Class actions formally became part of the Queensland legal landscape on 8 November 2016. The lack of a class action regime had led plaintiffs to institute proceedings more closely connected to Queensland in other States or the Federal Court (for example, the 2011 Queensland Floods claim is currently being heard in the NSW Supreme Court). The legislation provides the Queensland Supreme Court with the opportunity to develop new case management practices which draw on experience in other jurisdictions to attempt to facilitate the early resolution of proceedings.
Class actions are an established part of the Australian legal landscape
Regimes have existed in the Federal Court, Victoria and NSW for several years. Currently, there are approximately:
Class actions have been commenced in relation to a wide variety of issues, including securities claims (e.g. alleged breaches of continual disclosure obligations), environmental tort claims (e.g. bushfires, floods), product liability, competition law claims and human rights. Proceedings will often be commenced after the conclusion of an investigation by a government regulator or commission of inquiry. It is anticipated that class actions may become more prevalent as a consequence of the recent Full Federal Court decision in Money Max Int Pty Ltd (Trustee) v QBE Insurance Group Limited, which paved the way for litigation funders in open class actions to obtain fees from class members without the need to enter into funding agreements (see our alert here).
How does the new regime work?
The legislation is largely based on similar legislation in the Federal Court, NSW and Victoria. Decisions from these jurisdictions will serve as useful precedents in the interpretation of the Queensland legislation.
A class action can be commenced if:
- there are at least seven people who have claims against the same person which arise out of the same, similar or related circumstances; and
- all of the claims give rise to a substantial common issue of law or fact.
Proceedings may be commenced regardless of whether the proceeding involves different contracts or transactions between the defendant and individual group members, or involves separate acts or omissions in relation to individual group members. The legislation only applies to a proceeding commenced after the legislation commences (to be fixed on proclamation), although the cause of action the subject of the proceeding arose before commencement. This means that class actions currently on foot which have a Queensland connection will not be able to be transferred to the Supreme Court.
Opportunities to improve upon the existing regimes
The new regime gives Queensland the opportunity to develop new practice directions which may provide the opportunity to address procedural issues in other jurisdictions. A number of issues arise in class actions which are not typically experienced in ordinary civil litigation:
- Quantum: defendants’ lack of access to information about the total quantum of all of the group members’ claims at an early stage of the proceeding can be an impediment to early resolution of the proceedings. Defendants are often confronted with large headline numbers, without any material evidence substantiating the total claim. The plaintiff may not wish to incur significant costs attempting to quantify all of the claims if there are real questions around the strength of its liability case or there are likely to be a range of different issues affecting the quantum of each group member’s claim. Quantum information is often only received at a relatively late stage of the proceeding, such as during or immediately prior to a mediation. However, class actions typically impose a considerable cost burden on defendants, particularly in relation to procedural steps such as disclosure which are not borne by the plaintiff. In this respect, an attempt to balance the cost burden by encouraging provision of quantum information at an early stage may increase the prospect of early resolution of proceedings;
- Court-approved settlements: parties to ordinary civil proceedings may make commercial decisions to settle to resolve the matter expeditiously and avoid the further costs of proceeding to trial. Such arrangements can be implemented entirely outside the Court process. In contrast, class action settlements (and distribution schemes) must be approved by the Court. There remains a risk that any settlement will not be approved by the Court, which is less likely to be influenced by commercial considerations which may be underpinning the decision to settle. The stage of the proceeding may also be a relevant factor in considering whether a proposed settlement is reasonable (i.e. the plaintiff will have a better view on prospects if pleadings have closed and all of the evidence has been served as compared to attempting to settle at an early stage while procedural steps are still ongoing);
- Closed vs open classes: if proceedings commenced on behalf of a “closed” class (usually persons who have signed a retainer with a certain law firm and litigation funding agreement with a litigation funder), there remains a risk that a competing class action will be commenced on behalf of other group members. This means that defendants cannot be confident that all of the claims in relation to the particular act or omissions have been exhausted until limitation periods have expired. While the Money Max decision may lead to an increased number of claims brought on behalf of “open classes” (reducing this risk), it may also increase the uncertainty around the total quantum of all of the claims (particularly if the funder does not know the identity of all of the potential claimants);
- Early trial dates: a practice has emerged in other jurisdictions of setting trial dates at a very early stage of the proceedings. It is debatable whether this facilitates the early disposition of the proceedings, particularly if a trial date is set before pleadings have been closed and the scope of the matters in issue are still unknown;
- Splitting liability and causation: there is a real question as to whether issues of liability and quantum should be split into separate trials or whether it is more efficient to determine the entirety of the plaintiff’s case in one hearing to serve as a comprehensive precedent for all of the group members’ claims. While the decision (or even hearing) of issues relating to liability is likely to give the parties and the Court significant visibility over the merits of the case, determining quantum issues at the same time means that there can be a conclusive precedent set for all of the group members to follow. This is particularly prevalent in negligence claims as causal damage is an element of the cause of action;
- Plaintiff’s ability to adequately represent all of the group members: in addition to the representative plaintiff, a number of sample group members representing different locations or categories of loss have been appointed in recent major tort class actions. This has been a mechanism used in cases where it is possible that the resolution of the plaintiff’s claim may not cover the claims of all of the group members. There may be particular classes of case (particularly claims in negligence) where it would be appropriate to appoint sample group members at an early stage to ensure that all of the issues are identified and resolved at an early stage of the proceeding.
It remains to be seen how many of these issues will be addressed in any practice note governing the conduct of class actions in the Supreme Court.
King & Wood Mallesons offer a specialised class action team with the experience, skills and commitment needed to navigate a different path through complex negotiations and litigation. Successfully defending class action proceedings requires particular skills and resources to deal with complex legal issues, vast quantities of information, and often litigation in multiple jurisdictions. Kione Johnson and Justin McDonnell are currently acting for Seqwater in the 2011 Queensland floods class action.