Precedent (Australian Lawyers Alliance)
“A MATTER OF SOME INTEREST”
By Michael Legg
Class actions, also known as representative proceedings and group proceedings, attract a great deal of interest, both positive and negative, from a range of people and institutions. Reasons for this are discussed from various perspectives in this edition of Precedent.
The class action can facilitate access to justice, obtain compensation and protect consumer and human rights. Ben Slade’s contribution discusses the positive side of class actions through focusing on their social value. The different types of class action are illustrated. The class action’s versatility is further illustrated by three of the other contributions. Rebecca Jancauskas discusses the history of product liability class actions, the causes of action available under the Australian Consumer Law and recent examples including thalidomide, soy milk, knee and hip implants and the epic Vioxx proceedings which ran from 2006 to 2015. Rebecca Gilsenan addresses cartel class actions and barriers to their use including difficulties in accessing information and documents held by the Australian Competition and Consumer Commission, difficulties in proving covert conduct and impediments related to contravening conduct that occurs overseas. Solutions are suggested, including by drawing on the recommendations of the Harper Competition Policy Review. Ben Phi and Tim Finney discuss shareholder class actions and the debate as to the available approaches to proof of causation. The article reviews recent case law discussing whether actual reliance is required or if it is sufficient to prove some form of indirect or market-based causation. These three articles also illustrate another reason for the interest in class actions, namely that class actions may perform a regulatory function by being employed to vindicate broader statutory policies, specifically here: deterring defective products, enhancing competition and encouraging disclosure to the market.
Closely related to the utility of the class action is whether there is funding for what can be expensive and drawn out disputes. Wayne Attrill discusses the role of litigation funders in class actions including how funding arrangements operate and the criteria for funding. The article also deals with the regulation of litigation funding and explains how conflicts of interest are managed.
The class action has also occupied the attention of the judiciary in terms of how to most effectively manage and decide these complex claims. The Hon Justice Jonathan Beach of the Federal Court of Australia examines the issue of how judges may deal with scientific and technical evidence in class actions. His Honour focuses on the novel idea of the use of assessors who sit with a judge to assist in the understanding of expert evidence. The number of persons affected by a class action outcome and the quantum at issue means that novel issues of case management need to be supported and refined.
Class actions have also drawn critical attention on the basis that they enrich lawyers and litigation funders without truly compensating those who were injured. These concerns crystallised in December 2014 when a majority of the Victorian Court of Appeal (Maxwell P and Nettle JA, Kyrou JA dissenting) in Treasury Wine Estates Ltd v Melbourne City Investments Pty Ltd  VSCA 351 found that a shareholder class action brought against Treasury Wine Estates was commenced for the purpose of earning legal fees rather than vindicating legal rights. The class action was found to be an abuse of process. Special leave to appeal to the High Court was denied. Ross McInnes, Alexandra Kennedy-Breit and Magali Manon discuss entrepreneurial class actions in this edition, including the Treasury Wine case. The misuse of the class action is also protected against through the requirement that class action settlements must be approved by the Court. This includes the fees paid to the lawyers. Steven Lewis discusses the GPT shareholder class action where Gordon J conducted a close analysis of the legal fees charged and the evidence provided to support the reasonableness of those fees.
The positive and negative aspects of class actions mean that they need to have their effectiveness evaluated. In my contribution to this edition of Precedent I discuss whether the class action has met the objectives set for it and the need for the necessary information to evaluate effectiveness being placed in the public domain.
Michael Legg is Associate Professor, Faculty of Law, UNSW. He teaches and researches in the areas of complex civil litigation, regulatory litigation and class actions. EMAIL firstname.lastname@example.org.
 This understatement is drawn from Deborah Hensler et al, Class Action Dilemmas – Pursuing Public Goals for Private Gain (RAND Institute for Civil Justice, 2000) p 9.