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Focus: Finally – a class action regime for Queensland

17 August 2016

In brief: Class actions in Queensland are one step closer with the introduction of proposed new legislation into the Queensland Parliament. Partner Michael Ilott (view CV), Special Counsel Robyn Morrison (view CV) and Senior Associate Suzie Fraser report.

 
 

How does it affect you?

  • Deep pocket corporate defendants with disgruntled clients, shareholders and customers, along with their advisers, auditors and brokers, need to take stock and prepare for action. A class action.
  • A cause of action that occurred before the commencement of the new legislation can be the basis of a proceeding.

Background

Class actions are Australia's fastest-growing type of litigation. In recent years, Australia has become the most likely jurisdiction outside of the United States in which a corporation will face significant class action litigation.

Due to the lack of a proper class action regime in Queensland, until now, those actions have had to be commenced in other jurisdictions and the Federal Court. Yesterday, the Queensland Government introduced into Parliament the Limitation of Actions (Institutional Child Sexual Abuse) and Other Legislation Amendment Bill 2016 which will now see Queensland fall into line with other states such as New South Wales and Victoria and provide for a class action regime in its Supreme Court. The proposed regime is substantially the same as the regimes in the other jurisdictions.

The new regime at a glance

A new part will be inserted into the Civil Proceedings Act 2011 (Qld) providing for representative proceedings in the Supreme Court.

How is a class action started?

After the commencement of the new Part, it is proposed that a representative proceeding can be started, even if the cause of action arose before commencement of the Part, by one person on behalf of others if:

  • seven or more persons have claims against the same person;
  • the claims of all persons arise out of the same, similar or related circumstances; and
  • the claims of all persons give rise to a substantial common issue of law or fact.

The other members of the group are not expected to take an active role in those proceedings.

Who can be a member of the class?

The proposed regime is an 'opt out' system, which means that:

  • subject to a few exceptions, consent of a person to be a group member is not required;
  • the group members to whom the proceeding relates will be identified or otherwise described (for example, such as all persons who acquired shares in Company XYZ during a defined period) – it is not necessary to name members of the class nor to specify the number of people in the class;
  • every potential claimant who falls within the class definition is a member of the class unless they opt out of the proceedings. (There is a practice which has developed, however, where some particular law firms or third party funders define a class in a way that effectively requires members to 'opt in' to the class, for example, by entering into a retainer with the particular law firm or an arrangement with a particular third party funder);
  • group members will be given notice of the right to opt out on the commencement of the proceeding. In addition the court will fix a date by which a group member may opt out of the class action;
  • any party that does not respond to an 'opt out' notice within the time set by the court remains a member of the 'class' or group;
  • all group members will be bound by the outcome of the proceedings;
  • all group members are able to benefit from favourable findings in the proceedings and able to participate in any amount provided as settlement; and
  • anyone who opts out may bring an action in their own right arising out of the same facts and pursuant to the same cause of action the subject of the class action.
Judgement and settlement

As is usual with class actions, a representative proceeding will not be able to be settled or discontinued without the approval of the court. The court will need to be satisfied that the settlement is fair and reasonable.

Next steps

The Bill is yet to be reviewed by the nominated committee which will report back to Parliament before the second and third reading speeches. Once the Bill is assented to, the relevant Part will commence on a date to be fixed by proclamation.

It is expected that the Queensland Supreme Court rules will be amended to accommodate the new regime.

For further information, please contact:

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