86/29
IVE
DEPA
THE
CTI
ILL 1986
( P r i v a t e Senator's B i l l )
19 March 1986
Senate
Senator t h e tion. David V i g o r
Purpose
To make c l a s s a c t i o n s a v a i l a b l e i n A u s t r a l i a ,
Back g ro und
A c l a s s a c t i o n i s a c o u r t procedure where a number
o f people who a r e p a r t i e s t o ~ ~ t ~ g a t ji ooi n t o g e t h e r and
The s i t u a t i o n most commonly
a r e t r e a t e d as a s i n g l e p a r t y .
r e f e r r e d t o when d i s c u s s i n g c l a s s a c t i o n s i s where numerous
p l a i n t i f f s j o i n t o g e t h e r a g a i n s t a s i n g l e defendant.
C u r r e n t l y i n A u s t r a l i a p r o v i s i o n i s mad
m u l t i - p a r t y l i t i g a t i o n i n each S t a t e ' s Rules o f Court.
The
Rules v a r y from S t a t e t o State, however, t h e r e i s g e n e r a l l y
p r o v i s i o n f o r j o i n d e r o f p l a ~ n t i f f s and r e p r e s e n t a t i v e
actions.
J o i n d e r i s seldom used by numerous p l a i n t i f f s
because each p l a i n t i f f has t h e usual l i a b i l i t y f o r h i s l h e r
costs together w i t h t h e potential l i a b i l i t y o f t h e
d e f e n d a n t ' s c o s t s , and unnamed p a r t i e s a r e n o t bound by t h e
judgment.
Representative a c t i o n s f a i l where each p l a i n t i f f
i s r e l y i n g on a separate c o n t r a c t w i t h t h e defendant and a r e
a l s o r e s t r i c t e d by t h e C o u r t ' s i n a b i l i t y t o award damages i n
such a c t i o n s .
A c c o r ~ i n g ~where
y~
a nume~ous d i v e r s e group
o f people, such as consumers o f a p a r t i c u l a r product, s u f f e r
a small amount o f damage as t h e r e s u l t o f a d e f e n d a n t ' s
a c t i o n o r i n a c t i o n , i t i s u n l i k e l y t h a t t h e m a t t e r w i l l be
b r o u g h t b e f o r e an A u s t ~ ai la n Court
Class a c t i o n s have e x i s t e d i n t h e USA s i n c e 1938
and have been e x t e n s i v e l y used, part-icul a r l y s i n c e t h e
procedure was s t r e a m l i n e d i n 1966.
Class a c t i o n s a r e
86/29
- 2 -
a v a i l a b l e i n t h e USA where t h e c l a s s i s numerous, t h e r e a r e
common questions o f l a w or f a c t , t h e r e p r e s e n t a t i v e ' s c l a i m
i s t y p i c a l o f t h e c l a s s and he/she can show an a b i l i t y t o
f a i r l y r e p r e s e n t t h e i n t e r e s t s o f t h e o t h e r members o f t h e
c l ass
e
An i m p o r t a n t d i f f e r e n c e between t h e American and
t h e A u s t r a l i a n l e g a l system r e l a t e s t o t h e r u l e s regarding
costs.
I n t h e USA, u n l i k e A u s t r a l i a , a successful p a r t y ' s
lawyer r e c e i v e s as t h e i r f e e a percentage o f t h e amount
awarded i n judgment.
Where t h e r e i s t h e p o s s i b i l i t y o f a
very l a r g e award o f damages t h e i n i t i a t i v e t o commence
1 i t i g a t i o n sometimes comes from t h e lawyers.
Some problems experienced i n t h e USA w i t h c l a s s
a c t i o n procedure have been t h e d e f i n i n g , l o c a t i n g and g i v i n g
s u f f i c i e n t n o t i c e t o each p o t e n t i a l member o f a c l a s s , and
d e c i d i n g who should bear t h e c o s t o f such p r e l i m i n a r y work.
Secondly, t h e r e has been considerable debate about whether a
p o t e n t i a l member o f a c l a s s should have t o ' o p t i n ' o r ' o p t
T h i r d l y , consumer and b u s i n e s s
out' o f a class.[l]
o r g a n i s a t i o n s a l i k e a r e concerned a t t h e increase i n t h e
p r i c e o f goods and services, as businesses pass on t h e c o s t
o f having t o i n s u r e against t h e r i s k o f a m u l t i - m i l l i o n
d o l l a r c l a i m f o r damages.
