International Mass Actions and Class Actions - B. Australia

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CHAPTER IX

INTERNATIONAL MASS ACTIONS AND CLASS

ACTIONS – B. AUSTRALIA

Sections A and B of this chapter commence with a brief history and

background to each of the class action systems, and antitrust laws, of

Australia before section C sets out a more detailed analysis of the

principal features of each of the Australian class action systems.

Five cartel class actions have occurred in Australia and these are

summarized in Section D.

In section E we discuss the current issues in relation to c artel class

actions. We conclude the discussion of Australian law in section F,

highlighting the key differences between the competition regime in

Australia and the United States.

A. Brief Background to, and History of, Class Action Litigation in

Australia

The ability to bring class actions has existed in Australia since the

enactment of the Federal Court of Australia Amendment Act 1991 (Cth)

which provided for “representative proceedings” by inserting Part IVA

into the Federal Court of Australia Act 1976 (Cth). Part IVA commenced

on March 4, 1992.1

The class action in the Federal Court of Australia was a response to

the Australian Law Reform Commission (ALRC), Grouped Proceedings

in the Federal Court, Report No 46 (1988) and to limitations of the

representative action procedure derived from the English Courts of

Chancery.

The most common class actions taken to date under these provisions

are shareholder class actions, product liability actions and cartel actions.

In most instances, the cases proceed partially through the court process

before settling.

1. Class action regimes also exist in the Australian states of Victoria (Part

4A of the commenced in 2000 Supreme Court Act 1986 (Vic)) and New

South Wales. (Part 10 in the Civil Procedure Act 2005 (NSW)

commenced in 2011).

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As a common law country, in addition to the legislation itself, case

precedent has been important in establishing certain details of how the

system operates. The peak court in the Australian judicial system, the

High Court of Australia has rarely considered the procedural aspects of

class actions with the majority of guidance coming from Full Court of

the Federal Court of Australia, which is the intermediate appeals court in

the federal system.

The High Court in Wong v Silkfield2 was asked to interpret a

requirement to commence a class action in section 33C, namely that the

claims of the group members gave rise to a substantial common issue of

law or fact. The High Court approached the interpretation of the new

statutory regime by first noting that “Part IVA creates new procedures

and confers upon the Australian Federal Court new powers” aimed at

overcoming the limitations of the representative action. Further, Part

IVA was not to be confined by matters not required by its terms or

context.3 On the specific issue before it, the High Court interpreted

substantial to mean “real or of substance” and not “large,” “of special

significance,” or having “a major impact on the litigation.” This made

the commencement of class actions relatively easy.4 It also set the tone

for how to interpret the legislation.5

As explained below, there is no requirement for the court to approve

or certify the commencement of a class action. Rather, the respondent, or

the court acting on its own motion, can identify one of the reasons

specified in section 33N for why the class action should be discontinued.

As a result, applications pursuant to section 33N were a common step in

class actions. Guidance to section 33N was provided by the Full Federal

Court in Bright v Femcare Ltd.6 (In addition to interpreting section 33N

the Australian Federal Court’s general approach to class actions was

explained by Lindgren J:

2. Wong v Silkfield (1999) 199 CLR 255.

3. Wong v Silkfield (1999) 199 CLR 255 at [1], [12].

4. See discussion of the other commencement require ments in section 33C

below.

5. See, e.g., Cash Converters International Limited v Gray (2014) 223 FCR

139 at [23] (interpreting section 33C); City of S wan v McGraw-Hill

Financial Inc (2014) 223 FCR 328 at [12] (interpreting section 33K);

Blairgowrie Trading Ltd v Allco Finance Group Ltd (Receivers &

Managers Appointed) (In Liq) [2015] FCA 811 at [98] (interpreting

section 33ZF).

6. Bright v Femcare Ltd (2002) 195 ALR 574.

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18. .... [O]rdinarily one would expect that, in an attempt to give effect

to the legislative intention, a means will be sought, by case

management techniques, to enable a representative proceeding to

continue to the stage of resolution of the substantial common issues on

the basis that after that stage is completed, an order under s 33N or

directions under s 33Q will be made....

77. ... [L]et it be assumed that in respect of the resolution of each

woman’s claim, two thirds of the time to be spe nt will have to be

devoted to issues unique to that claim and one third to issues which are

common to all claims. Is it still not preferable that the co mmon issues

be heard and determined once so as to be binding as between each

claimant and the respondents rather than many times?7

The Full Federal Court signaled that rather than discontinue a class

action because it contained non-common issues or individual issues, the

class action would be allowed to proceed to resolve the common issues.

After that point, litigants could use section 33N to discontinue a class

action or directions could be given under section 33Q for the use of sub-

groups, individual trials, or other directions such as test cases. Single

judges of the Federal Court of Australia have used this approach at

various times, but the approach was now endorsed by an appellate court.

The Australian High Court’s other key decision was about litigation

funding. In Campbell’s Cash and Carry Pty Ltd v Fostif Pty Ltd8 the

High Court, by a majority, held that litigation funding was not an abuse

of process or contrary to public policy. The joint judgment of Gummow,

Hayne, and Crennan JJ indicated that existing doctrines of abuse of

process and the courts’ ability to protect their processes would be

sufficient to deal with a funder conducting themselves in a manner

“inimical to the due administration of justice.”9 Gleeson CJ and Kirby J

agreed with the reasoning of the joint judgment.10 Callinan and Heydon

JJ dissented on this issue.11 Since 2006, a third party financing another

person’s legal proceedings, including class actions, has been an accepted

practice in Australia.

The advent of litigation funding has affected the types of class

actions that are brought and the way in which a class is structured. In

7. Bright v Femcare Ltd (2002) 195 ALR 574 at [18], [77].

8. Campbell’s Cash and Carry Pty Limited v Fostif Pty Limited (2006) 229

CLR 386.

9. Id.

10. Id.

11. Id.