Class Action Update | February 2020

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This article was written by Peta Stevenson, Justin McDonnell and Moira Saville.

Welcome to our Class Action Update for February 2020.

Since our last update, we have seen a significant amount of activity, with:

  • the High Court rejecting the making of common fund orders (at least, prior to settlement) as a basis for approval of third party litigation funding commissions (read our article here);
  • two decisions regarding what if any losses may flow from a breach established by indirect, market-based causation theories (read our article here – the Babcock decision has been appealed, and the applicants in Myer have sought leave to file new expert evidence to establish loss under the market-based causation theory);
  • judgment for the plaintiffs in the vaginal mesh class action (read our article here) and Queensland floods class action (which has been appealed by at least one defendant);
  • the introduction of a Bill in Victoria which would permit plaintiffs' lawyers to charge legal costs representing a percentage of any award or settlement (passed by the Legislative Assembly; currently in the Legislative Council), commonly known as contingency fees; and
  • updates to the Federal Court's Class Actions practice note.

In the market place

At least 30 class actions were commenced between 1 July 2019 and 31 January 2020, including:

  • actions against Merivale, Woolworths, Skilled (Programmed) and Workpac in relation to alleged underpayment of employees;
  • securities-related claims against Westpac, Lendlease and Estia Health;
  • further actions in relation to fees charged on superannuation products, including against Colonial, MLC and Westpac;
  • actions in the Federal Court and the Supreme Court of Victoria relating to the use of Roundup;
  • the Robodebt class action against the Commonwealth; and
  • the first class action to be filed in the Supreme Court of Tasmania, relating to the 2013 Dunalley bushfires.

Recently announced class action investigations include potential securities claims against Treasury Wine Estates and iSignthis, and a possible action against the Commonwealth relating to the "sports rorts" grants program. 

Other significant developments included:

  • court approval of at least 17 settlements representing more than $400M in settlement funds, including $190M for the recovery of stolen wages for indigenous workers in Queensland, $29M for the Radio Rentals class action, $42M for one of the two Murray Goulburn class actions, $40M for the Sirtex class action, and the first privacy class action against the NSW Ambulance Service (read our IP Whiteboard post here);
  • the consolidation of competing class actions bringing claims against Lendlease, RCR Tomlinson and BHP; and
  • guidance from the Court of Appeal (NSW) in the AMP class action(s) on the principles to be applied when dealing with multiple open class actions.

Our watch list for the next sixth months includes:

  • judgments in the Live Cattle Export Ban class action, the Montara oil spill class action, the WorleyParsons securities class action, the Workpac appeal regarding the classification of casual employees and the High Court appeal for the European River class action (heard this month);
  • a further 9 settlements presently awaiting court approval, including the Volkswagen, Bellamy's, CIMIC, Vocus and Surfstitch class actions;
  • hearings for the Dick Smith, shattercane seed contamination, Ford, Woolworths and Spotless class actions; and
  • the appeal in the Gladstone Ports class action relating to litigation funding in Queensland.

Update on litigation funding commissions

We reported in December on the High Court's decision in the BMW and Westpac class actions, holding that the Federal Court and the NSW Supreme Court do not have power to make common fund orders pursuant to section 33ZF of the Federal Court of Australia Act 1976 (Cth) ("Federal Court Act") and its state equivalent. Since then:

  • parties in a handful of class actions have foreshadowed seeking orders that would deliver a commission to funders on settlement of a class action. They are relying on section 33V of the Federal Court Act, which allows the Court, on approving a settlement, to "make such orders as are just with respect to the distribution of any money paid under a settlement or paid into the Court".  It is by no means clear that this provision empowers the Court to force unfunded group members to pay funding commissions to third parties with whom they have not contracted, particularly in light of the High Court's dicta in the BMW and Westpac decision.  The issue is set to be tested in connection with the Vocus class action settlement, where the funder will earn a commission of $6.1 million if the Federal Court approves the settlement distribution scheme under section 33V.  The approval hearing in that case is scheduled for 24 April 2020 before Justice Moshinsky;
  • the Federal Court has issued an updated Class Actions Practice Note, in which it says that parties may expect that if it is "fair, just and equitable and in accordance with principle", the Court will "make an appropriately framed order to prevent unjust enrichment and equitably and fairly to distribute the burden of reasonable legal costs, fees and other expenses, including reasonable litigation funding charges or commission, amongst all persons who have benefited from" a class action.

These issues, combined with the impact of foreshadowed contingency fee legislation in Victoria and potential legislative reform in response to the High Court's decision, promise a complex and steadily evolving six months in this space.  We are actively monitoring developments and sharing insights from the coalface.

We hope you find this edition of our Class Action Update informative.


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