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The Review Class Actions in Australia SECTION ONE The Review Class Actions in Australia 2015/2016 Contents 03 Introduction SECTION ONE 04 Headlines SECTION TWO 13 Multiple class actions SECTION THREE 17 Parties and players SECTION FOUR 20 Red hot – litigation funding in Australia SECTION FIVE 24 Settlements — the closing act SECTION SIX 29 Recent developments in class action procedure SECTION SEVEN 33 Global developments SECTION EIGHT 36 Outlook – what’s next for class actions in Australia? HIGH NUMBER CONSUMER OF ACTIONS CLASS ACTION THREAT STATE THIS YEAR OF Rise in ORIGIN consumer class actions Largest FY16 settlement 35 actions DePuy hip launched 8 replacement potentially up to in FY16 in FY15 35 class actions were $1.75 launched in FY16, BILLION 29 following a historic high of WERE IN Highest value 11 $250 claims filed in FY16 MILLION NSW 40 class actions launched the previous year 2 King & Wood Mallesons Introduction Welcome to our fifth annual report on class action practice in Australia, in which we consider significant judgments, events and developments between 1 July 2015 and 30 June 2016. It was another big year for new filings, with at least 35 new class actions commenced, of which 29 were filed in New South Wales. This is a similar level of new actions to last year (up from previous periods). 16 class actions settled (2014/15: 12), and more than an estimated $600 million has been approved in settlement funds. Looking deeper into the numbers, consumer claims have seized the spotlight in a number of ways: the biggest single settlement was the $250 million settlement of a consumer claim relating to DePuy International hip replacement products; the highest value claims filed are consumer actions in relation to the alleged use of defeat devices in vehicles, with one media report estimating the total value of the claim at $1.75 billion; and the bank fees class action against ANZ was a consumer class action that failed. The bank fees class action is also a rare example of a class action that has made substantive law outside class action procedure, with the High Court clarifying the law on penalties in Australia. There have been a number of other notable judgments in the past year: the HIH decision on indirect causation; a judgment allowing former group members to pursue individual defences against Timbercorp, in circumstances where the class action had earlier been dismissed; and the rejection by the Court of the Willmott Forests class action settlement, which reflects the careful scrutiny that a Court will apply to settlements. In relation to funding, just under half of new class actions filed in 2015/16 were funded by a third party litigation funder. While there have been no developments on the regulation front, a funder has sought court approval for a “common funding” arrangement and judgment is reserved. We hope you find this report informative. Moira Saville Peta Stevenson Partner Partner King & Wood Mallesons King & Wood Mallesons Alexander Morris Patricia Matthews Partner Special Counsel King & Wood M/allesons King & Wood Mallesons The Review – Class Actions in Australia 2015/2016 3 SECTION ONE Headlines The new normal in breach of the Australian Consumer and deceptive conduct (2014/15: 11). Law (ACL) These included claims against QBE The year to 30 June 2016 has been proceedings against Ford regarding (profit and financial performance another big year with at least 35 new defective transmissions guidance);1Vocation (extent of class actions filed. This higher level two actions against Cash Converters government funding); against directors of class action activity may be the “new alleging unconscionable conduct and of Gunns2 (financial performance); normal”. Of particular note is the breach of the statutory interest rate cap against WorleyParsons (forecast increasing proportion of class actions that an action alleging misleading and earnings); against Macmahon Holdings are filed in NSW compared to other states. deceptive conduct in the selling and (profit forecasts); against directors and The Federal Court has reported that marketing of the Nurofen specific pain advisors of QRxPharma3 (failure to 63 class actions were current in the Court range, following an ACCC enforcement disclose in capital raisings that the US as at 31 March 2016. The Supreme Court action FDA had rejected the application by of Victoria’s website records 15 actions proceedings against Carnival Spirit after QRxPharma for a streamlined regulatory (and a further four undergoing settlement a cruise was rerouted as a result of approval process for MoxDuo); and distribution), and the New South Wales cyclonic conditions, and against Murray Goulburn (sales Supreme Court website records 14 class a class action against Commins forecast