Access to justice and class actions

Bar Association of Queensland - The changing face of practice conference
THE OPERATION OF THE AUSTRALIAN CLASS ACTION REGIME – 2013
The Hon Justice Bernard Murphy*
“The Victorian Supreme Court has begun hearing a class action in which about 10,500 people are seeking damages for losses in the Kilmore East-Kinglake fire. This particular fire storm claimed the lives of 119 people and destroyed more than 1200 homes and properties… That this case can be heard at all is a measure of the maturity of Australia's class-action regime, which in the past 15 years has generated substantial financial settlements for people and companies affected by negligence, misleading claims or the failure of company officers to properly carry out their duties.” Editorial, The Age (Melbourne), 5 March 2013. Introduction
It is unsurprising that, in a conference dedicated to a review of the changing face of legal practice, some attention is paid to developments in the Australian law relating to class Of course, representative procedures themselves are not new, having been available under English law for a long time. For example, Order 16 rule 9 of the Rules of the Supreme Court of England 1883 provided that “… where there are numerous persons having the same interest in one cause or matter, one or more of such persons may sue or be sued … on behalf of or for the benefit of all persons so interested”. These rules were replicated in Australia. However, interpretation of these provisions by the Courts led to procedural difficulties, and the representative procedures fell into disuse. * Justice of the Federal Court of Australia. 1 For example, Victorian Supreme Court Rules 1957 O16 r9; Federal Court Rules 1979 O6 r13. 2 See Temperton v. Russell [1893] 1 QB 435 ; Markt Co Ltd v. Knight Steamship Co Ltd [1910] 2 KB 1021; John v Rees [1970] Ch 345; Prudential Assurance Co Ltd v Newman Industries Ltd [1981] Ch 229; RJ Flowers Ltd v Burns [1987] 1 NZLR 260; and Carnie v Esanda Finance Corporation Ltd (1995) 182 CLR 398 The modern class action procedure was introduced in response to the deficiencies of the former representative scheme and that is what we are here to talk about today. This modern procedure is an attempt to deal with the problems of mass claims arising from the very large civil wrongs that sometimes occur in modern economies - that is, a mass The report of the Australian Law Reform Commission into Grouped
Proceedings
The Australian class action journey started in 1977 when the Federal Attorney General requested advice from the Australian Law Reform Commission (“ALRC”) as to whether class actions ought to be introduced into Australia. Following a review by a group, including Justice Wilcox of the Federal Court and Dr Peter Cashman, the ALRC issued a report in 1988 which recommended that a class actions procedure should be introduced in It did so for the expressly stated aim of enhancing access to justice by reducing the cost of court proceedings to the individual and improving access to legal remedies by the individual. It also aimed to promoted efficiency in the use of court resources, increase consistency in the determination of common issues, and make the substantive law more The class action regime in the Federal Court
Part IVA of the Federal Court of Australia Act 1976 (Cth) which contains the class action provisions, came into effect on 5 March 1992. It set out a prescriptive regime containing detailed provisions for the commencement and conduct of class actions. 3 Australian Law Reform Commission, Grouped Proceedings in the Federal Court, Report No. 46 (1998) (“ALRC Report”), p 8. At page 9 the report proposes that such a procedure could “…enhance access to remedies where many people have suffered loss or injury as a result of the same wrongful act or similar wrongful acts of another. The ability to act together as a group in making a claim for relief could enable the cost to the individual to be reduced and ensure an effective determination of common issues; one person being able to act on behalf of the group might assist those people to know about and to pursue their rights. The result could be to enhance access to legal remedies, ensure the efficient use of resources and avoid multiplicity of proceedings.” Section 33C sets out the threshold requirements for the commencement of a class action (a) There must be claims by seven or more persons against the same person. (b) The claims must arise out of the same, similar or related circumstances. (c) There must be substantial common issues of law or fact. Other important provisions include the following: No consent required to be a class member (s 33E); Ability to “de-class” proceedings (ss 33L, 33M, and 33N) when; the cost of distribution of damages is excessive having regard to the total it is in the interests of justice to do so. Determination of individual issues (s 33R); Settlement and discontinuance (including requirement for court approval) (s Settlement of the representative’s claim (s 33W); Suspension of limitation periods while class members’ claims are on foot (s Power of the Court to make such orders as it deems necessary in the interests Prohibition on ordering costs against class members (s 43(1A) (except in relation to specific individual or sub group issues) The climate in which the regime was introduced
