Access to Justice—Litigation Funding and Group Proceedings: Report (html)

4. Class actions and access to justice

Introduction

4.1 Class actions create economies of scale that make it financially viable to take legal action against a well-resourced defendant, such as a government agency or large corporation, to recover a small loss. By grouping individual claims from the same, similar or related circumstances, the cost of bringing proceedings can be spread across many claimants.

4.2 In this way, class actions have provided access to justice to thousands of Australians who otherwise would not have pursued a legal remedy because of the cost. For claimants who could have taken separate legal action, class actions have offered cost savings.

4.3 Class actions also reduce costs to defendants and the courts. Defendants are able to respond to multiple claims in one proceeding, saving the cost of separate proceedings. The burden on court resources is reduced by having fewer proceedings filed, although the intensive case management often required, and the court’s role in supervising settlement approval, can be onerous.

4.4 In short, the fundamental advantage of class actions, compared to separate proceedings, is that they are more efficient. A disadvantage is that most class members have limited contact with the lawyers acting in proceedings and incomplete information about the cost, progress and likely outcome of the proceedings. This is inevitable because the lawyers cannot establish and maintain with all class members the degree of contact that they have with the representative plaintiff.

4.5 The terms of reference ask the Commission to report on a number of reform options to ensure that class members are not exposed to unfair risks and disproportionate cost burdens. The Commission’s task is not to investigate whether class members are being treated unfairly or overcharged but to consider how to prevent these problems occurring. In doing so, the Commission has identified reforms that contribute to three broad objectives.

1) Improving efficiency. Measures that reduce delay and complexity also reduce costs. Although flexibility should be retained, there is a need for guidance and parameters that avoid, where possible, procedural and legal uncertainties that take time to resolve and add to the cost burdens borne by both defendants and plaintiffs. Proposals to improve efficiency by making the Supreme Court of Victoria’s powers and expectations clearer are discussed in this chapter.

2) Strengthening accountability. Class action lawyers have duties to all class members, not just those that have signed a legal retainer. The Court ensures that the interests of the whole class are taken into account in approving settlement or concluding a trial. Improving the means by which lawyers (and, through them, litigation funders) are accountable to class members and the court reduces the risk of an unfair outcome. In this chapter, particular attention is given to greater transparency and better reporting obligations.

3) Controlling costs. Proposals to directly control legal and funding costs, and how they are shared, to protect class members from disproportionate cost burdens, are discussed in Chapter 5.

4.6 As noted in Chapter 1, the consensus conveyed to the Commission in submissions and during consultations is that Australia’s class action regimes are generally working well, and that a particular strength that they have in common is the flexibility available to the courts in how they manage proceedings. The reforms suggested by the terms of reference, and by contributors to the review, have been considered in that context.

4.7 Some reforms discussed in this chapter recommend legislative amendments to give the Court power, or specify its existing discretionary power, in relation to certain matters. In making these recommendations, the Commission recognises that the Court, under part 4A of the Supreme Court Act 1986 (Vic) and the Civil Procedure Act 2010 (Vic), already has broad powers in class actions. However, recognising a specific power in legislation is desirable in some circumstances to underpin best practice and provide a clear source of power where this may not yet be determined.

4.8 While a number of its recommendations aim to ensure that Victorian class action law and practice are consistent with other Australian class action regimes, the Commission is mindful that the types of class action filed in each jurisdiction differ, as does the extent to which they involve litigation funders. These differences have influenced the practices and jurisprudence arising from each jurisdiction, and are important when considering reform options in Victoria. They are discussed in the next section.

Class actions in Victoria

4.9 The 85 class actions filed in the Supreme Court since the class actions regime commenced under part 4A of the Supreme Court Act 1986 (Vic) represent an average of between four and five each year, though the numbers have fluctuated between zero and 16. Five were filed in 2017.^[1]

4.10 Approximately two-thirds of Victorian class actions have settled, resulting in the distribution of at least one billion dollars to more than 28,300 class members.^[2] The two largest-ever class action settlements in Australia were secured under Victoria’s class action regime.^[3]

4.11 In terms of the number and variety of cases managed, Victoria’s class action regime is second only to the Commonwealth’s. The Federal Court manages the most active class action regime in Australia and, having been established in 1992, it is also the longest established. By 31 May 2017, 402 class actions had been filed in the Federal Court,^[4] and at least $3.5 billion had been paid by defendants pursuant to judicially approved settlements.^[5]

4.12 The range of class actions filed in the two jurisdictions are compared in Table 3.

Table 3: Number of class actions ever filed ^[6][7]

4.13 The differences in the types of class actions filed are significant. The Supreme Court has dealt with far more mass tort claims than the Federal Court, and continues to do so. The proportion of shareholder class actions filed in each jurisdiction is similar, but the last one filed in the Supreme Court was in April 2015.

4.14 Meanwhile, there has been a marked increase over the past five years in the number of shareholder claims being filed nationally, mainly in the Federal Court.

4.15 Although 25 investor claims have been filed in the Supreme Court—equal to the number of mass tort claims—16 of them were filed in response to the collapse of plantations group Great Southern.^[8] An investor class action has not been filed in the Supreme Court since May 2016. There was a surge in the number of class actions of this type being filed in the Federal Court after the global financial crisis of 2008. The number is now falling.^[9]

4.16 A further point of difference between the two jurisdictions is in the way proceedings are funded. As discussed in Chapter 2, litigation funders have been involved in only 10 class actions filed in the Supreme Court—11 per cent of the total. Four of them were transferred to the Federal Court.^[10]

4.17 Litigation funders are far more frequently involved in class actions in the Federal Court, where they have been involved in 26 per cent of all class actions. In the last five years, more than half of all Federal Court class actions have been financed by a litigation funder.^[11]

4.18 These differences are reflected in the procedural and legal developments in each of the regimes.

4.19 In Victoria, class actions are allocated between the Commercial Court and the Common Law Division of the Supreme Court. The Common Law Division manages proceedings founded, or concurrently run, in tort and breach of contract or statute. The Commercial Court hears cases of a commercial nature. In the Federal Court, class actions are allocated to a Docket Judge within the appropriate National Practice Area.

4.20 The Federal Court practice note on class actions provides detailed procedural guidance regarding the involvement of litigation funders; the equivalent Supreme Court practice note on class actions does not refer to litigation funders at all.

4.21 Compared to the Federal Court Practice Note, the Supreme Court Practice Note is less prescriptive, which allows for the flexibility needed in mass tort claims. Mass tort claims are complex to manage and the harm suffered by claimants is unique to the circumstances of the case and difficult to assess. Procedural guidelines that can be applied across all mass tort proceedings need to be more adaptable to the particular features of the claims than, for example, investor and shareholder class actions, where there is greater comparability of type and cause of loss (financial) between proceedings.

4.22 Because of the relative prevalence of funded litigation in its jurisdiction, the Federal Court has been at the forefront in developing law and procedure around the court’s role in supervising litigation funding fees. An example is the Federal Court’s approval of common fund orders, which allow litigation funders to obtain a court-approved funding fee from every registered class member, regardless of contractual arrangement.^[12]

4.23 In the Supreme Court, settlement distribution, which is the process by which class members’ individual claims are assessed and distributed, has presented a greater challenge. Settlement distribution in mass tort class actions is likely to be lengthy, and can account for approximately half the duration of proceedings. In comparison, it is likely to account for approximately a fifth of the duration of proceedings in shareholder class actions.^[13]

4.24 While it is important to recognise the differences between jurisdictions, the Commission considers that the operation of each class action regime benefits from sharing a common procedural form. As discussed in Chapter 1, it is desirable that innovations continue to develop in a consistent manner across jurisdictions rather than creating, or appearing to create, arbitrary distinctions. Many of the reforms discussed in this chapter respond to innovations by the Federal Court that have not yet been applicable to class actions in the Supreme Court. However, they may be relevant in the future, not only to the management of class actions in Victoria but to the decisions made by lawyers about the jurisdiction in which they bring proceedings.

Improving efficiency in class actions

4.25 The efficiencies that can be achieved by class actions, as compared to multiple individual claims, were highlighted in the 1988 Australian Law Reform Commission (ALRC) report on grouped proceedings, which led to the introduction of class actions in the Federal Court: economies in the use of Court and legal resources; greater fairness for defendants; and time and cost savings for class members.^[14] At the same time, the ALRC acknowledged that these efficiencies would not be realised if the procedure was used inappropriately, and it considered that enabling the Court to take an active role in case management would help prevent this possibility:

Grouped proceedings will sometimes be more complex and difficult to manage than other forms of litigation. The Court’s ability to control proceedings through directions hearings and taking a more active role in the management of the case will help to ensure that the costs incurred by the parties are less than the cost which would be incurred if the proceedings were all conducted as individual proceedings.^[15]

4.26 Since the introduction of the Victorian regime in 2000, the Supreme Court of Victoria has demonstrated its willingness to actively supervise class actions to ensure not only that they are run efficiently, but also that the class action mechanism is not abused or used improperly.^[16] Many of the case management techniques adopted by the Court to enhance efficiencies are set out in the Supreme Court Practice Note.

4.27 While the Supreme Court Practice Note preserves the Court’s flexibility in managing different types of class actions efficiently, differential case management is a reactive process that is time- and resource-intensive for both the courts and the parties. Ultimately, parties pay the increased legal costs that arise from this more intensive management of proceedings.

4.28 Some types of class action may benefit from a more standardised, structured process. Comments were made in consultations and submissions about four areas of possible reform:

• Certification. It has been suggested that Victoria adopt certification requirements such as those that apply in class actions overseas. As a pre-trial process, certification requires the court, and the parties, to turn their minds to procedural issues, including questions of efficiency, before a class action is commenced. Certification is identified in the Commission’s terms of reference as a possible reform.^[17]

• Powers of the Court under section 33N. Instead of providing for a certification process, Victoria’s class action regime empowers the Court to discontinue a class action in a range of circumstances under section 33N of the Supreme Court Act. An expansion of the Court’s powers under this section may give greater support to achieving the regime’s efficiency aims.

• Multiple class actions. Multiple class actions reduce efficiencies by increasing the burden on Court and defendant resources. A more formal approach to managing multiple class actions that are filed about the same subject matter has been proposed.

• Settlement distribution. Settlement distribution can be a lengthy and expensive process, yet it has been given little attention in research to date.^[18] An increased emphasis on efficiency during settlement distribution, particularly in mass tort class actions, is considered desirable.

4.29 These issues are discussed in the sections that follow. In considering the need for reform, it is important to acknowledge that improving efficiency in class actions is not only a matter of court procedure. Innovations in technology allow courts, and parties, to streamline processes and significantly enhance efficiencies in large and complex litigations. Some of these innovations, such as electronic settlement distribution, have already been adopted in overseas jurisdictions, and may be relevant in Australian class actions in the future. The impact of new technology on class actions is discussed in Chapter 6.

Certification

Current law

4.30 The certification of class actions is a formal process of obtaining court approval for a class action to commence. It requires a representative plaintiff to prove to the court, at a pre-commencement hearing, that certain preliminary criteria have been met and that the proceeding should commence as a class action.

4.31 Class actions in Australia do not include a certification process^[19] because the ALRC concluded, after considered deliberations, that certification does not protect parties or ensure efficiency:

Class actions, like all litigation, are open to abuse. Because of the potential numbers involved and the fact that many group members may be absent, specific safeguards have been built into the Commission’s recommended procedure to protect the interests of both group members and respondents. In the light of the recommended safeguards, the Commission sees no value in imposing an additional costly procedure [certification], with a strong risk of appeals involving further delay and expense, which will not achieve the aims of protecting parties or ensuring efficiency.^[20]

4.32 Instead of certification, a number of procedural factors influence how, and when, a class action is commenced.^[21]

4.33 In Victoria, the claim must satisfy threshold requirements contained in section 33C of the Supreme Court Act, which must be set out in a writ in accordance with section 33H. Parties must also comply with the overarching obligations set out in the Civil Procedure Act 2010 (Vic), which stipulate, among other things, that claims must have a proper basis and not be frivolous, vexatious or an abuse of process.^[22]

4.34 If the class action is properly constituted according to the threshold requirements, the Court still has the ability to prevent it from continuing as a class action under section 33N of the Supreme Court Act. Section 33N gives the Court the power to order that a proceeding no longer continue as a class action in a range of circumstances where that is in the interests of justice.^[23]

4.35 The Supreme Court also has access to traditional remedies to terminate a proceeding, such as those provided under the Supreme Court (General Civil Procedure) Rules 2015 (Vic).

4.36 As reiterated throughout the Commission’s consultations, a nationally consistent approach to class actions is desirable. Any changes to the way that class actions are commenced in Victoria, including the introduction of certification, could create an incentive to ‘forum shop’ if not introduced on a national basis.^[24] Several submissions highlighted the importance of national consistency in class action practice, including those calling for certification. Ashurst observed that introducing certification in only one class action jurisdiction is unlikely to promote efficiency or access to justice; the US Chamber Institute submitted that it is critical that any proposed reform options are ultimately considered for implementation at a national level; Litigation Lending put the view that, without

compelling reasons to do otherwise in a particular jurisdiction, harmonisation of laws across Australia should be encouraged.^[25]

4.37 The Commission notes that reviews of the civil justice system since the 1988 ALRC report have not called for a certification procedure in class actions. These reviews include the ALRC’s review of the federal civil justice system in 2000,^[26] the VLRC’s review of the Victorian civil justice system in 2008,^[27] the report by the Access to Justice Taskforce of the Commonwealth Attorney-General’s Department in 2009,^[28] and the report of the Australian Productivity Commission on access to justice arrangements in 2014.^[29]

Proposal to introduce certification

4.38 Supporters of certification consider that pre-commencement judicial approval of class actions promotes efficiencies and reduces unmeritorious class actions. The US Chamber Institute for Legal Reform submitted that the absence of some form of initial certification by Australian courts has led to vague and imprecise class definitions, the filing of unsuitable class actions, and the existence of competing class actions.^[30]

4.39 Simone Degeling, Michael Legg and James Metzger submitted that a certification process should be introduced in Victorian class actions. They identified several advantages:

• The representative plaintiff, who has the best knowledge of the proposed action, would be required to justify the proceedings, thereby enhancing efficiency.

• By requiring certain procedural matters to be addressed upfront, it would ensure that problems are identified early, avoiding the costs and delays associated with interlocutory challenges and responding amendments.

• It would provide a dedicated forum for addressing the adequacy of the representative plaintiff, the claims of competing class actions, and issues associated with litigation funding that need to be determined at an early stage of proceedings.^[31]

4.40 Similarly, the Insurance Council of Australia supported certification as a means of addressing threshold criteria and efficiency issues, including the suitability of representative plaintiffs, poorly pleaded class actions, competing class actions, and the use of closed class actions.^[32] Ashurst indicated that it could also be a useful mechanism to consider the capital adequacy of the funder of the class action.^[33]

4.41 The substantial majority of submissions did not support the introduction of a formal certification process, or higher threshold requirements, into Victoria’s class action regime.^[34] They identified the following primary reasons for opposing certification: the lack of evidence that the current provisions of part 4A are insufficient in preventing unsuitable claims being filed; the costs and delay evident in overseas jurisdictions which have implemented certification; and the barriers it creates to accessing justice. These issues are discussed in turn below.

Risk of unsuitable claims

4.42 Proponents of certification view it as an effective means of reducing the number of unsuitable class actions filed in Australia.^[35] Vince Morabito submitted that there is a lack of evidence, empirical or otherwise, to indicate that the current provisions of part 4A of the Supreme Court Act operate unfairly for defendants or are open to abuse by plaintiffs:

Only a handful of class actions has been put forward as evidence of systematic abuse and, with all due respect, all that these cases provide is evidence that the type of certification device that is being advocated is one pursuant to which a mini-trial, with respect to the merits of the substantive claims, is to take place.^[36]

4.43 The Supreme Court submitted that none of the judges who have regularly handled class actions believe there is any need for amending the commencement criteria contained in part 4A of the Supreme Court Act.^[37]

4.44 Moreover, the legal and procedural devices that are already available to the Court give it sufficient power to maximise procedural efficiencies and prevent unmeritorious claims from progressing.^[38] Vince Morabito observed that the powers under part 4A provide the Court with greater powers to determine which proceedings should be conducted as class actions than courts which have the power to withhold certification orders.^[39]

4.45 Within part 4A, these powers include the power to discontinue proceedings as a class action (section 33N); the power to order that individual issues or issues not common to the class be addressed through the use of sub-groups or by individual determination (sections 33Q and 33R); and the power to make any order necessary to ensure that justice is done in proceedings (section 33ZF). Proceedings must also meet specific threshold criteria (sections 33C and 33H), and a representative plaintiff must satisfy certain criteria and can be substituted upon application by class members if inadequate (sections 33D and 33T).

