Australia: Class Actions in Australia: Surveying the Landscape

Insurance Update (Australia)
Last Updated: 15 April 2013
Article by Kerry Hogan-Ross

Class actions have been long established in the litigation landscape of Australia. We are experiencing a steady rise in the number of class actions brought, the complexity of the claims, the amount of media attention given to them and the value in dollar terms. While there has been a notable rise in class actions concerning securities and financial services, there remains a strong focus on medical misadventure (transplants and drugs). We are also seeing claims being brought by those who suffered losses in natural catastrophes such as the Victorian bushfires and the Queensland floods.

The increase has also put the litigation funding industry under the spotlight, though it has emerged relatively unscathed and mostly unregulated.

In this article we examine some of the cases that have recently resolved, class actions currently afoot and those that are in the pipeline.


Class actions are no different to other types of litigation in the sense that far more settle rather than proceed to judgment. However, last year, two landmark decisions were delivered in class actions in relation to complex investment vehicles.

On 21 September 2012, judgment was delivered in favour of Wingecarribee Shire Council and other New South Wales councils that invested in complex investment products that ultimately led to large losses. The councils alleged that the investments should never have been recommended to them by the financial adviser, and the court agreed.

Another group of councils similarly complained that complex investment products should not have been recommended to them. However, they also joined the ratings agency, Standard & Poors (S&P), in relation to S&P's AAA rating of the investment product. Judgment was delivered in favour of Bathurst Regional Council in November 2012. The decision against S&P was a world-first.

Both of these decisions are dealt with in detail on pages 56 and 58.

In July 2012, the distributors of thalidomide in Australia settled with the lead plaintiff, paving the way for further settlements. Thalidomide, used in the late 1950s and early 1960s to inhibit morning sickness, caused congenital defects, which were often profound.

A class action was commenced in the Supreme Court of Victoria in 2011 against the German manufacturer and the British distributor. The lead plaintiff, Ms Lynette Rowe, who was born without arms and legs caused by thalidomide, settled with the distributor, which also agreed to negotiate with the other members of the representative action. No settlement has been reached with the manufacturer. Ms Rowe therefore remains the lead plaintiff in the litigation, which has been adjourned to allow group members to negotiate with the distributor.

A class action was launched in the Federal Court in 2010 against DePuy and Johnson & Johnson in relation to the alleged failure of knee implants. The class action settled on 29 August 2012.

The deadly 2009 Victorian bushfires have so far been the subject of three class actions. The fires were widespread and the cause of the destruction varied from place to place. The Beechworth and Mudgegonga fire class action involved a claim against SPI Electricity and others, alleging that fire started when a tree fell across a powerline. That class action settled in May 2012 for AU$32.5 million.

Aggrieved shareholders in agricultural company Nufarm Limited commenced a class action in relation to, amongst other things, alleged misleading and deceptive profit forecast. The class action settlement was approved by the Federal Court on 28 November 2012 for AU$46.6 million.

The near collapse of the Centro group following the Global Financial Crisis has been the subject of a lot of legal activity. In 2011, the Australian Securities and Investments Commission successfully prosecuted the Centro directors for their role in approving the company's 2007 financial accounts. Given the bona fides of that board, the prosecution has been widely questioned. When Centro share prices plummeted, shareholders commenced a class action in 2008. That action settled for AU$200 million on 19 June 2012.

Another shareholder action, against Sigma Pharmaceuticals, was settled on 19 December 2012 for AU$57.5 million. Shareholders in Sigma alleged misleading and deceptive conduct relating to a profit guidance issued to investors prior to a 2009 capital raising.

The global experience of class actions against Merck Sharp & Dohme (Merck) in connection with the arthritis drug Vioxx has varied widely. The company withdrew the big-selling drug from the market in 2004 after a study showed it increased the risk of heart attacks and strokes. What followed was a mountain of litigation.

In the US, 16 cases have gone to trial, with Merck winning 11 of those cases. In response to the unpredictable court decisions and the risk of huge jury awards, Merck set up a US$950 million settlement fund. It also pleaded guilty to a criminal misdemeanor charge to resolve US Government allegations that the company illegally promoted its former painkiller Vioxx and deceived the Government about the drug's safety.

In Australia, the class action against Merck was ultimately unsuccessful, leaving legal firm Slater & Gordon with a large loss on its books, thanks to approximately AU$10 million in unpaid fees. Last year its full-year profit fell by 11% because of its loss in the Vioxx class action.

In that action, the lead applicant, Mr Peterson was successful at first instance. He suffered a heart attack while taking Vioxx and brought proceedings against Merck, alleging that his consumption of Vioxx contributed to his heart attack. On appeal the Full Court found that it was not proven that but for the taking of Vioxx, Mr Peterson would have suffered a heart attack. The Full Court concluded that Vioxx was amongst a mix of factors that may have caused the heart attack, but it had not been shown that Vioxx was a necessary condition for the heart attack occurring.