The new class action regime only passed Federal Parliament following vigorous debate. The regime was introduced in a climate of concern that class actions would usher in; misuse of the media in a litigation context; thereby causing serious impediments to business. In particular, there was a concern that; the floodgates of litigation would open; and financial and reputational pressure from class actions would induce substantial out of court settlements regardless of the merits of a case. The operation of the regime in practice
Fortunately, the operation of the regime in Australia has been such that these early fears have gone unrealised in practice. Some important differences are apparent in the ways that class actions operate in the US and in Australia and these differences have assisted our system to remain balanced. It is now broadly accepted that the Australian class action regime is working well, which conclusion is supported by both the empirical and 4 For example, Commonwealth, Parliamentary Debates, House of Representatives, 26 November 1991, 3284 (Peter Costello) Empirical Research
Since 2009 we have had the benefit of detailed empirical research performed by Professor Vincent Morabito. Professor Morabito’s research shows that many of the myths about class actions are without foundation. Amongst other things, his The number of class actions that have commenced has been modest. The studies show that, in the Federal Court and the Supreme Court of Victoria, a total of about 281 class actions commenced in the 17 year period between March 1992 and 31 December 2009. This is an average of only about 15 per year in the Federal Court and about 3 per year in the Supreme Court. With respect to other jurisdictions, the number of commenced class actions is unlikely to be significant because they either did not have a class action regime for the relevant period or it was only recently introduced. Despite early concerns of an avalanche of such litigation, shareholder class actions still represent only 25 per cent of all class actions in the past Close to 70 per cent of all class actions concluded within two years and, at the time of publication of Professor Morabito’s research, the average Class actions are not always successful and in fact 51 per cent of the time class actions either do not continue or do not continue in that form. This result undermines the basis to concerns that defendants would be placed in 5 Vincent Morabito, An Empirical Study of Australia's Class Action Regimes -First Report: Class Action Facts and Figures (Department of Business Law and Taxation, Monash University, December 2009) (“the First Report”); Vincent Morabito, An Empirical Study of Australia's Class Action Regimes-Second Report: Litigation Funders, Competing Class Actions, Opt Out Rates, Victorian Class Actions and Class Representatives (Department of Business Law and Taxation, Monash University, September 2010), (“the Second Report”); Vincent Morabito, ‘Clashing Classes Down Under- Evaluating Australia's Competing Class Actions Through Empirical and Comparative Perspectives’ (2012) 27 Conn. J. Int’l L. 245 (“the Third Report”); with Vincent Morabito and Vicki Waye, Reining in Litigation Entrepreneurs: A New Zealand Proposal (2011) New Zealand Law Review 323, 346 (“the Fourth Report”). such a disadvantageous position that claims would succeed despite a lack The “typical” class representative was a married, middle aged, professional male residing in New South Wales. Professor Morabito’s research indicates that, in Australia, there is no culture of organising class actions such that the obligation to pay costs would be avoided in the event “Closed” or opt in classes has not led to any significant increase in During the 17 year period from 1992 to 2009, every class action under the federal system that was supported by a litigation funder resolved in favour The view of the ALRC
In January 2000, the Australian Law Reform Commission finished a lengthy and detailed review of the federal civil justice system. This review specifically included a consideration of the class action regime, concluding that: Procedures for representative proceedings generally appeared to be working well and in accordance with legislative intention. The Federal Court does not view such cases as more problematic than other complex The view of state legislatures
Following introduction of the federal regime the various state parliaments in Australia have had ample opportunity to see how the regime operates in practice. It is said that imitation is the most sincere form of flattery, and a good indication that 6 Australian Law Reform Commission, Managing Justice: A Review of the Federal Civil Justice System, Report No 89 (2000) 530 the federal regime is operating well is the fact that several state governments have adopted the same procedures. Class action regimes substantially the same as the federal regime were introduced in Victoria and New South Wales in the years 2000 and 2010 respectively. More recently the same regime has been recommended in Western Australia and there is support for the introduction of a similar regime in The view of lawyers acting for defendants in class actions.
Of course these views vary, but the view of defence lawyers appears to be that the Australian class action regime is working reasonably well. This sentiment has been confirmed to me at numerous class actions seminars, conferences and symposiums that I have attended or spoken at in the last 15 years. These forums have been attended by partners from each of the major law firms acting for defendants or their insurers. In the vast majority of cases they have informed me that they consider that the Australian regime is, in general terms, working well.
