Background

What is a grade activeness?

A grade activeness (also known as a "representative proceeding") is a legal procedure that enables the claims of a number of persons against the aforementioned defendant or defendants to be determined in one proceeding.

In a form action, ane or more than persons (the "representative plaintiff" or "representative plaintiffs") commences proceedings on his or her own behalf, and on behalf of 7 or more other persons (the "class" or "group") who have similar claims that share questions of law or fact with the representative plaintiff ("common issues").

There is no requirement that the common issues betwixt grouping members predominate over the private issues. Rather, in that location is merely a requirement that there exist at to the lowest degree one substantial common result of law or fact. In this sense, Australia'due south highest court has described 'substantial' as meaning of substance rather than denoting a certain size. In effect, this ways that, although mandatory, these requirements are not peculiarly onerous.

Generally, the group members do not accept to actively participate in the litigation. The court hears the representative plaintiff's instance and makes a decision, including on the common problems. Unless the group members "opt out" earlier a date fixed by the courtroom, they are leap past the outcome of the litigation.

Why were class deportment introduced?

Class actions were introduced to ensure that groups of people who have suffered loss or damage, whatsoever the type of claim, will be able to pursue redress and do so more cheaply and efficiently than would be the case with individual actions.

What types of claims may be filed as grade actions?

Form actions tin can be commenced in most areas of law where the courtroom has jurisdiction. They take been commenced in relation to a wide range of issues, including past:

  • consumers who have suffered personal injury through defective products;
  • consumers induced by misrepresentations and misleading bear;
  • shareholders against listed companies for misleading or deceptive conduct and/or breaches of the continuous disclosure authorities on the share market place.;
  • investors complaining of conduct by the promoters of various investments;
  • consumers and businesses against cartelists; and
  • individuals who have suffered loss, injury or harm as a outcome of a disaster including, for case, bushfires.

The group members can seek either equitable relief or make a claim for damages, fifty-fifty if the claim for damages requires individual assessment for modest amounts.

What type of relief may exist sought?

The court may order a broad variety of relief in class actions. For example, it may make up one's mind an consequence of law or fact, make a proclamation of liability, grant any equitable relief, or award amercement. In awarding damages, the court may either identify a specific amounts for individuals or particular classes of grouping members, place methods of computing a specific corporeality for individuals or particular classes of group members, or determine an aggregate amount without specifying how much must exist paid to individual group members.

Punitive (exemplary) damages are rarely awarded in Australia.

How long does a class action take?

The time taken from commencement to a terminal decision in a course action depends on the detail case and the nature of the claim. It may take anywhere from six months to several years for a affair to be heard and determined.

Initiating Proceedings

Who can bring a grade activeness?

Anyone with sufficient interest to embark a proceeding on his or her own behalf against a particular defendant or defendants can embark proceedings on behalf of a course. In addition, there are federal legislative provisions that let the Australian competition regulator, the Australian Competition and Consumer Commission (ACCC), to pursue individual enforcement (including by fashion of form deportment) on behalf of persons who have suffered, or are likely to suffer, loss or damage by reason of acquit that contravenes those federal provisions.

In which courts may class actions be brought?

  • Federal Court of Commonwealth of australia (since 1992)
  • Supreme Court of Victoria (since 2000)
  • Supreme Court of New South Wales (since 2011)
  • Supreme Court of Queensland (since 2016)
  • Supreme Courtroom of Tasmania (since 2019)

Whilst each of the state regimes are modelled on the federal regime, in that location are subtle differences between each jurisdiction.

How is a grade action initiated?

A class action is commenced past the representative plaintiff or representative plaintiffs filing an originating process in court. The originating process must:

  • describe or otherwise place the group members to whom the proceeding relates; and
  • specify the nature of the claims made on behalf of the group members and the relief sought; and
  • specify the questions of police force or fact common to the claims of the group members.

While the claimants must describe the grouping in the originating process, there is no obligation to place, name or even specify the number of group members.

Are there certification requirements? What are the threshold criteria?

