Class actions in Qld

The Limitation of Actions (Child Sexual Abuse) and Other Legislation Amendment Act 2016 is the vehicle by which the Civil Proceedings Act 2011 has been amended to establish a regime for conducting class actions in Queensland.

As at the date of this article, that part of the Act relating to class actions had not yet commenced. It will commence on proclamation, which is expected to be in early 2017.

Interests of justice

Before this legislation, Queensland potential ‘class action’ claimants could only bring proceedings in Queensland using the representative parties’ provisions of the Uniform Civil Procedures Rules 1999. These provisions are limited and do not provide the necessary framework for the effective conduct of large class actions.

In Queensland, if the proceeding enlivened Commonwealth legislation, proceedings could be commenced in the Federal Court.

Although the forum of convenience is a significant factor to consider when commencing representative proceedings, it is not the only one.

Expense, witness availability, location of parties and the governing law will be considered in arriving at a natural forum. Prior to the passage of this legislation, the existence of a class action regime in another jurisdiction was an advantage not open to a representative plaintiff in a large class action in Queensland.

Proceedings could be commenced in a jurisdiction with a class action regime (like New South Wales or Victoria) if it was in the interests of justice, even though they would otherwise have been commenced in Queensland.

Commencement of proceedings

By the insertion of Part 13A Representative Proceedings in Supreme Court, the Civil Proceedings Act 2011 now provides a comprehensive legal framework for the commencement and management of proceedings undertaken by and on behalf of more than seven claimants against the same defendant or defendants, arising out of the same, similar or related circumstances, giving rise to a substantive common issue of law or fact (s 103B).

A representative plaintiff undertakes the active conduct of the proceeding. With some exceptions, the other class members are passive participants except for establishing an entitlement to a benefit under the judgment.

If there are fewer than seven group members at any stage in a representative proceeding, the court may order that the proceeding be continued under Part 13A or that it no longer continue under that Part (s 103I).

Once a representative proceeding is commenced, the limitation period applying to the claim of a group member to which the proceeding relates, is suspended and only starts to run again if the member opts out of the representative proceeding or any appeal is decided without finally disposing of the member’s claim (s 103Z).

Constituting a group

Constituting a group for the purpose of commencing representative proceedings requires sufficient interest and standing as set out in s 103B.

The originating process does not have to identify the group members by name or number but only describe the members of the group, state the nature of the claims and state the common questions of law or fact. A defendant may find this frustrating because without more information, it is difficult to identify the potential extent of financial exposure that the defendant faces. However, in the appropriate circumstances, the court may order that particulars are provided by a representative party to a defendant.

Consent

Subject to certain exceptions, the consent of a person to be a group member is not required.  Membership of the group is acquired automatically by a party who comes within the group description. The exceptions are set out in s 103D. A person under a disability does not require a litigation guardian to be included as a group member but must have a litigation guardian to take a step or conduct part of the proceeding.

Sub-groups

The court has power to direct the establishment of sub-groups in circumstances where the determination of the common issues will not determine the claims of all group members but some of those issues are common to a group of members. If the sub-group representative is not the group representative, there may be costs implications for the sub-group representative in determining the issues peculiar to that sub-group (s 103M, N and O).

However, because of the costs issues referred to, a court may instead direct that the group representative provides sample group members to demonstrate that there remains sufficient standing and common interests for the group to remain whole. For example, in a large class action with group members from rural, residential, commercial and industrial areas, the identification of sample group members is appropriate.  Lay witnesses’ evidence can be given in support of the court’s directions.

Opting out

Any number or a group may opt out by giving notice and the court will usually set a date by which an Opt Out Notice should be given, but can extend it. The opt out date is important because membership of the group accrues to anyone who falls within the group decision. In fixing the opt-out date, the court considers the state of the proceeding. The hearing cannot commence until after opt out dates have passed. The Opt Out Notice is in a form approved by the court and its contents may vary depending on the legal status of the group members, for example, subrogated claims by insurers as distinct from other claims, property damage or economic loss claims.

If a group member fails to opt out within the time specified and then commences other proceedings concerning the same issues, the court may stay or summarily dismiss the later proceedings. Parallel proceedings between the same parties about the same issues usually amount to an abuse of process.

Occasionally a group member who has opted out seeks to be reinstated. The court may so order using its discretion to give directions (s 103ZA) or its power to ensure that proceedings are fully and finally determined.

Settlement and discontinuance

The settlement and discontinuance provisions are similar to the steps required to be taken in settling a claim by a person under a disability. A representative proceeding may not be settled or discontinued without the ‘approval’ of the court. If the court approves the settlement, then it may make orders which it considers just for the distribution of the money paid under a settlement.  Notice is required to be given to group members that an application will be made under s 103R for the approval of a settlement.

Similarly, in the provisions about discontinuance of proceedings, a court may order that a proceeding no longer continues under Part 13A if the court considers it is in the interests of justice to do so for specified reasons (s 103K).

The 'interests of justice' theme is strong in this new Queensland legislation, exemplified in the General Powers of the Court to make any orders on its own initiative (or on application) which it considers appropriate or necessary to ensure justice is done in the proceeding including in an appeal (s 103Z).

Judgment and damages

Judgment in a representative proceeding may take several forms. The judgment must describe or identify the group members and bind all members of the group except those who have opted out. The judgment may:

• determine an issue of fact or law
• make a declaration (as to liability for example)
• grant equitable relief
• award damages to group members, sub-group members or individuals
• award amounts worked out in accordance with the court’s directions
• award damages in an aggregate amount without specifying the amounts to individual group members or
• make any other order the court thinks just (s 103V).

If a court decides an issue of law or fact and makes a declaration of liability and awards damages under s 103V, that may lead to the necessity to make an order to constitute and administer a fund consisting of the monies to be distributed.

Appeals

Like the initiating proceeding, an appeal may take the form of a group proceeding. A representative party may appeal on behalf of the group members. A sub-group representative may appeal on behalf of the members of the sub-group. Conversely, a respondent may appeal either against the judgment generally or as to the issues common to a sub-group. A respondent may also appeal against the judgment so far as it concerns an individual. A group member cannot opt out of an appeal.

Costs

If the court awards damages, a representative party may apply for costs. If the costs awarded are likely to exceed the costs recoverable from the defendant, the court may award an amount equal to the whole or part of the excess be paid to the applicant out of the damages awarded.

For a successful defendant, the court has power to make any other order it considers just. There seem to be no specific references in the legislation for costs awards and their consequences if made in favour of a defendant.

Costs are a vexed issue in representative proceedings. Defendants must seek orders for security for costs outside the provisions of Part 13A. Obtaining from lawyers for representative parties early in the proceedings, details of their litigation funding arrangements and obtaining satisfactory undertakings and indemnities from them can be problematic for defendants.

Regulation of class action funding has recently been addressed by the Federal Court in the context of an open class action in which the court supported the use of a common fund order to require all class members (whether they had signed the funding agreement or not) to contribute to the funder’s commission. This may be unattractive to funders who may prefer to run closed class actions.

In these actions, every class member agrees to be bound by the terms of whatever financial arrangement has been struck with the parties, their lawyers and the particular funder to enable the group members to take part in the proceedings.

^{The information in this publication is provided for general purposes only. It is not to be relied on as a substitute for legal advice. Crown Law and the Department of Justice and Attorney-General accept no liability for losses caused by reliance on the material in this publication. Formal legal advice should be obtained for particular matters.}