24 March 2015

Class Action Update: Q1 2015

Welcome to the Q1 2015 issue of Class Action Update, our first edition for the calendar year. This quarter has been eventful, with a number of significant settlements and a number of new actions being filed or proposed in relation to a diverse range of subject matters.

In this edition:

Indirect causation – are we getting closer?

In March 2015, the Federal Court of Australia delivered its decision in Grant-Taylor v Babcock & Brown Limited (In Liquidation) [2015] FCA 149, dealing with shareholder claims against global investment house Babcock & Brown. It is very rare in Australia for a securities class action to proceed to judgment; here, the claimants were wholly unsuccessful. This decision, however, has a further significance in that, for the first time, a Judge of the Federal Court of Australia accepted that investors who buy shares in a listed company could, following continuous disclosure breaches, recover damages without proving a direct causal link between the non-disclosure and their decision to invest in the company. Although Justice Perram’s comments on this issue were obiter, the decision represents an important step in the ongoing debate concerning the basis for liability in complex securities litigation and class actions. Read more about the decision in our Alert of 5 March 2015.

In the market place:

Since our Q4 2014 edition, a number of new class actions have been filed, including proceedings against:

  • Australian Executor Trustees, arising from the collapse of non-bank lender, Provident Capital, in 2012; and
  • listed education provider, Vocation, filed by Slater & Gordon in February and alleging continuous disclosure breaches and misleading and deceptive conduct. An earlier action against Vocation was filed by Mark Elliott in November 2014 and a third class action (being investigated by Maurice Blackburn) is reportedly close to proceeding.

Further class actions have been mooted on behalf of Nexus Energy shareholders in relation to the takeover of the energy company; against a number of finance companies in relation to credit card late payment fees; and by consumers who have contracted Hepatitis A after eating frozen berry products. An action is also being considered by traditional owners in Western Australia against the State Government over the de-registration of sacred indigenous sites.

In addition, this quarter saw:

  • the proposed settlement of the CBA (Storm Financial) class action, with the approval hearing fixed for May;
  • the approval of a re-negotiated settlement in the Vioxx class action (an earlier settlement was not approved); and
  • an in-principle agreement, reached just before trial, to settle the Murrindindi-Marysville bushfire class action for $300 million. The settlement approval hearing is fixed for May.

Our watch list for the quarter ahead includes:

  • the hearing against DePuy and Johnson & Johnson, the producer and distributor of the ASR hip implant, which commenced in March;
  • the reserved judgment in relation to the common fund application in the Allco class action. See our Q3 2014 edition for more commentary on the common fund approach to the financing of class actions; and
  • the reserved judgment in the ANZ bank fees class action appeal (the hearing before the Full Federal Court of Australia concluded in August 2014).

Directions 2015 Report

We look forward to the release this week of the King & Wood Mallesons Directions 2015 Report, which focusses on issues and challenges facing Australian directors and boards. Notably, a significant 22% of the publication’s survey respondents ranked the “emergence of class actions” as one of the top five regulatory challenges in 2015 for their organisations.

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

Best wishes,
Moira Saville and Peta Stevenson

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