Australia: Class Actions In Australia—2017 Year In Review

Twenty-five years after the introduction of Australia's federal class action regime, class action law remains a significant element of the country's litigation landscape. Enhancements to Australia's class action jurisprudence in 2017 included developments in the class closure process, the coordination of competing class actions, and a newly implemented common fund approach to setting litigation funder's fees.

This Jones Day White Paper reviews these and other developments and lists the class actions matters that were commenced and resolved in 2017.

2017 marked the 25th anniversary of the federal class action regime in Australia which is embodied in Part IVA of the Federal Court of Australia Act 1976 (Cth). 2017 also saw the enactment of a class action regime in the State of Queensland, making it the third state after Victoria and New South Wales to adopt class actions. The class action is an important part of the Australian litigation landscape and consequently a key risk for entities operating in Australia. A clear understanding of class action law and practice is central to understanding the contours of that risk.

Australian class action jurisprudence was further refined in 2017 with developments in:

  • the class closure process whereby the group members are required to register to be able to participate in a class action settlement;
  • the management of competing class actions, which has become a common occurrence, especially for shareholder claims;
  • the newly adopted common fund approach to setting litigation funder's fees;
  • discontinuance of class actions; and
  • abuse of process.

Each is discussed below. Class actions law may also be set for reform with the Victorian Law Reform Commission due to report on 31 March 2018 on its inquiry concerning access to justice by litigants who seek to enforce their rights using the services of litigation funders and/or through group proceedings (class actions). At the end of 2017, the Australian Law Reform Commission was also tasked with investigating the regulation of legal costs and litigation funding in class actions, conflicts of interest and class action settlement distributions.

This White Paper also sets out the class actions that were commenced and settled in 2017.

KEY DECISIONS

Class Closure Process

The Australian class action procedure, like that of many other jurisdictions such as the United States and Canada, adopts an opt out model. The Australian class action legislation provides that a class action can be commenced without the express consent of group members and that all of the claimants who fall within the group definition are part of the class action. However, group members must be given an opportunity to exclude themselves, or opt out, of the class action. Group members who remain within the defined group are bound by the outcome of the proceedings.

To achieve finality in an open class action, where a monetary award or settlement is assessed or distributed, it is necessary to identify the particular class members to whom the monetary award or settlement is to be given. Australian courts, at the request of the parties, have made "class closure" orders which require group members to come forward and register their interest. The orders have frequently had the effect that failure to register means that the group member cannot participate in any recovery, whether by settlement or judgment, and the group member's claim is extinguished or barred. The approach has been criticised as undermining the access to justice goal of an opt out class action but has persisted as a practical necessity to achieve finality.

In Jones v Treasury Wine Estates Limited (No 2) [2017] FCA 296, the Federal Court altered the above orders. Registration was required to facilitate a mediation, and group members could participate in any settlement only if they had registered. If a settlement was achieved and approved by the Court, then unregistered group members obtained no recovery and lost their right to claim. However, unlike past orders, if no settlement was reached, then unregistered group members could still participate in any judgment.

The judgment was appealed to the Full Court of the Federal Court of Australia. While the Full Court did not need to expressly address the novel class closure order, it chose to provide guidance as it considered class closure to be an important part of class action procedure: Melbourne City Investments Pty Ltd v Treasury Wine Estates Limited [2017] FCAFC 98.

The primary judge expressed doubt that the Court had power to make an order, before the initial trial of a class action, to extinguish a group member's right to share in the fruits of a subsequent judgment unless the group member took steps to register in the proceeding. However, the judge did not rule on that question and instead addressed the issue as an exercise of discretion, ruling that it was not necessary or appropriate to make orders extinguishing the unregistered group members' claims at that time.

The Full Court considered the power to make class closure orders. It accepted that requiring group members to take active steps to "register" in order to share in a settlement of a class action undercut to some extent the opt out rationale underpinning the class action regime. However, the Full Court found that there was power to make a class closure order relying on s 33ZF of the Federal Court of Australia Act 1976 (Cth) which provides: "the Court may, of its own motion or on application by a party or a group member, make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding". If a class closure order facilitates the desirable end of settlement, then it may be reasonably adapted to the purpose of seeking or obtaining justice in the proceeding and therefore appropriate under s 33ZF. Settlement is facilitated because it allows a better understanding of the total quantum at stake in the proceedings. Moreover, the Full Court stated that an important aspect of the utility of the class action was its ability to achieve finality not only for group members but also for the respondent.

The Full Court endorsed the primary judge's remarks in relation to discretion and used them to express a number of cautions. The Full Court warned of the need to be vigilant before making a class closure order that, in the event settlement is not achieved, operates to lock class members out of their entitlement to make a claim and share in a judgment (at [76])—"the facilitation of settlement is a good reason for a class closure order but, if settlement is not achieved, an order to shut out class members who do not respond to an arbitrary deadline is not". Further caution needed to be exercised in relation to the stage at which a class closure order is made. The earlier the order, the greater the opt out rationale was likely to be harmed. The Full Court expressly stated at [77] that "the Court should usually not exercise the discretion to make a class closure order based merely on a respondent's assertion that it is unwilling to discuss settlement unless such an order is made". This was based on a view that it is the nature of opt out class actions that the respondent will be faced with uncertainty regarding the quantum of class members' claims because the number of claimants may be unknown.