4.46 Outside part 4A, the Court has the power under the Supreme Court Rules and the Civil Procedure Act to dismiss a proceeding, or make any other order it considers appropriate in the interests of justice where there is an abuse of process or no proper basis for the proceeding.^[40] Judicial case management ensures that proceedings are closely supervised and monitored. Moreover, the operation of the costs-shifting rule acts as a deterrent to commencing frivolous, vexatious or otherwise inappropriate proceedings.^[41]

4.47 Finally, as Vince Morabito has observed, the fact that not many class actions have been filed in the Supreme Court in the last five years suggests the need to explore why the regime is so little used rather than how to make class actions more difficult to commence.^[42]

Costs and delay

4.48 Although none of the proponents of certification suggested that Victoria fully replicate overseas practice (which, as noted in one submission, may be evolving and improving),^[43] the experience of jurisdictions that have adopted certification is informative.

4.49 The Commission was told that, rather than reducing cost and delay, certification increases it.^[44] An example from Canada, which has adopted certification in class actions, was provided by Andrew Roman, a lawyer consulted as part of the ALRC’s 1988 report on grouped proceedings. He highlighted the huge costs and delays involved in certification, which often mean that the law firm or funder will run out of time and money and class members will be left without a remedy:

If an opinion polling company was to ask class members whether they would prefer their interest to be protected in this manner [through certification], increasing the risk that they get nothing at all, I would think that most of them would say ‘No thank you, I risk nothing by being a member of the class, so don’t protect me by destroying the economics of those who are prepared to assume that risk’.^[45]

4.50 Preparation for a certification hearing (which is often converted into a mini-trial) requires parties to undertake discovery and gather evidence. This is a time-consuming procedure which can result in millions of dollars being spent in legal costs and the creation of a financial barrier to access to justice at the very outset.^[46] In the United States, significant class action resources are used in the certification process, as certification is primarily used for the purposes of implementing, on a class wide basis, the settlement agreement reached between the parties.^[47]

4.51 The Commission considers that there is a risk that the introduction of a certification requirement would cause significant complexity, cost and delay in the conduct of litigation.

4.52 Increasing the time and financial barriers faced by the class when commencing a class action not only makes justice less accessible and more costly,^[48] but also goes against the trend of recent judicial reform to reduce pre-trial complexity.^[49]

Barriers to justice

4.53 Because of the costs and delay, it was argued in submissions that certification creates an uphill battle for class members and the representative plaintiff when commencing a class action, while providing no discernible benefit to them.^[50] It was also suggested that introducing certification would reduce the types of class action commenced in Victoria.

4.54 It was submitted that, in Canada, class actions with an aggregate value of less than $20 million are unlikely to be brought, due to the significant costs of certification.^[51] In the United States, certification criteria such as predominance (requiring that questions of law or fact common to class members predominate over any individual questions) are less likely to be satisfied in class actions where highly individualised damage has been suffered. This means that individuals with product liability and mass tort claims who have suffered personal injury, for example, may be left without a remedy.^[52]

Other ways of improving efficiency at the early stages of proceedings

4.55 Although strongly opposing certification, participants in consultations during the review expressed support for greater ‘upfront’ supervision by the Court of issues relevant to the conduct of class actions: conflicts of interest, funding arrangements, and adequacy of representation.^[53] To the extent that these issues can usefully be addressed early in proceedings, the Commission supports reforms that ensure this occurs.^[54]

4.56 Proposals to strengthen the Supreme Court of Victoria’s powers to address issues about the conduct of class actions, from the earliest stages and throughout the proceedings, are made in this report. Recommendations to improve the information given to the Court at the commencement of proceedings are discussed in Chapter 2. Recommendations to increase the Court’s power to discontinue a class action, remove a representative plaintiff of its own motion, and manage competing class actions are discussed later in this chapter.

Conclusion

4.57 Although certification may appear to be a simple means of ensuring that only appropriate claims are conducted as class actions, there is no need to introduce it to Victoria’s class action regime, and many reasons not to do so.

4.58 It would not improve access to justice; rather, it would inhibit it by exacerbating pre-trial complexities and increasing costs and delays. The Court has sufficient powers to manage class actions efficiently and prevent unmeritorious or otherwise unsuitable class actions from progressing.

4.59 The Commission does not support its introduction in Victoria.

Recommendation

9 A certification requirement should not be introduced in Victorian class actions.

Court’s own motion power under section 33N

4.60 The ALRC recognised that the class action regime it proposed in 1988 would need to contain safeguards that allow a proceeding to be discontinued as a class action, where appropriate. It identified the importance of a defendant having the right to challenge the validity of a class action, and the Federal Court’s own motion power in certain circumstances, including the power to discontinue proceedings as a class action where it is not cost-effective to run the proceedings on this basis.^[55]

4.61 Section 33N of the Federal Court Act 1976 (Cth) gives broad effect to the ALRC’s intention. It empowers the Federal Court, upon application by the defendant or of its own motion, to order that proceedings no longer continue as a class action if it is in the interests of justice to do so because:

• costs would be likely to exceed those that would be incurred in separate proceedings

• the relief sought can be obtained without resort to a class action

• the class action is not an efficient and effective means of dealing with the claims

• it is otherwise inappropriate that the claims be pursued by means of a class action.^[56]

4.62 While section 33N of the Supreme Court Act is very similar to the Federal Court equivalent, it does not expressly give the Court an own motion power to discontinue a class action in the specified circumstances. Rather, the defendant has to make an application. In the interests of consistency across jurisdictions, to strengthen the powers of the Court, and to give full effect to recommendations of the ALRC in its 1988 report, the Commission recommends that section 33N be amended to make the power available on the Court’s own motion.

4.63 Most submissions indicated that, if an own motion power were introduced in Victorian class actions, the circumstances in which the Court can discontinue a class action under section 33N are sufficient to prevent inefficient, unsuitable, or inappropriate claims from continuing.^[57] Developments in case law have largely resolved concerns expressed in older commentary about the excessive use of section 33N by defendants.^[58] Commentators who raised concerns about section 33N 10 years ago, and used this as a basis for recommending certification, told the Commission that the low use of section 33N in contemporary class actions has changed their view.

4.64 Under section 33N, a proceeding can be discontinued as a class action if it is not ‘an efficient and effective means’ of dealing with class members’ claims. Allens suggested that amending the legislation to allow a class action to be discontinued if it is not the ‘most efficient and effective means’ of dealing with the claims would give better effect to the regime’s efficiency aims:

Currently, a class action will be allowed to proceed if it is an efficient or effective means of dealing with the claim of group members. This means that an action may be allowed to continue despite the existence of a compensation scheme, appropriate low cost or no cost tribunals or other mechanisms available to effectively deal with group members’ claims.^[59]

4.65 While a class action may not be the most efficient method of resolving the claims of class members, it provides access to justice for individuals who would otherwise be unable to pursue a remedy. Accordingly, the Commission considers the existing efficiency threshold contained in section 33N to be appropriate.

Recommendation

10 Section 33N of the Supreme Court Act 1986 (Vic) should be amended to provide the Supreme Court with the power of its own motion to order that a proceeding no longer continue under part 4A.

Efficiency and multiple class actions

4.66 The risk that multiple actions will be commenced against a defendant in respect of the same subject matter is inherent to Australia’s opt-out class action regimes: class members have the freedom to opt out of a class action and bring a separate individual proceeding or another class action against the defendant, should they wish.^[60]

4.67 The filing of multiple class actions relating to the same subject matter appears to be an increasing trend in Australia.^[61] Commonly cited reasons for this trend include: increased legal entrepreneurialism; the establishment of class action regimes in more jurisdictions; and the use of closed classes, which restrict proceedings to a particular category of class members.

4.68 It is not yet clear how common fund orders will affect the number and type of class actions that are filed relating to the same subject matter. Data collected by Vince Morabito indicates that fewer closed class actions have been filed since the Federal Court approved common fund orders for litigation funding costs.^[62]

4.69 Multiple class actions can be filed for a range of reasons and in a range of circumstances, and may involve proceedings in which:

• there is an overlap in class membership

• the classes are different but the subject matter of the litigation is the same

• the subject matter of the litigation is the same, but one commences after an earlier one has concluded.^[63]

4.70 Courts actively case-manage the proceedings when multiple class actions are filed, and may make a range of orders to enhance efficiencies and minimise duplication of work. For example, the court may direct the proceedings to be heard before the same judge, make orders that the respondent is only exposed to one set of legal costs, or appoint an independent lawyer to monitor the work done and resources deployed in proceedings and report to the court on a regular basis.^[64]

4.71 Class actions that involve overlapping class membership, or the same or substantially similar subject matter, are particularly problematic for courts to manage and have been the focus of proposed reforms. They are referred to as competing class actions in the following discussion.

Competing class actions

4.72 The Federal Court has observed that competing class actions increase legal costs and delays, waste court resources, and are unfair to defendants.^[65] Ultimately, the additional legal costs incurred as a result of intensive case management, lengthy negotiation between competing proceedings, and achieving a more difficult settlement are borne by class members.

4.73 Although the courts may not allow competing class actions to proceed in that form as long as there continues to be an overlap in class membership, there is no fixed rule as to how the issue should be addressed. In McKay Super Solutions Pty Ltd (Trustee) v Bellamy’s Australia Ltd (Bellamy’s), Justice Jonathan Beach held that there were five realistic options available to him where two open class actions with almost a complete overlap in class membership were filed:

• order the competing class actions be consolidated

• order a permanent stay of one proceeding

• declass one or more proceedings under section 33N

• order that one class be closed, and the other proceeding remain open, with a joint trial of both

• allow both proceedings to remain constituted as open class proceedings and order a joint trial of both.^[66]

4.74 Other options available for addressing competing class actions may include ordering sequential hearings, or selecting one proceeding to continue as a ‘test case’, with a temporary stay of the other proceedings until the test case is resolved.^[67]

4.75 Although it appears that courts have the power to permanently stay one or more proceedings, they are reluctant to ‘pick a winner’ or set a fixed rule that no more than one class action can proceed in these circumstances.

4.76 The reasons for this reluctance are twofold. First, if the threshold requirements for commencing a class action are met, a class action has prima facie the right to proceed (unless a declassing or decertification order is made). Preventing one class action from continuing under part 4A because another proceeding involving the same claim or cause of action is commenced may interfere with this right, and there must be a powerful and significant reason for this.^[68]

4.77 Secondly, the right of class members to choose their desired litigation funder and law firm, and not have this choice determined through judicial election, enhances freedom of contract.^[69] As observed by Vicki Waye, this view is held despite scant evidence that competing class actions have driven down the cost of funding or led to significant improvements in funding terms.^[70]

4.78 To date, competing class actions have not been a problem in Victoria.^[71] It is reasonable to suggest, however, that factors contributing to the filing of multiple class actions will continue to develop, and may lead to competing class actions in Victoria in future. It is desirable that Victoria examine the issue in conjunction with the Commonwealth and the other states which have a class action regime.

4.79 The consultation paper asked whether reform is necessary to assist the Court in addressing competing class actions. Responses considered whether legislative or procedural guidance should be introduced in the Victorian scheme, which is discussed below.

New guidance for the Court to address competing class actions

4.80 Although the Federal Court has found it has the requisite power to permanently stay one or more competing class actions and allow one to continue, the source of the power has not yet been determined by an appellate court. Certainty could be created through introducing a legislative power to appoint one class action.

4.81 Submissions expressed different views as to whether a legislative power is necessary, or desirable. Some supported the idea, although they differed as to whether this power should be mandated or discretionary, and whether it should be part of a certification requirement in Victoria or introduced under existing provisions.^[72] Other submissions did not consider legislative reform necessary; rather, they thought it might hinder the flexibility of the Supreme Court to craft responses best suited to the circumstances of

the case.^[73]

4.82 A related suggestion was that some form of non-exhaustive guidance for the Court when dealing with competing class actions would provide certainty and promote efficiency, provided it is not overly prescriptive.^[74] Several submissions highlighted issues that should be considered in preparing any guidance or checklist: Maurice Blackburn submitted that it should respect class members’ choice of legal representation and funding arrangements;^[75] Litigation Funding Solutions submitted that it should avoid promoting judicial consideration of some factors, such as lowest cost, over others;^[76] and Ashurst suggested that it should state that the timing of filing is not a relevant factor, except in certain circumstances.^[77]

4.83 The Federal Court, in two recent decisions, has reiterated the importance of a tailored approach to competing class actions. In Bellamy’s, Justice Beach determined that the appropriate course of action where two competing open class actions had arisen was to close one class, and try the cases together. He indicated, however, that had the facts been different and significant numbers of class members not signed agreements with litigation funders and law firms in each proceeding, it would have been appropriate to permanently stay one proceeding.^[78]

4.84 A different approach was taken by Justice Foster in Cantor v Audi Australia (No 2), where two proceedings were filed by different law firms. There was some overlap in class definition between the proceedings. Justice Foster determined that they should be allowed to continue in parallel and tried together.^[79]

4.85 Given the case-dependent approach adopted by the courts to date,^[80] the Commission does not consider it necessary to give the Court express legislative power to choose one class action when competing proceedings are filed. It would be unlikely to provide any real change to practice, and may risk a ‘one size fits all’ approach being adopted, which the Federal Court has cautioned against.^[81]

4.86 It is desirable, however, that there is consistency in judicial approaches to competing class actions.^[82] The Commission believes that it would be useful for the Supreme Court Practice Note to include a non-exhaustive list of factors that the Court may consider where competing class actions are filed. This guidance should reflect current practice, while also allowing the Court to respond flexibly in the circumstances of each case.

4.87 In Bellamy’s, Justice Beach set out a range of non-exhaustive factors that were relevant to his choice as to which proceeding should be closed, and which should remain open. These factors could provide a framework for any guidance included in the Supreme Court Practice Note. They include:

• the experience of the lawyers bringing the class actions

• the costs the lawyers expect to charge for the work performed

• the funding terms in each of the proceedings, including funding terms and conditions and percentages

• the resources made available by each law firm, and their accessibility to clients

• the state of preparation of the proceedings (relevant but not determinative if both proceedings will be ready for trial at the same time)

• the number of class members signed up to each of the proceedings

• whether each of the proceedings would proceed without a common fund order, and the terms of any proposed common fund order that might be sought

• the position adopted by each funder on the question of security for costs and generally their resources to meet any adverse costs order.^[83]

4.88 In the interests of promoting flexibility in the Supreme Court of Victoria’s approach to competing class actions, the Commission considers that any guidance should stipulate that the Court may take into account any other matter as it considers relevant.

Recommendation

11 The Supreme Court should consider amending its practice note on class actions to include guidance for the Court and parties on managing competing class actions. The guidance should reflect current practice, as it has developed over time, and allow for the Court to respond flexibly in the circumstances of each case.

Cross-vesting of multiple class actions

4.89 Although the consultation paper did not seek responses on the issue, the Commission’s consultations revealed that reform is necessary to improve the cross-vesting capabilities of Australian courts where multiple class actions are filed in different jurisdictions.^[84]

4.90 Under the Jurisdiction of Courts (Cross Vesting) Act 1987 (Vic), the Supreme Court has the power to cross-vest proceedings between jurisdictions. There was agreement among stakeholders, however, that existing cross-vesting powers, both in Victoria and nationally, are not adequate to ensure efficient cooperation between state and federal jurisdictions where multiple class actions arise.^[85] The consensus view was summarised by Vince Morabito:

competing class actions are rapidly becoming a ‘national’ problem and cannot therefore be adequately addressed by the legislatures or courts of class action jurisdictions acting on their own.^[86]

4.91 The decision to cross-vest a case is made by the court.^[87] Judges are able to ‘push’ cases to another court, but are unable to ‘pull’ cases to their own court. This prevents the undesirable situation in which large class actions are pulled to the court with the most resources. However, it also restricts the courts’ powers to enhance efficiencies and minimise duplication of work and expense.^[88]

4.92 Allens expressed concern that, as a matter of practice, the onus is generally placed on the defendant to pursue cross-vesting orders, which increases cost and time burdens.^[89] It also increases the risk that the defendant will ‘forum shop’ and choose a jurisdiction, or court, that is to their advantage in the proceedings.^[90]

4.93 Allens thought it preferable that the courts instead be required to proactively consider and determine which action should be transferred to another jurisdiction for, at the very least, case management of the proceedings by the same judge.^[91]

4.94 There was widespread support, including among judges of the Federal Court, for the establishment of a cross-vesting judicial panel to address the concerns relating to class actions.^[92] The role of this panel would be to make cross-vesting decisions where multiple class actions relating to the same subject matter are filed in different jurisdictions. It was envisaged that it would prevent one court having ultimate authority on cross-vesting decisions, while at the same time ensuring that the appointed court had the expertise and resources to be able to hear the multiple proceedings.

