In New South Wales representative proceedings can be brought under the Civil Procedure Act 2005 (NSW) which involve proceedings brought by seven or more persons where claims arise out of the same, similar or related circumstances and which give rise to a common question of law or fact.
These representative actions are what are commonly known as class actions.
Class actions provide a vehicle whereby a large number of people can bring proceedings which involve common facts and questions of law to have their claims prosecuted all at the one time. This affords an opportunity to share the costs of the action between the plaintiffs and avoids the need of having multiple hearings.
Class actions were formally recognised in 1992. Procedures and protocols were enacted to enable class actions to be brought which afforded an opportunity for many people to have their claims determined in circumstances where they would otherwise not be able to do so. A class action can level the playing for those people ordinarily would be unable to afford a lawyer to act on their behalf. When claims are brought by many who share a common cause of action then as a group they can pose a far more formidable challenge to either a large organisation or government institution being the party responsible for their injury, loss or damage.
What is required to bring a class action?
There are a number of requirements which must be satisfied in order to enable a class action to be brought. They are:
- There must be at least seven people who intend to claim against the same defendant
- The claims must arise out of the same or similar or related facts of circumstances
- There must be a common question of law that is to be determined referrable to all claims
The claim is brought by a representative plaintiff on behalf of all members of the class action.
The class action is brought on behalf of all persons who fall within the definition of those identified as plaintiffs. Such persons can be defined by a list of names individually recognised or alternatively by a criteria. For example, the class action may be brought on behalf of all persons who held shares in a particular company during a particular period of time. In those circumstances it is not necessary to individually name all members of the class action.
Every potential claimant who has been named in the class action or satisfied the criteria for inclusion in the class action will automatically be included in the class action unless that person elects to “opt-out”.
Settlement of a class action
Once proceedings have been bought in court they will eventually be determined either by way of a settlement as between the representative of the class action and the defendant or alternatively by way of a judgement of the court. If the class action proceedings are settled by way of negotiation as between the representative of the class action and the defendant, then the settlement must be approved by the court. The court must be satisfied, on the basis of all the available evidence, that the settlement is fair and reasonable.