Mr Ken Adams and Mr Damian Graves, the lawyers who head Australia's largest defence class action practice and the co-authors of a leading Australian academic text on class-action, wrote in a 2010 article: There is a lot of hysteria surrounding class actions in Australia and unfortunately for all parties involved it can lead to some serious misconceptions about what's happening in the local legal sector. The view of Australian corporate regulators
The two main corporate regulators in Australia have expressed support for the role class actions play in assisting the regulation of corporate misconduct. 7 Leaving aside the separate question as to the level of regulation of litigation funding which is appropriate, about which representatives of defence law firms have often expressed concerns. 8 Damian Graves, Ken Adams and Jason Betts, Class Actions in Australia (Lawbook Co, 2nd ed, 2012). First, in December 2005 the then Deputy Chairman of the Australian Securities and Investment Commission, Mr Jeremy Cooper, stated: ASIC cautiously welcomes the emergence of the shareholder class action in Australia as a “self help” mechanism whereby shareholders are able to seek damages for loss incurred at the hands of directors and advisers who negligently or dishonestly cause loss to those shareholders…….Vigilant shareholders and a vigorous, but appropriately balanced, shareholder class action landscape , will play an important part in maintaining the integrity of the equity capital market in years to come.” Second, in July 2006 the then Chairman of the Australian Competition and Consumer Commission, Mr Graeme Samuels welcomed the settlement of the Vitamins Cartel class action and stated that the $41 million settlement was “a lesson to those that are involved in cartels”. He referred to a three pronged approach under which the ACCC would first seek penalties, and second seek jail terms for cartel operators. The third prong was private claims for damages by consumers and The view from the bench
Whilst it would be wrong to suggest that there exists unanimity of views amongst judges as to the operation of the class action regime. I consider that it is now safe 9 Interview with Graeme Samuel (ABC Radio National PM Program 17 July 2006). 10 See Mobil Oil Australia Pty Ltd v Victoria (2002) 211 CLR 1 at 73, where Callinan J said: The question here is not whether, by their nature, group or class proceedings are oppressive to defendants, give rise to entrepreneurial litigation, in fact proliferate and prolong court proceedings, undesirably substitute private for public law enforcement or contrary to the public interest, with disadvantages outweighing a public interest in enabling persons who have been damnified but who would not, or could not bring the proceedings themselves, to be compensated for their losses. The question simply is whether the Victorian Act is valid.’ Cf Fostif v Campbells Cash and Carry [2005] NSWCA 83 at [101] where Mason P said: “In the report, Access to Justice, Lord Woolf wrote (Ch 17 §2): It is now generally recognised, by judges, practitioners and consumer representatives, that there is a need for a new approach both in relation to court procedures and legal aid. The new procedures should achieve the following objectives: (a) provide access to justice where large numbers of people have been affected by another’s conduct, but individual loss is so small that it makes an individual action economically unviable;(b) provide expeditious, effective and proportionate methods of resolving cases, where individual damages are large enough to justify individual action but where the number of claimants and the nature of the issues involved mean that the cases to say that the regime is viewed with much less suspicion by judges than was initially apparent. This appears from various decisions refusing to strike out class actions under s 33N of the Act, the apparent ability of the Federal Court and other courts to effectively case manage, hear and determine class actions and the fact that in doing so judges have not considered it necessary to point to any unfairness or injustice to either plaintiff or defendant in the regime. In my view the successes of the regime, particularly its apparent success in delivering a measure of justice to both claimants and defendants in mass claims, have lead to it being cautiously embraced. For example, in 2008 Justice Finkelstein While there are problems with securities class actions, it must, I think, be accepted that they serve a useful function. It is often said that these actions promote investor confidence in the integrity of the securities market. They enable investors to recover past losses caused by the wrongful conduct of companies and deter future securities law The claimants
Another obvious touchstone with regard to the success of the class action regime is its application to a large number of different causes of action, and on behalf of many hundreds of thousands of claimants in diverse areas. Examples include the Personal injury through food, water or product contamination
Such class actions include claims for injury arising from contaminated peanut butter, water, oysters, pizza, pork rolls, Christmas dinner, Spanish cannot be managed satisfactorily in accordance with normal procedure; (c) achieve a balance between the normal rights of claimants and defendants, to pursue and defend cases individually, and the interests of a group of parties to litigate the action as a whole in an effective manner. 11 Kirby v Centro Properties Ltd (2008) 253 ALR 65, 67. 12 Butler v Kraft Foods & Anor (settled) 13 Schokman v Sydney Water Corporation Limited, Federal Court of Australia, Proceeding No NG 794 of Mackerel, food provided on a holiday cruise, and illnesses caused by Personal injury through defective products
Class actions of this type include claims arising from defective breast implants, tobacco, defective pacemaker batteries, sterilisation clips, artificial knees, adverse reactions to a travel sickness pill ,and arthritis Actions under the Migration Act