guidance provided in Product actions. Hendricks Solicitors (Wagga Wagga) in Disclosure Statement). relation to overcharging of legal fees. Financial products/investments: In 2015/16 there has been a rise in the 11 actions were filed (2014/15:11), Securities and financial products/ number of consumer class actions with including against Sandhurst Trustees investment claims remained attractive, 11 new actions filed (2014/15: 8): (as trustee for notes issued by with 18 actions commenced: Wickham Securities); against Bank five actions alleging misleading and deceptive conduct by the installation of Securities: seven actions were filed of Queensland (on behalf of former defeat devices to alter emissions testing alleging breaches of continuous clients of Sherwin Financial); five results (Volkswagen, Audi and Skoda) disclosure obligations and/or misleading against Standard & Poor’s/McGraw-Hill Companies in relation to the rating of structured debt products and synthetic collateralised debt obligations; against New class actions filed 1 40 Bankwest/CBA and its directors and former directors (treatment of 35 commercial facilities); against Famularo and Westpac (unregistered managed investment scheme); against Centuria Strategic Property Limited in the Lang Centre Trust class action (investors 1 Our 2014/15 report noted that 33 class actions had been filed in the 12 months of that financial year. Further research has revealed an additional seven class actions, with recent improvements to the websites of the Federal Court and the New South 18 Wales and Victorian Supreme Courts making more 17 information about current actions publicly available. 2 Earlier proceedings brought against the company directly were stayed in 2012 after the appointment of an administrator, but not before the plaintiff obtained disclosure of relevant insurance policies – including for D&O cover. 3 As QRxPharma was in voluntary administration from May 2015, proceedings were filed against directors and advisors only (the company has since entered into a deed of company arrangement). Class action proceedings against QRxPharma in the United States in relation to the same events were dismissed on the basis of the 2012/2013 2013/2014 2014/2015 2015/2016 deed of company arrangement, with the remaining claim against the CEO dismissed on the merits in June 2016. 4 King & Wood Mallesons SECTION ONE Types of Claims Securities QBE 7 Vocation Gunns 11 Consumer WorleyParsons claims Macmahon Holdings Carnival Spirit QRxPharma (MoxDuo) Audi - Maurice Blackburn Murray Goulburn Audi - Bannister Law VW - Maurice Blackburn VW - Bannister Law Financial products/ 11 Skoda - Maurice Blackburn investments 2 x Cash Converters Sandhurst Trustees (Wickham) Nurofen Bank of Queensland (Sherwin) Legal fees overcharging 5 x S&P / McGraw-Hill Companies Ford Bankwest/CBA Sports Trading Club Famularo Advice Lang Centre Trust Government 4 Navy trade training 35 Home insulation program National disasters/ Asbestos landfill 2 (Liverpool City Council) events Walla Walla Rubbish Tip Fire Snake Valley Bushfire Winmalee/Springwood Bushfire (Mt Victoria) in unlisted property trust) and against Hume Shire Council in relation to the actions against Audi and Volkswagen, Sports Trading Club and its officers Walla Walla Rubbish Tip Fire. and (investments in a gambling scheme). McLaughlin & Riordan, who had Who’s joining the party? represented clients in the Royal Of the remaining categories: Commission into the Home Insulation Natural disasters and events: two More firms are trying their hand at class Program, partnering with ACA Lawyers in environmental actions (2014/15: 6), actions. There were 19 plaintiff firms relation to the subsequent class action. both of which related to major fire involved in the 35 new actions. events - the Snake Valley Bushfire The majority of securities class actions filed In a number of actions, a law firm with a in central western Victoria and the this year were commenced by Maurice particular area of expertise has partnered Winmalee/Springwood Bushfire in the Blackburn (QBE, Vocation and Gunns with a larger “class action” firm to bring the Blue Mountains of NSW. directors) and ACA Lawyers (Macmahon matter to Court, such as: Claims against the State: four Holdings and WorleyParsons), in contrast Watson Law Group, a Brisbane- actions were filed against the state to 2014/15 in which five of 11 securities based superannuation and insurance (2014/15: 2), including in relation to actions were associated with Mark Elliott firm, working with Quinn Emanuel in the Navy trade training program, an (2015/16: 1). No new class actions were relation to an action against the Bank action relating to the Commonwealth filed by Slater & Gordon in 2015/16. of Queensland and DDH
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