Western Australia’s new class action regime commences

Articles Written by George Croft (Partner), Robert Johnston (Partner), Felicity Karageorge (Partner), Heather Urry (Associate)
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On 24 March 2023, the Civil Procedure (Representative Proceedings) Act 2022 (WA Act) commenced. The WA Act introduces an updated and more cohesive mechanism for bringing class actions in WA. With this reform, WA becomes the fifth State in Australia to enact a dedicated class actions regime, joining NSW, Victoria, Queensland and Tasmania.

While it remains to be seen how long it will take for the first representative proceeding to be commenced in the WA Supreme Court, the development is an important one for corporates, the legal sector and litigation funders alike.

The impact

No class actions have yet been commenced in the Supreme Court of WA.[1] We expect that the Federal Court will largely remain the forum of choice overall with uptake expected to be relatively slow in WA.

That said, given the Western Australian economy is predominately resources focussed, it may not be long before we see shareholder class actions brought in WA based on allegations of continuous disclosure breaches against listed resources companies registered or operating in WA. These claims would be include alleged failures to have updated the market on matters concerning resource estimates and earnings guidance. In addition, given the experience of the Judges of the WA Supreme Court in dealing with mining litigation in particular, WA may become a more attractive forum to bring class action disputes of this kind. Litigation funders have a longstanding interest in WA-based litigation given the strong utilisation of arbitration as an alternative dispute resolution method in WA. Funders will therefore be attracted to funding WA-based class actions as a means of expanding the take up of litigation funding within the WA legal industry.

Background to the WA Act

Although not widely known or utilised, WA did have an existing mechanism by which class actions could be brought in the Supreme Court of WA.[2] However, the mechanism was criticised for being outdated and unclear. As many will know, the Federal Court had until recently become the primary ‘forum of choice’ for the bringing of class actions in Australia, since Part IVA the Federal Court of Australia Act 1976 (Cth) (Federal Court Act) was introduced in 1992.

In July 2011, the WA Law Reform Commission commenced an investigation to recommend changes to the principles, practices and procedures regarding class action disputes in WA. In 2019, the Law Reform Commission recommended that WA enact a legislative scheme based on Part IVA of the Federal Court Act.

Key differences with the Federal regime

The new WA class action regime will apply to all class actions commenced on or after 14 September 2022, including those involving a cause of action arising prior to the commencement date.

The new regime is largely similar to the Federal regime but contains the following key differences:

(a)The WA Act’s definition of ‘representative party’ is broader. It is not limited to a person who commences a class action proceeding but also includes a person who is substituted as a representative party.

(b)The Federal Court Act requires that the class of at least seven group members must have a claim against the ‘same person’. Under the WA Act, a class action can be commenced by a group of at least seven members against multiple respondents, regardless of whether at least seven people in the class has a claim against the same respondent.[3]

(c)The WA Act mandates a review of the operation and effectiveness of the regime every five years. There is no similar mandatory review provision in the Federal Court Act.

(d)Under the WA Act, the Supreme Court’s power to substitute another group member as a representative party is broader. The Court may do so if it is of the view that ‘it is otherwise in the interests of justice to do so’.[4]

An associated legislative amendment is the express abolishment of the torts of maintenance and champerty in WA, removing any issue as to whether third party litigation funders may fund class actions brought in the Supreme Court of WA.

Updates to Consolidated Practice Directions

Along with the enactment of the new legislation, the Supreme Court of Western Australia has also released an updated version of the Consolidated Practice Directions to provide procedural guidance on how class actions are to be conducted and managed in WA.

Class actions will be managed by a Judge in a dedicated list, called the ‘Representative Proceedings List’.

A directions hearing will be fixed for a date within six weeks of the filing of the originating process. Early strategic conferences will be used to ventilate issues such as the description of group members, the protocol for communicating with unrepresented group members, the date before which a group member may opt out of the proceeding and the manner of publication and dispatch of any opt out notices. Following the strategic conference, case management will be conducted in accordance with the Commercial and Managed Cases List.