Approximately 21 Class Actions relating to the operation of the Migration Act 1958 (Cth) and, in particular, in relation to refugee status, illegal detention, refusal of visas, and the like were commenced in the period 1992 to 2002. However, in October 2001 an amendment to the Migration Act put an end to such class actions by providing that class actions are not permitted in any proceeding relating to visas, deportations or removal of non-citizens. Shareholder class actions
Approximately 25 class actions have been commenced on behalf of shareholders for misleading and deceptive conduct and/or breaches of the continuous disclosure regime on the share market by various companies. The largest of these cases include the GIO Class Action which settled for 1998 14 Ryan v Great Lakes Council [1999] FCA 177 15 Sophia Pizza Class Action (settled) 16 Lopez v. Star World [1999] FCA 104 (settlement approved). 17 Georgiou v Old England Hotel [2006] FCA 705 (settlement approved) 18 For background see McLean v Nicholson [2002] VSC 446 19 Neil v. P&O Cruises Ltd [2002] FCA 1325 (settlement approved) 20 Downie v Spiral Foods Pty Ltd (on foot in the Supreme Court of Victoria) 21 Bates v Dow Corning (Aust) Pty Ltd [2005] FCA 927 (discontinued) 22 For background see Nixon v Phillip Morris (1999) 165 ALR 515 23 Courtney v. Medtel Pty Ltd (No 5) [2004] FCA 1406 (settlement approved) 24 For back ground see Bright v. Femcare (2002) 195 ALR 574, 590. 25 Casey v DePuy International Limited (No 2) [2012] FCA 1370 (settlement approved) 26 Reynolds v. Key Pharmaceuticals Pty Ltd (unreported, VSC, No N5621 of 3002) 27 See Peterson v Merck Sharp and Dohme (Australia) Pty Ltd (2010) 266 ALR 1 28 Wu v. Minister of Immigration 29 Lek v. Minister for Immigration(1993) 117 ALR 455. 30 Migration Act 1958 (Cth) s486B(4) 31 King v. AG Australia Holdings Ltd (formerly GIO Australia Holdings Ltd) [2003] FCA 980 $112 million in 2003, the Aristocrat Class Action which settled for $145 million in 2008, the Multiplex Class Action which settled for $110 million in 2010, and the Centro Class Action and National Australia Bank Class Action which settled for $200 million and $115 million respectively in Investor class actions
Numerous class actions been commenced by investors complaining of conduct by the promoters of various investments including in infrastructure projects, a shopping centre, debentures and security notes, vehicle tracking technology, margin lending arrangements, investments in collateralised debt obligations and in apartment purchases.
Anti-cartel class actions
Four class actions to date have been commenced on behalf of consumers and businesses against cartelists. Three of these cases concerned international cartels, and one concerned a local cartel. Three have been resolved, namely the Vitamins Cartel Class Action for $41 million, the Rubber Chemicals Class Action for $1.5 million, and the Amcor-Visy Class Action for $120 million. The Air Cargo Class Action which relates to an international cartel to fix various surcharges for air freight is ongoing. Disaster class actions
32 Dorajay Pty Ltd v Aristocrat Leisure Ltd [2009] FCA 19 33 P Dawson Nominees Pty Ltd v Brookfield Multiplex Ltd (No 4) [2010] FCA 1029 34 Kirby v Centro Properties Ltd (No 6) [2012] FCA 650 35 Pathway Investments v National Australia Bank (No 3) [2012] VSC 625 36 For background see AECOM Australia Pty Ltd (formerly known as Maunsell Australia Pty Ltd v RiverCity Motorway Management Ltd [2012] FCA 1304 37 For background see Barbara O’Sullivan v Challenger Managed Investments Limited [2008] NSWSC 602 38 For background see Harrison v Sandhurst Trustees Ltd [2011] FCA 541 39 See Lukey v Corporate Investment Australia Funds Management Ltd [2005] FCA 1074 40 For background see Imobilari v Opes Prime Stockbroking Ltd [2008] FCA 1920 41 Wong v Silkfield Pty Ltd [1999] HCA 48 ; see also Reiffel v. can 075 839 226 Ltd [2001] FCA 509 42 Darwalla Milling & Ors v. F Hoffman La Roche & Ors (No 2) [2006] FCA 1388 (settlement approved) 43 Wright Rubber Products Pty Ltd v Bayer AG (No 3) [2011] FCA 1172 44 Jarra Creek Packing Shed Pty Ltd v Amcor Ltd [2011] FCA 671 45 For background see De Brett Seafoods Pty Ltd v Qantas Ltd (No 3) [2011] FCA 1059 The Longford Gas Plant Class Action in 1998 on behalf of more than 1 million consumers, businesses and employees, which related to an explosion and fire at a major gas plant which caused a two week interruption to the gas supply to Australia's second-largest city. Following judgment and lodgement of an appeal the action was settled for $32.5 million. The Melbourne Aquarium Class Action in 2000 on behalf of more than 100 people who alleged that they contracted Legionnaires disease at the aquarium. The action was settled on the basis of payment in full to all class members for their personal injury and economic loss. Five Bushfire Class Actions were commenced in 2009 on behalf of thousands of people who suffered personal injury, property damage and economic loss as a result of bushfires against power companies whose alleged negligent maintenance and operation of powerlines is said to have caused the fires. Three of these class actions have been settled in favour of the class members The Abalone Virus Class Action in 2010 by Victorian abalone fishermen against a state government department in relation to the escape of a virus from an abalone farm which then decimated the wild abalone population off the A class action has been threatened against the Queensland government department that operates the Wivinhoe Dam in relation to major floods which caused numerous deaths and major property damage and economic loss in Consumer class actions
