Herbert Smith Freehills has recently published the Class Actions Developments and Trends report 2013/2014. Damian Grave, Ken Adams and Jason Betts provide a review of the past year and consider possible trends for 2014 for Australia, amongst other jurisdictions, while Peter Godwin and Gareth Thomas provide an update of the recent developments in Tokyo and Hong Kong. This blog post provides a synopsis of the report.
It is a growth period for class action litigation in Australia.
Australian corporations now face an unprecedented number of large class action proceedings commenced in Australian courts. Symbolic of this trend:
- Over the last 5 years, we have acted for defendants in class actions with a total claim value of more than $3 billion.
- In the last two years there have been close to $900 million of class action settlements in Australia.
- The largest class action funder, Bentham IMF, is on track to achieve a funded litigation portfolio of $2 billion.
- At least 6 class action trials are due to occur in 2014 and another 5 potential actions have already been promoted by major funders or plaintiffs’ firms.
- Several US commentators have identified Australia as a pro-plaintiff legal environment that is emerging as perhaps the most attractive forum for class action litigation after the US.
While the promoters of class actions have continued to focus on shareholder class action claims against Australian companies for breaches of the continuous disclosure regime under the Corporations Act, a range of developments over the last 12-18 months indicate that new horizons within the class action and funding industries are opening. In particular:
- There is a renewed interest in ‘mass consumer claims’ spurred by actions such as the Bank Fees class actions funded by Bentham IMF. Promoters are looking to prosecute claims across large consumer bases where the use of standard contracts or uniform processes for imposing charges created the possibility for significant contractual claims against large Australian corporations. Threatened class actions against mobile telecommunication providers are likely to emerge this year adopting a similar approach.
- Large scale product liability class actions are being pursued, particularly in circumstances where medical or pharmaceutical devices are the subject of a global class action or mass tort proceedings which can be ‘mirrored’ in Australia on behalf of local claimants.
- Australia’s propensity for significant natural disasters continues to set the context for major class action litigation, exemplified by the current and threatened class actions emerging out of major bushfire and flood events.
- New horizons for financial class action litigation are being explored, including more claims in relation to failed investment schemes, and the targeting of those responsible for insolvent investment vehicles in an effort to create class action opportunities in areas traditionally not exposed, including several claims against trustees of failed funds under the trustees provisions of the Corporations Act.
- The spectre of class action litigation continues to be a major topic in Australian boardrooms. It is also notable that five class actions commenced in 2013 were related to allegations of corporate non-disclosure. This underscores the need for corporate Australia to continue to be pro-active in managing continuous disclosure risk in the context of an ever-volatile market.
This summary of the class action environment is merely an overview of the complexity and controversy of this type of litigation and its continued growth in Australia. A number of these themes are explored in this report which includes:
- the outlook for class actions in 2014
- a snapshot of class action proceedings in 2013/2014
- settlement trends in 2013 and the approach of courts to settlements in 2013
- trends and developments in litigation funding
- key legal developments in 2013 including:
- case updates
- security for costs
- access to foreign documents
- legislative reforms in Australia, UK and Europe
- overseas developments in the UK, EU, Asia (including Hong Kong and Japan) and the US
- insurance issues relevant to class actions