The last 12 months has seen a flurry of activity in relation to the procedural requirements of the conduct of class actions across jurisdictions.
Set out below are summaries of:
- the new Federal Court Rules 2011, as they apply to class actions; and
- pre-litigation requirements in Federal Courts, NSW and Victoria.
New Federal Court Rules
New Federal Court Rules (FCR2011) come into effect on 1 August 2011. FCR2011 will apply both to proceedings commenced on or after 1 August and, for proceedings commenced before 1 August, to any step taken in those proceedings on or after 1 August, unless the Court orders otherwise in a particular case.
FCR2011 makes no substantive changes to the existing class action court rules. Most of the rules governing class actions are found in the Federal Court of Australia Act 1976 (Cth), which remains largely unchanged. However, FCR2011 deal with both class actions (which are now described as “grouped proceedings”) and an older, less common form of representative proceeding (described as “representative proceedings”, see below), within the one Part, and it is important not to confuse them. Grouped proceedings are dealt with in rules 9.31-9.35 (Division 9.3 of FCR2011), while representative proceedings are dealt with in rules 9.21-9.25 (Division 9.2).
It is not clear whether any substantive changes are planned for Practice Note CM 17 - Representative Proceedings Commenced under Part IVA of the Federal Court - are planned. Read more about CM 17 in our Article.
Pre-litigation requirements - update
Federal Court - genuine steps
The Civil Dispute Resolution Act 2011 (Cth) (Act) will come into operation on 1 August 2011, to coincide with the introduction of FCR2011.
As discussed in our Alert, the Act requires parties to file statements setting out the “genuine steps” they have taken to resolve their dispute or to clarify or narrow the issues in dispute between them. If an applicant has not taken “genuine steps”, for example because of the urgency of the dispute, they must explain this in their statement. If a respondent disagrees with an applicant’s statement that they have taken “genuine steps”, the respondent must explain why they disagree and set out the steps they think could have been taken in the circumstances. The Act also imposes a duty on lawyers to advise their clients of their obligations under the “genuine steps” requirements.
As part of the introduction of FCR2011, a “Respondent'’ genuine steps statement” (Form 11) and “Applicant’s genuine steps statement” (Form 16) have been issued. The forms, which are available from the Federal Court's website here require parties to give detailed information about the issues in dispute and the pre-litigation steps they have taken.
More information about the “genuine steps” requirements is available here.
Supreme Court of New South Wales - reasonable steps
The pre-litigation requirements introduced for NSW courts - as amendments to the Civil Procedure Act 2005 (NSW) - have commenced, but regulations have temporarily suspended their operation in Supreme Court proceedings. It is anticipated that this suspension will be lifted on or after 1 August 2011, when the Federal Court pre-litigation requirements will come into operation.
The NSW pre-litigation requirements were discussed in detail in our Alert. As with the Federal Court, parties to civil proceedings in the Supreme Court of New South Wales are required to take steps to resolve their dispute or to clarify or narrow the issues in dispute. The NSW legislation requires the parties to take “reasonable steps”, rather than “genuine steps”, but it is doubtful that the variation in wording will translate into any difference between the operation of the requirements in the two jurisdictions.
The Supreme Court has not released any prescribed “reasonable steps” forms.
Supreme Court of Victoria - no steps
Legislative provisions requiring parties to take “reasonable steps” were introduced on 1 January 2011 but repealed in March 2011 following a change of government in Victoria.
There are no longer any “reasonable steps” (or “genuine steps”) requirements in the Supreme Court of Victoria, but parties in that court are required to comply with other obligations relating to the “paramount duty” and the “overarching obligations” set out in the Civil Procedure Act 2010 (Vic). These obligations extend to insurers and litigation funders: see section 10(1)(d).
Representative proceedings under the FCR
As noted above, “representative” proceedings under Division 9.2 of FCR2011 were formerly permissible under Order 6 rule 13 of the FCR. That rule provides that where numerous persons have the same interest in any proceeding the proceeding may be commenced and continued by or against any one or more of them as representing all or as representing all except one or more of them.
While this mechanism under the FCR has been infrequently used, it is similar in its terms to the rules under the Uniform Civil Procedure Rules 2005 (NSW) and its predecessor the Supreme Court Rules 1970 (NSW), both of which derive from the English Rules of Court and the former practices of the Court of Chancery.
Despite the focus on class actions, or “grouped proceedings”, the usefulness of this type of representative proceeding should not go unmentioned. Importantly, the grouped proceedings mechanism can be used both for applicant representative proceedings and for respondent representative proceedings.
As the Australian Law Reform Commission’s report on grouped proceedings noted (at par 6), members of a represented group may have much to gain when represented by a plaintiff and everything to lose when represented by a defendant:
- A defendant representative does not voluntarily take on that role but is selected to represent others by the plaintiff.
- Although a representative plaintiff who brings proceedings on behalf of a group exposes group members to the risk of their claim being defeated, no personal liability ensues. Proceedings against a representative defendant on the other hand exposes defendant group members to the risk of liability being found against them and that they will have to pay damages.
- The institution of a representative claim prevents the limitation period running against a member of the plaintiff group; where a claim is brought against a representative group the limitation period will cease to run in favour of group members.
A recent example of the successful use of Order 6 rule 13 is proceedings brought by the receivers and managers of three companies within the Allco Finance Group, seeking declarations as to which of the Allco companies employed the respondent employees. The respondents were joined as contradictors in the proceedings, and were representatives of the various classes of employees: Gothard v Davey  FCA 1163.