46 Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (No 4) [2004] VSC 266 47 Hilton v. Melbourne Underwater World Pty Ltd [2004] VSC 357 48 Thomas v Powercor Australia Ltd [2011] VSC 614; Mercieca v SPI Electricity Pty Ltd [2012] VSC 204. 49 For background see Regent Holdings Pty Ltd v State of Victoria [2012] VSCA 221 These have included class actions by consumers induced by misrepresentations to purchase goods which were not as represented and the Bank Fees Class Action, which commenced in September 2010 against eight Australian banks for allegedly illegal fees charged including honour and dishonour fees, over limit fees, and late payment fees. Environmental class actions
There have been few such cases but those that have commenced include a class action in relation to injury caused by industrial pollution and a class action brought on behalf of landowners who suffered losses when gas from a nearby former rubbish tip entered into their houses. This last case was settled Human rights class actions
Similarly, there have been few such actions but some examples include a class action commenced in 2011 on behalf of children and young adults who had been wrongly we arrested and jailed because of out of date or incorrect bail information in the New South Wales police computer system, and a class action on behalf of former students at the Fairbridge Farm School between 1938 and 1974 against the Fairbridge Foundation and the Commonwealth Government alleging physical and sexual abuse. Trade union class actions
Trade unions commenced 45 class actions in Australia in the period between 1992 and 2011 (although 19 of these cases were brought with respect to the same industrial dispute.) The workplace issues have included matters such as underpayment claims, disputes about employer conduct in obtaining 50 Williams v. FAI Home Insurance Pty Ltd (No 5) [2001] FCA 399; For background see Tropical Shine v. Lake Gesture (1993) 118 ALR 510 51 Andrews v Australia and New Zeal and Banking Group Ltd [2012] HCA 30 52 For background see Cook & Ors v. Pasminco Ltd & Ors [2000] VSC 534 53 Wheelahan & Anor v City of Casey & Ors 2011] VSC 215 54 For background see Konneh v State of New South Wales[2011] NSWSC 1170 55 Constuction, Forestry, Mining and Energy Union v Contract Blinds Pty Ltd [2009] FCA 572 (settlement approved) workplace agreements, and orders against imminent termination of Miscellaneous
Numerous other class actions have been commenced for causes of action which fall outside the broad categories I have set out above. These include diverse causes of action such as a class action by women who were infected with Hepatitis C at a medical clinic, and a class action by travel agents to recover commissions on fuel charges paid by airlines. The variety of these causes of action, the large numbers of claimants, and the variety of types of claimants (including “mums and dads”, private individuals, small companies, public companies and institutions) that sign fee and retainer agreements or litigation funding agreements so as to join class actions indicates acceptance of In my view they do so because they expect some justice through the regime. Whilst there is no empirical research as to the total damages paid to date, my rough estimate is that the total is well over $1 billion. Laws which purport to provide protections to citizens but which are not capable of being used by them are no more than an illusion. In improving access to the protection of substantive laws an effective class actions procedure is plainly important. As observed by the Age editorial that begins this paper, in Australia we have so far seen hundreds of thousands of people - who would have been unable to pursue their losses in individual court proceedings - successfully obtain a measure of damages by use of a procedure that also provides protections to defendants. While the regime is working well, of course there remain numerous issues in the operation of class action law in Australia. Professor Cashman and I will now deal 56 For background see Smith v University of Ballarat [2006] FCA 138 57 Patrick Stevedores No 2 Pty Ltd v Maritime Union of Australia (1998) 153 ALR 643 58 For background see A v Peters and Ors [2011] VSC 478 59 For background see Leonie’s Travel Pty Ltd v Qantas Airways Ltd [2010] FCAFC 37 60 This estimate is based on Prof Morabito’s calculation in relation to funded shareholder class actions at p 346 of the Fourth Report, in addition the settlement figures from the Centro, GIO, Vitamins, Amcor-Visy, National Australia Bank and other class action settlements. with some of these issues, although it is of course impossible to do so in detail in a presentation of this length. I will deal with the first such issue, which is discovery and interrogation of class members, and Professor Cashman will deal with the Discovery and Interrogation of Class Members
The advantages for class members in participating in a class action rather than bringing their own individual action include the fact that: they are not required to instruct lawyers or pay legal fees; they are not required to take an active role in the case or assume its work or their exposure to adverse costs is very limited (see s 43(1A)); and they are not parties to the action and therefore not amenable to discovery or interrogation on the usual basis unless or until the common issues are resolved in The High Court drew a clear contrast between the participants in a class action in Mobil Oil Australia Pty Ltd v State of Victoria. The model of Part IVA is that once the proceeding meets the threshold requirements of s 33C, and is otherwise suitable to proceed as a class action, the matter proceeds on the basis that any findings made at a trial of common issues bind not only the parties, but also all non-party class members to the extent that those issues arise in each class member’s claim. In providing a remedy for mass civil wrongs there is a strong basis for arguing that to maintain the regimes utility and efficiency the resolution of the common issues should (as far as possible) occur without the necessity for class members to participate as parties, or be involved actively in the interlocutory steps and initial trial necessary to determine those issues. 