Australia: High Court Of Australia Determines Extent To Which Class Members Are Bound By Class Action Judgment

Last Updated: 12 January 2017
Article by John Emmerig and Michael Legg

Key Points

  • The High Court of Australia in Timbercorp Finance Pty Ltd (in liq) v Collins [2016] 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 proceeding.1

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 proceeding.

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 question.

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 reasons.4

By grant of special leave, Timbercorp Finance appealed to the High Court of Australia.

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1 Timbercorp Finance Ltd (in liq) v Collins [2016] HCA 44, [8] and [21] (French CJ, Kiefel, Keane and Nettle JJ), [89]-[90] (Gordon J).

2 Woodcroft-Brown v Timbercorp Securities Ltd (in liq) [2011] VSC 427; 85 ACSR 354; Woodcroft-Brown v Timbercorp Securities Ltd (in liq) [2013] VSCA 284; 96 ACSR 307. See Jones Day Commentary, "The Timbercorp Class Action Appeal: Product Disclosure Statement Obligations and Misleading Conduct in Australia" (October 2013).

3 Timbercorp Finance Pty Ltd (in liq) v Collins and Tomes [2015] VSC 461. See Jones Day Commentary, "Group Members and Unsuccessful Class Actions in Australia—Anshun Estoppel and Abuse of Process" (November 2015).

4 Timbercorp Finance Ltd (in liq) v Collins and Tomes [2016] VSCA 128.

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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