Interestingly, the court found that Vioxx did have a defect within the meaning of s 75AC Trade Practices Act 1975 (Cth) – a defect that affected some people, not all. It was found that Vioxx increased the risk of myocardial infarction and that the product information contained no advice or warning about this effect. Nevertheless, the state of scientific or technical knowledge at the time when the goods were supplied by Merck was not such as to enable that defect to be discovered.

As such, even if Mr Peterson could have established causation, Merck would not have been found liable, thereby sealing the fate of the rest of the class.


A pharmaceutical class action has been commenced in the Federal Court of Australia against Aspen Pharmacare Australia Pty Ltd and Eli Lilly Australia Pty Limited. The proceeding arises out of the alleged side effects of changed and abnormal behaviour, being compulsive gambling, compulsive spending, compulsive eating and hyper-sexuality following the consumption of the drug Permax. The drug is used in the treatment of Parkinson's Disease, restless legs syndrome and pituitary tumours.

With similar cases successful in the UK and Canada, 200 former Australian users are now suing the manufacturers of Permax and a similar drug, Casabar, alleging that the uncontrollable and compulsive behaviour causes significant financial and emotional damage.

Although these drugs have helped thousands of patients who have suffered none of these strange side effects, studies indicate up to a quarter of users may have been affected by odd compulsions.

Since 2008, the drugs' product information leaflets have contained mandatory warnings about possible side effects.

Prior to December 2009, Bonsoy soy milk was sold widely in most supermarkets as well as health food shops and cafes. However in that month, Bonsoy's distributor, Spiral Foods voluntarily withdrew the product from the Australian market when it was discovered that it contained extremely high levels of iodine, which could lead to serious health problems such as hyperthyroidism and hypothyroidism.

A class action of affected persons has been commenced in the Victorian Supreme Court against Spiral Foods and two Japanese companies that manufactured and exported Bonsoy.

In late 2012, a class action was commenced by a group of women against Johnson & Johnson in relation to a product called a transvaginal mesh. The mesh is said to have been widely implanted in women who have suffered organ prolapse, however it is alleged to cause extreme pain, discomfort and injury in some women.

Poor lending decisions are at the heart of the class action against some of the directors and officers of City Pacific Ltd (in liq) (City Pacific). Approximately 10,000 "mum and dad" unitholders in City Pacific lost their investments as a result of loans to property developers and are claiming losses of around AU$60 million. Trilogy Funds Management Limited, now the responsible entity for City Pacific, is bringing the claim on behalf of the unitholders.

Victorian bushfires

In the Murrindindi-Marysville bushfire class action, the lead plaintiff alleges that SP AusNet, a power utility company, was negligent in (amongst other things) failing to detect that a power line (which broke and caused the fire) was too close to an earthed stay wire. Claims are also brought against the Victorian Government, the Country Fire Authority and the Department of Sustainability and Environment in relation to the failure to issue timely and appropriate warning about the approaching bushfire.

Likewise, those affected by the Kilmore East-Kinglake fire have commenced proceedings against a power company, SPI Electricity and also government authorities responsible for land clearing and fire warnings.


Equine influenza

A class action is being prepared against the Commonwealth in relation to the equine influenza outbreak in 2007. It will be alleged that the Commonwealth failed to prevent the escape of the equine influenza virus and also failed to control dangerous activities at its Eastern Creek Quarantine Station. The evidence and findings of the Commonwealth's own Equine Influenza Inquiry will encourage the action.

Poly Implant Prothese (PIP)

The French brand of silicone breast implant PIP received massive worldwide publicity when it was found to be highly prone to rupture. The silicon used in the implants was of an inferior grade. An estimated 400,000 women worldwide have had the implants, with many reporting problems. The French Government ordered all women with PIP implants to have them removed (and replaced). However, as we go to print it appears that the contemplated class actions will not proceed.

South East Queensland floods

Seqwater, the operator of the Wivenhoe and Somerset Dams in South East Queensland, is the likely target of the proposed class action to be brought on behalf those who suffered loss and damage as a result of the floods. Again, the evidence and findings of the Queensland Floods Commission of Inquiry, which found that the Wivenhoe Dam was mismanaged, will encourage the action.

© DLA Piper

This publication is intended as a general overview and discussion of the subjects dealt with. It is not intended to be, and should not used as, a substitute for taking legal advice in any specific situation. DLA Piper Australia will accept no responsibility for any actions taken or not taken on the basis of this publication.

DLA Piper Australia is part of DLA Piper, a global law firm, operating through various separate and distinct legal entities. For further information, please refer to

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions