about commencing representative proceedings under Part IVA of the Federal Court of Australia Act 1976 (Cth) (Class Actions Practice Note (GPN-CA), 25 October 2016). It sets out the court's approach regarding case management processes that are particular to class actions, including what will occur at the initial case management conference.

The New South Wales and Victorian Supreme Court practice notes provide similar guidance (Supreme Court of New South Wales, Practice Note SC Gen 17 — Supreme Court - Representative Proceedings, 4 March 2011; Supreme Court of Victoria, Practice Note 10 of 2015 — Conduct of Group Proceedings (Common Law Division), 1 January 2015). They indicate that class actions will generally be managed by case conference, which is a more informal procedure designed to promote discussion between the parties and the judge. At the initial case conference, the parties are required to be in a position to deal with a range of matters that include:

  • Whether there is any dispute that the proceedings are actually a class action.

  • Any issues concerning the description of group members.

  • A timetable for the service of defences, cross-claims and any further pleadings.

In the Federal Court, New South Wales Supreme Court and Victorian Supreme Court, parties are expected to disclose funding agreements either at, or prior to, the first case management hearing.

Effect of the area of law on the procedural system

 
8. Does the applicable procedural system vary depending on the relevant area of law in which the class/collective action is brought?

There is unlikely to be any significant variance in the applicable procedural system based on the particular area of law to which the class action relates. However, courts in Australia have broad powers in relation to case management (see Question 7), and will adjust their procedures depending on the particular issues that arise in the proceedings.

 

Funding and costs

Funding

9. What are the rules governing lawyer's fees in class/collective actions?

Plaintiff law firms typically represent class action group members on a conditional fee arrangement, that is where the lawyer's entitlement to payment is conditional on a successful outcome to the proceedings, but the fees are calculated on an ordinary time and cost basis (section 283(1), Legal Profession Act 2006 (ACT); section 318(1), Legal Profession Act 2006 (NT); section 323(1), Legal Profession Act 2004 (NSW); section 323(1), Legal Profession Act 2007 (Qld); schedule 2 r 25, Legal Practitioners Act 1981 (SA); section 307(1), Legal Profession Act 2007 (Tas); section 3.4.27(1), Legal Profession Act 2004 (Vic) and section 283(1), Legal Profession Act 2008 (WA)).

Contingency or success fee arrangements (where the lawyer's fee is an agreed proportion of damages awarded in the proceedings) are, as at the time of publication, prohibited. Contingency fees are not allowed in criminal and family matters and in Western Australia, South Australia and Tasmania in matters relating to children and migrants. There is a limited exception for uplift fees, which allow lawyers to charge up to a 25% premium on their ordinary fees (excluding disbursements) if a successful outcome is achieved in litigious matters. In July 2015, New South Wales became the final jurisdiction to allow entry into an uplift fee agreement in relation to a claim for damages, removing the previous ban on such arrangements (section 324(1), Legal Profession Act 2007 (NSW)). In most jurisdictions, the lawyer must also have a reasonable belief that a successful outcome is reasonably likely before charging an uplift fee. However, this does not apply in Queensland and the Northern Territory. South Australia provides for the opposite condition: an uplift fee can only be charged if the risk of the claim failing, and the client having to meet his or her own costs, is significant.

As the prohibition on contingency or success fee arrangements only applies to lawyers, third party litigation funders can engage legal representation on an ordinary or conditional fee basis, indemnify the group members for legal costs incurred and charge group members a contingency or success fee. From a group member's perspective, the result is indistinguishable from the lawyer directly charging a contingency fee. There have also been recent attempts (which so far have not come to fruition) by litigation funders to act concertedly with law firms to co-fund claims, raising concern that law firms might exploit co-funding arrangements to indirectly obtain contingency fees. The Productivity Commission, an independent Commonwealth agency, has recently recommended amending the law to allow lawyers to charge contingency fees and provide a licensing regime for litigation funders (Australian Government Productivity Commission, Access to Justice Arrangements, Inquiry Report No 72 (2014) ch 18). However, the Law Council of Australia's opposition to the introduction of contingency fees in April 2016 reflects the divided nature of the debate.

 
10. Is third party funding of class/collective actions permitted?

In 2006, the High Court of Australia gave approval to the concept of third party funding in Campbells Cash & Carry Pty Ltd v Fostif Pty Ltd [2006] HCA 41, and since then most major class actions have been brought with support from a domestic or international third party funder. There are no restrictions on the level or terms of funding, although as all settlements are subject to the scrutiny of the court, onerous funding terms may not be enforceable in practice. Funding agreements must be disclosed to the respondent's lawyers early in the proceedings (Class Actions Practice Note (GPN-CA), 25 October 2016 [6.4]; Supreme Court of New South Wales, Practice Note SC Gen 17, Supreme Court, Representative Proceedings, 4 March 2011 [7.2]). The applicant's solicitors are also expressly required to disclose and manage any potential conflicts of interests to the applicant and class members (Class Actions Practice Note (GPN-CA), 25 October 2016 [5.9 and 5.10]).

Any person can be a funder, except for the solicitors involved in the case (an attempt by the plaintiff law firm in a recent class action (Clasul Pty Ltd v Commonwealth of Australia [2014] FCA 1133) to co-fund the case was withdrawn after the government said it would introduce legislation to stop this proposal). The courts have recently held that a type of "entrepreneurial" class action litigation (where the solicitor acting for the representative party was also the director and shareholder of that party) should not be allowed to continue without addressing the resulting conflicts of interest, for example by requiring an alternative set of solicitors to be retained (Melbourne City Investments Pty Ltd v Treasury Wine Estates Limited (No. 3) [2014] VSC 340).

Funders are governed by general law, although there has been some suggestion that they should be subject to a licensing regime which focuses on capital adequacy and disclosure requirements (Australian Government Productivity Commission, Access to Justice Arrangements, Inquiry Report No 72 (2014)). Funders must put in place a process to manage conflicts of interest (Australian Securities and Investments Commission, ASIC Regulatory Guide, Litigation schemes and proof of debt schemes: Managing conflicts of interest, RG 248, 27 March 2013).

Up to 2016, litigation funders in Australia were permitted to retain a percentage of moneys payable from only those group members who have entered into a litigation funding agreement. This is now set to change. On 26 October 2016, the Full Federal Court delivered a landmark decision allowing what is commonly known in the United States as a "common fund order", that is, an order requiring all group members to pay a portion of the litigation funder fees, even if they have not entered into a funding agreement. In Money Max Int Pty Ltd (Trustee) v QBE Insurance Group Limited [2016] FCAFC 148, the Full Court approved for the first time a common fund order in a class action. Under the approved order, the funded and unfunded class embers will be required to pay a funding commission, which is "highly likely" to be lower than the 32.5% or 35% funding fee under the existing funding arrangements. The funding fee will be set by the Court at an appropriate time, potentially at settlement. The decision, which is still subject to appeal, is likely to increase the number of open class actions in Australia.

 
11. Is financial support available from any government or other public body for class/collective action litigation?

No financial support is available from public sources for class or representative actions. However, some regulators can commence proceedings in their own names on behalf of affected private parties, such as the Australian Competition and Consumer Commission's (ACCC) power to do so under section 87 of the Competition and Consumer Act 2010 (Cth). Few such actions have been commenced in Australia.

 
12. Are other funding options available to claimants in class/collective actions?

Funding options are generally limited to third party funding arrangements. After-the-event insurance is not available in Australia. In the absence of third party funding, class actions will generally proceed with class members sharing legal costs.

Costs

 
13. What are the key rules for costs/fees in class/collective action litigation?

Generally, lawyers are entitled to charge fees that are fair and reasonable. In the 2016 Willmott Forests class action, Justice Murphy rejected a settlement including lawyers' fees of A$7.835 million, where the lawyers had failed to produce evidence to demonstrate that the costs were reasonable relative to the "real level of reimbursement to class members" derived from the settlement (Kelly v Willmott Forests Ltd (in liquidation) (No. 4) [2016] FCA 323, per Murphy J at [346]). The courts have discretion to order costs (which include, in Australia, legal fees) at any stage of the proceeding, although they are generally only assessed by the court at the end of a proceeding and if the parties are unable to negotiate a settlement in relation to their costs.

