In Australia, class actions operate on an opt out basis. If you satisfy the group member definition described in the pleading commencing the class action, you are automatically a group member irrespective of your awareness of the class action and you will have an opportunity to opt out. Fortunately for group members, with limited exceptions, they are not liable for any costs of the proceeding if they simply remain a class member. In understanding the advantages of group member participation in a class action, it is important to appreciate the differences between the roles and responsibilities between a plaintiff and a group member in a class action.
Plaintiffs / Applicants
In Australian class actions, the plaintiff (also referred to as the applicant in certain jurisdictions) commences the action on their own behalf and on behalf of the group members. The law firm running the class action would have a legal retainer with the plaintiff and if the class action is supported by a litigation funder, the plaintiff would also be asked to sign a funding agreement.
Whilst the plaintiff is the client who has the right to give instructions to the lawyers to prosecute the class action, the litigation funder would usually be authorised by the plaintiff under the funding agreement to give day-to-day instructions.
At any stage of the proceeding, the parties may agree to settle. Any settlement would need to be agreed by the plaintiff and, as per usual clauses in a funding agreement, also by the litigation funder (noting their significant interest in the outcome of the proceedings). Any agreement to settlement is however, subject to Court approval.
Group Members
Group members are effectively ‘non-parties’ to a class action and (with limited exceptions) assume a passive role. Technically, group members do not have to retain the class action’s lawyers or sign a litigation funding agreement with a funder, but there are many instances where they are asked to do so and it may be in their interest (e.g. if the class action would proceed only on a closed class basis – closed to those who sign a funding agreement).
Group members can keep themselves informed of key developments in the matter by checking Court notices and engaging in correspondence with the class action’s lawyers. Group members in most cases will not be asked to pay any out-of-pocket costs but will usually contribute to the costs and commissions (if any) from any settlement sum.
The requirement of Court approval is important for group members, as the Court will only approve the settlement if the settlement is fair and reasonable including to group members. Before any settlement approval hearing, a group member can object to the settlement and can appear at any such hearing.
Group members will be given an opportunity to opt out of a class action before a final hearing or before any settlement approval hearing.
If the action is unsuccessful, a group member (who has not opted out) cannot pursue the same claim/s and any related claims against the defendant / respondent in separate legal proceedings.
Advantages of group member participation
For group members, it is often advantageous to participate in a class action, especially for claims that would be uneconomical for the group member to litigate themselves. Class actions allow individuals the opportunity to collectively fight against a potentially well-resourced opponent, including with the support of a litigation funder. Class actions offer an efficient process to resolving large-scale disputes, whereby group members take a passive stance at no out of pocket cost.
The content of this article is intended to provide a general guide to the subject matter. Specific advice should be sought about your specific circumstances.
