Class actions

This fact sheet is designed to assist you in determining whether a class action (known in the Australian courts as a “representative proceeding”) is an appropriate avenue for your given situation.

A class action allows one claimant to bring an action in court on behalf of a group of people. There are no limitations on the types of claims that can be brought through the class action system. Recent class actions have concerned a diverse range of issues including product liability claims, medical negligence, financial and securities matters, and immigration law.

What are the requirements for bringing a representative proceeding?

In the Federal Court

Section 33C(1) Federal Court of Australia Act 1976 (Cth) sets out the main requirements for bringing a representative proceeding in the Federal Court:

  • There must be seven (7) or more persons who have claims against one or more individuals or corporate bodies. If there are less than seven people, the court can decide whether they will allow the proceedings (Order 6 rule 2(b) Federal Court Rules (Cth) and section 33L Federal Court of Australia Act 1976 (Cth); and
  • The claims must be in respect of the same, similar or related circumstances; and
  • The claims must give rise to a substantial common issue of law or fact. This means that the claims would raise serious rather than trivial issues which are common to all persons on whose behalf the litigation is brought.

The Act sets out a structured regime for the conduct and management of representative proceedings.

In the Queensland Courts

There is no set framework under the court rules in Queensland for the bringing and management of representative proceedings. However, rule 75 of the Uniform Civil Procedure Rules 1999 (Qld) provides:

“A proceeding may be started and continued by or against one or more persons who have the same interest in the subject matter of the proceeding as representing all of the persons who have the same interest and could have been parties in the proceeding.”

The courts have held that this rule allows for representative proceedings to be brought in the Queensland Courts.

What is meant by the same interest and same, similar or related circumstances?

“Same interest” has been defined to mean: “a community of interest in the determination of some substantial issue of law or fact” (see Carnie v Esanda Finance Corporation (1994-1995) 182 CLR 398).

Having separate contracts or transactions, or separate acts or omissions, which give rise to the legal action does not by itself prevent the bringing of a class action.

The court will decide whether your individual circumstances are sufficiently related to allow them to be grouped together.

What are the advantages of representative proceedings?

  • It may speed up the litigation process by allowing the claimants to be represented by one representative as opposed to each claimant coming before the court as an individual.
  • It may be cheaper for all the claimants, because the financial costs of bringing the action is shared amongst the claimants.
  • It allows for encouragement and support among claimants, resolving common issues. In particular it provides a method of litigation in those cases where individuals with limited resources would be reluctant to take action against large companies with extensive resources without such support.
  • It reduces the amount of a potential adverse costs order by bringing only one action against the defendant. Rather than defending multiple actions, the defendant is faced with complaints of all claimants simultaneously in a single claim, reducing the defendant’s legal costs (and the claimants’ liability to pay costs if unsuccessful) on the application.
  • A representative proceeding can also share the risk of an adverse costs order. While a claimant nominated to represent the group may assume the entire financial risk in a class action, any number of represented persons can contribute to a pool of funds and be collectively liable for any costs which may be awarded against the group.
  • The Federal Court has power to divide claimants into sub-groups for the ease of dealing with specific issues of the claim (ss 33Q and 33R Federal Court of Australia Act 1976(Cth). That means that individual matters are not neglected.
  • In the Federal Court, the law creates clear and easy-to-follow rules for the conduct of representative proceedings that any potential litigants can follow.

What are the disadvantages of representative proceedings?

  • At least in the Federal Court, the court usually requires the claimants to release to the public notice of the class action (s 33X Federal Court of Australia Act 1976 (Cth)). This is required for all claimants and defendants to be aware of the imminent court action and of the public issues the action will raise. Such notices can be costly (e.g. by newspaper advertisement).
  • Federal Court representative proceedings cannot be settled or discontinued without the court’s agreement (s 33V Federal Court of Australia Act 1976 (Cth)).
  • The Queensland court rules do not provide for a framework for the bringing of and management of representative proceedings and therefore does not provide certainty to litigants as to the requirement for instituting, continuing and defending representative proceedings.

How to commence class action

In the Federal Court

Under section 33H of the Federal Court of Australia Act 1976 (Cth), an application commencing a representative proceeding must:

  • describe or otherwise identify the group members to whom the proceeding relates;
  • specify the nature of the claims made on behalf of the group members and the relief claimed; and
  • specify the questions of law or fact common to the claims of the group members.

Representative proceedings decide the issues for all persons with the same claims even if they are not aware of the proceedings. However, the Federal Court has an ‘opt out’ system which allows any persons who do not wish to be a part of the proceedings or proceed further with their claims to ‘opt out’ (section 33J). The Court fixes a date before which a group member can opt out. After this date you must apply for an extension from the court to opt out of group proceedings.

In the Queensland Courts

The Queensland UCPR does not set out detailed procedures or rules for representative proceedings. You need only comply with rule 75, which states that persons to a representative action must have the same interest in the subject matter of the proceedings and that the persons represented could have been parties to the proceedings.

If a person is suing or being sued in a representative capacity, the person bringing the action must state that representative capacity on the originating process (the document which commences court proceedings). If a claim is being made against someone in a representative capacity, then the claimant must also define with sufficient particularity the members of the group who are said to have the same interest in the subject matter of the proceeding: Minister for Industrial Development of Queensland v Taubenfeld [2003] 2 Qd R 655.

Judgment in representative proceedings

A judgment in a representative proceeding must describe or otherwise identify the group members who will be affected by it. Unless the court otherwise orders, an order made in a representative proceeding binds not only the parties named in the proceeding but all persons who have the same interest as a representative party and could have been parties in the proceeding themselves (sections 82 of the Supreme Court of Queensland Act 1991 (Qld)), other than those persons in Federal Court proceedings who have chosen to not be party to (opted out of) the proceedings (section 33ZB of the Federal Court of Australia Act 1976 (Cth)).