United States Judicial Panel on Multidistrict Litigation

4.95 The Judicial Panel on Multidistrict Litigation (MDL Panel), which transfers cases between federal districts in the United States, was put forward as a possible model upon which to base a cross-vesting panel in Australia.^[93] The MDL Panel is a statutory body that considers motions for coordinated or consolidated pre-trial proceedings in federal cases.^[94] While the MDL Panel has no power over cases pending in state courts, it facilitates coordination by transferring federal cases to a district where related cases are pending in the state courts.^[95]

4.96 The purpose of the MDL Panel is twofold: it considers whether common questions of fact exist between proceedings filed in different federal districts, such that centralisation of the pre-trial process will promote the just and efficient conduct of the proceedings; and it determines which federal district and judge are best situated to handle the transferred matters.^[96]

4.97 The MDL Panel exercises considerable and largely unfettered discretion in its decisions to coordinate or consolidate pre-trial proceedings. Decisions are made by the seven sitting federal judges who are appointed to the panel (no two panel members being from the same federal circuit), and it convenes hearings in various locations around the country to facilitate the participation of parties and their counsel.^[97]

4.98 The Commission recommends further investigation into the operation of the MDL Panel and the viability of establishing a similar panel in Australia, with the ability to cross-vest class actions between federal and state jurisdictions. The Commission considers that such a panel, consisting of a senior judge from each jurisdiction with a statutory class action regime, would be of significant value in mitigating the existing cross-vesting difficulties and in strengthening a nationally consistent approach to class actions. Legislation would need to be developed, to establish the panel, determine its powers and how they should be exercised, and clarify how it would operate. The appropriate forum to undertake this task is the Council of Attorneys-General, which will doubtless consult with the Council of Chief Justices of Australia and New Zealand in relation to any proposals.

Recommendation

12 The Attorney-General of Victoria should propose to the Council of Attorneys-General that a cross-vesting judicial panel for class actions be established. The judicial panel would make decisions regarding the cross-vesting of class actions, where multiple class actions relating to the same subject matter or cause of action are filed in different jurisdictions.

Efficiency during settlement distribution

4.99 Settlement of a class action involves two phases. The first is the approval of the settlement by the Court under section 33V of the Supreme Court Act, and the second is the distribution of settlement amounts to class members.

4.100 While settlement approval under section 33V is guided by well-established principles, the way that settlement distribution is carried out will differ in every class action. As part of settlement approval, the Court will approve the process by which class members’ settlement payments are to be assessed and distributed (known as the settlement distribution scheme). The representative plaintiff’s lawyers are required to submit evidence to the Court explaining the broad contours of the settlement distribution scheme, including how it will be administered, supervised, monitored or audited.^[98]

4.101 Settlement distribution can account for a significant part of proceedings, particularly in large mass tort class actions. Although unique in size and scale, the Kilmore East/Kinglake bushfires class action provides an example of the possible complexity of settlement distribution: the trial lasted 16 months, followed by a settlement distribution process of close to two years.^[99] Ensuring that the settlement distribution process is carried out as efficiently and effectively as possible is critical in ensuring class members obtain a fair outcome, and are not unduly delayed in obtaining compensation for their damage or loss.

4.102 The Commission asked in the consultation paper how the management of settlement distribution schemes could be improved. The responses observed that the best approach depends on the type of class action, the complexities of the claims involved, and the capabilities of the appointed scheme administrator. These issues are discussed in the section below.

4.103 The accountability of the scheme administrator to the Court was also raised as an important issue during the Commission’s consultations, and is discussed at [4.191]–[4.217]. For ease of reference, all the Commission’s recommendations relating to settlement distribution, including those relating to efficiency, are included at the end of those paragraphs.

Trade-off between precision of assessment and efficiency

4.104 As set out in the consultation paper and recognised in submissions, there are two objectives of settlement distribution schemes. First, individual compensation in a class action should reflect the merits of each individual claim; and secondly, the distribution process should be completed in a manner that minimises cost and delay.^[100]

4.105 The type of class action and the damage being assessed during settlement distribution will determine whether a trade-off is required between the two objectives. In a product liability, personal injury, or mass tort class action, for example, the damage is likely to be highly complex, both in itself, and in comparison with the claims of others. The need to assess each class member’s claim individually will result in higher costs and a longer distribution process. Essentially, a trade-off is required between the first objective (the precision of individual assessment) and the second objective (minimisation of costs and delays).

4.106 In a shareholder class action, the tension between the precision of individual assessment and efficiency is not as keenly felt. As class members’ loss is of the same kind—financial—it can often be assessed according to a formulaic loss assessment. Settlement distribution can generally be completed within three to six months.^[101]

4.107 Even where the damages are diverse and complex, highly individualised assessments are unlikely to be desirable because of the detrimental effect of the cost on the settlement amount as a whole, and the time required. This was observed by Maurice Blackburn:

in the context of a class action settlement scheme, it will almost never be appropriate to obtain this full suite of expert evidence because it will not only add significantly (and unreasonably) to the costs of administering the settlement, thereby detracting from the overall amount that is available for distribution to group members, but will also add substantially to the time that it takes to assess all claims under the settlement scheme.^[102]

4.108 Where settlement distribution is unreasonably delayed, Allens suggested that, upon application by the legal profession’s regulator, sanctions should be imposed against persons responsible.^[103]

4.109 While the Commission recognises the expertise of the Victorian Legal Services Commissioner in handling complaints regarding lawyers, introducing another avenue for complaint may simply prolong settlement distribution for class members. Instead, allowing the Court to be involved in serious disputes arising from settlement distribution is a more efficient option. Recommendation 17 seeks to strengthen the role of the Court in resolving these disputes.

4.110 How the balance is achieved between precision of individual assessment and the minimisation of cost and delay is ultimately a factor for the Court to consider when approving a settlement,^[104] and it is important that it is provided with the necessary information to undertake this assessment. To assist the Court, the Commission recommends that information about the proposed measures being taken during settlement distribution to minimise costs and ensure a fair outcome, be provided to the Court at settlement approval (Recommendation 17).

Innovations developed during settlement distribution

4.111 Where settlement distribution requires highly individualised damages to be assessed, scheme administrators have been innovative in improving the efficiency of distribution. Examples of these innovations include:

• The use of interim distributions as part of global sum settlements. In some class actions, the settlement distribution scheme may provide the scheme administrator with the discretion to make interim distributions to class members whose claims have been completed, once a certain proportion of claims have been assessed. This may be desirable where the settlement distribution is likely to be lengthy. For example, in the Kilmore East/Kinglake bushfires class action, the settlement distribution scheme provided for interim distributions after 30 per cent of the personal injury and dependency claims or 40 per cent of the economic loss and property damage claims had been made.^[105] The risk of interim distributions is that they may further delay the settlement distribution,^[106] or may be too high, in which case the funds available for later payments will be diminished.

• The use of hardship payments, which allow for partial payment of settlement money where class members are facing financial hardship. Again, this may be useful where the settlement distribution is likely to be long and complex.

• The use of fast-track payments, where class members can elect to accept a fixed sum of compensation (at the lower end of the scale) in order to avoid a slower, more detailed and more expensive individualised assessment.^[107] Although the class member waives the right to a more rigorous individual assessment of the merits of their claim, they are able to obtain prompt (and certain) payment and avoid a potentially invasive and time-consuming individual assessment process. A fast-track payment system may be most attractive to class members who have not suffered significant loss or damage.^[108]

• The use of matrix or grid settlements, which ascribe certain sums to different experiences, based on a matrix of criteria. A matrix settlement involves use of a general formula, whereby a base payment is provided for each class member, with additional pre-set amounts deducted depending upon the number of criteria met. Although used in the United States, matrix settlement distributions do not appear to be widely used in Australia.^[109] While they provide certainty for class members during settlement distribution, individual loss or damage may not be fully compensated due to the formulaic nature of assessment.^[110]

4.112 Several of the Commission’s recommendations are expected to encourage scheme administrators to be innovative in distributing settlements efficiently as well as fairly. For example, the Commission recommends below that they be required to inform the Court about when class members are expected to receive settlement amounts. This may encourage consideration, from the outset, about how to address, and implement, efficiencies during settlement distribution.

Appointing third-party administrators for settlement distribution

4.113 The law firm acting for the representative plaintiff will generally, but not always, be appointed as the scheme administrator for the settlement distribution. As the lawyers involved in the case generally know the most about class members’ claims, this appointment makes sense on the grounds of efficiency. If experienced in class action litigation, the lawyers will be able to draw on expertise and knowledge in this area, and apply the most efficient method for assessment and distribution of claims.

4.114 However, Allens, IMF Bentham and healthcare companies and businesses proposed that, in some circumstances, it would be preferable to appoint a third-party scheme administrator.^[111] IMF Bentham suggested that the courts should consider appointing an administrator rather than the lawyers who conducted the action when:

• the settlement distribution would be likely to be conducted at less cost and more quickly

• it is unnecessary to have lawyers, at lawyers’ rates, undertake an administrative function

• the lawyers are likely to be less efficient than an administrator with more relevant expertise

• all that is required is the application of the court-approved scheme and there is little merit in having lawyers with the factual and legal knowledge implement the scheme

• the lawyers are likely to largely outsource the calculation or determination of merits in any event

• the lawyers do not have any particular expertise in the application of formulas or claim assessment used in the settlement distribution scheme.^[112]

4.115 Actual, and perceived, objectivity during settlement distribution is important. Settlement distribution is a separate part of proceedings that does not always require legal expertise. Class members may perceive a decision to appoint the representative plaintiff’s lawyers to administer the settlement as an opportunity for the lawyers to ‘double dip’.^[113]

4.116 The expertise that a third-party scheme administrator would need to bring would depend upon the circumstances of the case. In the Kilmore East/Kinglake bushfires class action, some class members suggested that a firm of accountants should be appointed as scheme administrator. Justice Forrest observed (extra-judicially) that it was unlikely that such a firm would have been able to carry out the task at a lower cost than the representative plaintiff’s lawyers.^[114]

4.117 Subject to the availability of resources, an option for administering settlement distributions in smaller, less complex class actions could be to utilise the expertise of Funds in Court. Funds in Court is an office of the Supreme Court which administers all funds paid into court in civil proceedings. As such, it has significant expertise in managing and distributing funds in accordance with Court orders. During the 2016–17 financial year, Funds in Court was responsible for $1.7 billion of funds under management.^[115]

4.118 As discussed in Chapter 6, settlement administration services in support of class actions and other litigation are prevalent in the United States, and services offered through online technology enable law firms to interact with large client groups efficiently. The Commission considers that its recommendations to improve the information given to the Court about the settlement distribution scheme will reinforce the need for the representative plaintiff’s lawyers to assess alternative service delivery methods when identifying the appropriate scheme administrator.

Strengthening accountability in class actions

4.119 The extent to which class members’ interests can be affected when a class action is brought has altered since Australia’s first class action regime commenced in the Federal Court in 1992. In designing the model, the ALRC envisaged a largely passive role for class members, where they were not required to do anything if they wished to participate in proceedings. The ALRC recommended that a class member be required to take active steps only if they wished to exclude themself from proceedings.^[116]

4.120 Thirty years later, class members’ interests can be adversely affected by remaining passive in a class action. As a consequence of the class member registration process, now typically included as part of opt-out, class members who fail to register by the stipulated date may be bound by the outcome of proceedings but excluded from obtaining a share of any money recovered. If a common fund order is made for the payment of a litigation funding fee, registered class members who have not signed a funding agreement may nonetheless be required to pay the fee. In one class action, the representative plaintiff’s application for a common fund order proposed that class members who had not signed the funding agreement would pay the funder a higher percentage of their share than those who had signed the agreement.^[117] In another, class members who did not pay security for costs, or who did not provide a reasonable reason for failing to do so, were excluded from obtaining any benefit in the proceeding or under any settlement.^[118]

4.121 These developments, combined with the representative nature of class actions, make it crucial that the lawyers acting for the representative plaintiff, the litigation funder (if involved) and the representative plaintiff are accountable to the court and class members for the impact that the conduct and funding of proceedings has on class members’ interests. The supervisory role of the court at settlement approval, which ensures that all class members’ interests are taken into account, also reduces the risk of unfair outcomes for class members.

4.122 Reform options were put forward during the Commission’s consultations and in submissions to reduce the risk that class members’ interests are exposed to unfair outcomes in class actions. They included:

• improving the accountability of the representative plaintiff’s lawyers to class members

• ensuring the representative plaintiff adequately represents class members, and that they are supported in the role

• strengthening the role of the Supreme Court at settlement approval

• enhancing the ability of the Court to supervise settlement distribution, where necessary

• improving communication with class members.

4.123 These reform options, and the recommendations made by the Commission in relation to them, are discussed in turn below.

Lawyers’ obligations to class members

Conflict of interest

4.124 In a class action, the law firm acting for the representative plaintiff will generally run proceedings on behalf of the entire class. The representative plaintiff will sign a legal retainer and costs agreement with the law firm, although many class members will not. Regardless, class action lawyers have responsibilities to the class that do not depend on contractual agreement, and that apply in both funded and unfunded proceedings.

4.125 These wide-ranging responsibilities are not specific to class actions, but arise from the broader obligations imposed upon lawyers. They include fiduciary responsibilities owing to the nature of the solicitor–client relationship, and professional obligations under the Legal Profession Uniform Law. Lawyers have fundamental duties to the Court and the administration of justice, and must comply with the overarching obligations contained in the Civil Procedure Act 2010 (Vic).^[119] They also have significant responsibilities that relate to the disclosure, and charging, of legal costs, which are discussed in Chapters 2 and 3.

4.126 The complexities of class action litigation create particular challenges for lawyers when there is conflict of class members’ interests. There may be differences between the interests of the representative plaintiff when compared to class members, as well as between the class members themselves. These differences may arise due to the different nature of the claim or the harm suffered; from the different categories of class members (for example, whether funded or unfunded);^[120] or from the structure of the class action mechanism, in which the representative plaintiff has responsibilities that class members do not share.

4.127 Views differ about the extent and significance of the conflict. Simone Degeling and Michael Legg have argued that there is a ‘real or substantial’ possibility that lawyers conducting the class action will be exposed to conflicts of interest between the competing needs of the different class members.^[121] Phi Finney McDonald put forward the opposite view, suggesting that it is highly unusual for lawyers acting for several class members to find that their obligations to those class members conflict because ‘group members will, in most cases and on most issues, have the same or similar interests given the nature of a properly constituted Part 4A proceeding’.^[122]

4.128 There was agreement that some aspects of proceedings are more prone to conflict than others. For example, where settlement distribution involves class members with different claims, conflicts of interest might be expected to arise.^[123] Allens observed that less obvious conflicts can arise throughout proceedings, not just at settlement distribution:

For instance, conflicts may arise at the start of proceedings, when plaintiff lawyers frame the issues in dispute in the statement of claim, and during the course of proceedings, when the representative plaintiff’s lawyers may have to make a decision about whether to amend application, and about which claims to pursue or abandon.^[124]

4.129 In addition, there is conflict between the law firm’s commercial interests and the interests of all class members at the settlement of a class action. Like other forms of litigation, while the lawyers have a justified financial interest in receiving payment from any settlement amount, the legal costs will necessarily reduce the amount available for class members. If acting on a ‘no win, no fee’ basis, the law firm stands to lose a significant amount if the class action is unsuccessful, and conflict may arise in determining when, and for how much, class actions settle. Conflict of this nature is inherent in the provision of legal services and routinely managed. The court’s role in reviewing legal costs, and approving settlement, in class actions is a significant safeguard.

4.130 Conflicts may be exacerbated in funded class actions, where a tripartite relationship is created between the lawyer, funder and representative plaintiff (or other class member who signs the funding agreement). Although funding agreements will generally reiterate that the lawyers’ duties to their clients prevail over those to the funder, in practice the funder can have a great deal of control over the day-to-day conduct of proceedings.

4.131 Without obtaining the client’s full and informed consent, a lawyer cannot continue to act for clients where these, or other, conflicts of interest arise, or where there is a real or substantial possibility of a conflict of interest. Unlike single client litigation, obtaining full and informed consent from class members to continue acting in this capacity is virtually impossible in a class action.

Guidance for lawyers

4.132 Submissions expressed divided opinions as to whether guidance for lawyers to address these conflicts of interest, either in legislation or Court guidelines, is necessary. Many suggested that prescriptive rules are unnecessary in view of the Court’s inherent jurisdiction and powers under the Civil Procedure Act to respond to issues as they arise, and lawyers’ existing professional obligations. In addition, the Australian Securities and Investments Commission’s regulatory guide on managing conflicts of interest in funded proceedings, and the Victorian Legal Services Commissioner’s powers (which provide for disciplinary intervention where necessary), were identified as adequate regulatory controls.^[125] It was observed that introducing additional guidelines in Victoria could result in lawyers being obliged to meet two sets of applicable standards, with confusing or overlapping obligations.^[126]

4.133 Other submissions indicated that further guidance could be useful because of the complexity of acting for multiple class members and as the limits of existing obligations are unclear.^[127] Simone Degeling, Michael Legg and James Metzger proposed that, as a minimum, lawyers should be educated about the fiduciary duties that may be owed to the entire class, and how these duties arise. This education could include guidance from professional bodies or the courts.^[128]

4.134 The Victorian Legal Services Board and Commissioner suggested that the legal profession consider introducing specialist accreditation in class action litigation. As well as assisting in quality assurance and expertise development, accreditation would help raise awareness among newer, inexperienced law firms of the complexities involved in class action litigation. As accreditation provides a clear way for consumers to readily identify expert lawyers, it may also help class members choose between different law firms where competing class actions arise.^[129]

4.135 Allens, the Law Council of Australia, Maurice Blackburn and Phi Finney McDonald proposed looking to the courts for guidance.^[130] It was suggested that the Supreme Court Practice Note incorporate the conflict of interest guidelines for lawyers that are set out in the Federal Court Practice Note. These guidelines state that:

• Legal costs agreements should include provision for managing conflicts of interest between the applicant(s), the class members, the applicant’s lawyers, and any litigation funder.

