Remedies That Cross Borders

The Legal System Generally

Australia is a common-law based Federal system. Australian trials, much like trials in the U.S., are conducted in an adversarial manner. Originally trials were heard by a judge and a jury, but in recent years the jury trial has eroded.

Class/Collective Actions

Australia is now the number one location outside of North America where a corporation is most likely to find itself defending a class action. In 2012, Australia’s securities class action settlements totaled more than one billion Australian dollars. In the first six months of 2014, a record 12 securities fraud class actions were proposed or filed. That rate of filings puts Australia on par with the United States in terms of number of securities class actions filed per year per capita.

Representative proceedings, more commonly known as class actions, were introduced in Australia in 1992. A class action is commenced by a single representative where seven or more persons have a claim against the same person. To qualify as a class action, all group members must have claims against all respondents. Additionally, the claims must arise out of the same, similar, or related circumstances and they must give rise to at least one substantial common issue of law or fact. A class action may be brought by an individual or a corporation who has sufficient interest to commence a proceeding. In some respects, the Australian class action system is more accommodating to plaintiffs than the United States because:

  • There is no initial certification procedure that requires the court to be satisfied that the proceedings are appropriately pursued as a class action.
  • There is no requirement that common issues predominate over the individual issues.

Technically, Australia’s class action system is an “opt-out” system. However, because Australian attorneys are prohibited from both representing clients on a contingent fee basis and advancing any litigation costs, Australian plaintiffs must often rely on third party litigation funding and many class actions are structured as “opt-in” class actions. That is to say that the class will typically be defined in such a way as to only include those class members who, in addition to purchasing securities during the relevant period, signed a litigation funding agreement before a given date. Structuring the litigation as an “opt-in” and requiring interested plaintiffs to sign a litigation funding agreement avoids the potential that only one plaintiff will be required to pay the entire cost of the legal proceedings.

In practice, once a shareholder signs a funding agreement and retainer, there is only minimal participation required on the part of the shareholder in the ongoing action. Group members are required to provide trade data and to respond to inquiries confirming the accuracy of the trade data but they are not typically required to provide additional discovery or to attend hearings or review submissions. The only other required participation is to review any proposed settlement and decide whether to object to the terms or to approve the settlement.

Costs of Litigation

  • Australia is a “loser pays” system and the court may require the losing party to pay the prevailing party’s costs and attorneys’ fees. 
  • The award of fees and costs is discretionary and the court may determine appropriate amounts and whether costs and fees should be awarded.
  • Attorneys are prohibited from representing clients on a contingent fee basis but third party funding is available.
  • Because of third party funding, generally the risks to interested claimants are still minimal. In exchange for a percentage of any settlement or judgment, the third party funder will typically advance all litigation costs, pay the attorneys’ fees, and assume the risk of paying the opposing party’s fees and costs in the event of a loss.

Kessler Topaz’s Experience in Australia

Kessler Topaz devotes considerable resources to monitoring both cases pending in Australia and Australian legal developments related to class/collective actions and shareholder rights.  Although we are not involved in an action in Australia, we are confident that we are ready to assist our clients with making a determination as to whether to get involved in a pending action in Australia and helping them effectively navigate the legal system once an action has commenced.