An example o f an American c l a s s a c t i o n which
a f f e c t e d A u s t r a l i a n s i s t h e case o f Vietnam veterans seeking
t o recover damages from t h e Dow Chemical Company f o r
i l l n e s s e s they allegedly contracted a f t e r contact w i t h t h e
h e r b i c i d e Agent Orange.
I n May 1984 a r e c o r d o u t - o f - c o u r t
s e t t l e m e n t o f $267 m i l l i o n was p a i d i n t o a fund f o r Agent
Orange v i c t i m s .
O f t h i s , $5.3 m i l l i o n was a l l o c a t e d t o
A u s t r a l i a n veterans.
E l i g i b i l i t y c r i t e r i a were determined
by t h e U n i t e d S t a t e s D i s t r i c t Court and a t r u s t company was
i n c o r p o r a t e d i n A u s t r a l i a w i t h a Board t o a d m i n i s t e r
d i s t r ib u t ione
I n 1974 and 1975 Professor N e i l W i l l i a m s o f t h e
Osgoode H a l l Law School i n Toronto, Canada, prepared two
papers[2,3]
which examined t h e need f o r c l a s s a c t i o n s i n
Canada and s e t o u t a d r a f t proposal f o r l e g i s l a t i o n t o
i n t r o d u c e c l ass a c t i o n s
The Canadian devel opments a r e
r e l e v a n t t o A u s t r a l i a because t h e procedures then e x i s t i n g
f o r mu1 t i - p a r t y 1 i t i g a t i o n were e s s e n t i a l l y t h e same as
e x i s t i n A u s t r a l i a now. J u s t as i m p o r t a n t l y , t h e c o s t r u l e s
i n Canada, as i n A u s t ~ a ~ ~ par o, v i d e f o r t h e unsuccessful
p a r t y t o pay a p r o p o r t i o n of t h e successful p a r t y ' s costs.
P r o f e s s o r W i l l iams l a r g e l y adopted t h e American
requirements necessary t o e s t a b ~ i ~ah c l a s s a c t i o n b u t a l s o
added t h e f u r t h e r p r e r e q u i s i t e t h a t t h e ' a c t i o n i s brought
i n good f a i t h and a p p e a r s t o have m e r i t ' Such a
p r e r e q u i s i t e would be d e a l t w i t h a t a ' p r e - h e a r i n g ' and i f
t h e p l a i n t i f f succeeded t h e y would be immune from meeting
f u r t h e r costs.
Professor W i l l i a m s t h e n provides f o r t h e
p l a i n t i f f ' s c o s t s t o be p a i d on a contingency b a s i s , w i t h
t h e Court c a l c u l a t i n g t h e amount and t a k i n g i n t o account t h e
s i z e o f t h e recoveryo
Professor Williams also f e l t t h a t the s t r i c t
requirements as t o n o t i c e , such as e x i s t e d i n t h e USA,
should n o t be adopted by Canada and t h a t requirements
r e g a r d i n g n o t i c e should be l e f t t o t h e C o u r t ' s d i s c r e t i o n .
I n 1977 t h e South A u s t r a ~ i a n Law Reform Committee
1 a r g e l y adopted t h e approach t a k e n by Professor W i l l iams
t o g e t h e r w i t h h i s d r a f t proposal f o r l e g i s l a t i o n . [ 4
Subsequently i n 1979 t h e A u ~ t r a ~ ~l a wn Reform
general l y endorsed Professor H i 11 iams ' views
present B i l l r e l i e s h e a v i l y on t h e South A u s t r a l i a n Law
Reform Committee's r e p o r t and i t s d r a f t B i l l f o r a Class
Actions A c t e
The Judi
1903 ( t h e P r i n c i p a l A c t ) i s
amended by clause 3 which w i l l i n s e r t a new D i v i s i o n 3A,
t i t l e d 'Class A c t i o n s ' i n t o t h e P r i n c i p a l Act.