In that location is no requirement that the proceedings be judicially certified equally advisable to be brought as a class action, notwithstanding, earlier a class action can be commenced, 3 threshold criteria must be met:

  • 7 or more persons have claims against the same person or persons;
  • the claims of those persons are in respect of, or arise out of, the same, similar, or related circumstances; and
  • all claims of those persons requite rise to a substantial common outcome of fact or law.

There is an assumption that the claim is validly brought unless the respondent brings an activeness seeking to strike out the claim for failure to meet the threshold requirements.

What is the limitation flow for bringing a class action? Can information technology be paused?

Limitation periods (that is, the maximum period of time which tin elapse from the fourth dimension of a cause of action arises until the commencement of court proceedings relating to that cause of action) exist simply vary considerably depending on the cause of activeness. When a class action is commenced, the running of any limitation flow is suspended and does not begin to run once again until either the grouping member opts out of the proceedings or the proceedings are finally adamant.

The Grade

Form membership

A class activity can have as many group members every bit satisfy the group definition and elect not to opt out. A group member definition may be drafted broadly in club to encompass a larger number of individuals (for example by incorporating multiple models of a product manufactured by the same company). Where this occurs, it is common for there to be additional representative plaintiffs appointed for each "sub-group" inside the class, in lodge to bargain with bug which arise in relation to some, but not all group members.

Because group members are not parties to the litigation and it is only the representative party who needs to bear witness his or her case, group members practice non have to take whatever activeness or play an active role in order to be part of the course, at least until a sentence or settlement occurs.

Notice requirements

Though group members are not required to take an active office, Australian constabulary requires group members to exist notified of diverse matters and so that group members can brand informed decisions concerning their rights. These include: the existence of proceedings (and their correct to "opt out"), where the representative plaintiff withdraws (to be replaced past some other representative), where an application for dismissal of the proceedings for want of prosecution is fabricated, or where the parties propose to settle the proceedings. In that location are specific requirements for the course of notices given to group members. The content and manner of distribution will depend on the individual circumstances of the instance.

Opt out

Each of the class deportment regimes prescribe an opt-out system. At some pre-divers phase in the proceedings, the court will settle on the particulars of an 'opt out notice' which includes fixing a date by which group members may opt out of proceedings, by fashion of written observe to the courtroom. If a claimant is within the grade as defined merely does not opt out earlier the fixed date, then they will be bound by any judgment of the court.

The courtroom will make specific orders as to the grade and media for publication of that detect, and the form of observe volition depend on the case. Discover is sometimes given past mode of press advertisements in national newspapers, past radio or television broadcast, or publication online or via social media. Direct notification is as well used where possible.

The courts have also permitted classes to exist defined in such a way that only persons who had signed upward with a item litigation funder (and their lawyers) could be a class fellow member – in effect, a form of gate-keeping or informal opt-in system.

If people opt out, tin can they start their own proceedings?

If a group fellow member decides to opt out of proceedings before the deadline, they will non share in any settlement or favourable judgment made by the courtroom. However, the private is and so able to pursue an individual merits against the respondent on the aforementioned allegations made in the class action, and the normal rules of civil procedure will apply.

How are competing and/ or overlapping class actions managed?

This area of the law continues to evolve. Equally there is no "certification" government in Commonwealth of australia, it is possible, and indeed frequent, for multiple class actions to be commenced (by dissimilar plaintiffs/ constabulary firms) against the same accused(due south) in respect of similar acquit.

Overlapping form deportment will generally be instance managed in the aforementioned court (with a formal transfer protocol in place between the State-based Supreme Courts and the Federal Court) past the same judge.

There is presently no formal process for resolving competing or overlapping class actions and how the court addresses multiple grade actions is a matter of discretion and case management which depends on the particular circumstances. The courts accept taken a number of dissimilar approaches in the past, including assuasive all proceedings to continue culminating in a joint trial, consolidating competing proceedings, and choosing one proceeding to go along whilst staying the others.

Process

What happens afterward a class action is commenced?

One time a class activeness has been commenced, it will continue until resolved unless the court determines that the proceeding should not continue as a class action. The principal basis for that determination is either that the action does not satisfy the mandatory criteria or that it is non otherwise in the interests of justice.

Grade actions are heavily reliant on constant judicial management. Typically, class actions are periodically listed for "case management conferences" (as well known as "directions hearings") where the approximate sets and oversees compliance with a court timetable to ensure that the proceedings is resolved as quickly and efficiently every bit is possible in the circumstances.