• Lawyers have a continuing obligation to recognise and properly manage any such conflicts throughout proceedings.^[131]

4.136 Other ideas put forward were to expand the Law Institute of Victoria’s guidelines on conflicts of interest (to include guidance for lawyers acting in class actions) or the commentary for the conduct rules under the Legal Profession Uniform Law (to specifically mention potential conflicts of interest in class actions).^[132]

4.137 The Commission considers that formal, and specific, guidance for lawyers acting in class actions is desirable. Measures should be put in place to ensure lawyers do not run class actions in a manner that adversely affects the interests of class members. The need for guidance has long been recognised. In its 2000 report on managing justice, the ALRC recommended that the legal profession develop professional practice rules governing lawyers’ responsibilities to multiple claimants and in class actions.^[133] It is just as important today, in view of increasing legal entrepreneurialism and the entrance of new and inexperienced law firms into class action litigation.^[134]

4.138 Although there are intricacies involved in producing conduct guidelines under the Legal Profession Uniform Law, the Commission considers that the complexity of issues involved in class actions and the real lack of guidance for lawyers acting in this capacity render formal guidance necessary. As New South Wales also has a class action regime, it is appropriate, for reasons of consistency, that the guidelines be applicable to all lawyers to whom the Legal Profession Uniform Law applies: namely, lawyers in New South Wales and Victoria. Under the Legal Profession Uniform Law, the Standing Committee, comprising the Attorneys-General of Victoria and New South Wales, can request the Legal Services Council to produce the guidance. The Legal Services Council makes Uniform Rules and can issue guidelines or directions to local authorities (state-based Legal Services Commissioners and professional bodies).

4.139 While the Commission’s recommendation is directed to ensuring that conduct guidelines are produced by the Legal Services Council, the local authorities in Victoria may consider it desirable in the meantime to produce conflict of interest guidelines for Victorian lawyers acting in class actions.

Recommendation

13 The Attorney-General of Victoria should seek the agreement of the Attorney-General of New South Wales that:

(a) guidelines should be issued to legal practitioners on their duties and responsibilities to all class members in class actions, providing specific direction on the recognition, avoidance and management of conflicts of interest

(b) the Standing Committee under the Legal Profession Uniform Law should ask the Legal Services Council to ensure that such guidelines are produced and promulgated.

Litigation funders’ obligations to class members

4.140 Litigation funders involved in class actions are likely to have little, if any, direct engagement with class members. Some class members may choose, or be required, to execute a funding agreement when participating in a class action, although the increased use of a common fund for the payment of funding fees will make this less likely.

4.141 As discussed in Chapter 2, litigation funders are required to have processes in place to manage conflicts of interest. Otherwise, the Commission considers that the lawyers acting for the representative plaintiff are best placed to ensure that class members and the courts are aware of the involvement of a litigation funder in proceedings, including the impact of any fees or charges on amounts. Recommendations to improve the transparency of litigation funding arrangements in class actions are contained in

Chapter 2.

Representative plaintiff’s obligations to class members

Adequacy of representation

4.142 In the absence of a certification requirement, the representative plaintiff need not demonstrate that they are able to adequately represent class members, or that their personal claim is reflective of the common questions to be determined in the class action.^[135]

4.143 However, as recognised in many submissions, the Court has powers under part 4A of the Supreme Court Act which allow it to address issues relating to the adequacy of the representative plaintiff, where required.^[136] These powers include:

• section 33N, which allows a proceeding to be discontinued as a class action if it is inappropriate that it continue

• section 33T, which enables class members to apply for the substitution of an inadequate representative plaintiff

• sections 33Q and 33R, which provide for sub-groups and individual questions, to ensure that all class members’ claims are addressed in proceedings

• section 33ZF, which gives the Court the broad power to make any order to ensure that justice is done in proceedings.^[137]

4.144 The Commission’s consultations suggested that adequacy of representation is not a systemic issue in Victorian class actions.^[138] This suggestion is reinforced by empirical data collected by Vince Morabito. His submission referred to two class actions commenced in the Supreme Court: Cohen v The State of Victoria (No 2) and Matthews v SPI Electricity Pty Ltd (Ruling No 1) in which the representative plaintiffs had not provided their consent to act in that role.^[139] He argued that two instances does not constitute sufficient evidence of a systemic problem.^[140]

4.145 Not all submissions considered adequacy of representation to be sufficiently addressed under part 4A of the Supreme Court Act.^[141] Simone Degeling, Michael Legg and James Metzger argued that introducing an adequacy requirement would reduce the risk of conflicts of interest between the representative plaintiff and class members, while Allens submitted that it would ensure that the common issues addressed by the representative plaintiff’s claim resolve all class members’ claims.^[142] Recommendations to introduce an adequacy requirement were generally made in conjunction with calls to introduce certification.^[143] As outlined above, the Commission does not support the introduction of certification in Victoria.

4.146 Requiring a representative plaintiff to prove they adequately represent the class would create further scope for interlocutory disputes and the associated costs and delay. It could also increase the disincentives for class members to take on this role, which are already significant.^[144] The Commission does not support additional burdens, or disincentives, being placed on the role of representative plaintiff.

Own motion power for the Court to replace a representative plaintiff

4.147 Currently, the Court has power to substitute a representative plaintiff under section 33T of the Supreme Court Act when a class member applies for this to happen. The Commission considers that the Court should have the express power to remove an inadequate representative plaintiff of its own motion. The following reasons in support of the idea were highlighted in submissions:

• The utility of the existing power is doubtful. Allens stated that it is unaware of any instances of section 33T being used.^[145]

• An own motion power would be in keeping with the Court’s supervisory role in class actions.^[146] Although the Court already has broad powers under sections 33N and 33ZF of the Supreme Court Act, an own motion power would allow a representative plaintiff and their lawyers to be replaced, without discontinuing proceedings, where deemed appropriate by the Court.

• It would be consistent with the recommendations of the ALRC in its 1988 report on grouped proceedings. The ALRC observed that, in order to manage a class action properly, the Court should have the power to replace the representative plaintiff of its own motion.^[147]

• It would recognise the important role of the representative plaintiff in ensuring class members’ interests are protected, without placing additional burdens or disincentives upon the representative plaintiff. The importance of this role has been recognised in the New South Wales and Queensland class action regimes. These regimes give the courts the power, upon application of the defendant or of its own motion, to discontinue a class action where the representative plaintiff does not adequately represent the class members.^[148]

4.148 For these reasons, the Commission is of the view that section 33T of the Supreme Court Act should be amended to give the Court the power to replace a representative plaintiff of its own motion, where necessary.

Recommendation

14 Section 33T of the Supreme Court Act 1986 (Vic) should be amended to empower the Court, of its own motion, to substitute another class member as representative plaintiff, and make other such orders as it thinks fit, if it appears that the representative plaintiff is unable to adequately represent the interests of class members.

Onerous role of representative plaintiff

4.149 The role of the representative plaintiff in a class action is a demanding one. As discussed in Chapter 5, class members are able to enjoy immunity from costs orders because this burden is placed solely on the representative plaintiff. In a large class action, these costs orders will run into the millions of dollars.

4.150 Although the representative plaintiff is not appointed by class members, and is not their agent or intermediary, they have responsibility for the conduct of proceedings on behalf of class members. The ALRC, in its 1988 report suggested that there is a fiduciary element to the role of the representative plaintiff which requires them to act in the interests of class members.^[149]

4.151 A representative plaintiff may face intense pressure from class members, and the general public, about the progress and outcomes of a class action. The Commission was told there can be a misapprehension about the role of the representative plaintiff in a class action. Class members may believe that the representative plaintiff is being paid by the law firm, or that their role is to make submissions on behalf of individual class members to the law firm or scheme administrators about the conduct of the proceedings.^[150] The public forum of class actions means that intense media scrutiny of proceedings, and the representative plaintiff, is common.

4.152 These obligations—combined with the significant investment of emotion and time that is required—mean that the appointment of a representative plaintiff who adequately represents the class members can be a difficult task. The Commission was told that, due to the significant financial risks involved, corporate entities are reluctant to be appointed as representative plaintiff in Australian class actions.^[151]

4.153 Some of the disincentives to acting in the role of representative plaintiff can be mitigated by altering the cost burdens and risks involved in this role. This is discussed in Chapter 5.

4.154 Other disincentives can be mitigated by ensuring that the representative plaintiff, and other class members, are adequately informed about the role. Providing standardised and clear information to all class members about the requirements and responsibilities of the representative plaintiff would assist class members who are considering whether to accept the role of representative plaintiff. With a clearer understanding that the representative plaintiff is not their agent, class members would also be less likely to place undue pressure on the person who takes on the role.

4.155 The Commission considers that the law firm acting for the representative plaintiff is best placed to provide this information to class members. It recommends that the representative plaintiff’s lawyers provide this and other key information to them, and the Court, at the start of proceedings (Recommendation 23).

Court approval of settlement

4.156 Court supervision is essential to safeguard participants in class actions from unfair risks and disproportionate cost burdens. Part 4A of the Supreme Court Act mandates Court supervision at various points of proceedings, one of which is settlement.^[152] In order to have legal effect, a class action settlement must be approved by the Court.^[153]

4.157 Because of the representative nature of class actions, where class members do not appear before the court, the Court’s supervisory role at settlement approval is a particularly onerous one. This was observed by the Federal Court in Australian Securities and Investments Commission v Richards:

The role of the court [at settlement approval] is important and onerous. It is protective. It assumes a role akin to that of a guardian, not unlike the role a court assumes when approving infant compromises. In the current context, the Court’s role is to protect those group members who are not represented by [the representative plaintiff’s lawyers] and whose interests may be prejudiced by their absence.^[154]

4.158 Not only is the Court’s role at settlement approval onerous, it is also regularly called upon in class actions. Like many other forms of civil litigation, settlement is the most common means of resolving a class action, especially in Victoria,^[155] and is encouraged by the Court.^[156]

4.159 The Court’s principal task is to assess whether the settlement is a fair and reasonable outcome for class members considered as a whole, not just for the representative plaintiff and the defendant. The ALRC recommended in its 1988 report on grouped proceedings that factors for the Federal Court to consider when approving a settlement should be set out in legislation.^[157] However, the recommendation has not been implemented in any class action jurisdiction in Australia, including Victoria.

4.160 On the one hand, the absence of statutory guidance enables the courts to exercise discretion in an innovative and appropriate manner according to the peculiar challenges of each settlement approval. On the other, it increases the risk that case law will be applied in a piecemeal or inconsistent fashion, and that parties will be unsure about the requirements of settlement. As directed by the terms of reference, the Commission has examined whether there should be specified criteria for the Court’s approval of a settlement under section 33V of the Supreme Court Act. Its recommendations are set out in the following section.

4.161 The role of the Court at settlement approval is particularly difficult due to the adversarial void that exists when both sides have become ‘friends of the deal’.^[158] The appointment of a contradictor, and a greater role for parties and class members were raised during consultations and in submissions as means of assisting the Court in this context. They are discussed in turn below.

4.162 Settlement approval is only the first phase of settlement. The second phase, settlement distribution, is discussed at [4.191]–[4.217].

Settlement approval under section 33V

4.163 As recognised by the Supreme Court, the process of settlement under section 33V has evolved over time, and ‘has grown in sophistication due to the need to adapt to complex scenarios’.^[159] The principles guiding settlement approval, and criteria relevant to the Court’s decision, are discussed below.

Settlement approval principles

4.164 The principles that govern the exercise of the Court’s power to approve a proposed settlement have developed through case law and are now well established. They were recently set out by Justice Emerton in Williams v Ausnet Electricity Services Pty Ltd,^[160] and are also included in the Supreme Court Practice Note. They require the Court to consider whether the proposed settlement is both:

• fair and reasonable as between the parties having regard to the claims of the class members

• in the interests of class members as a whole and not just in the interests of the representative plaintiff and the defendant.^[161]

4.165 The courts have indicated that these principles must be applied in a flexible manner. There will rarely be one single or obvious way in which a settlement should be framed, either between the claimants and the defendants or in relation to sharing the recovered amounts between class members. Reasonableness is a range, and the relevant question is whether the proposed settlement sum, and the proposed distribution of that sum between class members, falls within that range.^[162]

4.166 Further, this assessment does not involve guessing or interpreting the tactical decisions made by the representative plaintiff’s lawyers. Rather, the Court’s role is to satisfy itself that the decisions are within the reasonable range of decisions, having regard to the known, and reasonably knowable, risks and circumstances.^[163]

Settlement approval criteria

4.167 In assessing whether the proposed settlement falls within the range of fair and reasonable outcomes, the Court will consider a number of criteria which have also developed through case law. They are now set out, on a non-exhaustive basis, in the Supreme Court Practice Note.^[164] These criteria include:

• the complexity and likely duration of the litigation

• the reaction of the group to the settlement

• the stage of the proceedings

• the likelihood of establishing liability

• the likelihood of establishing loss or damage

• the risks of maintaining a class action

• the ability of the defendant to withstand a greater judgment

• the range of reasonableness of the settlement in light of the best recovery

• the range of reasonableness of the settlement in light of all the attendant risks of litigation

• the terms of any advice received from counsel and/or from any independent expert in relation to the issues which arise in the proceeding.^[165]

Legislative guidance

4.168 The Court’s flexibility is a particular strength of Victoria’s class action regime. It is important that this flexibility is maintained when the Court is evaluating the fairness and reasonableness of a settlement, and that it uses this flexibility in an appropriate manner.^[166]

4.169 Allens commented on the demonstrated ability of the Supreme Court to assess settlements in the interests of class members, and the importance of not limiting its ability to consider circumstantial factors:

In our view, given the preparedness of courts to scrutinise settlement terms in the class actions context, the Court should not be constrained in the criteria relevant to evaluating the reasonableness of a class action settlement. In particular, it is important that the Court is able to take into account the facts of the case, the circumstances of the group members and the nature of the funding arrangement.^[167]

4.170 The Supreme Court stated that the criteria for settlement approval do not require a formulaic recitation in legislation.^[168] A similar view has been expressed in case law, where the courts have reiterated that the settlement approval criteria, while providing a useful guide, are neither mandatory or exhaustive, nor do they supplant a detailed analysis of the particular facts in each proceeding.^[169]

4.171 It is expected that new matters which are relevant to the approval of a settlement will continue to arise in response to developments in class action practice, as well as broader developments in the legal and litigation funding industries. As Slater and Gordon stated, it is important that courts have scope to consider emerging factors when approving a settlement:

In this way, as new factors which are relevant to the court’s assessments arise – for example, the advent of litigation funding… – courts in future decisions can adopt an approach to considering whether to approve a settlement which reflect such changes in the class action landscape.^[170]

4.172 An example is the issue of costs. The settlement approval criteria listed above do not refer to legal costs, or any litigation funding costs. As discussed in Chapter 5, court scrutiny of costs is an important part of settlement approval and, in relation to litigation funding costs, is a rapidly developing one. Retaining flexibility in the settlement approval criteria has enabled the courts to recognise that, if applicable, the court should consider the legal costs and any litigation funder’s fee in its analysis of whether settlement is fair and reasonable.^[171]

4.173 Given the continually evolving nature of settlement approval jurisprudence, particularly on the matter of costs, the Commission considers that there are more effective mechanisms to strengthen the Court’s role at settlement approval than legislative recitation of settlement approval criteria. These mechanisms are discussed throughout the report, and include:

• introducing guidance for the appointment of contradictors at settlement approval and in settlement distribution

• improving the ability of class members to object to settlement approval

• increasing the accountability of the scheme administrator to the Court

• introducing a legislative power for the Court to review and vary all costs of proceedings.

4.174 These reforms avoid the risk that the Court will be constrained in considering the unique circumstances of each proposed settlement, or in adopting case law developments to the process of settlement approval. At the same time, they strengthen the ability of the Court to ensure that settlement is fair and reasonable, and in the interests of class members as a whole.

4.175 While there was little support for recognising the settlement approval criteria in legislation, and cogent reasons to avoid this, there are more compelling reasons to include the broader settlement approval principles in legislation. Simone Degeling, Michael Legg and James Metzger submitted that legislative guidance would ensure that the well-established principles from case law are given due consideration by the Court in every case.^[172] It could also play an important educative role for the public generally, and in particular for class members, as to how the Court will approach settlement.^[173]

4.176 For this reason, the Commission recommends including the settlement approval principles in legislation, while retaining the settlement criteria in the practice note. This will underpin the Court’s supervisory role at settlement approval, while also allowing factors relevant to this discretion to evolve and adapt with developments in case law.

Recommendation

15 Part 4A of the Supreme Court Act 1986 (Vic) should be amended to include the principles that govern the exercise of the Court’s power to approve a proposed settlement, currently contained in paragraph [13.1] of the Supreme Court’s practice note on class actions.

