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Proceeding on Racial and/or Employee Discrimination In Australia: Analytical Essay

Redressing class actions in Australia


In January 2019, the Commonwealth Attorney-General tabled its final report into Class Action Proceedings and Third-Party Litigation Funders. One of the recommendations arising from that report was that the government consider statutory redress schemes as an alternative to some class action proceedings.

Read also: “Just say ‘write my paper’ and we’re on it!”

Class actions are currently used for a variety of civil disputes including, but not limited to shareholder claims. This article will discuss these class actions, identifying the current jurisdictions in which these cases might be brought, analysing a previous class action that was brought in Australia against Multiplex and the issues in this dispute, and set out the features of statutory a redress scheme that might alleviate some of the concerns about class actions.

Class actions explained

Until 1992 in Australia, there were cases where people did not receive the justice that they deserved due to access and funding. This changed when the Federal Court of Australia introduced a class action procedure which allowed a group of people to form together and bring proceedings against a respondent. The requirements for launching a class action are:

  • seven or more people have claims against the same person(s);
  • the claims are in respect of, or arise out of, the same, similar or related circumstances; and
  • the claims give rise to at least one substantial common issue of law or fact.

Overtime, these requirements have been liberally interpreted by the Courts and are quite flexible – the main requirement is that seven or more people must have a claim against the same respondent. Although the class action requires a group of seven or more persons, group members are not listed individually in the matters and a single class representative is usually elected to become the applicant in the proceedings and represent every member in to proceedings.

In 2000, Victoria introduced class action proceedings into their courts, becoming the first Australian state to do so, the main difference being that the Federal Court could only hear matters where a federal claim was involved as opposed to the Supreme Court of Victoria which was not bound by the same restrictions. Following the introduction of class action proceedings in Victoria, other states started to follow suit, including New South Wales in 2011 and more recently, Queensland in 2017.

There are a variety of types of class actions which may be brought in Australia, most governed by federal statute which means that they can be held in the Federal Court of Australia, and they may consist of claims about racial and/or employee discrimination, or consumer claims and even possibly natural disasters and events. As figure 1.1 below demonstrates, a majority of class actions that were filed in the Federal Court between 2013 and 2018 were shareholder and investor disputes. The reason that these disputes are most prevalent is that they are often are low risk and profitable to and that there are many cases involving other claims with reasonable prospects of success but are deemed too expensive or not economically viable.

Statutory redress scheme

In the final report into Class Action Proceedings and Third-Party Litigation Funders, the Commonwealth Attorney General made a total of 24 recommendations. Recommendation 23 stated that:

The Australian Government should review the enforcement tools available to regulators of products and services used by consumers and small businesses (including financial and credit products and services), to provide for a consistent framework of regulatory redress.

When considering class actions and third-party litigation funders, it is almost impossible to design a regulatory redress scheme which entirely complements the broad regulatory redress power which should be mandatory and so the Australian Law Reform Commission (ALRC) instead suggested the implementation of a standing scheme which could be adapted quickly and easily depending on the various circumstances of the case, which would be overseen by a pre-determined host organisation.

This approach would not be a ‘one size fits all’ model and so the ALRC set out a number of principles which would guide the development and implementation of a regulatory redress scheme. The suggested principles included:

  • Voluntary – Corporations must be able to choose to establish a scheme where they have identified a breach, or potential breach, of the law causing loss and regardless of whether a regulator has instigated a formal investigation. Victims may choose to participate in the scheme or take alternative action to seek redress.
  • No-liability – Corporations may establish a scheme with or without an admission of liability.
  • Independence – the scheme must be implemented by a Panel appointed by the Corporation and approved by the Regulator. The Panel must include a consumer representative or small business representative as appropriate. The Corporation must provide any information reasonably requested by the Panel to enable the Panel to make that assessment.
  • Panel’s decision enforceable – the Panel will assess individual claims and whether they fit within the terms of the scheme and the amount of compensation awarded. The Corporation is bound by the Panel’s assessment.
  • No cost to victims – participation in the scheme must be free.
  • Cost neutral to the regulator – the Corporation must fund the costs of the scheme as well as the regulator’s costs in assessing and approving the scheme.
  • Consumer support: The scheme should include the provision of support to victims to access independent advice when deciding whether to join the scheme.
  • Compensation uncapped – the Regulator’s statutory authority to approve schemes should not be subject to a monetary cap.
  • Consumer outreach – the Panel should raise awareness of the scheme amongst victims (in particular vulnerable consumers) to ensure the scheme is known and people are able to assess whether to join.
  • Cy pres powers – where affected consumers cannot be located, the damages that otherwise would have been paid should be donated to charity, particularly those organisations that support consumers to access regulatory redress schemes.
  • Penalty Reduction – a Corporation that establishes a regulatory redress scheme should be eligible for a reduction of up to 50% of the applicable penalty. Criteria should be established to determine in what circumstances a reduction is appropriate and the amount of the reduction.