Generally in Australia, the successful party is usually entitled to be repaid its costs as assessed or agreed by the losing party. Costs recovery assured by the courts usually results in recovery of 60% to 70% of the winning party's legal costs. In the class action context, the legislation prohibits costs being awarded against group members and costs can only be awarded against the representative plaintiff.

Where a claimant discontinues a proceeding prior to determination, they will generally be liable for the costs any party has incurred in responding to the claim. As noted, it is only the representative plaintiff who has exposure to costs in a class action scenario. Practically, that plaintiff will usually be a company with limited assets, reliant on a litigation funder.

Contingency fee structures are prohibited for lawyers (but not third party litigation funders) (see Question 9).

Where a case settles, the parties' costs form part of the agreed terms of settlement, which much be approved by the court (see Question 21).

Key effects of the costs/funding regime

14. What are the key effects of the current costs/funding regime?

An agreement between a lawyer and client which provides for the lawyer to receive an agreed proportion or any judgement is illegal. This fact, plus the usual position that the loser pays the successful party's costs of litigation has meant that class actions have not been as popular in Australia as in some other jurisdictions. However a 2006 decision (Campbell's Cash & Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386), opened the door to litigation funders, and it has now become normal for class actions to be supported by a third party funder under cover of an agreement in which the funder will meet any adverse cost orders and in turn receive a proportion of any settlement or damages.

Litigation funding is a significant business in Australia as a result, with the number of domestic and international participants increasing. At least one funder, IMF (Bentham) Limited, is listed on the Australian Securities Exchange.

 

Disclosure and privilege

15. What is the procedure for disclosure of documents in a class/collective action?

Before litigation

Parties can apply for pre-action discovery either to identify or locate a defendant, or in some cases, to determine whether a party has a cause of action. The latter option applies only where a party has a reasonable suspicion that it has a cause of action, but lacks access to the key documents which would enable it to know for certain (and has exhausted all reasonable alternative avenues of obtaining such documents).

During litigation

Once litigation commences, parties are required to provide copies of any documents referred to in their pleadings to the other parties. In Victoria, parties are required to disclose the existence of any documents critical to the resolution of the dispute at the earliest reasonable time (section 26, Civil Procedure Act 2010 (Vic)).

Parties are required to disclose to their opponents all documents which are or have been at any time in the parties' possession, custody or power and which are relevant to any question or issue in the proceeding. In Victoria and New South Wales state supreme courts, the scope of discovery is somewhat narrower as parties are only required to discover:

  • Documents on which they rely.

  • Documents that adversely affect their own or another party's case.

  • Documents which support another party's case.

The timing for disclosure will depend on the timetabling orders made by the court. Generally, this will occur after the close of pleadings.

Parties can also obtain documents from third parties by applying to the court to issue a subpoena requiring that party to produce particular documents or classes of documents to the court. Those documents can then be inspected by the parties to the proceeding and used for the purposes of the proceeding.

In the context of class actions, subpoenas have often successfully been issued to regulators in an effort to obtain copies of documents provided to the regulator and transcripts of interviews conducted by the regulator in relation to the relevant underlying conduct.

Parties are subject to a common law undertaking to the court to only use documents disclosed to them in the course of litigation for the purposes of that proceeding (Home Office v Harman [1981] 2 WLR 310).

 
16. Are there special considerations for privilege in relation to class/collective actions?

Privileged documents are documents created for the dominant purpose of giving or receiving legal advice or for use in actual or contemplated litigation. Certain correspondence between the parties which relates to an attempt to settle the issues or the subject of the proceeding can also be withheld on the basis of "without prejudice" or "settlement" privilege.

Documents that are privileged must be discovered, but need not be produced for inspection by the other parties.