A key objective is to manage the transparency of legal costs. In order to accomplish this, there are general disclosure obligations to disclose cost agreements and litigation funding arrangements, which are based heavily on the Federal regime. For example:

(a)Lawyers must ensure that group members are notified of legal costs and litigation funding charges as soon as practicable and in clear terms. Further, notice of any material changes to those arrangements should be promptly given to group members. Failure to discharge these obligations may be taken into account by the Court in approving any settlement.

(b)The representative party’s lawyers must email, on a confidential basis, unredacted copies of any costs agreement and/or litigation funding agreement to the Associate of the managing Judge before the first directions hearing. Any amended versions of these documents must also be provided.

(c)The representative party’s lawyers must serve copies of any cost agreement and/or litigation funding agreement on all other parties to the class action (with limited redactions permitted).

(d)Referees may be appointed to determine whether legal costs and funders’ charges are reasonable and proportionate, and ought to be permitted, in the context of the Court being asked to approve any settlement.

Experience of class action regimes in other States

To date, NSW, Victoria, Queensland and Tasmania have adopted their own class action regimes largely based on the Federal regime. The prevalence of class actions in those jurisdictions may inform the likely uptake in Western Australia.

Victoria was the first State to amend its legislation in 2000 to improve the procedure for bringing class actions. Victoria’s longstanding class action regime makes it the second most popular forum, behind the Federal Court, to hear class action proceedings. More recently, Victoria changed its laws to permit lawyers to charge “contingency” fees in class actions. This allows representative claimants to seek an order from the court that legal costs payable to their lawyers be calculated as a percentage of any claim proceeds recovered in the proceedings subject to certain conditions being agreed by the lawyers. This is the only jurisdiction in the country which permits such contingency fees. Since its introduction, there has been an increase in class action claims filed in Victoria.

There have been around 60 class actions commenced in the New South Wales Supreme Court since the commencement of its regime in 2011. There are currently around 21 active class actions in the Court.

Queensland implemented its regime based on the Federal regime in 2017, but the uptake has been slower. In the past six years since its enactment, only around a dozen class actions had been filed in the Queensland Supreme Court. The same has been true in Tasmania since its amended class action regime commenced in 2019. The first class action there was not commenced for another three years when, in August 2022, a representative proceeding was brought on behalf of over 100 former child detainees of the State’s Ashley Youth Detention Centre.

The Federal Court currently remains the most favoured court in which to commence representative proceedings with 541 class actions having being brought in the Court since 1992. There are 145 current class actions being managed in the Federal Court.

[1] Since the announcement of WA’s new regime, two class actions have been filed in the WA District Registry of the Federal Court. See: (i) DWB22 v State of Western Australia – WAD 251/2022; and (ii) Paul Hamilton v Wilson Security Pty Ltd – WAD 229/2022.

[2] Rules of the Supreme Court 1971 (WA) Order 18, rule 12.

[3] The position is the same in NSW (see Civil Procedure Act 2005 (NSW) section 158), QLD (see Civil Procedure Act 2011 (Qld) section 103C) and Tasmania (see Supreme Court Civil Procedure Act 1932 (Tas) section 67).

[4] Under the Federal regime, the Court may substitute another group member as a representative party or another person as the sub-group representative party if it appears to the Court that the representative party or sub-group representative party does not adequately represent the interests of the group members or sub-group members (Federal Court Act, s 33T).

Important Disclaimer: The material contained in this article is comment of a general nature only and is not and nor is it intended to be advice on any specific professional matter. In that the effectiveness or accuracy of any professional advice depends upon the particular circumstances of each case, neither the firm nor any individual author accepts any responsibility whatsoever for any acts or omissions resulting from reliance upon the content of any articles. Before acting on the basis of any material contained in this publication, we recommend that you consult your professional adviser. Liability limited by a scheme approved under Professional Standards Legislation (Australia-wide except in Tasmania).

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