Numerous studies continue to highlight that access to justice for many individuals remains an issue as we have seen recently with The Banking Royal Commission which examined a range of practices in the banking and financial services industries that should have resulted in a remedy being provided where it was not, or was only provided many years later which in some cases is too late.

Slater and Gordon’s submission to the inquiry identified research by Professor Hensler which found that a number of regulatory redress schemes established in different countries have been blighted by problems. However, this was rebutted by Maurice Blackburn who suggested that recent ‘experience with voluntary redress schemes indicates that, in appropriate circumstances, they can operate as effective and low-cost methods of dealing with mass harm.’68

Class actions have previously proven beneficial in providing access to a remedy when an individual action would not be financially able to pursue although it is not a cure-all. When class actions settle, costs are typically taken from the global settlement amount which results in a sizable gap between the total amount paid by a respondent to defend and then settle a class action, and the amount actually received by individual class members.

Regulatory redress involves less time and are more cost effective when compared with pursuing adversarial litigation for both applicants and respondents. The option of regulatory redress also reduces the significant burden placed on the civil justice system by both private litigation and class action proceedings.

Redress is not a new idea, in fact, there are a range of existing forums which allow an individual or business to seek remedy including the courts (through private action), external dispute resolution (EDR) schemes (also known as industry Ombudsman), and compensation schemes established as a result of enforcement action taken by a regulator. These forums provide advantages for both plaintiffs and respondents in resolving mass damages claims outside of litigation.

The Storm Financial case study demonstrated that, in some situations, regulatory intervention to support redress can achieve outcomes for victims that are superior to class actions or individual alternative dispute resolution (ADR). There is also an opportunity for an approved voluntary redress scheme which is a form of ADR intended to provide business with an additional option for offering compensation to consumers and businesses quicker, easier, and without the costly litigation battle.


There has been research conducted internationally, most notably , which suggests that regulatory redress powers are imperative for an effective legal system.

The Competition Act 1988 (Redress Scheme) Regulations 2015 (CRAF) provided the basis for many of the proposed principles set out in the final report delivered by the Commonwealth Attorney General) and it also describes how the applications for the approval of redress schemes are considered, for example, section 49C of the CRAF allows a person to apply to the Competition and Markets Authority (CMA) for approval of a redress scheme – this application can be made by a single person or it can be lodged on behalf of a group and it does not require that the CMA make a decision on whether or not there has been an infringement at the time of lodging, but it can only be approved and made public at the same time as (or after) that decision has been made.

As with the proposed principles in the final report, the CMA has made clear that it does not view an application for a compensation scheme as an admission of liability or in any way inconsistent with the applicant continuing to exercise its rights of defence.

The first stage of the process involves the presentation of an outline scheme to the CMA which includes details of:

  • the start date, term and duration of the redress scheme (which must be at least nine months);
  • persons entitled to claim compensation under the scheme;
  • the scope and level of compensation to be offered under the scheme;
  • the process of applying for compensation under the scheme (including the estimated time it will take to determine applications for compensation) together with:
  1. the evidence applicants will be asked to submit in connection with their application for compensation;
  2. how the scheme is to be advertised;
  3. the complaints procedure; and
  4. the consequences of accepting compensation under the scheme.

Once the scheme is approved by the CMA, the infringing party has a statutory duty to comply with it. The CMA also has the power to offer a reduction in the level of fine of up to 20% to reflect the infringing party’s voluntary provision of redress, this principal has also been adopted into the proposed principles set out in the final report delivered by the Commonwealth Attorney General.