Where a class action is instituted following enforcement proceedings issued by a regulator, any witness statements served (and in some cases, prepared) by the regulator will no longer be subject to litigation privilege and may be required to be produced in the class action. This is if the court releases the respondent from the undertaking regarding the use of documents provided in the course of litigation (for example, ACCC v Cadbury Schweppes Pty Ltd & Ors (2009) 174 FCR 547) (see Question 15).

 

Evidence

17. What is the procedure for filing factual and expert witness evidence in class/collective actions?

A court can order that the parties file and exchange witness statements or outlines of evidence prior to the hearing of a proceeding, usually within weeks of the start of the hearing. If witness statements are filed and relied upon, the evidence in the statement will be subject to cross-examination.

Witnesses can give evidence through affidavits or signed witness statements and then be cross-examined on the content of the affidavit or statement. Witnesses can also give their evidence in chief orally. The manner in which a witness gives evidence is generally determined by the judge managing or hearing the proceeding.

In the Federal Court, the court has power to order pre-trial examination of witnesses in relation to incidental proceedings in the course of proceedings, such as discovery (section 46, Federal Court of Australia Act 1976 (Cth)).

There are no restrictions on the length of witness statements. Hearsay is generally inadmissible.

Parties are permitted to use experts in proceedings to give opinion evidence. In most instances, each party will appoint its own expert who will prepare a report which is filed with the court. The courts generally have the power to direct the expert witnesses to confer and produce a joint report. For example, the rules of the Federal Court of Australia provide for the court to appoint an expert to inquire into and report on a question, which is then provided to the court and parties. The Federal Court of Australia can also appoint an expert to assist the court.

If expert evidence is required in a proceeding, the court will make orders for expert reports to be exchanged, generally as part of the pre-trial steps. For example, the rules of the Supreme Court of Victoria provide that experts' reports must be filed and served no later than 30 days before the day fixed for trial.

Generally, experts will give oral evidence in relation to their reports, and the other party will have the opportunity to cross-examine them.

 

Defence

18. Can one defendant apply to join other possible defendants in a class/collective action?

Joining other defendants

Defendants can join other defendants to the proceeding, either for the purpose of apportioning liability under statutory proportionate liability regimes, or for the purpose of seeking contribution. The proportionate liability regime in Victoria requires parties in respect of which apportionment (the proportional reduction of the defendant's damages by reference to its percentage of fault) is claimed to be joined as parties to the proceeding. In other jurisdictions, this is not necessary. In proceedings in the Victorian Supreme Court, solicitors must satisfy themselves that there is a proper basis for making a claim of contribution or apportionment and provide a certification to the court to that effect (section 42, Civil Procedure Act 2010 (Vic)).

Rights of multiple defendants

Respondents to representative proceedings can communicate with each other without waiving privilege as long as common law and statutory common interest privilege protections apply. In practice, respondents typically enter into a common interest and confidentiality agreement, which identifies the basis of the privilege claim and controls the use and disclosure of information and documents exchanged by respondent parties.

Multiple respondents are typically not represented by the same parties, given the prospect that the respondents will bring contribution claims against each other, creating conflicts of interest. However it is more common for respondents to instruct joint experts, given that expert opinions are more likely to be required in areas where the respondents' interest in the litigation is the same.

 

Damages and relief

19. What is the measure of damages under national law in the field of class/collective actions?

Damages

Damages in Australia are generally calculated in accordance with common law principles of causation, remoteness and contributory liability, and also with regard to specific statutory recovery regimes. Although exemplary damages can be awarded (usually in common law proceedings), this is rare and occurs only when the respondent has shown a conscious and scornful disregard for the plaintiff's rights (Lamb v Cotogno (1987) 164 CLR 1 [8]).

Damages are usually calculated in accordance with the loss suffered by the class. Complex questions of loss and causation arise in many class actions, including those involving cartels where inflated prices have been passed on by direct customers to many different customers at other functional levels of the market. Australia has not adopted the Illinois Brick approach (where the US Supreme Court held that an indirect purchaser did not have standing to bring anti-trust claims for damages), and in theory both direct and indirect purchasers can recover for any loss they have not passed on.