D e f i n i t i o n s of ' c l a s s ' * ' c l a s s a c t i o n t and ' c o u r t '
a r e c o n t a i n e d i n proposed s
Proposed s e c t i o n 8% w i l l a l l o w a person t o sue on
b e h a l f o f o t h e r s , where t h e m ~ m ~ e r so f t h e c l a s s a r e
numerous, where t h e r e are common questions o f l a w o r f a c t
and where t h e r e p r ~ s ~ n t a t w~i 11
~ e f a i r l y and adequately
p r o t e c t the i n t e r e s t s o f t h e class.
The Court may, a t i t d ~ s c ~ ~ t oi rod enr ~t h a t n o t i c e
be g i v e n t o t h e members o f a c l a s , ~ p ~ o p so esc t~~ ~
o n85D).
A c l a s s a c t i o n will no
Lo be d j s c o n t i n u e d
w i t h o u t t h e approval o f t h e o u r t . As well, p l a i n t i f f s w i l l
n o t be a b l e t o c h a n ~ et h e i r a r r j s t e r s o r sol i c i t o r s w i t h o u t
t h e approval o f t h e Court (proposed s e c t i o n 85E).
- 4 -
86/29
Members who have requested e x c l u s i o n from t h e c l a s s
w i l l n o t be a f f e c t e d by t h e judgment (proposed s e c t i o n 856).
A Class A c t i o n Fund ( t h e Fund) w i l l be e s t a b l i s h e d
by proposed s e c t i o n 85K.
The Fund's income w i l l come from
Consol i d a t e d Revenue, o r d e r s made under proposed sub-section
855(5) and i n t e r e s t from t h e investments o f t h e Fund.
The
Fund w i l l be expended on a s s i s t i n g c e r t a i n people t o b r i n g
c l a s s a c t i o n s by paying t h e i r costs and t h e c o s t s t h e y have
i n c u r r e d by reason of having t o g i v e n o t i c e t o o t h e r c l a s s
members.
When c o n s i d e r i n g whether a person should r e c e i v e
assistance from t h e fund, t h e Attorney-General s h a l l t a k e
i n t o c o n s i d e r a t i o n t h a t person's resources o t h e r assistance
open t o t h a t person, t h e m e r i t s o f t h e c l a s s a c t i o n and
whether a c l a s s a c t i o n i s t h e s u p e r i o r mode o f t r i a l
(proposed s e c t i o n 85K(6)).
Such an a s s i s t e d person must
r e f u n d t h e money t o t h e Commonwealth i f t h e y a r e
subsequently awarded costs.
P r o v i s i o n i s made (proposed
s e c t i o n 85K(9)) f o r a person t o appeal a g a i n s t a d e c i s i o n o f
t h e Attorney-General
.
Proposed
section
85K(13)
requires
the
Attorney-General t o tab1 e an annual r e p o r t concerning t h e
o p e r a t i o n of t h e Fund.
The c o s t s o f a c l a s s a c t i o n w i l l be i n t h e C o u r t ' s
discretion.
However, a Court w i l l g e n e r a l l y not be a b l e t o
award costs t o a defendant (proposed s e c t i o n 85L).
For f u r t h e r i n f o r m a t i o n ,
Law and Government Group-
22 A p r i l 1986
i f required,
contact the
- 5 -
1.
2.
3.
Michael Owen, The Extended C l a s s A c t i o n i n t h e
Austral i a n Context, Austral ian I n d u s t r i e s Development
Association, Melbourne, 1979, pp.22-5.
Professor Neil Will iams
'Consumer Class Actions in
Canada - Some Proposals - f o r Reform',
Journal 13. June 1975. r1.1.
Professor i e i 1 Wi 11 ia% ,. 'Damages C1 a s s Act ion under the
4.
5.
0
Australian Law Reform Commission, Access t o t h e Courts
I 1 Class Actions, Discussion Paper No. 11.
-
Commonwealth of A u s t r a l i a 1986
Except t o the extent o f the uses permitted under t h e
Copyright Act 1968, no part of t h i s publication may be
reproduced o r t r a n ~ m i t t ~ di n any form o r by any means,
incl uding information s t o r a g e and r e t r i e v a l system, without
t h e p r i o r w r i t t e n c o n s e n t of t h e Department of t h e
Par1 iamentary L-i brary. Reproducti on i s permitted by Members
of the Parliament of t h e C~mmonwea~thi n the course of their
o f f i c i a1 duties
e