How is a grade activeness defended?

Every form action is unique and, as a outcome, the mode each class action is defended will depend on the item facts and issues between the parties. Some form actions require interlocutory management, some are resolved at an early stage and some go to trial.

How are class actions managed?

Civil proceedings in Commonwealth of australia are more often than not heard by a gauge sitting without a jury. Under the Federal Court's "docket organization" a class action volition be allocated to a judge from when information technology is commenced, who is then responsible for managing the case until final disposition. In grade actions commenced in a Land-based Supreme Court, proceedings are similarly allocated to a docket judge for case management, nonetheless it is uncommon for the aforementioned judge to and so preside over the eventual trial.

Common Questions and Trial

In almost respects, a class action trial proceeds in the same manner a single plaintiff trial is conducted. Still, the existence of mutual questions and the plaintiff's function every bit a "representative" mean that the procedure differs.

Importantly, though in that location is no standard process for how a class activity will proceed, information technology is mutual to determine the pb plaintiff's case beginning, in an endeavour to answer "common questions" for all group members. In some courts, this may be preceded by a trial of preliminary issues of fact, or mixed fact and law.

Whatsoever decision in a grade action (be that on preliminary issues, or mutual questions arising through decision of the lead plaintiff's example) is binding on all grouping members who did non opt out by the Court borderline.

How are non-common or individual issues dealt with?

Where the conclusion of the questions common to group members does non finally decide the claims of all grouping members and there are questions common to the claims of only some group members, the court may direct that those questions be adamant past sub-groups or alternatively past appointing sample group members.

A sub-group empowers the court to establish a number of smaller representative proceedings, and determine common bug in those smaller proceedings, within the overarching representative proceeding which determines issues that are mutual to all group members.

In addition, the court can allow an private grouping member to have part in the proceeding for the purpose of determining a question that relates only to the claim of that member. If the sub-group questions or the private questions cannot be adequately dealt with, the courtroom can direct that further proceedings exist commenced

It is increasingly common for individual problems to be dealt with, post-obit a binding court determination, past agreement, being in accord with a "settlement scheme" negotiated by the parties (and approved by the Courtroom).

Settlement

Approval of class action settlement

Settlement can occur at whatsoever point in the class action. Withal, once commenced, a class action may not be settled or discontinued without the approval of the courtroom.

Every bit role of the settlement approval, group members volition be given observe of the settlement and the opportunity to object to the settlement by filing a find of objection in court. The court will consider all of the notices of objection filed when determining whether to approve a settlement, and group members who take filed a notice may announced earlier the court during settlement approval and make submissions (with carve up legal representation if they wish). Information technology is worth noting that the court considers an absence of objections to be a factor in favour of determining that the proposed settlement is fair and reasonable.

In approving a settlement and determining whether it is a off-white and reasonable consequence of the litigation for all grouping members, the court must form a view as to whether to approve a settlement on the material presented and as to the prospects of success and risk of loss considered to use in the detail case, the advice provided by counsel. It must take an active role, as the blessing of the courtroom is a protective mechanism safeguarding the interests and rights of grouping members. The court will scrutinise whether any settlement or discontinuance of grade actions has been undertaken in the interests of the group members as a whole and is non solely beneficial to the grade bidder and respondent. The court may well pass up a privately negotiated settlement if it is non satisfied that the result is in the interests of group members as a whole.

Administration of settlement

If a course activeness settlement is approved past the court, the parties will devise a settlement scheme to determine how each grouping fellow member's merits is to be assessed in order to calculate and deliver individual entitlements. A registration process must occur equally role of settlement in order to identify the number and identity of group members taking part. Where group members do non register, they are still bound by an approved settlement (but volition not be entitled to receive any payment). They cannot commence their ain separate action if they practise non similar the terms of a Court approved settlement.

Judgment

What is the effect of judgment?

Each of the regimes stipulate that a judgment in a course action must describe or otherwise identify the group members who will exist affected by information technology, and binds all such persons so described other than any person who has opted out of the proceeding. However, it does not determine each individual group member'due south claim. Rather, criteria for cess are developed in light of the judgment and each group member'south merits is so determined against that scheme.