61 Mobil Oil Australia Pty Ltd v State of Victoria (2002) 211 CLR 1, [50] per Gaudron, Gummow and Hayne JJ “The position of the plaintiffs in the proceeding may be contrasted with those whom they represent - the group members. Subject to some exceptions that do not matter for present purposes, the consent of a person to be a group member is not required. Group members may neither know of the commencement of the proceeding nor wish that it be brought or prosecuted, although does provide for notice to be given to group members of (among other things) the commencement of the proceeding.” 62 see for example ss 33L and 33N While it is clear that the court has power to order discovery by class members, it is against this backdrop that the question whether and to what extent the courts should allow discovery from, or interrogation by questionnaire of, class members must be considered. Why not discovery from all class members?
Defendants to a class action will often want discovery from class members on both liability and quantum questions, or will want them to answer a questionnaire. They have this desire for obvious reasons. They may well be in the uncomfortable position of facing an action brought by the representative party but relating to claims by an unknown number of claimants, bringing claims of unknown quantum, where the particular strengths and weaknesses of individual class member’s claims are not easily discernable. There can be no prohibition on discovery from class members, but the authorities indicate that discovery is unlikely to be ordered from class members other than on a limited basis and from a representative sample. In Thomas v Powercor Forrest J said that “…there is no scope for an order for discovery by all group members, absent extraordinary There are a number of rationales for this approach. Firstly, it is because discovery from all class members is more likely to significantly reduce the utility of the class action regime, causing it to operate like a joinder of mass claims rather than a device to deal with those claims through the vehicle of the representative party. One can see the massive work and expense involved in, say, discovery from the 50,000 class members in the first shareholder class action King v GIO,, or the thousands of bushfire victims in Matthews v SPI Electricity Pty Ltd v Ors, that make diverse claims for property damage, economic loss, personal injury and death in varying circumstances. This work and expense may be wasted unless the plaintiff is successful on the common issues. 63 P Dawson Nominees Pty Ltd v Brookfield Multiplex Ltd (No 2) [2010] FCA 176, [16] 64 Thomas v Powercor Australia Ltd (Ruling No 1) [2010 VSC 489, [39]. 65 [2002] FCA 1560 66 see for example [2011] VSC 401 Secondly, the class members would likely have been required to instruct and pay lawyers in order to provide discovery or answer a questionnaire, cutting away at the passive role Thirdly, the difficulties for a defendant in ascertaining the quantum of class members’ claims must have been plain to Parliament in enacting Part IVA. As Finkelstein J said in …it is a common, if not an inevitable, feature of class actions that the defendant will be faced with uncertainty regarding the quantum of potential group member claims. This is partly because of the essentially passive role of group members, already discussed. In many class actions, this uncertainty will be compounded because the identity of the group members is not known. True their identity may be discovered, sometimes with a good deal of effort. But group members are under no obligation to identify themselves and the named applicant, if he does not know who they are, has no obligation to seek them out. Thirdly, many class members well understand the advantages of the Part in allowing their participation in a proceeding as a class member rather than as a party, and jealously guard their right to take no steps and incur no costs unless or until the common issues are resolved in their favour. The plaintiff will often be unable to compel the class member to Finally, the history of class action litigation in Australia seems to indicate that the parties have had sufficient information to enable informed settlement negotiations to occur. The vast majority of class actions have settled before trial, many doing so using devices which enable verification of quantum or liability questions to be dealt with as a condition of the settlement. Settlement appears to occur more readily in class actions than in non- 67 Ibid [32] to [33] 68 Vincent Morabito, the Second Report, above n 5, 35; Paul Miller, ‘Shareholder class actions: Are they good for shareholders?’ (2012) 86 ALJ 633. class action litigation (a fact confirmed in American experience) which points away from a need to disturb the regimes efficiency or the passive role of class members. Of course, as one experienced class action lawyer argues, justification for such disturbance may well still exist as settlements may have been reached notwithstanding unresolved issues and challenges because the costs, delays and risks of class proceedings make Some of the significant decisions on this issue include the following. P Dawson Nominees Pty Ltd v Brookfield Multiplex Ltd (No 2)