Appointing a contradictor for settlement approval

4.177 In recent years, the Supreme Court has changed its view about using contradictors at settlement approval. While not previously the case, the appointment of a contradictor for settlement approval is now the ‘default’ position in Common Law Division class actions,^[174] and it appears to be an increasing trend in other Australian courts.^[175]

4.178 A contradictor, appointed to represent the interests of class members, is likely to be appointed where the Court has concerns with some aspects of settlement, or is not well placed to review a particular aspect of it. Appointment may be necessary for an isolated element of settlement approval, such as the costs of settlement distribution, or it may be necessary to review the settlement as a whole.^[176] This will depend on the facts of the individual case.

4.179 There was strong support in submissions for the use of a contradictor during settlement approval, where deemed appropriate by the Court.^[177] Although the assistance provided by a contradictor was recognised to be valuable, most submissions did not support appointment being made mandatory due to the significant costs involved, which reduce the amounts available for class members.^[178] Phi Finney McDonald considered these costs to be so significant that they would be likely to outweigh the benefits of a contradictor in all but ‘the most flagrant of cases’.^[179]

4.180 Whether a contradictor is necessary may also depend upon the type of case. For example, Slater and Gordon suggested that class members in shareholder class actions are unlikely to need the assistance of a contradictor. It was submitted they generally have a good level of understanding of the legal system, and are either able to resolve their questions about the settlement by contacting the lawyers, or by lodging an objection with the court.^[180]

4.181 Allens submitted that the practical realities of settlement approval diminish the utility of a contradictor, as courts are generally reluctant to significantly intervene in an agreement reached by the parties unless there are serious deficiencies and it is practical to do so.^[181] The limited impact of a contradictor on a court’s decision was also raised during consultations with class members. Class members who had experience of a contradictor being used in proceedings suggested that, if appointed for only a small number of objecting class members, a contradictor can cause delays and cost burdens for the entire class, yet will be unlikely to have any real impact on the ultimate approval of settlement.^[182]

4.182 In light of these considerations, the Commission endorses the following approach to the use of contradictors in Victorian class actions:

• Contradictors should be readily available in class actions involving complex settlements. While appointment should not be mandatory, there should be a presumption that in Common Law Division class actions, or class actions with complex settlement distribution schemes, a contradictor will be appointed at settlement approval. Reflecting this in the Supreme Court Practice Note would convey the changed attitude of the Court to using contradictors at settlement approval.

• Increased guidance for the Court, when exercising its discretion to appoint a contradictor. The Commission agrees with the Supreme Court that guidance for the appointment of a contradictor could be usefully set out in the Supreme Court Practice Note.^[183] In order to promote flexibility, the guidance should be non-exhaustive. Allens suggested that it could include factors such as: the desirability of the appointment in light of the complexity of the settlement and potential impact on class members; the time and costs involved in bringing the contradictor up to speed; the level of unrepresented objections received; the relative proportion of fees to proposed compensation for each class member; any other matter the Court deems appropriate.^[184]

• Greater use of Funds in Court. Funds in Court has significant expertise in negotiating legal costs, and acting on behalf of persons with a disability, due to minority, or an intellectual or physical disability, or both. The Court has used Funds in Court in class action settlements where there are class members with a disability. For example, during the settlement of the Kilmore East/Kinglake and Murrindindi/Marysville Bushfires class actions, staff from Funds in Court collated the necessary information, prepared orders approving compromise and identified any issues of concern in relation to claimants with a disability.^[185] The Commission supports the continued use of Funds in Court during settlement approval, and, subject to resourcing issues, encourages investigation of its use as contradictor more broadly in class actions.

Recommendation

16 The Supreme Court should consider amending its practice note on class actions to include guidance for the appointment of an independent representative (commonly known as a contradictor) to assess the terms of settlement, or the terms of the settlement distribution scheme, on behalf of class members.

Class member objections to settlement approval

4.183 One way for the courts to assess the desirability of settlement for all class members is to consider both the rate of objection to settlement and the opt-out rate. If a number of class members object to, or opt out of, settlement, it may be an indication that it is not fair or reasonable for all class members.

4.184 A lack of objection or a low opt-out rate, however, does not necessarily represent class members’ assent and may carry little weight.^[186] Whether it is a relevant indicator will depend, among other factors, on whether timely and clear notice has been given to class members, and whether there is evidence that they actually understand the notice. In reiterating its protective role at settlement approval, irrespective of the rate of objections, the Federal Court in Money Max Int Pty Ltd v QBE Insurance Group Ltd observed:

It may be the case, as the applicant contends, that the absence of objection is ‘no small thing’, but care should be taken before approaching an application on the basis that class members’ silence is equivalent to their assent. It is the Court’s responsibility to protect class members’ interests and the absence of objections or a low level of objections does not relieve it of that task.^[187]

4.185 Allens suggested that reforms which aim to improve the settlement approval process should focus on alleviating the obstacles to class members’ participation in settlement approval.^[188] The appointment of a contradictor to coordinate and present class members’ objections is one way this can be achieved, and Recommendation 16 seeks to encourage the use of contradictors in appropriate class actions.

4.186 As class members bear their own costs in objecting to a settlement, reducing the costs of objecting is another way of alleviating obstacles to participation. While stakeholders indicated it is advantageous to have some cost obstacles in place to prevent the filing of ‘unlimited’ objections to settlement approval,^[189] the courts are increasingly willing to allow objecting class members to recoup some of these costs, if the objections assist the court.^[190] The Commission supports the continued exercise of discretion in this manner.

4.187 The Commission also observes the importance of clear and concise notice, and other communication, in increasing class members’ awareness of settlement, and ability to object, if appropriate. Recommendations to improve notice and other communication are discussed at [4.218]–[4.246].

Involvement of parties at settlement approval

4.188 The Supreme Court Practice Note sets out the range of matters that the parties seeking settlement are usually required to address at settlement approval.^[191] They include how the settlement complies with the criteria for settlement approval, why the proceedings have settled on particular terms, and the effect of the terms on group members. They are set out in full in Chapter 7 of the consultation paper.

4.189 The representative plaintiff is largely responsible for providing the relevant information to the court (in affidavit form). In the Federal Court, the affidavit must also address, where relevant, the terms of any funding agreement and its application to the settlement, if approved.^[192] This requirement underpins the judicial trend toward greater scrutiny of funding fees in the Federal Court. This provision could be usefully included in the Supreme Court Practice Note, and the Commission makes a recommendation to this effect.

4.190 The defendant, having already agreed to the terms of settlement, is unlikely to play an active role in settlement approval. The consultation paper suggested that greater involvement of the defendant at settlement approval could provide a cross-check for the ‘untested and uncontradicted’^[193] evidence provided by the representative plaintiff’s lawyers. Submissions did not consider that this would better protect the interests of class members.^[194]

Accountability during settlement distribution

4.191 Settlement of a class action has two phases. The first phase, settlement approval, is subject to mandated Court supervision under part 4A. There is no legislative provision for ongoing judicial supervision of settlement distribution, which is the second phase.

4.192 The Supreme Court Practice Note states that, at settlement approval, the Court will generally approve the settlement distribution scheme and make orders disposing of the proceeding.^[195] Accordingly, the accountability of the scheme administrator to the Court is largely dependent upon the terms of the settlement distribution scheme. If it gives the Court a limited supervisory role in the distribution process or in resolving any issues, the Court’s ability to rectify problems arising during the distribution process will be limited.^[196]

4.193 While the majority of submissions did not consider mandatory Court supervision of settlement distribution necessary, there was strong support for increased accountability through the use of a contradictor, increased reporting requirements, and increased Court review of disputed assessments. These matters are discussed in turn below. The Commission’s recommendations to enhance accountability of scheme administrators to the Court are included at the conclusion of the section.

Extent of Court supervision at settlement distribution

4.194 The necessity of Court supervision of settlement distribution depends on the circumstances, and type, of proceedings. In large mass tort class actions, settlement distribution will require highly individualised loss assessments to be carried out for each class member, which will be both lengthy and costly. It may be appropriate for the Court to maintain close supervision of the progress of the distribution to ensure that class members are kept informed and that issues are resolved expeditiously.

4.195 For example, in the Kilmore East/Kinglake bushfires class action, the Supreme Court had a heightened supervisory role during settlement distribution. Regular case management conferences were held to address the progress of the assessment process, Court direction or approval of particular matters, communication with class members, interim payments of the scheme administrator’s costs and other issues.^[197]

4.196 On the other hand, some Commercial Court settlement distribution schemes can be very straightforward.^[198] In shareholder or investor class actions, settlement distribution tends to be completed within three to six months.^[199] The Commission’s consultations indicated that intensive Court supervision in these class actions would result in increased costs and delays to class members, with few tangible benefits in terms of distribution time.^[200]

4.197 Stakeholders agreed that the degree of Court oversight should remain discretionary, depending on the circumstances of the case. Maurice Blackburn indicated that the appropriate level of supervision will depend on a range of factors which may include:

• the size of the settlement sum

• the types of losses claimed and the processes for assessing compensation entitlements

• the timeframe required to assess individual claims

• the complexity of the settlement distribution scheme

• the need (or otherwise) for close Court scrutiny.^[201]

4.198 Given the individualised nature of settlement distribution schemes, and the demonstrated capabilities of the Court to oversee settlement distribution where necessary, the Commission does not consider prescriptive guidelines about supervision of settlement distribution are necessary.

Use of contradictor during settlement distribution

4.199 The Supreme Court submitted that the complexity of some settlement distributions may justify the appointment of a contradictor to identify issues only in settlement distribution, as opposed to considering the merits of the overall settlement more broadly.^[202]

4.200 Justice Forrest has observed, extra-judicially, that any such appointment will depend on the size of the asset pool and the issues arising from settlement. Where there is no differentiation between class members’ claims or where the cost is disproportionate to the benefit to the class, it will not be necessary. While Justice Forrest did not consider that the appointment of a contradictor would have made any discernible difference to the approval of the settlement distribution in the Kilmore East/Kinglake bushfires class action, he envisaged that some parts of the scheme that caused problems might have been identified by a contradictor at settlement approval, and possibly set up differently.^[203]

4.201 The Commission considers that guidance for the appointment of a contradictor, whether for settlement approval as a whole or only for settlement distribution, should be included in the Supreme Court Practice Note, and makes a recommendation to this effect (Recommendation 16).

Court review of disputed assessments

4.202 Where a settlement distribution scheme involves complex individual assessments, the Supreme Court submitted that it may be desirable to have a mechanism which enables it to review some disputed assessments. It indicated that this review should be confined to exceptional circumstances, and only be available if the internal review process provided for in a settlement distribution scheme has already been followed.^[204]

4.203 Justice Forrest has observed, extra-judicially, that a similar mechanism may have been useful during the settlement distribution of the Kilmore East/Kinglake bushfires. While he noted that the Court did not want to be involved in individual assessments, he considered that the settlement distribution scheme could have provided for the Court to play a limited role in reviewing certain decisions of the administrator, such as:

• late registration

• final assessment where the result was legally wrong

• where necessary, in considering an interim distribution of funds.^[205]

4.204 The Supreme Court observed that any review mechanism would need to be included in the settlement scheme put forward at settlement approval, as options for further modification of this are limited once a scheme is approved.^[206] The Commission makes a recommendation to this effect (Recommendation 17).

Regularity of settlement distribution reporting

4.205 As a matter of practice, the Supreme Court requires scheme administrators to report every six months regarding the progress of the settlement distribution and the costs involved.^[207] There is no formal recognition of this requirement in the legislation or Court guidelines.

4.206 In comparison, the Federal Court Practice Note states that the affidavit in support of settlement should set out the frequency of any reporting during settlement distribution, as well as the time at which it is anticipated class members will receive settlement funds.^[208]

4.207 Maurice Blackburn and Slater and Gordon submitted that there may be value in requiring scheme administrators to provide this type of information to the Court at settlement approval.^[209] Provision of this information may, of itself, be relevant to the approval of the proposed settlement.

4.208 The Commission agrees, and recommends that reporting requirements for scheme administrators be included in the Supreme Court Practice Note.

Final reporting

4.209 At the conclusion of the settlement distribution scheme, a scheme administrator is required to file a final report with the Court.^[210] As with other reporting during settlement distribution, this is not recognised in legislation or the Supreme Court Practice Note.

4.210 The Commission considers that practice note guidance, setting out the matters to be addressed in the final report, would be useful in providing certainty for the scheme administrators. It would also encourage consistency in reporting requirements between different settlement distribution schemes, and may give scheme administrators an incentive to improve practices where they form part of the reporting criteria.

4.211 Healthcare companies and businesses submitted that relevant factors for a final report might include: information on the distributions made to class members; the time taken for such distributions; and the amounts charged for distributing. It was also recommended that compulsory publication of final reports be considered, to allow a transparent means of comparing law firms involved in class actions.^[211] While publication may be advantageous for data collection purposes, the Commission considers this should be subject to confidentiality considerations.

4.212 The Commission recommends recognition of the requirement to file a final report at the conclusion of settlement distribution in the Supreme Court Practice Note. In the interests of confidentiality, the publication of these reports should be left to the discretion of the Court.

Accountability for undistributed settlement amounts

4.213 In class actions involving a large undefined class, and where damage to each class member is very small, it is unlikely that all class members will register to share in any recovered amounts. Accordingly, not all the money paid by a defendant pursuant to the settlement agreement will be claimed by those who have suffered damage. Similarly, in a large class action where the settlement is significant, it is likely that there will be amounts remaining after all class members’ claims have been assessed and distributed.

4.214 In Victoria, it is common practice that if a large amount of money remains undistributed after settlement distribution, the Court will generally redistribute it among registered class members.^[212]

4.215 Redistribution of a small sum, however, will not be economical. In such cases, the money will generally revert to a charitable trust or body, as provided for in the settlement distribution scheme. In the Kilmore East/Kinglake bushfires class action, for example, the settlement distribution scheme contained a provision that any undistributed amounts of money (below a certain amount) would be provided to bushfire relief funds.^[213]

4.216 Data collected by Vince Morabito suggests that the Victorian practice is consistent with the approach of the courts in other jurisdictions.^[214] Judges consulted from the Supreme Court indicated that it would be useful for the Court to have an express discretion to determine how undistributed settlement money is allocated, where this is not provided for in a settlement distribution scheme.^[215]

4.217 As discussed in Chapter 6, technological advances mean that class actions where the damage to individual class members is very small may be filed more regularly in the future. The Commission considers it prudent for the Court to have the express discretion to order how any undistributed money is allocated, and for the scheme administrator to be required to report on the distribution of any unclaimed settlement amounts at the conclusion of the process.

Recommendations

17 The Supreme Court should consider amending paragraph [13.5] of its practice note on class actions to require the affidavit(s) in support of settlement approval to include the following additional matters:

(a) the time at which settlement funds will be received by class members

(b) a mechanism for Court review of disputed decisions of the scheme administrator where the settlement involves complex individual assessments

(c) the application of the terms of any litigation funding agreement to the settlement, if approved

(d) how class members will be kept informed of the settlement distribution scheme, including measures to ensure the ease of accessibility of these communications for class members

(e) the proposed measures that are being taken, in the settlement distribution scheme, to ensure a just, efficient, timely and cost-effective outcome for class members.

18 The Supreme Court should consider specifying in its practice note on class actions that scheme administrators report to the Court:

(a) on a six-monthly basis, or other period as determined by the Court, regarding the performance of the settlement distribution scheme, including the costs involved and the distributions made

(b) at the completion of the settlement distribution scheme, outlining the distributions made to class members, the time taken for such distributions, the amounts charged each class member for distribution, and any outstanding amounts that were unclaimed by class members, including what was done with these outstanding amounts.

19 Part 4A of the Supreme Court Act 1986 (Vic) should be amended to specify that the Court has the discretion to make any orders in relation to the distribution of money remaining after settlement distribution.

Notice and communication with class members

4.218 Ensuring that class members are informed about proceedings and understand the consequences of participation is an important way to reduce the risk that they may be exposed to unfair costs or disproportionate cost burdens in class actions.^[216]

4.219 The Commission recognises this can be a difficult task. There may be thousands of potential class members involved in proceedings, some of whom may remain unidentifiable. Class members may be geographically dispersed; they may not speak English as a first language; they may come from a range of socio-economic backgrounds, and a class may include both institutional and individual participants. Some class members may have signed contracts with litigation funders and/or lawyers, while others have not. Each type of class member may need to receive different information, communicated in diverse ways.

4.220 Although the Court publishes information about class actions, including court documents, on its website, class members are most likely to rely on the lawyers acting for the representative plaintiff to inform them about the proceeding. They may be contacted directly, if the law firm has their details, or they may seek information on the firm’s website.