After providing the above guidance, the Full Court recognised that (at [79]):

Whether it is appropriate to order class closure is a question of balance and judicial intuition. The Court must take into account the interests of the class as a whole in requiring class members to take steps to facilitate settlement, and consider the surrounding circumstances including the point the case has reached, the attitude of the parties, and the complexity and likely duration of the case.

The Full Court found that the class action legislation provided Australian courts with the power to make class closure orders. The power may be exercised to facilitate the goal of settlement. The Full Court also endorsed the approach of the primary judge which changed prior practice and provided that if no settlement was reached, then unregistered group members could still participate in any judgment. It is to be expected that this form of class closure order will become the standard procedure.

The use of class closure orders to facilitate settlement was further considered in Hardy v Reckitt Benckiser (Australia) Pty Limited [2017] FCA 341 ("Hardy v Reckitt Benckiser"), Kamasaee v Commonwealth of Australia & Ors (No 8) (Class closure ruling) [2017] VSC 167 ("Kamasaee") and Petersen Superannuation Fund Pty Ltd v Bank of Queensland Limited (No 2) [2017] FCA 1231 ("Petersen Superannuation Fund").

In Hardy v Reckitt Benckiser, a consumer class action in relation to alleged misleading statements about pain relief medication, the respondents sought class closure to facilitate mediation. The respondent argued that it needed to know who was claiming in the class action to be able to determine its maximum theoretical liability to group members. The Court declined to make the orders. The Court regarded the likely size of the group and the possibility that there may be many group members with modest claims who have not yet registered as a consideration that weighed against the making of a class closure order before the initial trial. The trial would be relatively short (two to three days), and a mediation could still be useful as it would allow consideration of how to assess the claims of group members.

In Kamasaee, 1,905 asylum seekers detained in the Manus Island Regional Processing Centre sought compensation based on claims of negligence and false imprisonment. The defendants sought class closure orders to determine how many group members will ultimately participate in any settlement so that they could meaningfully quantify the damages sought. The plaintiff objected to the orders based on there being sufficient information already available to the defendants to determine compensation. The Court declined to make the orders based on a number of characteristics of the group members, including that at least 25 percent of the class reside outside Australia and thus they may not receive the notice or be able to obtain assistance in understanding and complying with it. Additionally, others may harbour apprehensions that in the event that they were to take the positive step of opting in to the proceeding, their prospects of participating in any resettlement may be jeopardised.

These decisions may be contrasted with Petersen Superannuation Fund, where the applicant alleged that losses were caused to it and the group members by failures in the operation of a financial product. The respondents sought a registration or class closure process to facilitate a mediation that the Court had indicated it would order. The applicants objected to such a process, including because the group members must have been known to the respondents having completed application forms to obtain the product. The Court referred to Melbourne City Investments Pty Ltd v Treasury Wine Estates Limited [2017] FCAFC 98 and ordered that a registration process occur as the respondents could not ascertain the likely amount of the losses which the group members might claim.

Competing Class Actions

Competing or multiple class actions addressing the same or similar claims have become a regular occurrence, with courts needing to determine how to choose between or manage the class actions. In 2017, the Queensland Floods and Bellamy shareholder class actions gave rise to this issue.

The Queensland Floods class action was originally brought in the Supreme Court of New South Wales through a closed class that had been commenced in July 2014 ("Rodriguez proceeding"). A second class action was commenced by Philip Hassid as the representative party on 9 January 2017 ("Hassid proceeding"). The Hassid proceeding was commenced in response to amendments to the Rodriguez proceeding that excluded group members' claims for pure economic loss. After the amendments, the Rodriguez proceeding pursued only claims for damage to real and personal property and consequential loss. The Hassid proceeding sought to bring claims for pure economic loss but, through the group definition employed, inadvertently created a situation where group members with both property and pure economic loss claims pursued the property claims in both class actions. Rodriguez sought to strike out that part of the Hassid pleading that created the overlap for three main reasons: it creates conflicting duties for the legal representatives, it will cause uncertainty and the incurring of excessive costs for Rodriguez during the opt out process of the Hassid proceeding, and it is likely to adversely affect the prospects of the Rodriguez proceeding settling. Beech-Jones J agreed with these contentions and struck out the part of the Hassid pleading that created the overlap.

In McKay Super Solutions Pty Ltd (Trustee) v Bellamy's Australia Ltd [2017] FCA 947, Beach J dealt with two open class actions, the McKay proceedings (which also had 1,500 signed-up group members) and the Basil proceedings (which also had 1,000 signed-up group members) by closing the class in the Basil proceedings so that it was limited to the signed-up group members only and allowing the McKay proceedings to continue as an open class action. This had the result that unsigned group members could be part of the McKay proceedings only, and an overlap in group membership, which could be an abuse of process, was avoided. Both class actions would be jointly case managed with a view to conducting a joint trial. The respondents' application for a permanent stay of either class action was denied, principally because it would interfere with the choice of lawyer and funder by a large number of group members.

To read this White Paper in full, please click here.

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.

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

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

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
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 Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

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