Causation is also a significant issue in shareholder class actions. Up to 2016, the question of whether causation could be established through market-based causation remained unresolved. The judgment in the matter of HIH Insurance Limited (in liquidation) & Ors [2016] NSWSC 482 was the first decision in Australia to accept what is commonly known as market-based causation. In HIH, the Court held that plaintiff shareholders who bought shares in a publicly listed company at an inflated price could recover their loss without the need to establish a direct link between the company's misleading and deceptive conduct and their decision to purchase the shares. Although the HIH decision was not a shareholder class action, plaintiffs will seek to apply it in existing and future shareholders class actions. It is noted that HIH is a decision of a single judge in the Supreme Court of New South Wales. Ultimately, the debate of whether indirect causation is available under Australian law is likely to be resolved by an appellate court.

Difficult questions also arise in shareholder class actions where expert evidence is needed to prove that the share price was inflated prior to the corrective announcement by reason of the company's contravening conduct, rather than by reason of other market conditions. Australian courts are yet to provide firm guidance on whether the "event study" approach used in the US (to analyse the impact of a particular event on the price of a security price) is of assistance in calculating loss.

If the class is closed and the different group members are all party to an agreement which covers apportionment, damages may be apportioned between them based on the methodology agreed. However, apportionment of damages must be approved by the court, including as part of its oversight of a proposed settlement. One factor the court must consider is whether the amount offered to each group member is "fair and reasonable" and whether any settlement is in the interests of the group as a whole and not just a part of the group (ACCC v Chats House Investments Pty Ltd (1996) 71 FCR 250, 258).

Recovering damages

Respondents can cross claim against other parties in class action proceedings in order to ensure that arguments about those parties' contributions to loss and damage can be heard and decided by the court. Respondents can also seek recovery against other parties once a court decision has been handed down, subject to any relevant limitation period arguments.

Interest on damages

The ordinary rules regarding the payment of interest apply to class action proceedings in Australia. In the Federal Court and the Supreme Court of Victoria, a penalty interest rate accrues on the unpaid amount of a civil judgment from the date of the judgment. In the Supreme Court of New South Wales, no interest applies if the judgment amount is paid in full within 28 days.

At the time of writing, penalty interest rates were 7.25% in the Federal Court and New South Wales (the Reserve Bank of Australia cash rate plus 6%), and 9.5% in Victoria (set by the Attorney General).

 
20. What rules apply to declaratory relief and interim awards in class/collective actions?

Declaratory relief

Section 21 of the Federal Court of Australia Act 1976 (Cth) confers on the Federal Court the power to make binding declarations of right, whether or not any consequential relief is or could be sought. Superior courts such as the Supreme Court of Victoria and the Supreme Court of New South Wales have both inherent jurisdiction and statutory power to grant declaratory relief (Ainsworth v Criminal Justice Commission (1992) 175 CLR 564, 582; section 75, Supreme Court Act 1970 (NSW); section 36, Supreme Court Act 1986 (Vic)). The legislation clarifies that the rule in equity which provides that declaratory relief can only be granted as ancillary to some other form or relief does not apply.

Courts have unfettered discretion as to whether to grant declaratory relief. However, an applicant must:

  • Demonstrate that they have a sufficient interest in the relief sought.

  • Show that the relief is to determine legal issues and not to answer abstract or hypothetical questions (Ainsworth v Criminal Justice Commission (1992) 175 CLR 564, 582).

  • Be able to secure a proper "contradictor" (that is, a person who has a true interest to oppose the declaration) (Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd [1921] 2 AC 438 ).

Declaratory relief is sometimes sought by representative parties in class action proceedings, invariably accompanied by a claim for some form of monetary or proprietary relief.

A request for declaratory relief can be included in the originating process, and can be used to clarify legal rights and obligations prior to the commencement of proceedings. For example, this could include a class action litigation funder who has previously sought a declaratory judgment that it could use a share register to approach parties who may be able to join a shareholder class action (IMF (Australia) Ltd v Sons of Gwalia Ltd (Administrator Appointed) [2004] FCA 1390).

Interim awards

Interim relief, such as injunctions, is theoretically available in the field of class actions, but very rarely used. Interim awards of damages are not available in Australia.

 

Settlement

21. What rules apply to settlement of class/collective actions?

Settlement rules

A settlement or discontinuance of the substantive claims of all or a group of members in class action proceedings has no legal effect until it is approved by the court (section 33V, Federal Court of Australia Act 1976 (Cth); section 33V, Civil Procedure Act 2010 (Vic); section 173, Civil Procedure Act 2005 (NSW)). In approving the settlement or discontinuance, the court will assess whether it is fair and reasonable, having regard to the claims made on behalf of the group members who will be bound by the settlement, and whether the proposed settlement has been undertaken in the interest of group members as well as the applicants and respondents (Class Actions Practice Note (GPN-CA), 25 October 2016 [13]).

Factors taken into account ordinarily include (Williams v FAI Home Security Pty Ltd (No 4) (2000) 180 ALR 459):

  • The amount offered to each group member.

  • The reasonableness of the settlement as between group members.

  • The prospects of success in the proceeding.

  • The likelihood of the group members obtaining judgment for an amount significantly in excess of the settlement offer.

  • The terms of any advice received from counsel and from any independent expert in relation to the issues which arise in the proceeding.

  • The likely complexity, duration and cost of the proceeding if continued to judgment.

  • The attitude of the group members to the settlement.

In the April 2016 Willmott Forests decision, the Federal Court rejected a settlement on reasonableness grounds where the settlement required a broad release of the defendants, which would have precluded group members from raising individual claims in the future. However, in October 2016 (Newstart 123 Pty Ltd v Billabong International Ltd [2016] FCA 1194), the Federal Court approved a settlement that gave a far-reaching release of not only the defendant company, Billabong International Ltd, but also of its related entities. Beach J reasoned that such releases are "a common feature" of commercial settlements, that the release was crucial to achieving a settlement between the parties, and that any individual claims that may be hampered by the release were unlikely to be of "any significant value".

A related issue considered in recent class action proceedings is whether group members dissatisfied with settlement terms must "opt-out" of the proceedings to retain an entitlement to bring an individual claim against the defendant. The authority is discordant. In Clarke (as trustee of the Clarke Family Trust) & Ors v Great Southern Finance Pty Ltd (Receivers and Managers Appointed) (in liquidation) & Ors [2014] VSC 516, the Victorian Supreme Court approved a settlement that bound all group members to the terms of a loan deed, refusing to allow objecting group members to opt out. In contrast, Murphy J reasoned in Willmott Forests that it would be unjust to deny group members who had no prior notice of settlement the opportunity to raise individual defences to the enforceability of loan deeds. The decision thereby rejects the proposition that subsequent individual claims are contingent on group members "opting out" of the class action.

In determining whether to approve of a proposed settlement, courts have on occasion amended a proposed settlement agreement. For example, in a settlement agreement where legal costs were insufficiently substantiated and the litigation funder sought to recover its commission from group members who had not signed a litigation funding agreement, the court revised down the provision for legal costs and reallocated the amount of the commissions in question from the litigation funder to the general pool of funds to be distributed equally between group members (Modtech Engineering Pty Ltd v GPT Management Holdings Limited [2013] FCA 626). The amendment resolved the "free rider" issue associated with some group members not being required to pay a commission whilst limiting the payment to the litigation funder to its strict contractual entitlement.

Separate settlements

A settlement between respondents and an individual group member does not require court approval unless the individual group member is a representative party, or the legal effect of the settlement has the substantial effect of resolving the entire representative proceeding (section 33V, Federal Court of Australia Act 1976 (Cth);King v AG Australia Holdings ltd (2002) 121 FCR 480 [36]–[47]).

Bar orders are not available in Australia, and so the respondent may still be exposed to cross-claims and contribution claims by other respondents. Representative parties can only settle their individual claim with leave of the court. If a representative party seeks to settle his or her individual claim in whole or in part, he or she must first seek leave to withdraw as the representative party (section 33W, Federal Court of Australia Act 1976 (Cth);section 33W, Supreme Court Act 1986 (Vic); section 174, Civil Procedure Act 2005 (NSW)). Before the court approves of a representative party's withdrawal, notice must be given to other group members and any application to have another person substituted as the representative party must be determined.

 

Appeals

22. Do parties have a right to appeal decisions relating to class actions, such as a decision granting or denying certification of a class action?

Certification is not required before a person can appeal a decision in class action proceedings. If the representative party does not lodge an appeal within time under the ordinary court rules, another member of the group or sub-group can lodge an appeal within a further 21 days on behalf of the group or sub-group (section 33ZC(6), Federal Court of Australia Act 1976 (Cth); section 33ZC(5), Supreme Court Act 1986 (Vic); section 190(3), Civil Procedure Act 2005 (NSW)).

A respondent can appeal a determination in accordance with the usual court rules. The appeal proceedings will operate as a class action against the representative party if it relates to the judgment generally, or against the sub-group representative party if the appeal relates to aspects of the judgment that deal with common issues of the claims of a sub-group.

A respondent or group member can appeal an issue that relates only to the claim of an individual group member, in which case the parties to the appeal are the group member and the respondent. A group member cannot opt out of appeal proceedings (section 33ZC(8), Federal Court of Australia Act 1976 (Cth); section 33ZC(7), Supreme Court Act 1986 (Vic); section 190(5), Civil Procedure Act 2005 (NSW)).

 

Alternative dispute resolution

23. Is alternative dispute resolution (ADR) available in class/collective actions?

ADR is a well established and entrenched feature of the litigation landscape in Australia. This applies with equal force in relation to class action proceedings.

For example, the Federal Court practice note regarding representative proceedings provides that at the initial case management conference, parties will be asked to indicate whether the matter should be referred for ADR and, if so, a timetable within which ADR processes are to proceed (Federal Court of Australia, Practice Note CM 17, Representative proceedings commenced under Part IVA of the Federal Court of Australia Act 1976 (Cth), 9 October 2013 [3.4]).

The practice note in New South Wales is even more prescriptive. The purpose of the practice note is to facilitate the just, quick and cheap resolution of the proceedings (in accordance with section 56 of the Civil Procedure Act 2005 (NSW)). It provides that as a matter of general practice, representative proceedings will be referred to mediation at an appropriate time. The timing of mediation and the identity of the mediator are matters which are to be agreed to between the parties (Supreme Court of New South Wales, Practice Note SC Gen 17, Supreme Court, Representative Proceedings [10.1]).

As discussed in Question 21, the three formal class action regimes in Australia each require that the settlement or discontinuance of a representative proceeding must be approved.

 

Proposals for reform

24. Are there any proposals for reform concerning class/collective actions?

The Australian Government Productivity Commission has recommended:

  • The removal of restrictions on contingency fees (lawyers' fees calculated as an agreed share of amounts recovered in proceedings), subject to an exception for criminal and family matters.

  • Enhanced disclosure requirements.

  • A percentage fee cap for retail clients.

  • A bar on combining standard fees and contingency fees.

The Commission noted that, provided clients are fully informed of the merits of their claim, contingency fees may better align the interests of lawyers and clients by enhancing lawyers' incentive to deal with the matter efficiently. It also recommended the establishment of a federal licensing regime for third party litigation funders to strengthen the ethical and financial supervision of litigation funders.

The Law Reform Commission of Western Australia has recommenced the adoption of a class action regime in that state.

In August 2016, Queensland Parliament considered a proposal to introduce Part 13A into the Civil Proceedings Act 2011 (Qld) to enable class actions proceedings in the Queensland Supreme Court. The proposed regime is modelled on the other Australian jurisdictions' schemes, and remains before the Parliamentary Committee at the time of publication.