4.221 The information that is made available is of two main types: formal notices approved by the Court; and other information provided by the lawyers, ranging from legal documents to general progress reports. Part 4A of the Supreme Court Act mandates that formal, Court-approved notice must be provided to class members at certain points during proceedings, including prior to opt-out and settlement.^[217]

4.222 The content and style of most other communication with class members will be determined by the lawyers. Law firms experienced in running class actions have developed innovative methods for communicating effectively with large classes of persons, including through class action websites, social media platforms, and other digital media.^[218]

4.223 Comments were made throughout the Commission’s consultations about the potential for class members to be confused or misguided about the nature of the class action, the costs involved, and individual obligations and rights. The reasons suggested as to why class members have difficulty in understanding these things included:

• the lengthy, dense and legalistic information sent by law firms and litigation funders at the start of and during proceedings^[219]

• the rare use of formal notice at the commencement of proceedings due to cost considerations^[220]

• the possible distortion or minimisation of risks communicated during book build, when lawyers and litigation funders have an incentive to sign contracts with class members^[221]

• the complexity of formal notice, when used.^[222]

4.224 The Commission was told that a more comprehensive approach to communication must be adopted in class actions, for both formal notice and other communications with class members.^[223] These are discussed in turn below, with the Commission’s recommendations included at the conclusion of the chapter.

Formal notice

4.225 There was consensus during the Commission’s roundtable discussions that formal notices, including both opt-out and settlement notices, are opaque and do not promote understanding by class members.^[224] Stakeholders agreed that the clarity and accessibility of formal notice could be enhanced through using modern methods of communication for disseminating notice, and by engaging communications experts to draft the content.

4.226 The Commission considers that the Court’s website can be more effectively used than at present to convey information about class actions, and notes that it is being upgraded as part of the Court’s Digital Strategy, with a view to providing a clear and accessible channel for class members to obtain information about proceedings. The Commission’s recommendations that the Court consider drafting standard form notices (Recommendation 21), and that the representative plaintiff’s lawyers be required to produce a class action summary statement (Recommendation 23), complement this development. The notices and summary statements should be published by the Court on its updated website.

4.227 Stakeholders indicated that there was a lack of independent, accessible information about class action proceedings more generally.^[225] The Commission is of the view that the Court is best placed to provide an independent source of information for class members who are deciding whether to participate in a class action. Such information could usefully be included on the updated Court website.

4.228 There was strong support expressed for formal notice being drafted by communications experts rather than lawyers, and that it should omit jargon, references to legislative provisions and any details of court proceedings.^[226] Instead, notice should:

• be drafted by Plain English experts, and should incorporate a greater use of graphics and pictures.^[227] The Commission considers that in Victoria, a body with significant expertise in the use of plain language, such as the Victoria Law Foundation, would be well placed to provide expertise on the drafting of formal notice.

• be designed and tested by media, communications and design experts to ensure it is truly effective.^[228]

• be provided in short form where possible, using a dot point summary of key matters.^[229]

• include the option for a phone call or meeting with the law firm running proceedings to ensure class members can obtain further information.^[230]

4.229 The Commission endorses these suggestions being adopted in all formal notice, particularly in class actions involving vulnerable class members, and recommends that they also be incorporated in standard form notices drafted by the Supreme Court.^[231] Standard form notice is discussed below.

Standard form notice

4.230 The form of opt-out notice in Victorian class actions is prescribed by the Supreme Court Rules,^[232] and the Court will approve the form, content and manner of distribution of the notice in each class action. There is no prescribed form for settlement notice, but the Supreme Court Practice Note contains a comprehensive list of matters that should be included.^[233]

4.231 Some submissions supported the idea that the Court should draft an opt-out notice in a standard form and Plain English, and publish this on its website for use by parties in proceedings.^[234] This practice has been adopted in the Federal Court since 2010, although stakeholders held differing views about its success in promoting class members’ understanding of opt-out.^[235]

4.232 The Federal Court Practice Note provides additional guidance for parties drafting opt-out notices. This includes that notice should:

• use plain language and give a balanced, succinct description of the claims and defences

• clearly describe the consequences of remaining a class member or opting out

• alert class members to the fact and consequences of costs agreements or litigation funding agreements

• be disseminated in an effective and cost-effective manner.^[236]

4.233 The utility of standard form notice depends on its ability to capture the complexities of class action procedure, while remaining adaptable to a range of proceedings and comprehensible to class members. As observed by Vince Morabito, since the introduction of the Federal Court’s standard opt-out notice, the complexity of information that must be included in this notice has significantly increased.^[237] If a standard form notice does not include this information, and communicate it in a clear and comprehensible manner, it will be of little use to lawyers and will not improve class members’ understanding of proceedings.

4.234 The Commission considers that the complexities of opt-out and settlement, and the need for more clarity in formal notice that was expressed during its consultations, necessitates the drafting of Plain English standard form notices by the Supreme Court. These standard form notices should incorporate the suggestions for improving clarity and accessibility included at [4.228]. These notices should be published on the Court’s website for use by parties in proceedings, as part of the Court’s Digital Strategy.

Recommendations

20 In revising the pages on its website about class actions, the Supreme Court should consider ensuring that they contain the following:

(a) current and clear information on class actions generally as well as on proceedings before the Court

(b) links to the Class Action Summary Statement (Recommendation 23) and, if applicable, the Funding Information Summary Statement (Recommendation 6) for each class action

(c) standard form opt-out and settlement notices (Recommendation 21).

21 The Supreme Court should consider drafting Plain English standard form opt-out and settlement notices, in consultation with the Victoria Law Foundation, and publish these on the Court website.

22 The Supreme Court should consider amending its practice note on class actions to:

(a) specify that opt-out notices and settlement notices should, where possible, follow the standard form notices published on the Supreme Court’s website

(b) incorporate guidelines for preparing opt-out notices consistently with those contained in the Federal Court practice note on class actions.

Other communication with class members

Communication during proceedings

4.235 Maurice Blackburn and Slater and Gordon submitted that the methods used to communicate with class members during proceedings are both adequate and appropriate. Use of electronic communication was highlighted as an important means of increasing the reach and accessibility of this communication.^[238]

4.236 The Commission’s roundtable discussion with class members, however, indicated that important information is not necessarily presented or explained in an accessible or clear way by the lawyers. The volume of information was found to be excessive and difficult to understand, making it overwhelming.^[239]

4.237 Communication guidelines for lawyers are of limited use, because class actions vary so much. However, class members in all class actions do need to have basic information communicated to them clearly and succinctly. This includes information about:

• the law firm acting for the representative plaintiff

• the role of the representative plaintiff in proceedings, including their responsibilities

• the identity of any litigation funder involved, and where to obtain further information about the funder and the terms of any finance being offered

• whether any other class actions have been filed (or are likely to be filed) on the same subject matter

• how legal fees and disbursements will be charged, including the impact of any funding equalisation order or common fund order

• who to contact for further information (noting that there is no charge for this).

4.238 Chapter 2 discusses the use of a standard form disclosure document in funded class actions. The Commission considers that a similar disclosure document should be adopted in all class actions, not just those involving a litigation funder.

4.239 This document (a class action summary statement) would require the representative plaintiff’s lawyers to provide standard information to class members in every proceeding. In doing so, it would ensure that regardless of the book building process, or the experience of the law firm involved, class members receive the same information in every proceeding.

4.240 In order to be most effective, the Commission considers the class action summary statement should:

• be drafted in Plain English

• be no more than one to two pages long, and be broken down into bullet points where possible

• be disseminated to all potential class members at the start of proceedings, and provided to the Supreme Court for publication on its website

• contain, as a minimum, the information set out at [4.237].

4.241 The Commission recognises that the content of the class action summary statement may change over time, as class action practice and funding frameworks change. The required content should be determined, from time to time, by the Principal Judges of the Commercial Court and Common Law Division.

Recommendation

23 The Supreme Court should consider amending its practice note on class actions to require the representative plaintiff’s lawyers:

(a) to provide the Court, when the writ for the proceeding is filed, with a brief Class Action Summary Statement for publication on its website

(b) at the same time, or before, make the Class Action Summary Statement available to class members (whether they are actual or potential clients) through, for example, publication on the representative plaintiff’s lawyers website.

Communication during settlement distribution

4.242 It is important to ensure that class members are informed of the mechanics and expected timing of the settlement distribution scheme. It provides certainty, avoids unrealistic expectations, and enables class members to elect alternative payment mechanisms, such as fast-track payments or interim payments, if available.^[240]

4.243 Roundtable discussions with class members indicated that information sent by the scheme administrator about settlement distribution is often lengthy and complex. Where information about probable compensation amounts, or the expected timeframe for distribution was provided, class members found this information useful.^[241]

4.244 Although submissions recognised the importance of keeping class members informed during settlement distribution, they did not generally recommend that guidelines be drafted for lawyers on how and what they communicate with class members during this time.^[242]

4.245 The significant variability of settlement distribution schemes was the primary reason against guidelines. As submitted by Maurice Blackburn, communication during settlement distribution will vary significantly, depending upon the type of class action. For example, the need and scope for disclosure of progress, costs and possible outcomes of the settlement distribution scheme in a shareholder class action will be very different to the disclosure that may be warranted in a distribution process that occurs over several years.^[243]

4.246 While acknowledging the variability in settlement distribution schemes, the Commission considers it would be useful for the scheme administrator, at settlement approval, to be required to inform the Court how class members will be kept informed during settlement distribution. The Commission recommends that this should be included in the Supreme Court Practice Note (Recommendation 17).

1. For more information, see Victorian Law Reform Commission, Access to Justice—Litigation Funding and Group Proceedings (2017) Ch 2.

   ↑

2. Submission 35 (Professor Vince Morabito). Data as at 10 November 2017.

   ↑

3. Both were brought on behalf of some of the victims of the 2009 ‘Black Saturday’ bushfires. The class action brought on behalf of victims of the Kilmore East/Kinglake bushfire settled for almost $500 million after a 16-month trial. The proceeding brought on behalf of victims of the Murrindindi/Marysville bushfires settled, on the first day of the trial, for $300 million: Submission 13 (Maurice Blackburn Lawyers).

   ↑

4. Vince Morabito, An Empirical Study of Australia’s Class Action Regimes, Fifth Report: The First Twenty-Five Years of Class Actions in Australia (July 2017) 24.

   ↑

5. This amount refers to the amount paid by respondents in settlements, not the amount received by class members: Vince Morabito, ‘Empirical Perspectives on 25 Years of Class Actions’ in Damian Grave and Helen Mould (eds), 25 Years of Class Actions in Australia: 1992–2017 (Ross Parsons Centre of Commercial, Corporate and Taxation Law, 2017) 43, 55.

   ↑

6. Data as at 10 November 2017, based on information provided by Vince Morabito.

   ↑

7. Data as at 31 May 2017: Vince Morabito, An Empirical Study of Australia’s Class Action Regimes, Fifth Report: The First Twenty-Five Years of Class Actions in Australia (July 2017) 27.

   ↑

8. Clarke v Great Southern Finance Pty Ltd (in liq) [2014] VSC 516 (11 December 2014).

   ↑

9. Vince Morabito, An Empirical Study of Australia’s Class Action Regimes, Fifth Report: The First Twenty-Five Years of Class Actions in Australia (July 2017) 29.

   ↑

10. Submission 35 (Prof Vince Morabito).

    ↑

11. Vince Morabito, An Empirical Study of Australia’s Class Action Regimes, Fifth Report: The First Twenty-Five Years of Class Actions in Australia (July 2017) 33.

    ↑

12. Money Max Int Pty Ltd v QBE Insurance Group Ltd (2016) 245 FCR 191.

    ↑

13. Rebecca Gilsenan and Michael Legg, ‘Settlement Distribution Schemes’ (Speech delivered at the IMF Bentham and UNSW Class Action Conference, Sydney, 1 June 2017).

    ↑

14. Law Reform Commission (now Australian Law Reform Commission), Grouped Proceedings in the Federal Court, Report No 46 (1988).

    ↑

15. Ibid 65.

    ↑

16. See, eg, Melbourne City Investments Pty Ltd v Myer Holdings Ltd [2017] VSCA 187 (20 July 2017).

    ↑

17. The terms of reference direct the Commission to examine whether a certification requirement should be introduced in respect of class actions ‘and similar proceedings that involve a number of disputants being represented by an intermediary’. As discussed in Ch 2, there are important differences between class actions, where the representative plaintiff is not appointed by the class members and is not an agent or an intermediary for them, and other representative proceedings, where the intermediary is appointed on behalf of the participants, and is directly answerable to them. In the latter case, issues that certification aims to address, such as the adequacy of the representative plaintiff and the satisfaction of threshold issues, are not relevant. The Commission considers there is no need to investigate the introduction of certification in these proceedings.

    ↑

18. Rebecca Gilsenan and Michael Legg, Australian Class Action Settlement Distribution Scheme Design, IMF Bentham Class Action Research Initiative Research Report No 1 (University of New South Wales, 2017) 2.

    ↑

19. While South Australia does not have a statutory class action regime, its rules for representative proceedings require that representative parties apply to the Supreme Court for an order authorising the action to be maintained as a representative action within a specified time: Supreme Court Civil Rules 2006 (SA) rr 80–1.

    ↑

20. Law Reform Commission (now Australian Law Reform Commission), Grouped Proceedings in the Federal Court, Report No 46 (1988) 63–4.

    ↑

21. See further Victorian Law Reform Commission, Access to Justice—Litigation Funding and Group Proceedings, Consultation Paper (2017)
    
    Ch 6.

    ↑

22. Civil Procedure Act 2010 (Vic) ss 10, 18. The overarching obligations apply to lawyers, or law firms acting on behalf of a party, as well as litigation funders: s 10.

    ↑

23. The Court also has the power to order that a class action not continue where there are fewer than seven class members, where the distribution costs would be excessive, and the Court can make any order it thinks appropriate or necessary to ensure that justice is done in the proceeding: Supreme Court Act 1986 (Vic) ss 33L, 33M, 33ZF.

    ↑

24. Submissions 5 (Andrew Roman), 19 (US Chamber Institute for Legal Reform), 30 (Supreme Court of Victoria), 35 (Professor Vince Morabito).

    ↑

25. Submissions 11 (Litigation Funding Solutions), 19 (US Chamber Institute for Legal Reform), 27 (Ashurst).

    ↑

26. Australian Law Reform Commission, Managing Justice: A Review of the Federal Civil Justice System, Report No 89 (2000).

    ↑

27. Victorian Law Reform Commission, Civil Justice Review, Report No 14 (2008).

    ↑

28. Attorney-General’s Department, Commonwealth Government, A Strategic Framework for Access to Justice in the Federal Civil Justice System (September 2009).

    ↑

29. Productivity Commission, Access to Justice Arrangements, Inquiry Report No 72 (2014). Also, in 2015 the Law Reform Commission of Western Australia published a report recommending the introduction in Western Australia of a class action regime based on part IVA of the Federal Court Act 1976 (Cth). It did not recommend certification be introduced as part of this: Law Reform Commission of Western Australia, Representative Proceedings, Final Report Project 103 (2015).

    ↑

30. Submission 19 (US Chamber Institute for Legal Reform).

    ↑

31. Submission 9 (Professor Simone Degeling, Associate Professor Michael Legg, Dr James Metzger).

    ↑

32. Submission 29.

    ↑

33. Submission 27 (Ashurst).

    ↑

34. Submissions 5 (Andrew Roman), 8 (Dr Warren Mundy), 12 (Allens), 13 (Maurice Blackburn Lawyers), 15 (Phi Finney McDonald), 17, 18 (Adley Burstyner), 21 (Law Council of Australia), 24 (Consumer Action Law Centre), 25 (IMF Bentham Ltd), 28 (Slater and Gordon Lawyers), 30 (Supreme Court of Victoria), 33 (Victorian Bar), 35 (Professor Vince Morabito). This was also supported by the majority of stakeholders in roundtable discussions: Roundtable 2 (professional stakeholders). Not all stakeholders agreed: Submissions 9 (Professor Simone Degeling, Associate Professor Michael Legg, Dr James Metzger), 19 (US Chamber Institute for Legal Reform), 20 (Healthcare companies and businesses), 27 (Ashurst), 29 (Insurance Council of Australia). Certification for funded proceedings was supported by Submission 1 (Ashleigh Leake, Josephine Vernon, Bruce Efron), and there was some support for amendment of the threshold of section 33C: Submissions 26 (Australian Institute of Company Directors), 29 (Insurance Council of Australia). Submission 4 (Chartered Accountants Australia and New Zealand) indicated support for certification from some members. Submission 22 (Dr Michael Duffy) suggested that the issue should be monitored and reviewed in the future. Submission 12 (Allens) did not support a formal certification regime, however, it supported greater upfront scrutiny of the appropriateness of class actions.

    ↑

35. Submissions 19 (US Chamber Institute for Legal Reform), 27 (Ashurst), 29 (Insurance Council of Australia).

    ↑

36. Submission 35 (Professor Vince Morabito). See also Submissions 8 (Dr Warren Mundy), 13 (Maurice Blackburn Lawyers), 25 (IMF Bentham Ltd), 30 (Supreme Court of Victoria), 33 (Victorian Bar).

    ↑

37. Submission 30 (Supreme Court of Victoria).

    ↑

38. Submissions 8 (Dr Warren Mundy), 13 (Maurice Blackburn Lawyers), 15 (Phi Finney McDonald), 21 (Law Council of Australia) 25 (IMF Bentham Ltd), 28 (Slater and Gordon Lawyers), 30 (Supreme Court of Victoria), 35 (Professor Vince Morabito); Roundtable 2 (professional stakeholders).