What entreatment rights exist (mostly)?

In virtually all jurisdictions in Australia at that place is a right of entreatment against the judgment of a trial judge. The procedure varies depending on the jurisdiction in which the original trial was conducted. Leave to appeal is usually necessary when the appeal is from an interlocutory judgment.

Fifty-fifty though appeals generally turn on questions of law, it is non uncommon for parts of the evidence used at trial to be reviewed during the course of an appeal. A political party dissatisfied with the determination of a country or territory courtroom of appeal or the Full Federal Court may seek leave to appeal to the Loftier Court of Australia, the state'due south ultimate appellate court. Appeals to the High Courtroom are essentially restricted to questions of police. The High Court will grant leave to appeal just if it is convinced that at that place is a significant question to be determined.

In a class action, a representative plaintiff, or sub-group representative plaintiff, may appeal a judgement on behalf of all group members or all sub-group members within a specified menstruum of fourth dimension. If a representative plaintiff, or sub-group representative plaintiff does not entreatment within the specified fourth dimension, a group fellow member has a further menstruation of time in which to appeal. A group member does non take the option to opt out of an appeal.

An private who has had an individual issue determined by the court may appeal from a judgment in respect of that issue.

A respondent may appeal from a judgement confronting all group members or sub-group members.

Litigation Funding and Costs Recovery

Can a defendant obtain security for costs?

Where an application is made past a defendant, the Courtroom has discretion to order that the representative plaintiff provide security for costs to ensure that there are sufficient funds available to come across a costs gild against them. If the class action is backed by a litigation funder, specific disclosures must also be fabricated to the Court about the funding arrangements.

Can the successful party recover its costs (class actions)?

The loser-pays rule applies in Australian class actions – the unsuccessful party is commonly ordered to pay the costs of the successful party.

These costs include not only court filing fees, copying charges and other out-of-pocket expenses, but as well the lawyer'due south professional fees. In this context, a reference to costs is not a reference to the total or actual costs incurred by the successful party. Recoverable costs are generally calculated by reference to a court calibration, which invariably limits the amount a successful party can merits for disbursements and services performed by their lawyers.

Responsibility for payment of costs may also exist agreed between the parties as part of, or divide to, an offer of settlement. The parties may agree on a precise sum for costs payable or a machinery to determine that sum (for instance, assessment by an contained third party).

What is the representative plaintiff's liability? Do the grouping members need to contribute?

In a class action, only the representative plaintiff is liable to pay costs and is entitled to recover costs. In addition, if the court has made an award of amercement in a course action, the representative plaintiff may apply to the courtroom for reimbursement of costs that exceed the amount recoverable from the other political party. If the courtroom is satisfied that these boosted costs have been reasonably incurred, it may guild the excess paid out of the damages awarded.

The courts have also permitted classes to be divers in such a fashion that but persons who had signed upwards with a item litigation funder (and their lawyers) could be a class member – in effect, a form of gate-keeping or informal opt-in system.

How are costs calculated?

Costs are either agreed or assessed. This will commonly occur at the terminate of the proceedings. The quantum of any costs recovered and the calculation of those costs volition vary considerably depending upon the nature of the class activeness and the issues that were litigated.

Third-party litigation funding

A third-political party who has no direct involvement in the outcome of the litigation agrees to fund the litigation in render for a share of whatsoever favourable judgment or settlement. If the representative plaintiff is unsuccessful, the litigation funder does non receive any return on its investment.

Typically, third-party funders sign upward a portion of but not the entire class. This means that some group members are getting a "gratis ride". It is generally accepted that this is unfair and the burden of litigation should be borne by all those who derive a benefit. Over the years, the courts have taken different approaches to resolving this problem, including requiring all group members to contribute towards the costs of the litigation, regardless of whether they take signed upwardly with the third-party funder. This area of the law continues to evolve.

Following recent changes to the law, litigation funders acting in Australian class action proceedings are now (generally) required to hold an Australian Financial Services License (AFSL) and equally a consequence are bailiwick to various obligations under the weather condition of their AFSL as well as the Corporations Human action 2001 (Cth).