By Ross McInness and Alexandra Kennedy-Breit -
Snapshot
- The desire to provide access to justice has resulted in what many have described as a “plaintiff-friendly” Federal Court class action regime in Australia. It also arguably provides greater flexibility than other regimes around the world, particularly the United States
- The endorsement of the litigation funding model in Campbells Cash & Carry Pty Ltd v Fostif Pty Ltd(2006) 229 CLR 386 has fuelled the pursuit of more class actions and also resulted in a shift away from product liability-type actions in favour of shareholder actions and other mass consumer claims
- The original “opt-out” regime has been eschewed in favour of class actions only pursued on behalf of those who have signed up to a funding agreement, thereby changing the kind of cases that are pursued and also the individuals who access justice
- The next game changer for the class action and litigation funding industry is the “common fund” application. Although it has seen mixed success to date, if successful in the future (see Allco), the commercial viability of class actions from a litigation funder’s perspective will change dramatically
- Class actions will come full circle and will once again be pursued on an “opt-out” basis. Once again, all individuals will be provided with access to justice, but not for the reasons and not in the way in which the legislature envisaged when the class action regime was introduced
A dedicated class action regime was introduced in Australia in 1992, with the introduction of Part IVA of the Federal Court of Australia Act 1976 (Cth) (Federal Court Act). At the time, there were three consistent themes cited in support of the introduction of the procedure. First, the regime would provide a remedy in cases where the individual loss was small but the total amount in issue was significant. Second, the regime would promote efficient use of court resources through the aggregation of claims. Third, the regime would provide access to justice for those who might otherwise be unable to afford it. It is the final rationale – access to justice – that is most vocally advocated by those who pursue class actions in Australia. It was the desire to provide access to justice that resulted, at least in part, in the Federal Court class action regime being crafted in a way which many have described as “plaintiff-friendly”. Victoria and New South Wales have followed with very similar regimes. While those pursuing class actions may not agree with the procedure being described as “plaintiff-friendly”, few would dispute that the Australian model has many features that provide greater flexibility than other regimes around the world, particularly the United States.
It was for this reason that when the class action regime was first introduced, the business community feared a flood of speculative litigation, with all the worst aspects of United States-style litigation.
Despite this fear, at the turn of the century it was generally agreed the class action procedure had not caused a rapid increase in entrepreneurial claims. According to the ALRC, at least up until 2000:
[t]here ha[d] been no flood of class action litigation. Instead there ha[d] been a gradual adoption of the procedure in many appropriate cases with more than adequate restraint and control being exercised by the court as judges and the profession [sought] to come to grips with [the] procedure … (ALRC, Managing Justice: A Review of the Federal Civil Justice System, Report No 89 (2000) 478)
