Class actions in the Federal Court – what’s required?

Class actions, (Class Actions) as the name suggests, allow a group of people in their capacity as members of a certain class of persons to commence legal proceedings as joint claimants against a respondent.  In the Federal Court of Australia, Class Actions are also referred to as Representative Proceedings.  Not all members of the class need participate in the proceedings, but they may benefit from the outcome of the proceeding.

How is a Class Action commenced?

Class Actions are regulated by the Federal Court of Australia Act 1976 (Cth) (Act) and the Federal Court Rules 2011 (Cth) (Rules).  The Act, per section 33C, outlines the requirement to commence a Class Action:

33C Commencement of proceeding

• Subject to this Part, where:
  • 7 or more persons have claims against the same person; and
  • the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances; and
  • the claims of all those persons give rise to a substantial common issue of law or fact,
• a proceeding may be commenced by one or more of those persons as representing some or all of them.

The law anticipates that technical differences may exist between members of a class.  For example, members pursuing a claim against the same respondent may have separate contracts or transactions in respect of which relief is sought.  Such members of the same class will not be barred from pursuing a Class Action on the basis of these technical differences, provided their claim arise out of similar or related circumstances and have a common issue of law or fact.^[1]

Any one of the seven (7) or more people referred to above in subsection 33C(1)(a) has sufficient interest to commence a Class Action (or even appeal)^[2] against a respondent on behalf of other persons forming part of the class.^[3]  Generally, consent on the behalf of the other class members is not required for a particular person to bring the claim on their behalf.^[4]  Where consent is required it may be given in accordance with Form 20.^[5]

Members of the class may opt out of the Class Action,^[6] by filling out a Form 21.^[7]

Mechanics behind a Class Action

Jurisdictional issues must be considered at the outset.  To bring a Class Action in the Federal Court of Australia, the law underlying the claim which is to be brought must not be of a State or Territory law.  Further, the Federal Court cannot hear claims for Class Actions where its jurisdiction would otherwise be enlivened by virtue of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth).

An originating application (Form 19)^[8] concerning the Class Action must, in addition to the ordinary particulars, include the following:

• identify the group members to whom the proceeding relates (but not by their individual names);
• specify the nature of the claims made on behalf of the group members and the relief claimed; and
• specify the question of law or fact common to the claims of the group members.^[9]

Limits on Class Actions

Where it can be seen that it is in the interests of justice that a Class Action no longer continue, on application by the respondent, the Federal Court may order that the proceeding be discontinued.  Such an order will be interests of justice where:

• the costs that would be incurred if the proceeding were to continue as a Class Action are likely to exceed the costs that would be incurred if each group member conducted a separate proceeding; or
• all the relief sought can be obtained by means of a proceeding other than a Class Action; or
• the Class Action will not provide an efficient and effective means of dealing with the claims of group members; or
• it is otherwise inappropriate that the claims be pursued by means of a Class Action.

A respondent generally has one (1) attempt at the above-mentioned type of application.  If an application to have the Class Action discontinued is unsuccessful, it would be very difficult to bring another similar application.^[10]

Where a Class Action is ordered to discontinue, the individual members may bring an action in their individual capacity.^[11]  Interestingly, another group member may apply to be joined to the application of another group member provided the ordinary criteria to be so joined are satisfied.^[12]

Another limit which may arise from time to time is that the total number of group members of the class, for whatever reason, falls below seven (7) persons.  In such case, the Court will, on such conditions as it thinks fit, either order the proceeding continue or be discontinued.^[13]

Takeaways

Class Actions can be an effective mechanism to pool a group’s assets to enable the ventilation of a collective or widespread issue through the Federal Court.  There are various and strict procedures which need to be followed both at the commencement of the application and throughout the proceeding.  Where such obligations are not met there is often provision for the Court to discontinue the Class Action.

Links and further references

Legislation

Federal Court of Australia Act 1976 (Cth)

Federal Court Rules 2011 (Cth)

Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth)

Cases

Larsson v WealthSure Pty Ltd [2013] FCA 926

Further information about potential class actions

If you need advice on a potential class actions, contact us for a confidential and obligation-free discussion:

Disclaimer

This article contains general commentary only.  You should not rely on the commentary as legal advice.  Specific legal advice should be obtained to ascertain how the law applies to your particular circumstances.

[1] Federal Court of Australia Act 1976 (Cth) s 33C(2).

[2] Ibid s 33D(2).

[3] Ibid s 33D(1).

[4] Ibid s 33E(1).

[5] Federal Court Rules 2011 (Cth) r 9.33.

[6] Federal Court of Australia Act 1976 (Cth) s 33J.

[7] Federal Court Rules 2011 (Cth) r 9.34.

[8] Ibid r 9.32.

[9] Federal Court of Australia Act 1976 (Cth) s 33H.

[10] Ibid s 33N(2).

[11] Ibid s 33P(a); Larsson v WealthSure Pty Ltd [2013] FCA 926.

[12] Ibid s 33P(b).

[13] Ibid s 33L.

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