    ↑

39. Submission 35 (Professor Vince Morabito).

    ↑

40. Supreme Court (General Civil Procedure) Rules 2015 (Vic) o 23; Civil Procedure Act 2010 (Vic) ss 18, 29.

    ↑

41. Submissions 13 (Maurice Blackburn Lawyers), 15 (Phi Finney McDonald), 21 (Law Council of Australia), 28 (Slater and Gordon Lawyers); Roundtable 2 (professional stakeholders). The involvement in class actions of litigation funders whose strict funding criteria naturally minimise the risk that vexatious, frivolous, abusive, or improperly constituted class actions are commenced was also noted: Submission 14 (LCM).

    ↑

42. Submission 35 (Professor Vince Morabito).

    ↑

43. Submission 20 (Healthcare companies and businesses).

    ↑

44. Submissions 8 (Dr Warren Mundy), 13 (Maurice Blackburn Lawyers), 21 (Law Council of Australia), 25 (IMF Bentham Ltd), 28 (Slater and Gordon Lawyers), 33 (Victorian Bar).

    ↑

45. Submission 5.

    ↑

46. Submission 8 (Dr Warren Mundy); Roundtable 2 (professional stakeholders).

    ↑

47. Submission 35 (Professor Vince Morabito). See generally John C Coffee Jr, Entrepreneurial Litigation: its Rise, Fall, and Future (Harvard University Press, 2015).

    ↑

48. Submissions 5 (Andrew Roman), 8 (Dr Warren Mundy), 18 (Adley Burstyner), 24 (Consumer Action Law Centre), 30 (Supreme Court of Victoria).

    ↑

49. Submission 8 (Dr Warren Mundy).

    ↑

50. Submissions 5 (Andrew Roman), 8 (Dr Warren Mundy), 35 (Professor Vince Morabito).

    ↑

51. Submission 5 (Andrew Roman).

    ↑

52. Submission 13 (Maurice Blackburn Lawyers); Roundtable 2 (professional stakeholders).

    ↑

53. Roundtables 2, 3 (professional stakeholders).

    ↑

54. While the Commission considers it desirable that issues relevant to the conduct of class actions be addressed early in proceedings, this is not always possible. For example, the Commission was told that it is uncommon for conflicts of interest to become evident, or crystallise, until settlement approval. It is at settlement approval that financial interests, and any conflicts between the competing financial interests of the class members, the lawyers and the litigation funders, will become evident. Prior to this, it is difficult to identify or address these or other conflicts which may only emerge only after detailed exchange of evidence or commencement of settlement discussions: Consultation 2 (Judges of the Federal Court of Australia).

    ↑

55. Law Reform Commission (now Australian Law Reform Commission), Grouped Proceedings in the Federal Court, Report No 46 (1988) 62–6, 70.

    ↑

56. Federal Court Act 1976 (Cth) s 33N (1)(a)–(d).

    ↑

57. Submissions 13 (Maurice Blackburn Lawyers), 15 (Phi Finney McDonald), 21 (Law Council of Australia), 25 (IMF Bentham Ltd), 28 (Slater and Gordon Lawyers), 30 (Supreme Court of Victoria), 33 (Victorian Bar).

    ↑

58. Submissions 13 (Maurice Blackburn Lawyers), 21 (Law Council of Australia).

    ↑

59. Submission 12 (Allens). This suggestion was also supported by some stakeholders at the Commission’s roundtable discussions: Roundtable 2 (professional stakeholders).

    ↑

60. An individual’s ability to bring another class action against the defendant depends on satisfaction of threshold criteria under part 4A, including the requirement that there be seven or more persons in the subsequent class action with the same, similar or related claims. The extent to which class members, who do not opt out, will be estopped from pursuing claims not pleaded in the class action has been the subject of recent litigation: see, eg, Timbercorp Finance Pty Ltd (in liq) v Collins (2016) 259 CLR 212.

    ↑

61. Submission 12 (Allens).

    ↑

62. In the five years preceding the decision in Money Max Int Pty Ltd v QBE Insurance Group Ltd (2016) 245 FCR 191 (Money Max) (26 October 2011 to 25 October 2016), 48% of funded Federal Court class actions used a closed class mechanism. In the seven months after Money Max, 23% of the funded class actions employed closed classes: Vince Morabito, An Empirical Study of Australia’s Class Action Regimes, Fifth Report: The First Twenty-Five Years of Class Actions in Australia (July 2017) 39–41. This trend, however, cannot be attributed to the approval of common fund orders alone; a downward trend in the use of closed classes by litigation funders was evident in Federal Court class actions prior to the decision in Money Max: Vicki Waye and Vince Morabito, ‘When Pragmatism Leads to Unintended Consequences: A Critique of Australia’s Unique Closed Class Regime’ (2018) 19 Theoretical Inquiries in Law 303, 328.

    ↑

63. See, eg, Emma White and Justin McDonnell, Developments in Competing Class Actions (4 April 2016) King and Wood Mallesons <http://www.kwm.com/en/au/knowledge/insights/developments-competing-class-actions-australia-20160404>; Submission 13 (Maurice Blackburn Lawyers).

    ↑

64. See, eg, McKay Super Solutions Pty Ltd (Trustee) v Bellamy’s Australia Ltd [2017] FCA 947 (18 August 2017) [7] (Beach J).

    ↑

65. Money Max Int Pty Ltd v QBE Insurance Group Ltd (2016) 245 FCR 191, 230 (Murphy, Gleeson and Beach JJ).

    ↑

66. McKay Super Solutions Pty Ltd (Trustee) v Bellamy’s Australia Ltd [2017] FCA 947 (18 August 2017) [9] (Beach J).

    ↑

67. Law Council of Australia and Federal Court of Australia, Case Management Handbook (2014) 119–20.

    ↑

68. See, eg, McKay Super Solutions Pty Ltd (Trustee) v Bellamy’s Australia Ltd [2017] FCA 947 (18 August 2017) [23], [54] (Beach J). The situation is different in jurisdictions that have adopted certification in class actions, such as Canada, where class actions cannot be issued of right and continue. Accordingly, while the Canadian experience, which allows a representative plaintiff to apply for a ‘carriage motion’ seeking a stay of all other class actions relating to the same subject matter, is informative in Australia, it is not a direct analogue: [54]. It has also been observed that the Canadian carriage motion does not deal with competing class actions filed in different provinces: Justice Bernard Murphy and Vince Morabito, ‘The First 25 Years: Has the Class Action Regime Hit the Mark on Access to Justice?’ in Damian Grave and Helen Mould (eds), 25 Years of Class Actions In Australia: 1992–2017 (Ross Parsons Centre of Commercial, Corporate and Taxation Law, 2017) 13, 41–2.

    ↑

69. See, eg, McKay Super Solutions Pty Ltd (Trustee) v Bellamy’s Australia Ltd [2017] FCA 947 (18 August 2017) [56] (Beach J).

    ↑

70. Submission 2 (Professor Vicki Waye).

    ↑

71. Submissions 30 (Supreme Court of Victoria), 35 (Professor Vince Morabito).

    ↑

72. Submissions 9 (Professor Simone Degeling, Associate Professor Michael Legg, Dr James Metzger), 12 (Allens), 19 (US Chamber Institute for Legal Reform), 20 (Healthcare companies and businesses), 26 (Australian Institute of Company Directors), 27 (Ashurst), 29 (Insurance Council of Australia). Submissions 12 (Allens) and 26 (Australian Institute of Company Directors) supported the introduction of an express power to appoint one class action in the absence of certification.

    ↑

73. Submissions 13 (Maurice Blackburn Lawyers), 14 (LCM), 15 (Phi Finney McDonald), 21 (Law Council of Australia), 22 (Dr Michael Duffy), 25 (IMF Bentham Ltd), 33 (Victorian Bar).

    ↑

74. Submission 12 (Allens).

    ↑

75. Submission 13.

    ↑

76. Submission 11.

    ↑

77. Submission 27.

    ↑

78. McKay Super Solutions Pty Ltd (Trustee) v Bellamy’s Australia Ltd [2017] FCA 947 (18 August 2017) [7]–[8] (Beach J).

    ↑

79. [2017] FCA 1042 (1 September 2017). Justice Forster indicated that, in the future, some further action may need to be taken in order to address problems caused by the continued maintenance of the separate proceedings, which would be kept under constant review as the litigation progressed: [75].

    ↑

80. See also Smith v Australian Executor Trustees Ltd [2016] NSWSC 17 (5 February 2016); Kirby v Centro Properties Ltd (2008) 253 ALR 65; Johnson Tiles Pty Ltd v Esso Australia Ltd [1999] FCA 56 (5 February 1999).

    ↑

81. Cantor v Audi Australia (No 2) [2017] FCA 1042 (1 September 2017) [74] (Foster J).

    ↑

82. See, eg, Cantor v Audi Australia (No 2) [2017] FCA 1042 (1 September 2017) [74] (Foster J).

    ↑

83. McKay Super Solutions Pty Ltd (Trustee) v Bellamy’s Australia Ltd [2017] FCA 947 (18 August 2017) [71]. A similar list of non-exhaustive criteria is contained in the Federal Court’s case management handbook: Law Council of Australia and Federal Court of Australia, Case Management Handbook (2014) 120–21. Submission 12 (Allens) also set out a list of factors that could be considered by the courts when faced with competing class actions.

    ↑

84. Roundtable 2 (professional stakeholders); Consultation 2 (Judges of the Federal Court of Australia). The issue has also been raised in commentary. See, eg, Justice Bernard Murphy and Vince Morabito, ‘The First 25 Years: Has the Class Action Regime Hit the Mark on Access to Justice?’ in Damian Grave and Helen Mould (eds), 25 Years of Class Actions In Australia: 1992–2017 (Ross Parsons Centre of Commercial, Corporate and Taxation Law, 2017) 13, 41–2.

    ↑

85. Roundtable 2 (professional stakeholders); Consultation 2 (Judges of the Federal Court of Australia).

    ↑

86. Submission 35 (Professor Vince Morabito).

    ↑

87. Consultation 3 (Judges of the Supreme Court of Victoria).

    ↑

88. Consultation 2 (Judges of the Federal Court of Australia).

    ↑

89. Submission 12 (Allens).

    ↑

90. Consultation 2 (Judges of the Federal Court of Australia).

    ↑

91. Submission 12 (Allens).

    ↑

92. Consultation 2 (Judges of the Federal Court of Australia); Roundtable 2 (professional stakeholders).

    ↑

93. Roundtable 2 (professional stakeholders).

    ↑

94. The first multidistrict litigation statute was passed by Congress in 1968: 28 USC § 1407 (1968).

    ↑

95. Federal Judicial Center, Manual for Complex Litigation, Fourth (2004) 231.

    ↑

96. United States Judicial Panel on Multidistrict Litigation, Overview of Panel <http://www.jpml.uscourts.gov/overview-panel-0>.

    ↑

97. Ibid.

    ↑

98. Supreme Court of Victoria, Practice Note SC Gen 10—Conduct of Group Proceedings (Class Actions), 30 January 2017, [13.5].

    ↑

99. The settlement distribution process for personal injury claims was just under two years; for property claims, it took two years and two months: Rebecca Gilsenan and Michael Legg, ‘Settlement Distribution Schemes’ (Speech delivered at the IMF Bentham and UNSW Class Action Conference, Sydney, 1 June 2017).

    ↑

100. Submissions 13 (Maurice Blackburn Lawyers) 15 (Phi Finney McDonald), 28 (Slater and Gordon Lawyers), 25 (IMF Bentham Ltd). See generally Michael Legg, ‘Class Action Settlement Distribution in Australia: Compensation on the Merits or Rough Justice?’ (2016) 16 Macquarie Law Journal 89.

     ↑

101. Submission 13 (Maurice Blackburn Lawyers), 28 (Slater and Gordon Lawyers).

     ↑

102. Submission 13 (Maurice Blackburn Lawyers).

     ↑

103. Submission 12.

     ↑

104. Submission 13 (Maurice Blackburn Lawyers).

     ↑

105. Matthews v Ausnet (Ruling No 41) [2016] VSC 171 (19 April 2016) [5], [39] (Forrest J).

     ↑

106. See, eg, Matthews v Ausnet (Ruling No 42) [2016] VSC 394 (15 July 2016) [23]–[28] (Forrest J).

     ↑

107. Roundtable 3 (professional stakeholders). The fast-track payment mechanism was proposed for use in Stanford v DePuy International Ltd (No 6) [2016] FCA 1452 (1 December 2016).

     ↑

108. See, eg, Stanford v DePuy International Ltd (No 6) [2016] FCA 1452 (1 December 2016) [140]–[143] (Wigney J).

     ↑

109. Rebecca Gilsenan and Michael Legg, Australian Class Action Settlement Distribution Scheme Design, IMF Bentham Class Action Research Initiative Research Report No 1 (University of New South Wales, 2017) 31.

     ↑

110. See, eg, Stanford v DePuy International Ltd (No 6) [2016] FCA 1452 (1 December 2016) [99]–[109] (Wigney J).

     ↑

111. Submissions 12 (Allens), 20 (Healthcare companies and businesses), 25 (IMF Bentham Ltd).

     ↑

112. Submission 25 (IMF Bentham Ltd).

     ↑

113. Roundtable 5 (clients and consumers).

     ↑

114. Justice Jack Forrest, ‘Issues in Case Management of Class Actions and Administration of Settlements—Kilmore East/Kinglake Bushfire Trial’ in Damian Grave and Helen Mould (eds), 25 Years of Class Actions In Australia: 1992–2017 (Ross Parsons Centre of Commercial, Corporate and Taxation Law, 2017) 71, 94.

     ↑

115. Supreme Court of Victoria, Annual Report 2016–17 (2017) 57.

     ↑

116. Law Reform Commission (now Australian Law Reform Commission), Grouped Proceedings in the Federal Court, Report No 46 (1988).

     ↑

117. Capic v Ford Motor Company of Australia Ltd, Federal Court Proceedings NSD 724 of 2016.

     ↑

118. They remained class members and were bound by the outcome of proceedings, but were precluded from claiming compensation, including in separate proceedings: Kelly v Willmott Forests Ltd (in liq) (No 4) (2016) 335 ALR 439, 449–50 (Murphy J).

     ↑

119. Civil Procedure Act 2010 (Vic) ss 10, 17–26.

     ↑

120. Conflicts of interest arising due to the classification of class members as funded/unfunded can be reduced by making a common fund order: Money Max Int Pty Ltd v QBE Insurance Group Ltd (2016) 245 FCR 191, 225 (Murphy, Gleeson and Beach JJ).

     ↑

121. Simone Degeling and Michael Legg, ‘Fiduciary Obligations of Lawyers in Australian Class Actions: Conflicts Between Duties’ (2014) 37 University of New South Wales Law Journal 914.

     ↑

122. Submission 15 (Phi Finney McDonald).

     ↑

123. Ibid.

     ↑

124. Submission 12 (Allens).

     ↑

125. Submissions 10 (Victorian Legal Services Board and Commissioner), 13 (Maurice Blackburn Lawyers), 15 (Phi Finney McDonald),
     
     21 (Law Council of Australia), 25 (IMF Bentham Ltd), 28 (Slater and Gordon Lawyers).

     ↑

126. Submission 15 (Phi Finney McDonald).

     ↑

127. Submissions 12 (Allens), 22 (Dr Michael Duffy).

     ↑

128. Submission 9 (Professor Simone Degeling, Associate Professor Michael Legg, Dr James Metzger).

     ↑

129. Submission 10 (Victorian Legal Services Board and Commissioner).

     ↑

130. Submissions 12 (Allens), 13 (Maurice Blackburn Lawyers), 15 (Phi Finney McDonald), 21 (Law Council of Australia).

     ↑

131. Federal Court of Australia, Class Actions Practice Note (GPN–CA)—General Practice Note, 25 October 2016, [5.9]–[5.10].

     ↑

132. Submission 10 (Victorian Legal Services Board and Commissioner). The Commission notes that the Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (and equivalent conduct rules in other jurisdictions) are currently being reviewed by the Law Council of Australia, with submissions invited by 31 May 2018: Law Council of Australia, Review of the Australian Solicitors’ Conduct Rules, Consultation Discussion Paper (2018).

     ↑

133. Australian Law Reform Commission, Managing Justice: A Review of the Federal Civil Justice System, Report No 89 (2000) 553; Recommendation 82.

     ↑

134. Submission 10 (Victorian Legal Services Board and Commissioner) referred to two examples of lawyers with insufficient experience in class actions commencing proceedings. In both cases, disciplinary action was taken.

     ↑

135. Part 4A of the Supreme Court Act 1986 (Vic) contains little specific guidance as to what an ‘adequate’ representative plaintiff looks like. The representative plaintiff must have a sufficient interest to be able to commence the proceedings on their own behalf: s 33D. While the representative plaintiff is not required to prove that their personal claim is reflective of the common questions to be determined in the class action, the statement of claim should be drawn so that their personal claim can be used as a vehicle for determining the common questions in the action: Supreme Court of Victoria, Practice Note SC Gen 10—Conduct of Group Proceedings (Class Actions), 30 January 2017, [4.2].