In P Dawson Nominees Pty Ltd v Brookfield Multiplex Ltd (No 2) Multiplex sought an order that a closed class of 109 shareholders, many of whom could be described as sophisticated or institutional investors, provide discovery of litigation funding agreements and broad share trading trade information evidencing their acquisition and sale of shares. The applicants had already provided a shareholder database created from the material provided by the shareholders. Multiplex asserted that it could not assess the value of the claims without further and better information, and could better decide what course to take, including whether to settle, if it received the information. A mediation process was Finkelstein J refused to order discovery of trade information by class members (although litigation funding agreements were required to be disclosed) explaining: “The starting point is that the class actions regime under Part IVA of the Federal Court Act is designed to require little or no active involvement by group members. A group member is a group member principally for the limited purposes of taking the benefit, or suffering the burden, of findings on common questions (i.e. questions that are common to 69 Nicholas Pace, Class Actions In The United States Of America (Globalisation of Class Actions Conference, Oxford University, 2007); Marc Galanter, ‘The Vanishing Trial: An Examination Of Trials And Related Matters In Federal And State Courts’ (2004) 1 J. Empirical Legal Stud., 459. 70 Ken Adams, Issues And Challenges In Resolving Class Actions (Commercial Law Conference, Supreme Court of Victoria, 2012). 71 Ibid [16] to [17]. the claim brought by the named applicant and claims that may be pressed by group members). In an action where money relief may be sought by a group member, the group member will generally only be required to provide specifics about the quantum of his or her claim after the common questions have been resolved and that may be in a separate Given the intent of the class action regime, there must be some compelling reason
demonstrated before a court will order group members to go beyond their otherwise
essentially passive role.” (Emphasis added)
Thomas v Powercor Australia Ltd (No 1)
In Thomas v Powercor Australia Ltd (No 1), a claim for damages for property damage and economic loss suffered by about 135-185 class members in a bushfire, the defendant initially sought discovery of all documents relevant to quantum in the possession of the class members. The proceeding was an open class action. The solicitors for the plaintiff also acted for 67 members of the class and the defendant later revised its request to discovery of all quantum information provided by these class Although rejecting the defendant’s contention that it might be appropriate to order discovery from all known class members, Forrest J also decried the “bulldog approach” of the lawyers for the plaintiff in refusing to provide any discovery and particulars of loss for mediation purposes. His Honour said “…it is patently contrary to the purpose and intent of the [Civil Procedure Act 2010 (Vic)] for a court to sit by passively and allow a case to proceed to what may be a lengthy trial of Mr Thomas’ claim on liability and quantum, without ensuring that there is adequate information available to both Mr Thomas and Powercor to achieve resolution, not only of Mr Thomas’ claim but also of the claims of the group members. In my experience this is not a novel proposition. Often in group proceedings the solicitors for the representative plaintiff provide particulars and, where necessary, supporting documentation relevant to the quantum of group His Honour made orders for limited discovery and particulars of claim by 10 class members (five large and five small claims) so as to increase the defendant’s understanding of the quantum of the claims made against it and improve prospects of Two Victorian Supreme Court of Appeal decisions
In two recent decisions the Supreme Court of Victoria Court of Appeal took different courses. In National Australia Bank Ltd v Pathway Investments Pty Ltd the Court of Appeal upheld Pagone J’s refusal to require the plaintiff in a closed shareholder class action to disclose the identity particulars of the class or provide wide ranging discovery in respect of 20 large shareholders. The discovery sought went to liability questions rather than quantum. His Honour took into account that discovery was being sought in respect of class members who normally play a passive role in class proceedings. In Regent Holdings Pty Ltd v State of Victoria and Anor a differently constituted Court of Appeal upheld the decision of Beach J to order that 14 members of a closed class of 194 persons provide particulars and discovery of documents relating to quantum in the context of a pending mediation. The proceeding sought damages suffered as a result of the release of a virus from an abalone aquaculture farm which had severely damaged wild The Court of Appeal drew a distinction between orders to discovery in class actions which were “open” and those where the class was “closed”. If more broadly applied this approach could operate to significantly reduce the utility of the regime for closed classes which nevertheless contain substantial numbers of class members. In likening the closed class to a “joint enterprise” in which the representative party and class members were engaged, the Court did not apparently take into account the fact that each class member had entered an agreement with a litigation funder and a retainer with a solicitor on the express basis that they would participate in the proceeding only as a class member. Even Of course, so to say does not imply that class members ought generally be required to provide particulars and make complete or even substantial discovery in advance of the determination of a representative party’s claim. Each case turns on its own facts and circumstances. But where, as here, it is proposed to mediate the whole class action in advance of the trial of the representative party’s claim, it makes sense to order such particulars and discovery as will provide the defendants with sufficient information to formulate rational settlement offers. Hopkins v AECOM Australia Pty Ltd (No 2)
