In this practice area
Representative proceedings in the Federal Court and NSW Supreme Court, where one claimant sues on behalf of a group with claims arising from related circumstances.
What class actions are
A class action allows one person, the representative applicant or plaintiff, to bring proceedings on behalf of a group of people whose claims arise from the same, similar or related circumstances against the same respondent. It makes claims viable that would be uneconomic to bring individually, and allows common issues to be decided once.
In Australia, class actions commonly involve shareholders alleging breaches of continuous disclosure obligations, investors, consumers affected by defective products, franchisees, employees and groups affected by a common event. Businesses may be respondents, group members, or both.
The legal framework
In the Federal Court, representative proceedings are governed by Part IVA of the Federal Court of Australia Act 1976 (Cth). Under section 33C, proceedings may be commenced where seven or more persons have claims against the same person, the claims arise out of the same, similar or related circumstances, and they give rise to a substantial common issue of law or fact. In the NSW Supreme Court, Part 10 of the Civil Procedure Act 2005 (NSW) establishes an equivalent regime, with the same seven-person threshold in section 157. Other states have their own regimes, including Victoria, where the Supreme Court can make group costs orders.
Australian class actions generally operate on an opt-out basis. Group members are bound by the outcome unless they opt out by the date set by the court. A class action cannot be settled or discontinued without the court's approval, under section 33V of the Federal Court Act and section 173 of the Civil Procedure Act. Many class actions are supported by litigation funders, and the court supervises the fairness of funding and legal cost deductions from any settlement.
How these matters typically run
Class actions follow a recognisable path: investigation and funding, filing, early interlocutory disputes about the pleadings and the class definition, notices to group members and opt out, discovery and expert evidence, mediation and, in some cases, trial of the common questions followed by individual issues. Most settle, and settlement approval is itself a significant step requiring evidence that the settlement is fair and reasonable to group members.
Competing class actions over the same events are common, and courts have developed approaches to decide which proceeding should go ahead. Respondents also have to manage parallel regulatory investigations and insurance issues.
How we act
We advise respondents facing actual or threatened class actions, businesses assessing whether to participate as group members, and representative parties. For respondents, we focus early on the pleadings, the class definition, insurance and the interaction with any regulator.