     ↑

136. Submissions 13 (Maurice Blackburn Lawyers), 15 (Phi Finney McDonald), 21 (Law Council of Australia), 25 (IMF Bentham Ltd), 28 (Slater and Gordon Lawyers), 30 (Supreme Court of Victoria), Submission 35 (Professor Vince Morabito).

     ↑

137. Supreme Court Act 1986 (Vic) ss 33N, 33Q, 33R, 33T, 33ZF.

     ↑

138. Roundtables 1, 2 (professional stakeholders).

     ↑

139. [2011] VSC 165 (13 May 2011); (2011) 34 VR 560.

     ↑

140. Submission 35. Previous research indicating that a high proportion of professionals and managers have been appointed as representative plaintiffs in Federal Court class actions also casts doubt on the assertion that representative plaintiffs are commonly appointed as ‘persons of straw’: Jane Caruana and Vince Morabito, ‘Turning the Spotlight on Class Representatives: Empirical Insights from Down Under’ (2012) 30(2) Windsor Yearbook of Access to Justice 1.

     ↑

141. Submissions 9 (Professor Simone Degeling, Associate Professor Michael Legg, Dr James Metzger), 12 (Allens), 19 (US Chamber Institute for Legal Reform), 27 (Ashurst), 29 (Insurance Council of Australia).

     ↑

142. Submissions 9 (Professor Simone Degeling, Associate Professor Michael Legg, Dr James Metzger), 12 (Allens).

     ↑

143. Submissions 9 (Professor Simone Degeling, Associate Professor Michael Legg, Dr James Metzger), 19 (US Chamber Institute for Legal Reform), 27 (Ashurst), 29 (Insurance Council of Australia).

     ↑

144. Roundtables 1, 2 (professional stakeholders); Submission 35 (Professor Vince Morabito).

     ↑

145. Submissions 12 (Allens), 33 (Victorian Bar).

     ↑

146. Submission 12 (Allens).

     ↑

147. Law Reform Commission (now Australian Law Reform Commission), Grouped Proceedings in the Federal Court, Report No 46 (1988) 78.

     ↑

148. Civil Procedure Act 2005 (NSW) s 166(1)(d); Civil Proceedings Act 2011 (Qld) s 103K(1)(d).

     ↑

149. Law Reform Commission (now Australian Law Reform Commission), Grouped Proceedings in the Federal Court, Report No 46 (1988) 77.

     ↑

150. Roundtable 5 (consumers and clients).

     ↑

151. Roundtables 1, 2 (professional stakeholders).

     ↑

152. The Court must also fix the opt-out date and approve the formal notices sent to class members: Supreme Court Act 1986 (Vic) ss 33J, 33Y.

     ↑

153. Ibid s 33V.

     ↑

154. Australian Securities and Investments Commission v Richards [2013] FCAFC 89 (12 August 2013) [8] (Jacobson, Middleton and Gordon JJ) (citations omitted). See also Lopez v Star World Enterprises Pty Ltd (1999) ATPR ¶41-678, 42 670 (Finkelstein J).

     ↑

155. Submission 35 (Professor Vince Morabito).

     ↑

156. See, eg, Civil Procedure Act 2010 (Vic) s 22.

     ↑

157. Law Reform Commission (now Australian Law Reform Commission), Grouped Proceedings in the Federal Court, Report No 46 (1988) 163.

     ↑

158. Kelly v Willmott Forests Ltd (in liq) (No 4) (2016) 335 ALR 439, 454 (Murphy J).

     ↑

159. Submission 30 (Supreme Court of Victoria).

     ↑

160. [2017] VSC 474 (28 August 2017) [31].

     ↑

161. Supreme Court of Victoria, Practice Note SC Gen 10—Conduct of Group Proceedings (Class Actions), 30 January 2017, [13.1].

     ↑

162. See, eg, Newstart 123 Pty Ltd v Billabong International Ltd (2016) 343 ALR 662, 664 (Beach J); Camilleri v The Trust Company (Nominees) Ltd [2015] FCA 1468 (18 December 2015) [5] (Moshinsky J); Harrison v Sandhurst Trustees Ltd [2011] FCA 541 (20 May 2011) [13] (Gordon J); Darwalla Milling Co Pty Ltd v F Hoffman-La Roche Ltd (No 2) (2006) 236 ALR 322, 339 (Jessup J).

     ↑

163. Ibid.

     ↑

164. See, eg, Williams v FAI Home Security Pty Ltd (No 4) (2000) 180 ALR 459, 465–6 (Goldberg J); Supreme Court of Victoria, Practice Note SC Gen 10—Conduct of Group Proceedings (Class Actions), 30 January 2017, [13.3].

     ↑

165. Supreme Court of Victoria, Practice Note SC Gen 10—Conduct of Group Proceedings (Class Actions), 30 January 2017, [13.3].

     ↑

166. Submissions 14 (LCM), 15 (Phi Finney McDonald), 25 (IMF Bentham Ltd), 28 (Slater and Gordon Lawyers).

     ↑

167. Submission 12 (Allens).

     ↑

168. Submission 30 (Supreme Court of Victoria).

     ↑

169. See, eg, Mitic v OZ Minerals Ltd (No 2) [2017] FCA 409 (21 April 2017) [11] (Middleton J).

     ↑

170. Submission 28 (Slater and Gordon Lawyers).

     ↑

171. See, eg, Mitic v OZ Minerals Ltd (No 2) [2017] FCA 409 (21 April 2017) [11] (Middleton J) citing Earglow Pty Ltd v Newcrest Mining Ltd [2016] FCA 1433 (28 November 2016) [91], [99], [140] (Murphy J).

     ↑

172. Submission 9 (Professor Simone Degeling, Associate Professor Michael Legg, Dr James Metzger).

     ↑

173. Michael Legg, ‘Class Actions, Litigation Funding and Access to Justice’ [2017] 57 University of New South Wales Law Research Series 1, 8 <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3035096>.

     ↑

174. Consultation 4 (Judges of the Supreme Court of Victoria).

     ↑

175. Justice Bernard Murphy and Vince Morabito, ‘The First 25 Years: Has the Class Action Regime Hit the Mark on Access to Justice?’ in Damian Grave and Helen Mould (eds), 25 Years of Class Actions In Australia: 1992–2017 (Ross Parsons Centre of Commercial, Corporate and Taxation Law, 2017) 13, 38.

     ↑

176. Submission 30 (Supreme Court of Victoria).

     ↑

177. Submissions 3 (Professor Julie-Anne Tarr), 9 (Professor Simone Degeling, Associate Professor Michael Legg, Dr James Metzger), 11 (Litigation Funding Solutions), 12 (Allens), 13 (Maurice Blackburn Lawyers), 18 (Adley Burstyner), 19 (US Chamber Institute for Legal Reform), 21 (Law Council of Australia), 22 (Dr Michael Duffy), 24 (Consumer Action Law Centre), 27 (Ashurst), 28 (Slater and Gordon Lawyers), 30 (Supreme Court of Victoria), 35 (Professor Vince Morabito).

     ↑

178. Submissions 12 (Allens), 13 (Maurice Blackburn Lawyers), 21 (Law Council of Australia), 25 (IMF Bentham Ltd), 28 (Slater and Gordon Lawyers), 30 (Supreme Court of Victoria), 35 (Professor Vince Morabito). Submission 27 (Ashurst) submitted that a third-party contradictor should generally be appointed, except where the costs would not warrant the appointment. Submission 19 (US Chamber Institute for Reform) stated that part 4A should be amended to provide for this appointment at any settlement approval.

     ↑

179. Submission 15 (Phi Finney McDonald).

     ↑

180. Submission 28 (Slater and Gordon Lawyers).

     ↑

181. Submission 12 (Allens).

     ↑

182. Roundtable 5 (clients and consumers).

     ↑

183. Submission 30 (Supreme Court of Victoria).

     ↑

184. Submission 12 (Allens).

     ↑

185. Supreme Court of Victoria, Annual Report 2016–17 (2017) 57.

     ↑

186. Money Max Int Pty Ltd v QBE Insurance Group Ltd (2016) 245 FCR 191, 204–5 (Murphy, Gleeson and Beach JJ); Kelly v Willmott Forests Ltd (in liq) (No 4) (2016) 335 ALR 439, 454 (Murphy J); Blairgowrie Trading Ltd v Allco Finance Group Ltd (rec and mgr apptd) (in liq) (2015) 325 ALR 539, 573 (Wigney J); P Dawson Nominees Pty Ltd v Brookfield Multiplex Ltd (No 4) [2010] FCA 1029 (21 September 2010) [23] (Finkelstein J).

     ↑

187. (2016) 245 FCR 191, 204–5 (Murphy, Gleeson and Beach JJ).

     ↑

188. Submission 12 (Allens).

     ↑

189. Roundtable 3 (professional stakeholders).

     ↑

190. Justice Bernard Murphy and Vince Morabito, ‘The First 25 Years: Has the Class Action Regime Hit the Mark on Access to Justice?’ in Damian Grave and Helen Mould (eds), 25 Years of Class Actions In Australia: 1992–2017 (Ross Parsons Centre of Commercial, Corporate and Taxation Law, 2017) 13, 38.

     ↑

191. Supreme Court of Victoria, Practice Note SC Gen 10—Conduct of Group Proceedings (Class Actions), 30 January 2017, [13].

     ↑

192. Federal Court of Australia, Class Actions Practice Note (GPN–CA)—General Practice Note, 25 October 2016, [14.5].

     ↑

193. Michael Legg, ‘Class Action Settlements in Australia—The Need for Greater Scrutiny’ (2014) 38 Melbourne University Law Review 590, 597–8.

     ↑

194. Submissions 12 (Allens), 13 (Maurice Blackburn Lawyers), 28 (Slater and Gordon Lawyers).

     ↑

195. Supreme Court of Victoria, Practice Note SC Gen 10—Conduct of Group Proceedings (Class Actions), 30 January 2017, [13.4].

     ↑

196. Submission 30 (Supreme Court of Victoria).

     ↑

197. Justice Jack Forrest, ‘Issues in Case Management of Class Actions and Administration of Settlements—Kilmore East/Kinglake Bushfire Trial’ in Damian Grave and Helen Mould (eds), 25 Years of Class Actions In Australia: 1992–2017 (Ross Parsons Centre of Commercial, Corporate and Taxation Law, 2017) 71, 93–4.

     ↑

198. Submission 30 (Supreme Court of Victoria).

     ↑

199. Submissions 13 (Maurice Blackburn Lawyers), 28 (Slater and Gordon Lawyers).

     ↑

200. Roundtable 3 (professional stakeholders).

     ↑

201. Submission 13. See also Submissions 15 (Phi Finney McDonald), 28 (Slater and Gordon Lawyers), 30 (Supreme Court of Victoria).

     ↑

202. Submission 30 (Supreme Court of Victoria).

     ↑

203. Justice Jack Forrest, ‘Issues in Case Management of Class Actions and Administration of Settlements—Kilmore East/Kinglake Bushfire Trial’ in Damian Grave and Helen Mould (eds), 25 Years of Class Actions In Australia: 1992–2017 (Ross Parsons Centre of Commercial, Corporate and Taxation Law, 2017) 71, 93.

     ↑

204. Submission 30.

     ↑

205. Justice Jack Forrest, ‘Issues in Case Management of Class Actions and Administration of Settlements—Kilmore East/Kinglake Bushfire Trial’ in Damian Grave and Helen Mould (eds), 25 Years of Class Actions In Australia: 1992–2017 (Ross Parsons Centre of Commercial, Corporate and Taxation Law, 2017) 71, 94.

     ↑

206. Submission 30.

     ↑

207. Submission 30 (Supreme Court of Victoria).

     ↑

208. Federal Court of Australia, Class Actions Practice Note (GPN–CA)—General Practice Note, 25 October 2016, [14.5].

     ↑

209. Submission 13 (Maurice Blackburn Lawyers), 28 (Slater and Gordon Lawyers). While Maurice Blackburn indicated there may be value in requiring scheme administrators to provide information about the time at which class members receive settlement sums, the difficulty of giving precise estimates at an early stage was also noted: Submission 13.

     ↑

210. Submission 30 (Supreme Court of Victoria).

     ↑

211. Submission 20 (Healthcare companies and businesses).

     ↑

212. Consultation 4 (Judges of the Supreme Court of Victoria). If an award of damages is made, part 4A provides that the defendant may apply for the payment of undistributed funds: Supreme Court Act 1986 (Vic) s 33ZA(5).

     ↑

213. Consultation 4 (Judges of the Supreme Court of Victoria).

     ↑

214. Although only in the early stages of an empirical study, Vince Morabito has found that in at least 18% of all settled class actions, the settlement distribution schemes or orders made after settlement approval envisaged the payment of undistributed settlement amounts to persons or entities other than the defendant, including the class members: Vince Morabito, An Empirical Study of Australia’s Class Action Regimes, Fifth Report: The First Twenty-Five Years of Class Actions in Australia (July 2017) 13–14.

     ↑

215. Consultation 4 (Judges of the Supreme Court of Victoria).

     ↑

216. Providing proper notice and an opportunity to object may permit a representative plaintiff to take steps that are contrary to class members’ interests. The Federal Court has accepted in numerous cases that, with proper notice and an opportunity to object, subject to the leave of the Court, the representative plaintiff may take steps that are contrary to unidentified class members’ interests: Money Max Int Pty Ltd
     v QBE Insurance Group Ltd (2016) 245 FCR 191, 216 (Murphy, Gleeson and Beach JJ).

     ↑

217. Supreme Court Act 1986 (Vic) ss 33X, 33Y.

     ↑

218. Submissions 13 (Maurice Blackburn Lawyers), 15 (Phi Finney McDonald), 28 (Slater and Gordon Lawyers).

     ↑

219. Roundtables 1 (professional stakeholders), 5 (clients and consumers).

     ↑

220. Roundtable 3 (professional stakeholders).

     ↑

221. Ibid.

     ↑

222. Roundtables 1, 3 (professional stakeholders).

     ↑

223. Roundtables 3 (professional stakeholders), 5 (clients and consumers).

     ↑

224. Roundtable 1 (professional stakeholders).

     ↑

225. Roundtable 1 (professional stakeholders).

     ↑

226. Submissions 9 (Professor Simone Degeling, Associate Professor Michael Legg, Dr James Metzger), 27 (Ashurst), 35 (Professor Vince Morabito); Roundtable 1 (professional stakeholders).

     ↑

227. Submissions 10 (Victorian Legal Services Board and Commissioner), 28 (Slater and Gordon Lawyers); Roundtable 1 (professional stakeholders).

     ↑

228. Submissions 2 (Professor Vicki Waye), 9 (Professor Simone Degeling, Associate Professor Michael Legg, Dr James Metzger), 12 (Allens). Submission 24 (Consumer Action Law Centre) suggested that insights could also be obtained from the field of behavioural economics.

     ↑

229. Submission 15 (Phi Finney McDonald).

     ↑

230. Submissions 10 (Victorian Legal Services Board and Commissioner), 11 (Litigation Funding Solutions); Roundtable 1 (professional stakeholders).

     ↑

231. There is some evidence that these methods are being adopted in the Federal Court class actions: a professional designer and a sociolinguistic expert were recently used, reportedly for the first time, in drafting a notice in a Federal Court class action: Vince Morabito, An Empirical Study of Australia’s Class Action Regimes, Fifth Report: The First Twenty-Five Years of Class Actions in Australia (July 2017) 21.

     ↑

232. Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 18A.04.

     ↑

233. Supreme Court of Victoria, Practice Note SC Gen 10—Conduct of Group Proceedings (Class Actions), 30 January 2017, [13.6].

     ↑

234. Submissions 10 (Victorian Legal Services Board and Commissioner), 12 (Allens), 13 (Maurice Blackburn Lawyers), 15 (Phi Finney McDonald), 25 (IMF Bentham Ltd), 28 (Slater and Gordon Lawyers), 30 (Supreme Court of Victoria). These submissions recognised that, given the varied nature of class actions, standard form notice will not be suitable for use in every proceeding, and must be tailored to the circumstances of the individual case.

     ↑

235. Roundtable 1 (professional stakeholders).

     ↑

236. Federal Court of Australia, Class Actions Practice Note (GPN–CA)—General Practice Note, 25 October 2016, [11.2].

     ↑

237. Opt-out notices may now be required to address, inter alia, registration requirements, applications for common fund orders or other orders relating to the payment of a funding fee, security for costs orders, or choice of class action where competing proceedings arise: Submission 35 (Professor Vince Morabito).

     ↑

238. Submissions 13 (Maurice Blackburn Lawyers), 28 (Slater and Gordon Lawyers).

     ↑

239. Roundtable 5 (clients and consumers).

     ↑

240. Submission 28 (Slater and Gordon Lawyers); Roundtable 5 (clients and consumers).

     ↑

241. Roundtable 5 (clients and consumers).

     ↑

242. Submissions 13 (Maurice Blackburn Lawyers), 15 (Phi Finney McDonald), 21 (Law Council of Australia). This view was not held by all stakeholders: for example, Submission 11 (Litigation Funding Solutions). Submission 22 (Dr Michael Duffy) stated that, as not all class members are clients of the law firm, some mandating of progress reports would be reasonable.

     ↑

243. Submission 13 (Maurice Blackburn Lawyers).

     ↑