The CRAF ensures that individuals and businesses alike are not obliged to accept redress under the relevant scheme and are free to pursue private action through the courts if they are not satisfied with the proposed scheme. Individuals privy to the action must also elect to optin to the settlement. Although some would suggest that the voluntary nature of this agreement would not encourage parties to participate, the opposite is often true – the speed, economic benefits, and relative certainty of receiving some compensation can make litigation the less appealing option for all involved.

When determining whether or not a redress scheme would be effective and beneficial, the ALRC examined the relatively new redress scheme in and Wales and the research seemed to indicate that overall, such schemes are a quicker and more cost-effective alternative to litigation as it can avoid the duplication of effort and costs in separate, sequential public and private actions. It also suggested that suitably empowered regulators are likely to be able to deliver compensation in an efficient manner whilst still allowing opportunities for the defendants to avoid the perception of reputational loss and the high costs involved in defending a class action and incur lower statutory penalties if compensation is paid early before any fine is imposed.

Case study: multiplex limited securities

Multiplex is one of the leading international construction contractor companies. It was alleged that over a period from August 2004 to May 2005, Multiplex failed to comply with the disclosure requirements of the ASX Listing Rules and also engaged in misleading and deceptive conduct, by not properly disclosing to investors and ASX all the information regarding material cost increases and delays in the construction of the Wembley National Stadium in and various other projects.

The action was initiated by the firm, Maurice Blackburn Lawyers, and funded by a Singapore based funder, launching the proceedings in December 2006 which lasted for almost 42 months. Investors were approached by advertisement and word of mouth, to participate in the action and almost 120 investors signed up to the class action. It was a precondition to becoming a member of the class action group that the participating party enter into a funding agreement with the nominated funder.

The applicants alleged that investors who had purchased their interest in Multiplex during this period had done so at substantially more than the true market value and they were seeking damages which equated to the difference between the price paid by investors for Multiplex shares and the ‘true value’ of these shares.

Multiplex sought an order from the court that it was inappropriate that the claim be pursued by means of a class action, arguing that the requirement that any person wishing to be a class member sign up to a funding agreement with the nominated funder deterred individuals from terminating the funding agreement, once signed up which was inconsistent with the ‘opt out regime’ provided by the Federal Court class action rules.

The court was not persuaded by Multiplex’s arguments and allowed the proceeding to continue as a funded class action. Three and a half years after the proceedings were commenced, a settlement was reached before the hearing which was set to commence in October 2010. The Federal Court approved a $110 million settlement negotiated between the parties on the basis that no party made any admission as to liability. A breakdown of the $110 million shows that approximately $10 million would be paid in legal fees to Maurice Blackburn, and about $35 million to the Singapore-based funder. This would leave $65 million to be divided between the 120 investors involved in the class action (approximately $541,500).

Although a number of the proposed principles were already satisfied in this class action, some were not. For example, if a redress scheme had been implemented in this case it would have alleviated the financial burden for the individual group members ensuring that their involvement in the proceedings was at all times voluntary. Evidence provided by empirical research into international redress schemes suggests that this matter could have been settled sooner than three and a half years saving all parties involved, including the courts, valuable time and money.


There has long been debate about the effectiveness of class action proceedings, with some arguing that it is a positive addition to the Australian legal system which provides access to justice for a lot of people who, without the option of a class action, might be denied the right to have their claims heard. Others have argued that class actions brought against corporations have the “potential to impose significant burdens on the companies and directors involved”.


  1. The push to reform class action procedure in Australia: evolution or revolution? Http://
  2. Some current practical issues in class action litigation Http://
  3. The Victorian law reform commission’s class action reform strategy Http://
  4. Class actions down under and how they grew Http://
  5. The Multiplex class action settlement — best and fairest outcome or is there room for improvement? Http://
  6. Class actions increasing in Australia Http://
  7. Multiplex class action Https://
  8. Shareholder class actions in Australia Https://
  9. Class Actions in Australia: Fact versus Fiction
  10. A beginners guide to class actions in Australia

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