Class actions, when commenced appropriately, are an effective channel to obtain commercial damages or relief for a number of aggrieved parties where their related circumstances give rise to a claim against the same person or organisation.
In a class action, one or more people are able to act as representatives for some or all of the people in the class. This is why class actions are also known in Queensland as representative proceedings. In order to commence a class action, the threshold requirements include that:
- Seven (7) or more persons have claims against the same person;
- The claims of all those people arise out of related or similar circumstances; and
- The claims of all those people give rise to a substantial common issue of law or fact.
Whether the claims possess the requisite nexus to each other is a question of degree. The issue is comparatively illustrated in the cases of Wong v Silkfield (1999) 165 ALR 373 and Phillip Morris (Australia) Ltd v Nixon  FCA 229.
In Wong, a class action was commenced against a property developer for misleading and deceptive conduct. The High Court accepted that the distribution of particular documents from the developer to members of the class was a sufficient nexus, even if, in the final resolution of the litigation, this common issue might not prove to be the ‘major’ or ‘core’ issue.
By contrast, Phillip Morris was a class action commenced against a number of tobacco companies for misleading and deceptive conduct. The Full Court of the Federal Court concluded that, despite the common issue of lung cancer attributable to smoking cigarettes being suffered by the plaintiffs, the claims did not meet the threshold given there were three tobacco companies, 182 brands of cigarettes and promotions and other public statements spanning over a 39 year period which were not exclusive to the defendant.
The precise requisite of commonality of issues is certainly not settled in law. Whether there is a substantial common issue of law or fact in a particular set of circumstances needs to be considered thoroughly with your legal representative before commencing a class action. There are significant repercussions for plaintiffs who commence a class action without due consideration to those circumstances, including significant exposure to adverse costs orders. Accordingly, the importance of obtaining accurate legal advice from the outset, whether you are the plaintiff or defendant in a representative action is key.
In addition, there is a superior need for caution when considering a class action and how this may affect individual group members. This is partially remedied by section 103G of the Civil Proceedings Act 2011 which allows a group member to opt out of the proceedings. Where represented parties may be exposed to a risk of detriment, (i.e. an adverse costs order), it may also be appropriate that they be required to expressly opt in.
The Big is Better Misconception
Class actions have historically been limited to financially resourced parties. In recent times; however, a new era of class actions have emerged with more flexible fee structures and litigation funders prepared to engage in class action litigation. The resourcing required to run class actions is now more available to a greater cross-section of potential claimants. Importantly, those claimant’s also have greater choice in who they engage to represent them and on what terms.
Rose Litigation Lawyers has experience in acting for claimants in a class action, and defending class actions in relation to matters concerning professional negligence and other commercial disputes. We are familiar with the strict requirements of the legislation and we can confidently advise you at all stages of the litigation and work with you to achieve your desired outcome cost effectively and proactively.
Ending the Dispute Early
Whether to commence proceedings as an individual or as a class is an important decision that requires careful legal advice. There is no denying that bringing large scale litigation is a costly exercise and bearing those costs collectively can be an effective litigation strategy.
A major drawback, however, is the ability to resolve the dispute early. Section 103R of the Civil Proceedings Act 2011 (QLD) and section 33V of the Federal Court of Australia Act 1976 (Cth) provides that representative proceedings may not be settled or discontinued without the approval of the Court.
In the event that conflicts of interests arise as between members of a class, a proposed settlement may fall over if it is no longer fair and reasonable to all those affected. In this way, reaching a commercial resolution once class proceedings are commenced can prove difficult.
At Rose Litigation Lawyers, we are committed to proactively resolving your dispute in the most efficient manner without having to resort to litigation where possible. If you are considering involvement in a class action, we recommend you first phone our Legal Practitioner Director, Shaun Rose for an obligation free initial discussion.