Proposed changes to NSW's class actions laws could see it
leap-frog the Federal and Victorian court systems to become the
most popular forum for class actions in Australia.
The draft Civil Procedure Amendment (Supreme Court
Representative Proceedings) Bill 2010 is based on Part IVA of the
Federal Court of Australia Act 1976 but it is not exactly
the same. It is those differences which could make NSW even more
plaintiff-friendly than the Federal Court.
It would allow class actions to be brought where claims are
based only in negligence and for breaches of NSW statute, and will
not require a federal cause of action. These claims not only are
those in respect of a cause of action arising on or after the
commencement of this section, but also in respect of historical
causes of actions "with the leave of the Court".
Comment is due by 10 November 2010.
The three significant aspects of the proposed class action
The three significant differences are:
class actions may be brought on behalf of a defined, limited
group of identified individuals, not only an open,
class actions may be taken against several defendants
– even if not all group members have a claim against all
the defendants; and
the Supreme Court can distribute the undistributed part of a
fund of damages to charities or public interest beneficiaries.
Why the proposals should concern all businesses
There are two main problems with these proposals:
First, they seem to give the Court largely
unfettered powers to order the establishment of a fund of money to
be distributed to group members and also to establish a scheme for
money remaining in the fund (or any part of it), that cannot
practicably be distributed to group members, to be applied
cy-prčs, which means "As near as (possible)". In
effect, this could spur the growth of class
actions, if the US is any guide. There, the growth of
"coupon litigation" (class actions for claims involving
very small amounts, where it is difficult to identify members of
the class, and the administrative costs of any settlement are
prohibitive) has led to minimal returns for class members, but
significant returns to plaintiff lawyers.
Secondly, the proposals would allow class
actions against several defendants – even if not all
group members have a claim against all the defendants. A party
brought into a class action as a respondent, but in respect of a
different claim by different group members, will incur costs
associated and generated by its mere (long-term) presence in the
class actions, but is less likely to have the case against it
determined in a speedy, just and efficient manner. In short, it is
more likely that you will be joined to a class action, and could
pay more to defend yourself.
Litigation funding reforms - still to be considered
The NSW Government is also considering making what it calls
"minor changes" to deal with the growth of the litigation
funding industry. These could include ensuring:
legal practitioners are aware that their responsibility is to
the plaintiff and not to the litigation funder;
disclosure of litigation funding arrangements to the court;
giving the court the power to issue cost orders to relevant
No details of these have been released, and it is unclear if
there will be a consultation process either.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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This was an interlocutory decision about the appointment of a tutor for the child appellant, to carry on his proceedings.
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