In Hopkins v AECOM Australia Pty Ltd (No 2) Nicholas J largely rejected an application by the respondents for a questionnaire to be administered to members of a closed class of investors. The questionnaire sought information regarding: the quantum of each class member’s investment which was the subject of the whether the class member read the product disclosure statement, if so, which part, and further, how long it took him or her to do so; what other documents the class member had read before taking up the investment, including when and where they did so, what parts he or she read the identity of any financial adviser who may have advised a class member about the investment including details of any written or oral advice. The respondent desired to bring claims for contribution against the financial advisers of Victorian or Tasmanian class members, but did not know their identity. Essentially because of the risk of prejudice to the respondent if orders to identify relevant financial advisers were not made, Nicholas J allowed a limited questionnaire to be administered to those class members who resided in Victoria or Tasmania. Having decided that a questionnaire was appropriate on this basis his Honour also allowed some other questions Overseas authorities
In overseas jurisdictions which have class action regimes a similar approach has been taken. That is, some discovery is allowed from class members but significant limitations are imposed. In the Canadian case of Western Canadian Shopping Centres Inc v Dutton I agree that allowing individualised discovery at this stage would be premature. One of the benefits of a class action is that discovery of the class representatives will usually suffice and make unnecessary discovery of each individual class member. Cases where individual discovery is required of all class members are the exception rather than the rule. Indeed, the necessity of individual discovery may be a factor weighing against allowing the action to proceed in representative The Manual for Complex Litigation (a respected American reference) provides as follows 78 There is though a question as to the basis of the respondent’s concerns that they may become unable to claim contribution from the class members’ financial advisors by effluxion of the limitation period (as accepted by Nicholas J). For example, s 24(4)(a)(i) of the Wrongs Act 1958 (Vic) allows a contribution claim to be made at any time within which the action might have been commenced against the party seeking contribution. The relevant limitation period is six years for the causes of action under the Corporations Act. However the time limit is suspended for all class members by operation of s 33ZE of Pt IVA which provides: (i)Upon the commencement of a representative proceeding, the running of any limitation period that applies to the claim of a group member to which the proceeding relates is suspended. (ii) The limitation period does not begin to run again unless either the member opts out of the proceeding under section 33J or the proceeding, and any appeals arising from the proceeding, are determined without finally disposing of the group member’s claim. 79 [2001] 2 S.C.R. 534; 201 DLR 385 Post certification discovery directed at individual class members (other than named plaintiffs) should be conditioned on a showing that it serves a legitimate purpose… One of the principal advantages of class actions over massive joinder or consolidation would be lost if all class members were routinely subjected to discovery. Most courts limit discovery against unnamed class members, but do not forbid it altogether. In setting appropriate limits, a judge should enquire whether the information sought from absent class members is available from other sources and whether the proposed discovery will require class members to obtain personal legal counsel or technical advice from an expert. Some courts have held that class members are not parties for the purpose of discovery by interrogatories, but may be required to respond to a questionnaire approved by the court. Others have… permitted limited numbers of interrogatories upon a showing of need, limited the number of class members to whom interrogatories may be directed, limited the scope of discovery to a brief, non-mandatory questionnaire relating to common issues, or have imposed on defendants the added cost of mailing otherwise permissible interrogatories to absent members of The result
The authorities indicate that judges hearing class actions will not automatically reject an application to discover documents from, or administer a questionnaire to, class members, but are likely to take a cautious and limited approach in this regard. Whether such orders are appropriate will depend upon the particular facts and circumstances of the case, the purpose of the request, the breadth of the discovery or the questionnaire proposed, and the number of class members proposed to be affected. A relatively common basis for an application for discovery from class members is that it will assist in settlement if the defendant is able to understand the identity of the class members and the quantum of the claims made. The authorities indicate that a request for particulars and/or discovery of quantum documents only, from a limited sample of class 80 David Herr, Annotated Manual for Complex Litigation (Thomson West, 4th ed 2007) [21.41] members, sought so as give a defendant some idea of quantum for settlement purposes, will likely have good prospects of success. 81 Thomas v Powercor Australia Ltd (Ruling No 1) [2010 VSC 489 [56] to [57] where Forrest J said: “…Powercor should be provided with sufficient information, relevant to the group members, to enable it to have some idea as to the size of the claim it has to meet in the event it is found liable to the group. As I have said, the provision of discovery by all group members is out of the question; however there should be a process by which Powercor can obtain such information in the form of particulars of loss and with accompanying substantiating documentation from, if possible, a representative sample of members.”

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