Legal development

Western Australia has a new class actions regime

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    What you need to know

    • On 1 September 2022, the Civil Procedure (Representative Proceedings) Bill 2021 was enacted. The Act provides for representative proceedings in the Supreme Court of WA and is substantially modelled on Part IVA of the Federal Court of Australia Act 1976 (Cth). The Act contains similar provisions to Part IVA and also is substantively consistent with the analogous provisions in the regimes in other states.
    • The substantive provisions of the Act will not commence immediately in order to allow the WA Supreme Court time to develop supporting practice directions and rules.
    • The new regime was first proposed in 2019 in response to the report by the Law Reform Commission of Western Australia in June 2015, which found that order 18 rule 12 of the Rules of the Supreme Court 1971 (WA), which deals with representative proceedings, is inherently uncertain and inadequate to facilitate large representative actions.  The Bill was re-introduced in substantially the same form following the 2021 state election.
    • The Act abolishes the torts of maintenance and champerty.  This adopts the recommendation in a report by the Law Reform Commission of Western Australia in August 2021, which considered that the torts were a barrier to justice and noted that the torts have since been abolished by most other Australian jurisdictions.  The abolishment will provide more certainty for parties seeking to engage litigation funders to support representative proceedings.

    What are the main features of a class action?

    Some notable aspects of the Act are:
    • proceedings are commenced in the name of one or more "representatives" on behalf of 7 or more persons;
    • consent to be a "group member" of the representative proceedings is not required but a group member may "opt out" of the proceedings prior to a certain date;
    • causes of action accruing after commencement of the representative proceedings may be dealt with as part of the representative proceedings;
    • the Court may discontinue proceedings in circumstances where costs incurred in the proceedings are likely to exceed the costs that would be incurred if each group member conducted separate proceedings (among other reasons);
    • notice of certain matters must be given to group members, including in relation to commencement of the proceedings and the date to opt out of the proceedings;
    • the Court may order the constitution of a fund consisting of the money to be distributed to group members; and
    • representative proceedings cannot be settled or discontinued without the approval of the Court. 

    Differences between the Act and other Australian regimes

    Following commencement of Part IVA of the Federal Court of Australia Act in 1992, various states adopted similar regimes.  These regimes have been adopted in New South Wales, Victoria, Queensland, South Australia and Tasmania.  It remains to be seen whether the Northern Territory and the ACT will follow suit.

    There are a number of minor differences between each of the regimes, and WA has had the benefit of observing and considering how each regime has worked in the other states.  Some key differences are as follows:

    • In NSW, a court may discontinue proceedings if the representative party is unable to adequately represent the interests of its group members.  There is no such provision in the Act, however, the Act allows the Court to substitute another group member as a representative party where the representative party is not able to adequately represent the interests of the group members.
    • The Act provides that it is not necessary that each claimant have a claim against every named defendant.  As noted in the explanatory memorandum for the Bill, this provision was inserted in order to avoid the effect of Philip Morris (Australia) Ltd v Nixon (2000) 170 ALR 487, which is authority for the proposition that, under the Federal Court of Australia Act, group members must have a claim against all respondents.  This provision was inserted notwithstanding doubt having been cast over this proposition in Cash Converters International Limited v Gray [2014] FCAFC 111.  This issue is not addressed in the federal or Victorian regimes, but is addressed in the Queensland and New South Wales regimes.
    • Both the Act and the regime in NSW contain provisions permitting a Court to determine sub-issues for sub-groups.  However the Act, but not the regime in NSW, contains a provision which provides that a representative of a sub-group, as opposed to the representative party, may be liable for costs associated with determining the sub-issue.

    Abolition of torts of maintenance and champerty

    Litigation funding arrangements play a significant role in the class action regime in Australia due to the high costs of conducting large-scale representative proceedings.  Previously, the torts of maintenance and champerty made it unlawful for a litigation funder to support a litigation that it did not have a direct interest in.

    In 2021, the Law Reform Commission of Western Australia recommended that the torts be abolished as they were considered to be a barrier to justice.  In drafting the Bill it was recognised that the torts could be used by defendants to stymie class actions when litigation funders assist plaintiffs.

    There was broad stakeholder support for the abolishment of the torts and the changes bring WA into line with most other Australian jurisdictions, which have also abolished maintenance and champerty.

    Will the Act improve access to justice?

    The aims of Part IVA of the Federal Court of Australia Act were described in Money Max Int Pty Ltd (Trustee) v QBE Insurance Group Ltd [2016] FCAFC 148 at [177]:

    "…the central aims of Part IVA of the Act include enhancing access to justice and increasing the use of judicial measures by allowing a common, binding decision to be made in one proceeding instead of in multiple proceedings…such purposes underpin class action regimes around the world".

    Likewise, Attorney General John Quigley said that the WA regime will enhance access to justice by reducing the cost of court proceedings, improving the individual's ability to access legal remedies and enabling court resources to be used more efficiently.  Given the cost of litigation, many claims are not pursued because the amount likely to be recovered is too small relative to the costs of prosecuting a claim in court.  However, when many persons suffer a similar loss, albeit of a low value, an opportunity arises to deal with them at the same time in a cost effective manner.  The experience under the class action regimes in the Federal Court of Australia Act and in the other states suggests that the new regime will enable claims to be prosecuted which would otherwise be uneconomical to pursue.

    Will there be an increase in the prevalence of class actions in WA?

    The Act provides WA litigants with a clear alternative to the Federal Court and will enable class actions to be brought where there is no federal cause of action or jurisdiction.  In other states, class actions have been brought in the tort of negligence under the state regimes, including in relation to disasters affecting large numbers of claimants, such as bushfires and floods.

    The introduction of the Act will likely result in:

    • an increase in the number of representative actions being commenced in the WA Supreme Court, which have dwindled in recent years;
    • a reduction in costs associated with pursuing representative actions in the WA Supreme Court;
    • improved certainty for parties when considering their options with respect to commencing or defending a class action and identifying the associated costs, including engaging litigation funders; and
    • dedicated WA Supreme Court resources. 

    While the immediate impact of a new class action regime for WA remains to be seen, it is likely to significantly alter the local litigation landscape.

    Authors: Adrian Chai, Partner; Sam Mengler, Senior Associate; and Yasoda McGeary, Graduate Lawyer.

    The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to.
    Readers should take legal advice before applying it to specific issues or transactions.

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