Class Actions Research Paper #4: 9 October 2020 The problem of delay in class actions Peter Cashman1 & Amelia Simpson2 In this paper we examine delays in the resolution of class actions in the Federal Court and the New South Wales, Victorian and Queensland Supreme Courts. We have sought to obtain and analyse the available empirical data on 542 cases.3 The data collected included information on: • the date(s) on which the cause(s) of action arose or time periods relevant to the cause of action • the date on which each class action was filed • the date on which the proceeding was finalised • the date of judgment in cases where liability was judicially determined • the date on which any settlement agreement was approved (or rejected) by the court. Using this data, we have computed: • the time period (in days) from the date of commencement of the proceeding to the date on which the matter was ‘finalised’ • the time period (in days) from the date of filing to the date of settlement approval or judgment • for cases that are as yet not finalised: the period from when the case was commenced until 30 September 2020. We then calculated, for cases commenced in each calendar year in the period 1992 to 2020, the average and median times from commencement to ‘finalisation’. The results and our analyses are set out in this Research Paper. We have included as Appendix A a schedule of the cases considered. We have also included reference below to: • other available quantitative data on delays in class actions in Australia • the qualitative information on the problem and causes of delay in class action litigation based on interviews which we conducted with experienced class action practitioners, which we previously set out in detail in Research Paper #34 and • suggested guidelines, proposed by others, for the purpose of determining unreasonable or undesirable delay in civil proceedings generally. 1 Barrister, 3 Wentworth Chambers; Adjunct Professor of Law, University of New South Wales. 2 Solicitor; Research Assistant. 3 A further 11 cases are listed at the end of the attached schedule of cases. We have excluded these cases from our analyses because we were not able to obtain sufficient data on such cases. 4 Peter Cashman and Amelia Simpson, ‘Class actions and litigation funding reform: the views of class action practitioners’ (Class Actions Research Paper #3: 17 September 2020). 1 Some methodological difficulties In compiling and analysing the data referred to in this paper we encountered a number of difficulties. First, there is no readily available uniform or comprehensive statistical data on class actions compiled by the courts. Thus, there are a number of cases considered where we were unable to obtain all of the information sought.5 Second, determining the date on which the causes of action arose in respect of the causes of action of class members is inherently problematic. Many cases encompassed multiple statutory and other causes of action which arose on different dates, both according to the applicable legal principles and on the individual facts. Accordingly, we determined relevant time periods for each of the class actions. For example, the relevant period in which class members acquired shares in the case of securities class actions and the range of times in which class members had to reside or own land within a certain geographical area for class actions related to the contamination of land. Third, in cases arising out of personal injuries, including product liability cases, the accrual of causes of action varied according to the time of use of or exposure to the product in question and the idiosyncratic medical facts of each class member. Fourth, although the dates of relevant judgments in respect of liability and/or of settlement approval are relatively easily ascertainable, the date on which each matter was ‘finalised’ is inherently problematic.6 Judgment on liability or settlement approval is usually followed by some form of claims resolution process. This can be both expensive and protracted. Moreover, the dates on which such claims resolution processes were concluded were not readily able to be determined. Furthermore, in many instances, the final resolution of the matter was delayed by interlocutory appeals or appeals from the final judgment or settlement approval. Even judgments were not without complication as often orders would be made approving of a settlement with a judgment with reasons delivered at a later date. In addition, in some cases, further proceedings continued in respect of apportionment of liability or contribution claims. Fifth, an additional complication arose of out multiple competing or overlapping class actions. These were often commenced on different dates. In some instances, one or other would be stayed, transferred to another court or allowed to proceed concurrently with another case, whether by consolidation or otherwise. 