The High Court of Australia in
Timbercorp Finance Pty Ltd (in liq) v Collins  HCA
44 determined that a class member in an unsuccessful class action,
who later raised individual defences against a claim from a
defendant to the original class action, was not precluded from
raising them by reason of Anshun estoppel, nor were the
defences an abuse of process.
The statutory class action regimes in
Australia are structured so that a representative party represents
class members only with respect to the claim that is the subject of
the class action—the common issues—but not with respect
to their individual claims.
The decision highlights the
importance of framing the common questions in the class action, as
they will determine the scope and extent of any claims that may
survive the determination of a class action proceeding.
A class action proceeding was brought against members of the
Timbercorp Group in the Supreme Court of Victoria under Part 4A of
the Supreme Court Act 1986 (Vic), following the collapse
of that group in 2009. The class action was brought on behalf of
about 18,500 investors who had invested in horticultural and
forestry managed investment schemes ("MISs") operated by
the Timbercorp Group during the relevant period. The claims in the
class action proceeding concerned allegations of false or
misleading statements and breaches of disclosure obligations under
the Corporations Act 2001 (Cth).
A member of the Timbercorp Group, Timbercorp Finance Pty Ltd
("Timbercorp Finance"), had made loans to some, but not
all, of the investors who later comprised members of the class
action so that they could invest in the MISs during the relevant
period. After being placed into liquidation, the liquidators of
Timbercorp Finance commenced proceedings against some borrowers to
recover the loan amounts. Modest progress was made before the class
action was filed. Timbercorp Finance then filed a counterclaim
against the representative party in the class action for the
recovery of loan amounts. Before hearings began, that Court
directed that the counterclaim be tried separately and after the
determination of the issues the subject of the class action
The class action proceeding was unsuccessful at first instance
and on appeal.2
In 2014, with the counterclaim still unresolved, Timbercorp
Finance commenced proceedings in the Supreme Court of Victoria
against other borrowers, including Mr and Mrs Collins and Mr Tomes,
to recover alleged loan amounts and interest. Mr and Mrs Collins
and Mr Tomes had been members of the class action proceeding (but
neither were the representative party or "lead
plaintiff"). In the proceedings brought by Timbercorp Finance,
Mr and Mrs Collins and Mr Tomes each sought to raise claims and
defences challenging the validity and enforceability of the loan
agreements that had not been raised in the class action
By order of the Court, the question whether Mr and Mrs Collins
and Mr Tomes were precluded from raising any, and if so which,
defences pleaded by them by reason of their participation as class
members in the class action proceeding, was heard as a separate
At first instance, Robson J held that the defendants were not
precluded, by reason of Anshun estoppel, abuse of process
or otherwise, from raising those defences.3 His
Honour's decision was confirmed on appeal, but for different
By grant of special leave, Timbercorp Finance appealed to the
High Court of Australia.
2016 was an important year for the development of class action jurisprudence in Australia. The year brought at least 25 new class action lawsuits and substantial settlements that will impact litigation moving forward.
Considering costs issues early in the process of seeking injunctive relief can facilitate more efficient recovery.
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