Class Actions in Australia Explained
Australia has had an opt-out class action system in its Federal Court since the early 1990s. Here's how representative proceedings work, who is included, and how settlements reach group members.
Australia has a well-established class action system. In the Federal Court, class actions are called representative proceedings and run under Part IVA of the Federal Court of Australia Act 1976. They are opt-out, so if you fit the group definition you're included unless you opt out. Several states, including Victoria, New South Wales and Queensland, have similar regimes in their supreme courts. Any settlement must be approved by the court.
How a Part IVA proceeding starts
A representative proceeding can be started when seven or more people have claims against the same person, the claims arise out of the same, similar or related circumstances, and they raise at least one substantial common issue of law or fact. Unlike the US system, there's no separate certification hearing before the case can proceed; the defendant can instead ask the court to stop it continuing as a class action.
- ✓Applicant. The person who brings the case on behalf of the group, called group members.
- ✓Opt-out notice. Group members are told about the case and given a date by which they can opt out.
- ✓Closed classes. Courts sometimes allow a case to be limited to group members who register, which can feel like opt-in in practice.
- ✓Litigation funding. Many Australian class actions are backed by commercial litigation funders who are paid from any recovery if the case succeeds.
Settlement approval
A representative proceeding can't be settled or discontinued without the court's approval. The court considers whether the settlement is fair and reasonable for group members as a whole, and also reviews the legal costs and any funding commission deducted from it. Group members can usually object before approval.
Many Australian settlements require group members to register or submit a claim by a set date to share in the money. Even though the class was opt-out, missing a registration deadline can mean you receive nothing, while still being bound by the settlement.
State regimes
Victoria, New South Wales, Queensland, Tasmania and Western Australia have representative proceedings regimes broadly modeled on the federal one. Details differ. Victoria, for example, allows the court to make group costs orders, under which the lawyers' fees are calculated as a percentage of the amount recovered. Which court a case is in can affect costs and timing, but your role as a group member is similar.
Common types of Australian class actions
- 1Shareholder claims over continuous disclosure obligations.
- 2Consumer claims, including product defects and misleading conduct under the Australian Consumer Law.
- 3Financial services claims, such as insurance or superannuation fees.
- 4Claims against governments, including environmental and administrative cases.
- 5Privacy and data breach claims.
Australians and overseas settlements
If you bought a product from a US company, you might wonder whether a US settlement covers you. Many US settlements are limited to US residents or US purchases, but some include buyers anywhere. Read the class definition, and see our guide to filing from outside the US.
For comparison, our explainers on UK group claims and Canadian class actions show how other common law countries handle the same problem.
Costs and what group members pay
Group members generally aren't liable for the legal costs of a representative proceeding. The applicant, who brings the case, is the party exposed to an adverse costs order if the case loses, which is one reason litigation funders and after-the-event insurance are common. When a case succeeds or settles, the court may approve deductions from the settlement for legal costs and, where relevant, a funding commission. Court approval of these deductions is meant to protect group members from paying more than is fair.
Some courts have made orders that spread the funder's commission across all group members, not just those who signed funding agreements. How these orders are used has been debated and has shifted over time, so check the specific settlement's approval orders to see what was deducted and why.
If you're contacted about joining an Australian class action, check which court the case is in by searching the court's online file, and confirm the law firm named is the one actually running the case. Be cautious about unsolicited calls asking for personal or bank details.
SettleScout tracks Australian class actions and settlements alongside those in the US, Canada and the UK. You can browse the open Australian cases, or add the companies you use in the app to get matched and reminded before registration and claim deadlines.
Frequently Asked Questions
Are Australian class actions opt-in or opt-out?
Federal Court representative proceedings are opt-out, so group members are included unless they opt out. To receive settlement money, though, you often need to register or file a claim by a deadline.
How many people are needed for a class action in Australia?
Under Part IVA of the Federal Court of Australia Act, a representative proceeding needs seven or more people with claims against the same respondent.
Who pays for Australian class actions?
Often a litigation funder, who takes a share of any recovery if approved by the court. In Victoria, lawyers can also be paid a percentage of the recovery under a group costs order.
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