An increased threat of class actions is the ‘new normal’ for Australian business as this year sees 35 class actions launched, following a historic high of 40 actions launched the previous year.
In recent years, we have seen record settlements recovered in securities and natural disaster class actions, however, in FY16 the biggest single settlement was the $250 million settlement of a consumer claim relating to DePuy International hip replacement products.
In addition to the largest settlement, consumer claims represent the largest category of new claims filed this year, including the claims with the highest alleged value - with the potential recovery from the defeat devices actions reported to be as high as $1.75 billion.
At the other end of the spectrum, we have seen failed actions in relation to bank fees, in which class actions represented over 170,000 class members in a bid to recover more than $200 million.
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Breakdown of claims
The claims filed are diverse, with a range of sectors at risk of being the target of one or more class actions. Over the last 12 months we have seen a rise in the number of consumer class actions with 11 new actions filed in FY16 (almost a third of all claims) compared to 8 in the previous year.
Of the remaining FY16 claims:
- Securities and financial products/investment claims remained attractive, with 7 securities class actions (FY15: 11) and 11 financial product class actions commenced (FY15: 11).
- Natural disasters and events were inched out of the spotlight with 2 actions filed - both claims relating to major fire events (FY15: 6).
- The remaining 4 actions were filed against government (FY15: 2)
State of play
Also of note is the fact that 29 of the 35 actions launched in FY16 were filed in New South Wales, with the state seeing an increasing proportion of new class actions (83% compared to FY15: 58%). Victoria saw just 5 cases over the same period.
Since 1 July 2015, it has been possible for lawyers in New South Wales to charge an uplift of up to 25% of fees where cases are run on a conditional or “no win no fee” basis (which had already been possible in Victoria). The ability to charge an uplift provides an alternate funding model to third party litigation funding.
Behind the numbers
Over the past 12 months there has continued to be a very high settlement trend, with 16 actions having settlements approved (although this year we saw the Court also reject one settlement). Given the size of recent settlement figures and associated legal fees, it is unsurprising that we are seeing more and more players entering this space, with a total of 19 firms involved in new actions in FY16.