 

Online resources

Australasian Legal Information Institute (AustLII)

W www.austlii.edu.au/

Description. The Australasian Legal Information Institute (AustLII) is a comprehensive website providing free access to Australasian legal materials including legislation and case law for the Commonwealth and each of the states and territories.

ComLaw

W www.comlaw.gov.au/

Description. ComLaw is the official website for Commonwealth legislation in Australia. It has the most complete and up-to-date collection of Commonwealth legislation.

NSW legislation

W www.legislation.nsw.gov.au/

Description. NSW legislation is the official website for legislation in New South Wales. It has the most complete and up-to-date collection of legislation and related materials.

Victorian legislation and Parliamentary documents

W www.legislation.vic.gov.au/

Description. Victorian legislation and Parliamentary documents is the official website for legislation in Victoria. It has the most complete and up-to-date collection of legislation and related materials.



Contributor profiles

Beverley Newbold, Partner

Minter Ellison

T +61 2 9921 4894
F +61 2 9921 8070
E beverley.newbold@minterellison.com
W www.minterellison.com

Professional qualifications. LLB; BA; LLM (international business regulation; litigation and arbitration)

Areas of practice. Litigation and dispute resolution; corporate and commercial disputes; class actions; international disputes; defamation, libel and media; commissions and inquiries; arbitration; regulatory compliance and disputes; consumer protection; financial services; administrative law.

Recent transactions

  • Acting for Kagara Ltd non-executive directors in a class action brought by shareholders.

  • Acted for Billabong International Limited in a class action brought by shareholders.

  • Acted for MFS group non-executive directors in a class action brought by unit holders.

  • Acted for Qantas in a class action brought by travel agents.

  • Advised in relation to class actions against Lehman Bros and Standard & Poors.

Richard Murphy, Partner

Minter Ellison

T +61 3 8608 2682
F +61 3 8608 1145
E richard.murphy@minterellison.com
W www.minterellison.com

Professional qualifications. LLB, Monash University, 1980; BSC, Monash University, 1978

Areas of practice. Insurance; competition and regulatory; litigation.

Recent transactions

  • Advising Singapore Airlines Ltd and Singapore Airlines Cargo Pte Ltd in the defence of a class action relating to an ACCC investigation into an alleged international air cargo price-fixing cartel.

  • Acting for a major law firm through the instructions of its primary insurers in relation to a class action arising out of the collapse of Banksia Finance Company, a major mortgage lender.

  • Advising Crown Casino in its successful defence of a A$20 million unconscionable conduct claim by an alleged problem gambler and its successful A$1 million counterclaim in proceedings heard at first instance in the Supreme Court of Victoria and in successful appeals to the Court of Appeal and the High Court.

  • Advising Village Roadshow Ltd in relation to its successful defence and counterclaim in long-running proceedings in the Supreme Court of Victoria, the trial of which occupied six months. The case involved claims in excess of A$200 million on trade practices and other grounds, and counterclaims on corporations law and other grounds. The later appeal was compromised.

Kate Watts, Special Counsel

Minter Ellison

T +61 2 9921 4704
F +61 2 9921 306
E kate.watts@minterellison.com
W www.minterellison.com

Professional qualifications. BA/LLB (Hons); BA (Hons)

Areas of practice. Competition law; class actions and commercial litigation.

Recent transactions

  • Included in the Best Lawyers – class actions list for 2014 to 2016.

  • Acted for Singapore Airlines in the global air cargo cartel penalty proceedings:

    • brought by the ACCC against it and several other carriers which ran for over five years and involved jurisdictional issues and economic questions regarding market operations; and

    • the follow-on class action proceedings brought against it and a number of carriers, which ran for over seven years and involved complex questions of pass-on defences to damages claims and liability between alleged cartelists.

  • Acted for a large electricity transformer producer in relation to private enforcement proceedings seeking damages for losses allegedly suffered as a result of collusive tendering.

  • Acted for SingTel Optus in its landmark High Court victory over the New South Wales and Victorian local councils regarding rating the carrier's pay TV cables.

  • Currently acting in a very large high profile investigation involving complex questions of the interaction between competition and corporations laws and related jurisdictional issues.


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