5 The data were obtained from: court websites (e.g.: Federal Court of Australia, Current Class Actions <https://www.fedcourt.gov.au/law-and-practice/class-actions/class-actions>; NSW Supreme Court, Class Actions <http://www.supremecourt.justice.nsw.gov.au/Pages/sco2_classaction/sco2_class_action.aspx>; Victorian Supreme Court, Class Actions <https://www.supremecourt.vic.gov.au/law-and-practice/class- actions>; Commonwealth Courts Portal, <https://www.comcourts.gov.au/>); submissions and information disclosed to the Joint Committee Parliamentary Inquiry into Litigation funding and the regulation of the class action industry <https://www.aph.gov.au/Parliamentary_Business/Committees/Joint/Corporations_and_Financial_Services/Li tigationfunding>, plaintiff law firm websites, news media, a number of scholarly publications on the class action regime in Australia referenced below, and legal research through online databases including Austlii, LexisNexis, Westlaw, and Jade BarNet. 6 See, e.g., Professor Vince Morabito, An Empirical Study of Australia’s Class Action Regime: First Report, Class Action Facts and Figures (December 2010) 19. 2 Sixth, there may also be ongoing disputes or appeals in relation to legal costs or funding commissions. Seventh, in a number of instances proceedings were discontinued, after a relatively short interval, for a variety of reasons. Detailed information on the cases we reviewed is set out in Appendix A. For each class action, there are brief notes. Where there are inconsistencies in dates noted in judgments, in media releases or other publications by law firms, or on ComCourts, the dates on ComCourts have been preferred. We will update the information in Appendix A as more information is obtained. The increasing incidence of class action litigation. Over the period of 28 years for which we have obtained data, in the period 1992 to 2019, there has been a marked increase in the number of cases commenced each year. This is not surprising. In the period immediately following the introduction of class actions in the Federal Court of Australia relatively few cases were commenced. This was in part due to the fact that the provisions of Part IVA of the Federal Court of Australia Act 1976 are only able to be utilised in respect of causes of action that arose after the legislative amendments came into force in 1992.7 Moreover, the requirement that there be a cause of action within the original jurisdiction of the Federal Court precluded proceedings based solely on common law causes of action. Furthermore, the eventual introduction of analogous class action provisions in other Australian jurisdictions slowly evolved over time and is still continuing. Thus, there is an increasing number of class actions now being commenced in courts other than the Federal Court. The lack of available funding mechanisms and the adverse costs exposure of the applicant constrained the use of class actions until commercial litigation funding and adverse costs insurance became more readily available in the aftermath of the decision of the High Court in Fostif8 in 2006. Part of the explanation for the increase in class action litigation is the changing nature and increased entrepreneurial activity of plaintiff law firms. A number of law firms that previously handled traditional personal injury and trade union work diversified and expanded their practices and have actively marketed their class action work. Commercial litigation funders have not only provided financial support for class action litigation, they have also proactively sought out and recruited litigants and class members. In the period 1992 to 2019 there has not only been a quantitative annual increase in the frequency of class action litigation, but also a marked qualitative change in the types of actions brought. In particular there has been an increase in the number of shareholder or investor cases, many of which are now funded by commercial litigation funders. In recent years, particularly in the aftermath of the decision of the Full Federal Court in Money-Max9 upholding the power of the Federal Court to make 7 Section 33B Federal Court of Australia Act 1976 (Cth). 8 Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386. 9 Money Max Int Pty Ltd (Trustee) v QBE Insurance Group Limited [2016] FCAFC 148; 245 FCR 191. However, the High Court has held that neither the Federal Court nor the NSW Supreme Court has power to make such orders on an interlocutory basis: BMW Australia Ltd v Brewster; Westpac Banking Corporation v Lenthall [2019] HCA 45. See Michael Legg, ‘Litigation Funding of Australian Class Actions after the High Court Rejection of Common Fund Orders’ (2020) 4 Civil Justice Quarterly 305-323.The power of the court to make such an order (e.g. under s 33V) at the conclusion of the case is subject to a Full Court appeal in Davaria Pty Ltd v 7- Eleven Stores Pty Ltd & Ors and Pareshkumar Davaria & Anor v 7-Eleven Stores Pty Limited & Anor (VID180/2018 and VID182/2018, commenced on 20 February 2018) and an appeal to the NSW Court of 3 interlocutory common fund orders, there has been an increase in competing or overlapping class actions.